Business Essays – Employee Relations

Employee Relations

Despite reports of its early death, voluntarism is alive and well as the underpinning principles in the conduct of employee relations in the United Kingdom.

This report explores the significant elements of employee relations, the internal and external factors influencing it and considers voluntarism as an underpinning principle in the practice of employee relations.

The last quarter of the twentieth century saw the decline of traditional industries and the enormous growth of the service sector that coincided with a steady decrease in British union membership from 13 million in the early eighties, to 8 million in the late 1990’s. This paralleled the increase in the use of human relations practices and new forms of work organisation that provided the basis for a new win-win relationship between employees and managers. This contributed to the introduction of employee relations as a concept that broadened the study of industrial relations from a union focus to include wider aspects of the employment relationship, including non-unionised workplaces, personal contracts, and socio-emotional, rather than contractual arrangements. (Taylor, 2003)

British unions have traditionally been known for their adherence to a collective laizzes-faire approach or voluntarismmeaning “reluctance to see state intervention in industrial relations.” (Howell, 1998, p 296) However, by the mid 1990’s the Trade Union Congress had endorsed a wide range of individual and collective rights at work into legislation. This culminated in a number of provisions of the 1999 Employment Relations Bill, (especially those dealing with union recognition) and more recently policy directives from the European Union. (Sisson, 1999 and Taylor, 2003) Sisson, 1999, argues that the idea of voluntarism is not confined to state or legislative intervention in the union and employer relationship but should be expanded to consider the relative freedom of employees and employers to determine there own relationships. An example is the increasing number of companies that are introducing various forms of employee consultation in their establishments. This is motivated by a desire among many employers to manage necessary workplace change through cooperation and agreement. This is seen as a sensible way of carrying through reforms designed to improve business performance. (Beardwell, 1996) This report therefore focuses on voluntarism in this context, as a key success factor in an emerging employee relations model.

The management of people at work is evolving to keep pace with changes in the workplace. Personnel management has evolved to human resource management to human capital management as organisations attempt to outperform competitors in a global economy. Successful organisations therefore seek to develop constructive relationships with employees that translate into strategies that draw on the full potential of their people through performance improvement and organisational change. Economic pressures dictate that the rate of change will be more frequent as technology improves and the demand for customised services shifts. Employee relations therefore need to focus on knowledge management and people at an individual level as a competitive advantage. (Bryson, 2001)

This contrasts with the pluralistic approach, recommended by the Donovan Report in 1968, that assumes that conflicts between management and staff are inescapable and that structured mechanisms must be designed to resolve differences in an orderly way. Pluralism emphasised collective bargaining by adversarial unions in the workplace where stability is sought through compromise. However, the human resource management efforts during the 1980’s and 1990’s to improve team working methods together with changes in union demographics from blue collar to largely white collar and public sector membership led to a more unitarist approach. (Guest and Hoque, 1996)

The unitarist approach suggests that the employer is a professional manager seeking to harmonise the needs of staff with those of the organisation. The focus is on the individual with inclusivity as a theme that seeks long term benefits for both parties with acceptance that no employer can guarantee a job for life in the new economic reality. The success of the approach in an uncertain environment where downsizing and restructuring are inevitable, has encroached on the traditional territory of trade unions. (Howell, 1998) It follows that organisations now concentrate on communication processes with the individual rather than collectively through pluralistic structures using institutionalised procedures.  (Machin and Wood, 2003) The extent of the application of either approach will be a function of the sophistication of the workforce, the size of the organisation and the propensity for change.

The emerging employee relations model therefore recognises that organisations will succeed in a competitive environment by raising skills as a mechanism to create a sustainable advantage and hence establish a secure future for employees as can be managed with their voluntary co-operation. This translates into effective, mutually agreed performance and a knowledge and understanding of employee aspirations with attention to employee voice. Employee voice can be expressed in a number of ways and through a variety of two way channels cascading both down and feeding back up through the most direct routes. Attitude surveys provide another commonly used channel which is inherently flexible but not interactive. Broad forms of employee voice include direct involvement in the way work is organised and indirect influence on decisions affecting the broader organisation through works councils or joint consultation committees.  (Edwards, 1998)

The employer’s organisational culture and management style impact directly on productivity and performance and research has shown that employee relations similarly impact on performance. Key elements of good practice include job design, skills development, and a climate of regular, consistent consultation and involvement. Associated with this approach is good management practice that provides a positive psychological contract based on trust and fairness tied into an organisational culture that delivers positive outcomes linked to performance. The effect at an employee level is commitment, job satisfaction, and a willingness to produce. (Guest and Conway, 1998) From an employee’s perspective of the contract, their subjective assessments of their well-being at work are affected by a variety of factors including the nature of the work task, social integration in the workplace, participation in decision-making and job security which link into the total experience of work. Although the contract is individual in nature, there will be work group, departmental and company wide aspects which imply that whilst structures and relationships adjust, the historical legacy may take time to change. (Patterson et al, 1998) 

The promotion of partnership between employer, employee and trade unions has emerged  as an inclusive mechanism whereby union relevance is supportive of longer term interests on the organisation and hence its employees. The partnership mechanism is based on recognition of a common interest to secure the competitiveness, viability, and prosperity of the organisation. This involves a continuing commitment by employees to improvements in quality and efficiency. It requires the acceptance by employers of employees as stakeholders with rights and interests to be considered in the context of major decisions affecting their employment relationship. The positive role of co-operative unions in such a partnership is the provision of employee ‘voice’, supplying employers with feedback on managerial policies and genuine consultation opportunities, essential for delivering employee commitment and motivation. This partnership approach and re-invention of union roles was showcased at the Trade Union Congress in September 1997 under the slogan ‘Partners in Progress’ with strong support from the New Labour government. By implication, the potential for membership growth and resurgence of unions as relevant is possible. (Bryson, 2001 and Haynes and Allan, 2001)

In conclusion, it is clear that the nature of employee relations has undergone dramatic changes in concept and process, as the role of trade unions has evolved to that of a social participation with elements of both the pluralistic and unitarist models and a “third way” or new approach.  The reinvention of union participation as partners to business together with the broadening of the historically narrow definition of voluntarism, to encompass a more inclusive approach accommodating economic realities, has meant that voluntarism in the British workplace remains an underpinning principle in employee relations.

Bibliography

Beardwell, I. (1996) Contemporary Industrial Relations: A Critical Analysis. Oxford University Press, Oxford.
Bryson, A. (2001) “The Foundation of Partnership? Union Effects on Employee Trust in Management.” National Institute Economic Review. London.
Edwards, P. K. (1998) “The Changing Employment Relationship: the Search for New Models” Paper to IPD/ESRC Employment Relations Seminar.
Guest, D. and Conway, N. (1998) “Employee Motivation and the Psychological Contract.” Issues in People Management. IPD, Volume 21.
Guest, D. and Hoque, K. (1996) “Human Resource Management and the New Industrial Relations” in Beardsell, I. (Eds) Contemporary Industrial Relations: A Critical Analysis. Oxford University Press, Oxford.
Haynes, P. and Allan, M. (2001) “Partnership as a Union Strategy: a Preliminary Evaluation.” Employee Relations. Volume 23, 2.
Howell, C. (1998) “Restructuring British Public Sector Industrial Relations: State Policies and Trade Union Responses.” Policy Studies Journal. Volume 26, 2.
Machin, S and Wood, S. (2003) Looking for HRM/Union Substitution: Evidence from British Workplaces. Centre for Economic Performance, London School of Economics, London.
Patterson, M. G., West, M. A., Lawthom, R. and Nickell, S. (1998) “Impact of People Management Practices on Business Performance.” Issues in People Management. IPD, Volume 22.
Sisson, K. (1999) “The “New” European Social Model.” Employee Relations. Volume 21, 5.
Taylor, R. (2003) The Future of Employment Relations. Economic and Social Research Council, Swindon.