Employee Relations And Employment Relationship In Business Management Essay

Due to rapid increase in the technology and internationalization of business. The employment relationship has become very important part of an organisation. So when was the last time you took a good look at your work force? What did you see? You probably saw a rapidly changing group of employees that is getting more diverse by the day (Grey Roper, may 2005). The accelerated growth of diversity in the workforce over past 20 years has spawned new developments in managing employee relations, making it one of the biggest challenges facing managers.

As the organisation is bubbling cauldron of individuals with diverse personalities, experiences, wants, needs, and objectives, and as managers seek to exercise a degree of influence and control over the employees in order to facilitate the completion of key business activities, it is inevitable that alienation and conflict may occur at some stage. To meet this challenge, managers must improve skills such as active listening, adaptability and decision-making. These core skills can assist supervisor and managers in tackling difficult issues that may arise within their workforce.

Generating the required cash flow that a successful shop requires is almost impossible without employees. The years of one person managing a shop and doing repair work are gone. And even if it were possible to run a successful business without employees, a major illness or accident that made you unable to work would put the entire business at risk (Vasconcellos, Dec 1998). Like it or not, the future of your shop depends on employees who can generate the necessary revenue to keep it running if something happens to you.

Research by the CIPD has repeatedly demonstrated the links between the way people are managed, employee attitudes and business performance (Purcell 2006 and Truss et al 2006). Employment relationship can and has found to make difference. However there is great disagreement surrounding how to define relationship. Furthermore, it is evident that sound, academic research lads somewhat behind practice given that literature is under developed, and the concept of employment relationship is still in its infancy.

What is Employee Relations and Employment Relationship?

According to Torrington et al, (2005), employee relations (or ’employment relations’, as it is also known) is responsible for preventing or alleviating such conflict and ensuring that a harmonious working environment is facilitated. ‘Employee relations’ also refers to the formal and informal relationship that exists between the employer and employee. The term employment relationship describes the link between employers and employees in the workplace. The basis of employment relationship is an undertaking by an employee to provide skill and effort to an employer in return for which the employer provides a salary or wage, a safe workplace and an obligation to act in good faith towards employee. The term ’employee relations’ was conceived as a replacement for the term ‘industrial relations’ but it’s precise meaning in today’s workplaces needs clarification. In 2004/5, CIPD undertook research into the changing nature of employee relations work in UK organisations, through interviews with HR and Employee Relations managers to provide a snapshot of current attitudes and practice.

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“Employee relations’ is a common title for the industrial relations function within personnel management and is also sometimes used as an alternative label for the academic field of industrial relations. The term underlines the fact that industrial relations is not confined to the study of trade unions but embraces the broad pattern of employee management, including systems of direct communication and employee involvement that target the individual worker.” (Heery & Noon, 2001)


“Employee Relations involves 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.”

Research problems

A number of internal and external factors have resulted in imbalance of relations between employers and employees. Where employees are not happy with working conditions this frequently leads to high labour turnover, bad timekeeping, and high levels of absenteeism. It may also occur in the form of slackness by individuals, poor working, deliberate time wasting and similar practices. Other evidence of discontent will be revealed in complaints, friction, ignoring rules and apathy.

There are numbers of forms of organised trade union action which are harmful to business such as withdrawal of goodwill, working strictly to the rules set out in work rulebooks and sticking rigidly to only doing tasks set out clearly in job description, refusing to job overtime and going on strike. All of the above actions are undesirable as they reduce company profitability and its ability to fulfil orders, harm employment prospects, reduce wages of employees and they cause problems to customers and economy as whole. Thus it is very important to create harmonious relationship between employers and employees.

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Disputes between employers and employees (and/or their representatives) usually occur when all the available channels of discussion and negotiation have been tried. Reasons for disputes are usually very complicated, and one needs to be cautious about saying that one party is ‘wrong’ or ‘right’. If the causes of disputes were that simple, then they would rarely occur. In this country ACAS (The Advisory, Conciliation and Arbitration Service) has played a major role in resolving industrial disputes, and in creating a climate and framework for managers and unions to create harmonious working relationships.

Employment relationship is not efficient then there are the chances of economics damage to firms as the employees may disclose the confidential information in the public which may affect the company policies and strategies. Sometimes the danger is raised by employees as they share the information on their blogs which indeed are damaging company reputation in the public and lead to decrease in business.

Research objectives and questions

The main objective of the proposed research is to better understand the employment relationship in the company. The aim is not only to evaluate employment relationship, but also to analyze what type of policies and strategies company need to take in order to achieve its objectives.

The objectives for this study are as follows:

To determine the reason behind lack of employment relationship

To understand what motivates employers/employees relations

To examine the relations between employers/employees

The main research questions to be addressed are:

What strategies do company adopt in order to maintain relationship?

Why employment relationship is needed in the business?

How employment relationship increases the productivity of company?

Key literature

Research by the Robinson (2006) suggest that inclusion of employee in decision making enable employee to work with more enthusiasm and motives them for doing there work more effectively. Robinson also suggests there is considerable evidence that many employees are greatly under-utilised in the work-based decision. Hyman and Mason (1995) argue that employee relations schemes “extend little or no input into corporate or higher level decision making” and generally do not entail any significant sharing of responsibility.

It should be noted that employee relations and legal provision that govern this relationship differs from country to country. The employment relationship can be encompassing a number of key areas such as contractual relationship, negotiation and collective bargaining, employee involvement and communication and discipline and grievance. Guest and Conway (2002) define psychological contract as “the perceptions of the two parties, employee and employer, of what their mutual obligations are towards each other”. CIPD (2004) point out that, if the psychological contract is breached or broken, it can lead to job dissatisfaction and lack of commitment to both job and organisation.

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Recent research suggest that high-involvement work practices can develop the positive beliefs attitudes associated with employee relation, and these practices can generate the kind of discretionary behaviours that lead to enhanced performance (Konrad 2006). Research in the UK, based on an electronic survey of 2,000 employees from across the UK, found that only 35 per cent of employees were actively engaged in their work (Truss et al 2006). A significant majority had fairly low opinion of their senior managers, with only a third seeing them as trustworthy. The research clearly shows that whilst senior managers can make a real difference to people’s working lives and performance, many have issues around visibility, communication and employee involvement.


Managing conflict in the workplace has become a key issue for many organizations today, especially with the increase in business expansion to other areas and continents this problem has only increased. Here the need of employee relation has become vital. “Mediation as a method or technique of resolving workplace issues represents an important shift from the traditional industrial relations framework, with its emphasis on formal discipline and grievance procedures, towards more of a ‘win-win’ approach consistent with the philosophy of HR management”.

Successful employer/employee relations involve striking a balance of interests. From the employer’s point of view, industrial relations is about having the right to manage – the ability to plan for the future so that a company can continue to be a success, to make profits for its shareholders and to keep its employees motivated. From the employee’s point of view, it is all about securing the best possible conditions and living standards for employees.

There is clear evidence in the psychological literature of the effect of individual differences on the work performance. Kahn (1990) suggested that individual differences shape a persons nature, which in turn, affects their ability to personally engaged or disengaged in all or some type of roll performance.

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