HRM and Collective Bargaining - Assignment Example

HRM and Collective Bargaining Abstract The following is an integrative study of employee relations emphasising on the concept of collective bargaining, and how this concept is applied in organisations. Discussions have been added relating collective bargaining to the Human Resources function with additional introductions given to aspects of employment law in relation to statutory and voluntary regulations. It has been concluded from the study that collective bargaining is an established practice in economies where trade unions are legally recognised, and certain degree of flexibility is to be exercised by both employers and employees to reach meaningful agreements, although rigidity may not necessarily result in failure for both parties as explained through the cases. A recommendation would be to employ distributive bargaining for better results. I INTRODUCTION: The following is an integrative report on the role of the human resources function in terms of negotiating with labour unions. The report will delve into management relations with unions, and how these relationships are likely to be affected if either the union or management take a rigid stand during collective bargaining negotiations, and not exercise flexibility. The report will also look into such factors as health and safety regulations, misconduct, payroll, minimum wage, and others, to establish arguments and issues from either side, and will attempt to culminate all these factors to come up with meaningful conclusions and/or provide future recommendations. Where possible, the report will endeavour to provide examples of real organisational cases to strengthen relevant arguments. The report will make use of extensive established literature in the subject area to gain and provide theoretical input towards its discussions. II LITERATURE REVIEW: II.1 The Different Regulations: Employment relationship is protected by two different types of regulations namely legal and voluntary regulations (Willey, 2003), where legal regulations refer to standardised laws passed by the government like processes for dealing with complaints about infringement of legal rights; and the provision of solutions; whereas voluntary regulations refer to the additional discretion employers have, in compliance with legal regulations, in determining pay and employment conditions and the procedures followed; use of grievance procedures; disciplinary procedures; the roles of consultation and collective bargaining; and the involvement of third parties to the regulation of employment relations (Willey, 2003; Newell and Scarbrough, 2002). In order to better understand the employee relations aspect of the human resources function, it may useful to study both these regulations in depth. II.1.a Voluntary Regulations: These regulations refer to additional discretion for the employer in terms of employment contracts, determining pay and working conditions, grievance and disciplinary processes, consultation and collective bargaining, and involvement of third parties in regulations. The Employment Contract: This is the main instrument employers use to regulate individual employment relationships. Seen as an initiating point for all grievances, disciplinary actions, and complaints to tribunals, this fundamental tool has also got its flaws. This is because researchers believe that the contract is biased towards the interests of the employer, ‘powered by an imbalance where the employee can be vulnerable to employer action’ (Willey, 2003, pg 49). The contract is also seen as a means of control and direction to the employee, and has been described as a, ‘command in the guise of an agreement’ (Kahn-Freund, 1983). Such freedom to the employers is however limited by application of ‘common law’ as discussed in previous sections, as universal regulation. In accordance, employers are to design their contracts in compliance with universal minimum standards as laid out by common law. Although there are other aspects to the employment contract, this report is mainly concerned with the processes of consultation and collective bargaining. All aspects of individual employment as discussed in preceding sections are important in understanding how these aspects play important roles in collective efforts, as, after all, collective groups are made of individuals and so is the case with employment unions (Hofstede, 1997). Consultation: This process involves representation of the views of the employees, in reply to disclosure of information by management, regarding any propositions made by management that may directly or indirectly affect the interests of the employees (Rose, 2008; Willey, 2003). This representation is normally sought by employers as a means to encourage employee participation in the strategic decision making process. Although management’s intentions are normally for the decision making power to remain with it, consultation may help reach an agreement with the workforce regarding any particular change or course of action. There are two broad kinds of consultation, namely, Pseudo Consultation, where management discloses information as more of a formality rather than with the intention of really coming to an agreement with the workforce regarding important decisions. Discussions are held with workers only as a means to comply with contract procedure, but these discussions are not included in the decision making process (Willey, 2003). This is more prominent in organisations with no union representation, where any thought of such representation is inhibited through the ‘right to manage’ (Rose, 2008; Willey, 2003; Clarke et al, 2000). An example would be the Griffith report that introduced many structural changes within the NHS in 1984, where staff was informed about the changes and discussions were held to listen to staff views, but the changes were carried out anyway despite staff objections. (Source: http://www.hsj.co.uk/resource-centre/best-practice/the-griffiths-report-25-years-on/5001481.article) Genuine Consultation, where emphasis is given to substantial information disclosure by management, which determines the extent to which management representatives actively listen to the views of the workforce and its representatives, and the depth to which management engages in discussion with the workforce(Rose, 2008; Willey, 2003). It also determines the extent of openness shown by management in terms of its response to and incorporation of ideas and views presented by the workforce, and ultimately, the willingness of management to amend a policy proposal or a change in decision. This leads to an integrative kind of consultation, where significant workforce participation is sought in bringing about important organisational changes in terms of work deployment and other aspects (Willey, 2003). This effectively leads to the concept of collective bargaining. Marks and Spencer, the global retailer, is a good example of genuine consultation, where in the late 1970s and early 1980s the company saw a decline in productivity attributed to a long and hierarchical organisational structure. The company then made a move to decentralise and engage ground level staff in more participation through consultation (www.macdermott.net/Ben/assignment.doc) Collective bargaining: The process of collective bargaining examines the options available to managers should management become involved in a collective dispute with its employees. This involves applying certain conflict resolution mechanisms like disputes procedures, and third party involvement in the employee relations processes as negotiation, mediation and conciliation (Gennard and Judge, 2005). Lockton (2008) defines collective bargaining or agreements as the result of joint negotiations between two sides of industry, that is, the union and the employer or employer’s association (third parties). Lockton continues that these are further defined by the Trade Union and Labour Relations (Consolidation) Act 1992 as ‘any agreement made by or on behalf of one or more trade unions and one or more employer or employer’s association and relating to one or more specified matters such as terms and conditions of employment; engagement or termination of engagement of workers; allocation of duties etc (cited in Lockton, 2008). Such agreements may not bind the individual parties on one level where they mainly deal with issues like negotiation rights and date of renegotiation, as these issues do not carry any weight regarding relationship between individual employees and their employers, but on another level, issues such as pay rises and hours of work are more relevant to the individual employee, and agreements based on such issues tend to bind the individual parties (Lockton, 2008; McLoughlin and Gourley, 1994). Such differences in collective and individual agreements can be studied in detail: Agreements between Collective Parties: Such agreements are between the union, also seen as a separate entity and a corporate body independent from its human members and officers, and the union’s employer or employer’s association (Daniels, 2008; Lockton, 2008). Agreements made at this level are not legally binding or enforceable between the collective parties, and are considered little more than ‘a gentleman’s agreement’ (Lockton, 2008). And because they are not legally binding, they cannot be enforced by the union. Agreements between Individual Parties: Any collective bargaining negotiations between a union and its employer are likely to affect the individual employees that make up the union (Daniels, 2008). Pay rises for instance will affect all of the employer’s workers, but the dilemma for the individual employee is how they would enforce a pay rise against their employer, as the actual other party involved in the bargaining process if the union independent of the employees (Daniels, 2008; Lockton, 2008; Conaghan et al, 2004). Hence the only way individual employees can enforce a legally binding agreement is if such an agreement has been incorporated into the employment contract between them and their employer. III. Human Resources Management (HRM) and Collective Bargaining: Guest (1987) argues that one of the organisational benefits from the function of HRM is HRM’s primary allegiance to the company rather than the union, which may bring us to the assumption that companies at large are individualistic in operations and do not leave much scope for collective negotiations through bargaining. The HRM function therefore poses a considerable challenge to traditional industrial relations and more so to trade unions (cited in McLoughlin and Gourlay, 1994). But Guest continues to say that in essence, human resources are not anti-union regarding key-elements like strategic integration and emphasis on management recognition of the value of employees as human beings (1987, cited in McLoughlin and Gourlay, 1994). However, Storey (1995) suggests that it may even be debateable to characterise the HRM function as individualistic, because the function does accommodate trade unions should a more co-operative relationship is proposed. Storey’s research on mainstream British organisations does suggest that strong HRM practices do develop established and organised trade union representation encouraging the concept of ‘dualism’, which is based on a co-operative effort from both parties. In this above context, Willey identifies some kinds of collective bargaining that have been studied by researchers as, Distributive Bargaining, where the focus is primarily on the distribution of economic resources or power, and is either short or medium-term oriented. Collective negotiations are enforced to last for usually a year or so and then are open for renegotiation. The short term orientation is based on the constantly changing aspects of product markets, technology, profitability, pay comparison with other groups of workers, and cost of living. This kind of bargaining is deemed most common within employment relations. Distributive bargaining can be best described through the example of wage negotiations, where employees demand an increase in wages, whilst every penny is crucial for the employer in terms of the increase. So both parties come to a temporary agreement on a short term basis, and at the end of the term, renegotiate the terms. Integrative Bargaining, on the other hand, is based on a cooperative, trustworthy and in depth relationship between an employer and the workforce, and its union representatives. The main aspects of focus are technological change, work organisation and fundamental restructuring of employment relations. This type has the possibility of melting into integrative consultation due to its focus on interrelated matters and high participation from the union. An example of integrative bargaining is the case of Philip Electronics BV in Netherlands, where traditionally, wage distribution between blue collar and white collar workers was done through consultation, and after years of successful collective implementation of wages, the company decided to introduce differences in wages within the blue collar level according to performance, hence paying some workers more than the others. This lead to an industry wide uproar and the union finally was favoured in collective negotiations. This involved restructuring of employment relations to bring back the trust between parties (IST, 2001). Composite Bargaining, where rationalisation of structure and operations, introduction of new technology, rigid productivity goals and norms have increased uneasiness amongst employees and their unions in terms of increased workloads, general disregard of health and safety issues by employers etc. Through this kind of bargaining, unions focus more on demanding equity in matters of environmental hazards, work norms, employment levels etc., which in turn trigger the involvement of the statutory bodies discussed in earlier sections regarding aspects under laws like the Health and Safety Act, Health and Safety at Work Regulations, Working Time Regulations, and other such laws which protect workers’ rights. Hence the importance of understanding these standardised laws to approach the concept of collective bargaining (Willey, 2003; Harzing and Ruysseveldt, 2004). An example would be that of Rover in the late 1990’s in Britain, when the automobile industry was conducting considerable amounts of negotiations regarding working time. The company reduced the working time in a collective agreement with the union with aim of increasing productivity through flexible working hours where workers were required to work at least 200 hours above or below their contracted hours depending upon demand, and these 200 hours will only be paid in terms of minimum wage (IST, 2001). In addition, certain ‘systems’ of collective bargaining have also been identified as, Single Plant Bargaining: This is where the bargaining process takes place between management and the workers union representing a single business unit of the organisation. Agreements reached at this unit level are restricted to it and may not be applicable to other units (Schuler et al, 2002). A good example for single plant bargaining is of First National Maintenance Corporation (FNM) in New York, USA, where FNM did not honour its bargaining duty with the workforce when the company terminated the workers by giving a thirty day notice with no room for bargaining. This was later ruled against the company by the court as violating the bargaining obligation (O’Connell, 1986). Multi Plant Bargaining: Bargaining here takes place between the complete entity of the organisation consisting of multiple business units, even across geographic boundaries, and the workers’ union representing all of these units. Agreements reached will take effect throughout all the units, even in different geographical locations (Schuler et al, 2002). An example of multi plant bargaining is of Dansoff , a large industrial group in Denmark, where as a result of multi plant bargaining, any employee of the entity injured in a work related accident is entitled to re-employment even after the probationary period for sick leave has passed, and can be re-trained for more accessible jobs with pension facilities (IST, 2001). It can be inferred from the above that collective bargaining is based on the willingness of both employers and the employees’ union to consult with each other in reaching agreements. The process involves significant shift of position by both parties to reach an area of compromise wherein the negotiations take effect (Willey, 2003). It involves management making concessions in their exercise of management power, whilst at the same time, the workers union is required to show preparedness to compromise on their original bargaining objectives (Willey, 2003). Health and Safety: Another area where human resources should be concerned with, with respect to collective negotiations is Health and Safety issues at the workplace. Health and safety policies and programmes are concerned with protecting employees and other people affected by what the company produces and does (Armstrong, 2010). HR managers often demonstrate their concerns about the protection of employees and associated parties through written health and safety policies, and how this protection will be provided. Some of the key points that may be included in such policies are: Description of common health and safety hazards associated with the company and the work environment Guidelines as to how to eliminate or at least minimise risk of injury or ill-health Description of various personal protective equipment available for use at the workplace and how to use it Strict regulations on the use of protective equipment and possible consequences of not using it (health hazards as well as employment termination) (source: Armstrong, 2010) In this case if employees adhering to all the above rules and guidelines still get injured or ill due to work related circumstances, the employer will then become liable for the employee’s welfare and for any actions by law for not anticipating such hazards (Armstrong, 2010). For example, fuel stations that operate under volatile conditions due to the obvious fire hazards have a number of health and safety guidelines for employees for different situations that may arise. Organisations with such operations are constantly updating their health and safety regulations according to situations that come up during operation (Esso: www.esso.com). Such written policies and guidelines however, are initially applied to the individual employee, but if certain hazards have not been given importance by the organisation, and those which may have collective implications, this becomes a union matter with collective representation (Willey, 2003). This brings us to the question of what would happen if either or both parties pursue a rigid stand. III. a. Pre-requisites for Collective Bargaining: In order for collective bargaining to produce meaningful agreements, certain prerequisites must be ensured, relating to the concepts discussed so far in this report. Some of these are as follows: Employer Attitude: Although there is no legal requirement for employers to engage in collective bargaining, it becomes a necessity where observing statutory regulations are concerned, as discussed previously, especially where workers’ unions are recognised by law. As a consequence, proposals put forward by employers are aimed at achieving the benefits of ‘creating order and stability in the organisation of employment relations’, and ‘the approval of the workforce with regards to the terms and conditions, and changes in employment’ proposed by the employer (Willey, 2003). This results in achieving the two fundamental requirements of establishing codes of practice applicable to both employers and employees, and regulating the power relationship between the employers and the workforce (Flanders, 1968, Hofstede, 1997 Successful implementation of such company laws by employers is an absolute must for successful bargaining. Trade Union Attitude: The attitude of the union is also crucial for successful bargaining, where a rigid and non-compromising stance from the union may result in a state of stale-mate, where no party benefits from the bargaining, and no common consensus can be reached upon. Such rigidity may also affect profitability and productivity, and may force the employer to take drastic measures like layoffs and even company or unit dissolution (Rose, 2008). Other problems posed by union attitude are when different sections of the union are in disagreement with each other. For example, if the union representation of a single business unit is not in agreement with or is in conflict with the ideas of the larger union body, there is the possibility of dissent which does not help with negotiations (Hendry, 1994). Recognition of Workers’ Unions: For collective bargaining to take place, it is first mandatory for employers to recognise the existence of a union. If an employer refuses such a recognition, the collective bargaining process becomes further complicated, with no body to represent the unions. This assumes more power to the employer to enforce authority (Rose, 2008). This again brings us to the importance of statutory laws, where workers’ unions are legally recognised, and employers are made to oblige to such laws by exercising the bargaining process. Hence these laws can be seen as control measures applicable to employers to keep the extent of their power in check. IV Critical Assessment and Conclusion(s): Some conclusions that can be derived from the topics and concepts studied in this report are as follows: Collective bargaining is an established form of negotiations between employers and workers’ unions in most developed countries The success of collective bargaining depends upon flexibility from both employers and employees in reaching an agreement The human resource function plays a major role in recognising union interests and matching them with corporate and strategic interests of employers Certain codes of practice are essential for both employers and employees to create uniformity in direction, and to act as foundations upon which collective negotiations can take place Individual employee issues with the employer may not be applicable to the union as a whole, and is normally dealt with through consultation with statutory bodies like the employment tribunal, appeals court etc., but where many individuals are faced with the same issues, this can then become a collective issue, and may be escalated to the union level for bargaining. A strong union without internal conflicts stands a better chance of benefitting from collective bargaining. Rigid stands by either employers or unions will hinder the bargaining process, and no proper consensus will be reached Certain regulatory bodies like the Health and Safety Commission, the Commission for Equality and Human Rights, and the Advisory, Conciliation and Arbitrary Service, etc, play important roles for both employers and employees to base their propositions on. The employment contract plays a major role in establishing an initial agreement between employers and employees as to the terms and conditions of the employment, and also the ground rules that determine any action(s) that each party may seek to propose for each other. An example, both popular due to its significance in British history, and also due to the way it was dealt with by the government (the employer), is the Miner’s Strike of 1984 – 1985. After being threatened by Margaret Thatcher’s emphasis on free market enterprise, where many nationalised organisations were in the process of semi or full privatisation, the coal miners’ union initiated a nationwide strike against the move; mainly as many coal pits were facing the threat of closure, which also meant loss of jobs for the miners. The miners ultimately lost the battle but the following points can be noted from this industrial action: Both parties (miners and government) took a rigid stand on their objectives with no room for compromise There were dissentions within the miners’ association regarding the objectives of the strike, where some miners continued to work and were hated by the larger union leading the strike The government used incentive based strategies in luring a section of the miners to continue working, whilst also being prudent in storing enough coal discreetly to provide for fuels and electricity during the strike period. The striking miners lost in their efforts after being forced to come back to work, after almost a year of no income or other means of survival. (http://news.bbc.co.uk/1/hi/uk/7925552.stm; http://www.timesonline.co.uk/tol/news/politics/article5847315.ece) Almost all of the above points are in agreement with the theory studied in this report, except for the fact that despite both sides taking rigid stands, there was, however, an outcome, as opposed to the stale-mate theory studied earlier. This may mean that compromise may not always be the solution for collective bargaining. But this may be disagreed due to the fact that the employer in the case of the miners’ strike was the national government itself, which holds the power to exercise absolute authority by designing its own policy. Also, a PEST analysis of the national environment during the period of this strike will reveal that the nation was in the process of a cultural and economic transformation as a result of excessive immigration and economic recession respectively (Kotler, 2003). Hence tough measures had to be taken by the Thatcher government to contend with these issues. But at the integral level, the lack of consultation from the government was what apparently motivated the miners to go on a strike. This again suggests, according to theory, that consultation and room for bargaining, emerging from the employer’s recognition of the workers’ union, is of prime importance to avoid situations that lead to strikes. The government’s stand in the miners’ strike case, however, was supposedly aimed at improving the national environment for long term benefits, hence requiring short term sacrifices. V. Recommendations: In light of the above conclusions, it is therefore recommended for employers and employees to remain reasonably flexible during collective negotiations, but this may not always bring success, and neither would a rigid stand result in failure for both parties, as evident from the above case. However, the distributive kind of bargaining as discussed previously, may prove beneficial in the sense that it actually provides short term goals and consequently, milestones wherein the progress of previously agreed negotiations can be checked, evaluated, and improved by both parties, providing clearer analyses of success or failure, and creating flexibility to change views and ideas from both sides according to the short-term results. Bibliography Armstrong, M. (2010). Essential Human Resource Management Practice. Kogan Page: UK Conaghan, J., Fischl, R.M., Klare, K. (2004). Labour Law in an Era of Globalisation. Oxford University Press: UK Daniels, K. (2008). Employment Law. 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Pearson: England Online Resources http://news.bbc.co.uk/1/hi/uk/7925552.stm; http://www.timesonline.co.uk/tol/news/politics/article5847315.ece http://www.hsj.co.uk/resource-centre/best-practice/the-griffiths-report-25-years-on/5001481.article Read More