Employment Relations - Case Study Example

Employment Relations Changes in the organization of work are paralleled by changes in employment relations. Critics admit that where responsibility is decentralized to the work group, it is essential to ensure a high level of organizational commitment in order to prevent work groups using their power to further sectional rather than organizational interests. IBM Australia is one of the leading companies in the world which expends its activities and searches for new opportunities in IT industry. The aim of the paper is to analyze employment relations and evaluate the role and importance of management function. The paper will be based on Harvard HRM model including situational factors; stakeholder interests; HRM policy choices; HR outcomes and long-term consequences. Situational factors for analysis include workers, business strategy, management philosophy, task technology and societal factors. In IMB Australia employment relationship demands increased recognition of the professional qualities of the autonomous worker, which poses problems of incompatibility with an employment contract built upon subordination. Pay is determined by time worked, whilst idle time due to poor organization and absenteeism is reduced. In IBM Australia task characteristics is affected by broader managerial philosophies. The adoption of new managerial policies of human resource management is important in this respect. At one level, a concern for human resources implies investment in training and in the skills of employees. For instance, in 2005 26,4% of the budget ($ 48, 706M) was spent on training and development of employees and 48% was spend on outsourcing (FYI. IBM Global services, n.d.). Further, given the costs of training for employees using new and complex equipment, there is a strong incentive to provide conditions of employment which reduced turnover. The use of advanced technologies tends to be accompanied by greater job security and generally more favorable terms of employment. IMB Australia seeks to bind employee commitment over the longer term by providing extensive fringe benefits and developing internal labor markets that give good opportunities for advancement up a highly stratified promotion ladder (Arrowsmith & Sisson 2001). Management philosophy is based on the idea to keep top talent and support professional growth of employees. Following Storey (1989) … treating employees as valued assets, a source of competitive advantage through their commitment, adaptability and high quality (Storey 1989, p. 33). Equally important, to the extent that it involves the decentralization of decision-making to employees, whether as individuals or through forms of team decision-making, it is expected to encourage the growth of task discretion and autonomy which has been shown to be so important in employee satisfaction and motivation. However, as has been seen, there are still substantial doubts about how far human resource management policies have spread within industry and there are also doubts about how far the emphasis on decentralization of decision-making is rhetoric or reality (Bach & Sisson 1999). Other tensions within the employment relationship impinge upon the rules of employment and power relationships. IBM Australia management is about the achievement of organizational goals through people so managers are successful to the extent that these goals coincide with the aims and aspirations of those people, be they workers or customers. This matching of broadly reciprocal needs between employers and workers are referred to as a psychological contract, or set of contracts. It suggests managers and workers share goals, but this is not at all straightforward. Storey (1989) expresses this as follows: In stereotyped form HRM appears capable of making good each of the main shortcomings of personnel management. Its performance and delivery are integrated into line management: the aim shifts from merely securing compliance to the more ambitious one of winning commitment (p. 33). This makes the management of the employment relationship an uncertain process within which there is a blend of contradictory principles around the need to control and to gain the consent of workers. Another approach to the subjective quality of working life has focused not on the immediate work task but on the extent to which the employing organization permits employee participation in decision-making. In IBM, the interest in participation has come from a number of directions. One is from personality theorists that have postulated the growing importance of aspirations for self-realization. For Marshall (cited Gennard & Judge 2002) the institutionalization of legal and political citizenship generated a conception of equality and equal social worth that led naturally to a challenge to the legitimacy of economic inequalities and forms of organization based on traditional hierarchical principles. In IBM, the principle of citizenship is likely to prove contagious (Lashley 1997). This is a large claim, for the centrality of power and control has been a recurrent theme of sociologists accounts of workplace relations. Examples include monitoring or surveillance based on information technology; the growth of flexible employment contracts and subcontracting; just-in-time (JIT) systems for production and delivery; the continuing spread of budgetary systems and targets, including in the public sector. While rules may be the substantive rules of employment, e.g. pay and conditions of employment, implicit in the notion of rules affecting people is the concept of behavior. Managements job is to control and direct workers behavior to perform work to the desired standards, and thereby ensure that the rules of employment are adhered to (IBM Integrated supply chain 2007). IBM stakeholders are management, employees, government, community and unions. Employment relations with stakeholders are stipulated by contracts, agreements and social corporate responsibility policies. The purpose of these policies is co-ordination of activities in accordance with the code established by the company. In this case, the norms are directed towards achieving the goals and objectives of the organization. The structure defines tasks and responsibilities, work roles and relationships, and channels of communication. The nature of ethical standards is one of the key issues to be addressed by personnel managers operating in IBM. There is gradually a growing together of national prac­tice on working hours, but it will take a lot longer for rates of pay to harmonies.(CSV Analysis: IBM 2007; IBM Integrated supply chain 2007). Government and community interests are based on the idea of common good and compliance with current rules and industry regulations. Concentrating for the moment on the delivery of the service, a values-driven approach to specification will consider issues of humanity, whether in a transient encounter or a long-term relationship. For instance, in “November 2006:$1,6 billion, IBM signed 10-year agreement with the State of Indiana Family and Social Services Administration for eligibility modernization, includes outsourcing of intake processing services and development of an automated eligibility application system” (FYI. IBM Global services n.d.). Also, IBM signed contracts with the German Army, the State of Indiana Family and Social Services, the Texas Department of Information Resources. Timeliness, responsiveness and flexibility, courtesy and friendliness, availability and access, sympathy and support, understanding and guidance; all these, and others such as respect and confidentiality, have to be considered as elements in the design of human services where the felt experience of the client is at least as important as, if not more so than, procedural or technical precision. Specifically in the labor contract this is because the workers ability to work is only realized as useful labor in the course of carrying out that work, hence a rule is a complex social institution. The development of collective and social partnership is hampered by the reluctance among employers to promote partnership with trade unions. The challenges of global competition have caused employers to restructure and adopt new methods. Customers are the main stakeholders of IBM. Customers perceive IBM as a leader in BPO and as the best innovator in providing emerging technology-related services in the following industries: financial, manufacturing, communications and media, government, healthcare services, retail, and professional services” (FYI. IBM Global services n.d.). HR policy choices are based on opportunities and benefits proposed by IT technology and innovative solutions developed by the company. IBM uses flexible reward system and work systems in order to motivate and inspire employees. Tacit skills, such as learning to deal with customers, are learnt in and through the very act of doing, often involving trial and error and not from following a body of procedurally-designed rules (Bach & Sisson 1999). They are seen as an interpretive achievement of the user as to how the rules fit the task in hand. By mastery of the rules comes the power to extend them. HR outcomes include motivated staff and commitment to work, high productivity and positive corporate culture. In order to be effective IBM Australia tries to be responsive to external environmental influences. IBM Australia operates within a dynamic environment and it requires a structure and culture that are sensitive and readily adaptable to change. Culture is a major factor in the appropriateness of managements methods of motivation. In addition to arrangements for the carrying out of organizational processes, management has a responsibility for creating a climate in which people are motivated to work willingly and effectively (Bach & Sisson 1999). IBM’s organizational climate influences the level of morale and attitudes which members of the organization bring to bear on their work performance and personal relationships. External environment has a great impact on employment relations and performance. The main factor of influence is competitive environment. Competition dictates new approaches to management and training, new vision of HRM and market performance. IBM’s policy is formulated by the leadership, subject to varying degrees of consultation. Management continues to have the dominant voice in production, marketing, finance, and other matters of business strategy. “IBM possess a leadership advantage that is clearty a differentiator with prospects as well as with existing customers" ().Increased competition caused by constant technological innovations is the main factor which forces IBM to introduce new methods of doing business and innovate. Competitive advantage of IBM Corporation is driven more by sales and performance management than by manufacturing and product innovations (Bach & Sisson 1999; IBM Integrated supply chain 2007). For the innovation of new ideas to be successful a high degree of integration is needed between all concerned (e.g. engineering, production management and marketing). Change process is closely connected with the integrity perception which is built into their way of doing things, a passion for integrity which applies to employees, customers, suppliers and other audiences such as the community. While innovations in high technology often receive the greatest publicity, advances have been made in many fields and at many levels of technology. Long-term consequences include cost effectiveness and productivity, societal well-being and individual well-being. It examines the relationship between organizational commitment and three measures of employee work behavior that are likely to be of relevance for their productivity: how frequently they are absent from their organizations, how they assess their job performance relative to others, and their intentions about staying in the organization (IBM Integrated supply chain 2007). Discretion is expected progressively to replace control, and the consequences are predicted to be benign, with more commitment and higher productivity following. The advance of discretion in itself implies a weakening of work intensity. But management will counter this through new forms of control (bureaucratic control, or whatever lies beyond that) and it will be the control, not the discretion, which assures productivity. SWOT The main strength of the company is it strong corporate culture, professional staff and innovative technologies. Traditional occupational boundaries are breaking down, as jobs become more flexible. The main weaknesses are decentralization and diverse workforce. These factors are misleading in service work because employment strategy is concerned with both control and commitment, and because they fail to recognize the importance of employee discretion as an element of job design, which is crucial to an understanding of the service delivery. The main opportunities are innovative approaches to change management and government support, strong market position and technological leadership. IBM invests in different projects and spends much on training of employees and outsourcing. Growth ofteh server market is another opportunity for IBM. These factors will help IBM to sustain strong leadership position and compete in future. The main threats are competition and government regulations. Oracle emerges as the main threat for IBM in Asia Pacific region. As stakeholders, government and society have a great impact on the IT industry through legal norms and regulations. “IGS must complete the shift to higher-value, higher-growth businesses {e.g., SMB} in a timely fashion while continuing to drive improvements in operational efficiency“ (FYI. IBM Global services n.d.). Also, increased customers needs and expectations require additional investments in research and development and the service delivery. In sum, IBM Australia develops positive employment relations aimed to support and develop workforce and meet interests of diverse stakeholders. Both managers and workers in a variety of work and employment situations see their workplaces in unitary terms, The main justification for widening the scope of this relationship derives from the fact that the service encounter is the interaction of the producer and consumer of services, and is a more complex phenomenon where financial considerations are interwoven with social ones. Bibliography Arrowsmith, J. and Sisson, K. 2001, International competition and pay, working time and employment: exploring the processes of adjustment, Industrial Relations Journal, iss. 32, vol. 2, pp. 136-53. Bach, S. and Sisson, K. (eds) 1999, Personnel Management: A Comprehensive Guide to Theory and Practice, 3rd edn, Oxford: Blackwell. CSV Analysis: IBM. 2007. FYI. IBM Global services. N.d. IBM Integrated supply chain 2007, Gennard, J., Judge, G. 2002, Employee Relations. Chartered Institute of Personnel & Development; 3Rev Ed edition. Lashley, C. 1997, Empowering Service Excellence: Beyond the Quick Fix, London: Cassell. Storey, J. 1989, New perspectives on Human Management, Routledge, London. Read More