Employee relations is a term used to describe the legal environment of the employment relationship. While traditionally, this has been the major focus for business entities, there has been a shift in accepted wisdom. Businesses now focus on a wider range of factors and place a greater emphasis on other factors such as employee appraisal and motivation. The surfacing of ‘human resource management as an important function of a business, and the increase in behavioral effects has meant that employment relations are no longer perceived simply as industrial relations. Instead, terms such as employment relations and workplace relations are more appropriate in describing this broadened focus.
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The below-discussed factors significantly impact employment relationships within business organizations.
Globalization has been shown to be one of the major factors that influence employee relations, which can also be referred to as industrial relations. Strategic planning and management are imperative because changes in employee relations have led to the increased bargaining power of the employees, litheness in working conditions and even time as well as changing job functions and this has taken place due to the rise in competition, product processes alterations due to consumer knowledge coupled with the increasing spirit in quality, productivity, and skills.
With the increased relevance of employee relations, human resources have shifted its focus to improving quality, innovation, and reduction of the cost of production. The magnitude of human resource management (HRM) is reflected in how personnel is managed in the firms. (Elizabeth Morris 2003)
There have always been a large number of trade unions in Great Britain, and for this matter, there have been correspondingly a large number of employees out of unions.
Union membership by employees has declined. For instance, in a country like Australia, the decrease was from around 50% in 1970 to around 20% in 2007. It is because of this reason that we have had a rise in the number of non-union firms and especially in Great Britain. This fall in terms of membership in unions can be a result of a number of factors. Structural changes within the economy have consequently changed the nature of jobs within such countries.
Traditional blue-collared job opportunities with higher rates of unionized labor have been in decline. In some cases, the economic incentives for joining a union have become less apparent as they are not meeting the targets of Institutional changes such as freedom of association laws (resulting in the removal of compulsory unionism), and industrial relations reform (such as the Accord, the Workplace Relations Act and Work Choices) has curtailed the power of unions. In addition, extensive casualization of the labor force has pushed people into work that is not traditionally not under a union. A reduction in membership in unions limits the level of employee interactions.
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The attitudes of the management towards union recognition may or may not be influenced by statutory recognition, but what is relevant in this case is how employers respond to the idea of union recognition.
However, attempts to unionize have to some great extent, been resisted by employers. (Dundon 2002; Logan 2001)
The attitudes of the management towards union recognition may promote collective marginalization. This will, in turn, send a clear message to the employees that trade union presence is not in the best interest of the employees.
These attitudes, therefore, influence employee relationships as they can lead to artificial bargaining and recognition due to a decline in union membership and activities within the organization.
In some organizations, there is no influence from the trade unions. These are firms in which the management does not deal with the trade unions, which represent the interest of the employees either for the whole or for the sake of the workforce.
Some firms are unionized because the management uses some strategy to avoid the influence on employee relations. (Guest and Hoque 1994)
Lack of common goals
The various stakeholders in business have goals that both extend beyond and compete with one another. Employees will typically be looking for higher wages, job stability or security, and favorable working conditions, while on the other side, the business owners will typically aim for improved productivity, reduced costs, and increased profits.
The need for higher wages for employees clashes with the goal of lower costs for owners, both of these stakeholders entirely depend on the sustainability of the business so as to achieve their goals. The employees rely on the success of the business (as measured by its profitability) as much as the owner wishes. Effective employment a relation involves unification or harmonizing these conflicts of interest so that both parties can achieve their goals. Finally, governments as key stakeholders desire economic stability and therefore work for harmonized goals of all parties.
Since there is a conflict of interest, the employment relationship is affected negatively as all the parties involved are not working towards achieving a common goal (Rose 2004)
The government can influences employment relations through its independent bodies such as the established Commissions and by acting as the legislative body fully in charge of industrial relations law. The government can come up with organizations such as the Office of the Workplace Advocate in Australia, which registers agreements while making sure they comply with the requirements set by the government.
The Workplace Ombudsman will also oversee and investigate complaints against employers. The Australian Fair Pay Commission is responsible for setting the Australian fair pay and conditions standard based on the requirements stipulated by the government.
Other organizations such as the Australian Industrial Relations Commission (AIRC) have traditionally played a more important role… The government is able to legislate and change the industrial relations system of a country and has played a continual role as countries have moved towards a more deregulated industrial relations system. The government is also responsible for other employment legislation such as anti-discrimination and occupational health and safety laws.
The state policy affects the attitudes and expectations of managers towards employee relationships. this shapes the conceptions of the stakeholders about the nature of the exchange relationship. (Kochan et al.) 1986
But still, there are contradictions and ambiguities concerning the direct influence of the law on employee relations.
British employers are said to have been unwilling to utilize the law in seeking injunctions against unions or actively advocate for non –union relationships using legal measures.
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Certain measures by the law have restricted unions from recruiting and representing members.
Some relationships have been formally regulated.
Change of organizational structures
Over time businesses have undergone certain trends, for example, downsizing and flattening organizational structures. This was a result of response to traditional hierarchical structures which could not be supported within a modern business environment. As businesses moved towards behavioral styles of management, structures were not only flattened, but human resource management came up as a very important function of the business. Although the downsizing that occurred in the 1990s was often necessary, it has left many organizations unable to accomplish current positions within a jobs market characterized by skills shortages.
Insufficient succession planning has left many organizations with shortages of staff. Other important changes center around the need for workplace flexibility and multi-skilling amongst employees, both having arisen in response to downsizing. This impacts negatively on employment relationships because people lose their jobs as a result of the downsizing process as the organization structure changes. (Cully M 1995)
Economic change determines the nature of the labor market. In times of economic recession, there tends to be an oversupply of labor (as the rates of unemployment are high) which drives down wages (or constrains wage rises) and increases the availability of candidates. For a business trying to fill a position, the economic downturn is good in that they have a greater pool of candidates and have greater bargaining power with respect to wages and conditions.
From the employee’s point of view, this is not a good time to be looking for work, for the same reasons.
In an economic upsurge, unemployment tends to fall, and businesses often find it hard to fill positions.
Skills shortages may occur, and wages may be improved, therefore, increasing business costs.
Businesses must also plan depending on the nature of the economy. Because the demand for labor is derived from the goods and services that a business produces – businesses must forecast expected sales (which are influenced by the state of the economy) and plan strategically. The economic change affects the performance of the employees and therefore weakens the relationship between the employee and the managers Capelli, P. (1995)
Influence of the workplace
Industrial relations have been shifting from the government towards the workplace (i.e., in favor of employers and employees but away from the control of government) for a number of reasons.
Firstly, with the encouragement of enterprise and individual agreements instead of industry awards, workplaces are confident to adopt a flexible approach to employment relations.
Secondly, the onset of new behavioral influences has seen the emergence of human resource management as a significant function within a business. As employees now work for longer hours and as there has been an increase in female participation, workplaces now have to cater to new lifestyles, which were previously not very common. Examples of this shift in focus include the flexibility demanded by businesses within the employment contract.
Particular industries, for example, the mining sector, rely on supple contracts that include the many job specific factors linked with mining (such as moving to remote areas). The popularity of family-friendly programs is another example of how businesses have adapted to social influences such as increased female participation and working hours. The conditions at the workplace are key in determining the kind of relationship that would exist between the employees.
A workplace characterized by a lot of demands which translate into high-pressure situations is not conducive for the workers. The relationship is therefore affected. While on the other hand, a workplace where workers are enjoying whatever they are involved in creates a good employee working relationship. Blyton, P. & Turnbull, P. (2004)
Size of organization
The size of a business is important in determining the kind of employee relations that exists within the system.
In large businesses, employment relations are typically managed by a specialist department known as human resources. This department manages many of the diverse aspects of employment relations, including industrial relations, recruitment, and employee motivation. All needs and aspects of employer and employee are dealt with in the human resources department.
Specialists in each of these fields can focus on each aspect of employee relations. This approach is usually only available to larger businesses due to the costs associated with a specialist human resources department. Smaller businesses may choose to incorporate employment relations as a regular management duty, with line managers responsible for many of the aspects of employment relations. Specialized areas such as the legal component may be outsourced from the relevant authorities. Chandler, A.D.jr. (1962)
The management style
Different organizations have managers with different leadership styles. This can be in the form of democratic or autocratic. In employment relations, leadership can be viewed in terms of the overall approach to handling relations between the managers and the employees. It refers to the way the management exercises authority over the subordinates.
Managers have different styles of handling human resources as part of their legitimate role in the management of the organization.
The style of management is closely associated with the behavior of the managers, and therefore it is likely to have a strong impact on the employment relationship and could have a very strong impact on the human resource strategy. (Purcell 1987)
The management style can also impact strongly on other characteristics of the employment relationship.
From a labor relations point of view, managerial styles of applying control over employees have been linked to capitalism.
The strategy that is applied by the management also dictates the technology which is supposed to be used to deliver a product or service. This has a direct influence on employee relations because it is the employees who will be involved in the delivery of the product. ( Cully, M., Woodland, S., O’Reilly, A. and Dix, G. (1999))
It is also important to point out that increased technical control over work processes means that the demand for labor will reduce, and therefore employees would be viewed in terms of disposable factors of production.
This will consequently affect employer relations.
Conversely, employees who possess high levels of expertise obtain a great degree of influence over the work process. They are therefore better placed in terms of higher bargaining power and can modify the employee relationship.
In other words, technology governs what work should be done and at what time.
It also determines the kind of relationship to exist between those who are doing the work.
It, therefore, has a social impact on the employees. Cully, M., Woodland, S., O’Reilly, A. and Dix, G. (1999)
In conclusion, the employment relationship is greatly affected by an interrelationship between both factors within and outside the organization. These factors impact the environment of both organization’s management and the employees. The factor which touches directly on the welfare of the employees has a great impact on the employment relationship. Trade unions play a very significant role in championing good employee relations. All the stakeholders in any business contribute substantially to the factors that affect employment relationships.
Ackers, P, Smith, C. & Smith, P. (1996) The New Workplace and Trade Unionism London: Routledge.
Ackers, P. & Wilson, A. (2003) (eds.) Understanding Work & Employment: Industrial Relations in Transition Oxford: OUP.
Blyton, P. & Turnbull, P. (2004) (3rd edition) The Dynamics of Employee Relations, Basingstoke: Macmillan.
Cully, M., Woodland, S., O’Reilly, A. and Dix, G. (1999). Britain at Work: As Depicted by the 1998 Workplace Employee Relations Survey. London: Routledge.
Capelli, P. (1995) Rethinking Employment. British Journal of Industrial Relations, 33 (4), 563-602.
Chandler, A.D.jr. (1962) Strategy and Structure, Chapters in the History of the Industrial Enterprise. MIT Press, Cambridge, Mass.
Dunn, S 1993 From Denovan to whatever British Journal of Industrial Relations31(2) 169-67.
Elizabeth Morris: “Globalization and research priorities for labour markets in Southeast Asia”, ILO Subregional Office for East Asia. Web.
Rose, E. (2004) (2nd edition) Employment Relations London: Prentice-Hall.