Differences between industrial and employee relations

Define Employment relations, distinguish between the terms “industrial relations” and “employee relations” and identify the different disciplinary inputs which comprise the study of employment relations.

Employment relations in general

Employment or human relations cover all types of interactions among employees such as cooperative efforts, interpersonal and group relationships. The purpose of employment relations is to deal with the people, the business employees and the issues arising from their employment. Acquiring, developing, maintaining and motivating staff are all aspects that are covered by the employment relations area. Employment relations are necessary as the employee is the most important part of a business and turn it either to a successful unit or drive it to catastrophe.

‘Industrial relations’ is generally understood to refer to the relationship between employers and employees collectively. The term is no longer widely used by employers but summons up a set of employment relationships that no longer widely exist, except in specific sectors and, even there, in modified form.

The term ’employee relations conceived as a replacement for the term ‘industrial relations’ but it’s precise meaning in today’s workplaces needs clarification. Business managers have come to recognize that their employees are the most important part of a business and through effective management a business can gain the competitive advantage. The skills, knowledge and creativeness of employees is the main potential that a business has over it competitors and thus the realisation that the employee has the most influence over important aspects such as its profitability, competitiveness and adaptability has led to the idea that managing these human resources to develop their maximum capabilities. Human resource management or employee relations is the process of finding the people the business needs, developing their skills, knowledge, talents, careers. Motivating and maintaining their commitment to the business.

The turn from industrial relations to employee relations can be spotted on a number of different dimensions. From a peak of some 12 million plus, union membership has fallen to around 7 million today. Between 1980 and 2000, the coverage of collective agreements contracted from over three-quarters to under a third of the employed workforce. The Workplace Employment Relations Survey (WERS) 1998 showed that union officials spent most of their time not on negotiating pay and conditions but in supporting grievances on behalf of individual members. Even where collective bargaining continued, its impact on the exercise of management discretion was greatly diminished.

In order to distinguish industrial relations from employee relations one could come to the following conclusions.

industrial relations:

â-  became inevitably associated with trade unions, collective bargaining and industrial action;

â-  had too strong a tendency to view the world of work as synonymous with the heavy extractive and manufacturing sectors of employment, sectors which were dominated by male manual workers working full-time and which are in decline in nearly all developed economies.

Using the term employee relations enables the adoption of a broader concept that:

â-  encompasses the now dominant service sector which, in many developed countries, now employs more than 70 per cent of the workforce, and the changes in the composition of the labour force such as more women working and more part-time, temporary and fixed-term contracts;

â-  include non-union as well as union scenarios and relationships.

The meaning of employee relations to employers

Some broad conclusions emerging from research are:

Employee relations can be seen primarily as a skill-set or a philosophy, rather than as a management function or well-defined area of activity.

Despite well-publicised instances of industrial action, the emphasis of employee relations continues to shift from ‘collective’ institutions, such as trade unions and collective bargaining, to the relationship with individual employees.

The ideas of ’employee voice’ and the ‘psychological contract’ have been accepted by employers and reflected in their employee relations policies and aspirations.

Employee relations skills and competencies are still seen by employers as critical to achieving performance benefits through a focus on employee involvement, commitment and engagement. 

Employee relations is seen as strategic in terms of managing business risk: both the downside risk of non-compliance with an expanded body of employment law, and the upside risk of failing to deliver maximum business performance.

Nearly two-thirds of unionised employers regard the relationship between management and unions as either positive or very positive.

Public sector managers are more likely than those in the private sector to see union influence as strong, with almost three-quarters reporting union influence as significant or very significant.

Disciplinary inputs of employment relations

Many national labour laws contain provisions on the employment relationship. Despite certain similarities, however, not all national labour laws provide exhaustive or equal coverage of the subject. Some provisions deal with the regulation of the employment contract as a specific contract, its definition, the parties and their respective obligations. Other provisions are intended to facilitate

recognition of the existence of an employment relationship and prescribe administrative and judicial mechanisms for monitoring of compliance . In general terms, the employment relationship creates a legal link between a person who performs work and the person for whose benefit the work is performed in return for remuneration, under certain conditions established by national law and practice.

The the determination of the existence of an employment relationship should be guided by the facts of what was actually agreed and performed by the parties, and not on how either or both of the parties describe the relationship. This is known in law as the principle of the primacy of fact. Legislation adopted in some countries since the end of the twentieth century contains provisions refocusing the employment relationship to extend the scope of the law and hence its protection to new categories of workers; to combat disguised or fraudulent employment relationships and improve compliance with the law; and to ease the burden of proof on the worker, in particular when seeking to prove the existence of

an employment relationship in a given case. Parallel to this regulatory response to the growing concern at the lack of protection for workers who are in fact in an employment relationship which might be ambiguous or disguised, there has also been a continuing tendency in case law to apply the traditional approach on the employment relationship to new and complex situations.

To conclude, employment relations involve the body of work concerned with maintaining employer-employee relationships that contribute to satisfactory productivity, motivation, and morale. Essentially, Employee Relations is concerned with preventing and resolving problems involving individuals which arise out of or affect work situations.”

Question 2: Explain by reference to specific examples the impact of technological and other changes upon workforce employment 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 union membership. 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)

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)

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 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.

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.

Technological and other changes upon employment relations

External factors drawn from political, economic, technological and social environments are able to both stimulate and constrain the organisation of subsystem work (Lewis et al., 2003). In current global economic downturn and recession times, the discussion of economic and social factors along with their implications on employment relationship are relevant. Within the context of UK, the automobile industry (car manufacturing) has been hit by a slump in demand of a wider economic slowdown in particular and has resulted into massive sale losses, production plant shutdowns and redundancies for its workers on regular basis. For example, Luxury car maker Bentley after, 200 job cuts , three-day week in October 2008 and longer Christmas break has announced on 10 February, 2009 that it is cutting 220 more jobs and also revealed all staff will take a 10% pay cut. Moreover, due to slump in demand it is going to close Crewe plant for seven weeks from this march. However,Bentley said it hopes to make cuts through voluntary redundancies but also warned it would not rule out any compulsory action if needed. Previously, the redundancies in October reflected a great sense of deprivation and feelings of insecurity among employees. Moreover, this threat of necessary action on job cuts can lead to employment relationship break down and could result into industrial action or strikes on allegedly breakdown of psychological contract between employees and employers. Therefore, the success of the company will be at higher risk in future. BBC.

ODM Ltd., which is expert in providing direct sales services of credit cards, and its main clients are Tesco and Argos. Before economic down turn (recession), company was doing good business with huge volume of customers and staff was paid basic pay plus bonuses on the activation of every card. Therefore, everyone in the company, was enjoying good employment relationship and sales targets were easily achievable. However, due to current economic downturn and credit crunch the attitude of customers towards credit cards has changed and they are reluctant to apply for credit cards, resulting into significant decline in the sales. In this scenario company’s profit levels decreased and it has refused to pay any bonuses to the staff on the activation of cards. Consequently, the employees in the company are feeling de-motivated, suppressed, dissatisfied and their relationship with management has been badly affected resulting into lower level of loyalty and performance. Therefore, the sales targets are not being met largely and the overall performance of employees and company has been adversely affected which undermine the success scenario of company in long term. In employee relations the trade unions are the organizations which play very vital role in the regulation of employment relationship. ‘A trade union is any organization, whose membership consists of employees, which seeks to organize and represent their interests both in the workplace and society and, in particular, seeks to regulate the employment relationship through the direct process of collective bargaining with management’ (Salamon,2000). Moreover, the section one of Trade Union and Labour Relations Act 1992, provides the current definition of Trade union as “an organization whether temporary or permanent, that consists wholly or mainly of workers whose main purpose is the regulation of relations between these workers and employers or employer’s associations” (Lewis et al., 2003).With regards to the structure of trade unions Daniels (2006) believed that the traditional classification of trade unions are company unions, craft unions, occupation unions, industry unions and general unions. However, Lewis et al.(2003) argued that after trends of union mergers, technological and industrial changes and shift from collectivism to individualism have resulted into the decline of trade unions and in its membership in recent years. With regards to trade union’s function it is considered to be very broad and dynamic and Salamon(2000) defines the broad function of trade union in terms of power, economic regulation, job regulation, social change, member services and self-fulfillment. In this regard some of the trade unions have got affiliation with representative bodies; for example in UK Trade Union Congress (TUC) is the representative body of the trade union movement and it describes itself as ‘the voice of Britain at work’.

Summarizing the technological changes have affected employment relations as stated in the following points:

– largely supply-side initiatives to improve workings of the labour market

– Family-friendly initiatives

– Training and the labour market – IT learning centres, learning accounts

– Assistance to job seekers and long-term unemployed

– Anti-discrimination legislation

– Changes to unfair dismissal legislation

– Statutory union recognition procedures

– Individual labour law extended to areas previously untouched by statute law – wage levels, hours of work, holidays

– Efficiency wage thesis – higher labour costs force employers to use labour more efficiently

– Business friendly – has made changes but emphasis on flexibility and anti – EU initiatives that impose undue burdens on business (I&C)

– New employment relations for a modern (knowledge) economy