Human Resource Management In Industrial Relations Management Essay
The management of industrial relations in Great Britain has changed notably in the last three decades. Industrial relations management has been significantly affected by several factors: economic climate, political change, and social environment. After world war two, British economic condition has gradually fallen down. It has been proved that it is much more complicated to manage industrial relations than before. The causes can be analyzed from many aspects: the increasing competition in product market, globalized trend, restructuring labor force, and reduced unions’ power.
From 1979, the power of trade unions has been greatly restricted by government. Deregulation on the labor market also has been enhanced. At the same time, British economy had to face a severe international competition with high inflation and unemployment in domestic. Then, what are the changes of British industrial relations in the last three decades. What are major factors influencing British industrial relations management. We plan to find out more in the following parts.
First, the nature of industrial relations management was the first issue. Then, industrial relations management in the period from 1979-1997 and period from post-1997 has been discussed respectively from two aspects: economic and political factors. Finally, the role and influence of employer, trade union and government have been embedded respectively.
Human resource management in industrial relations
In the 1980s and 1990s, the attitudes and strategies of industrial relations have been changed. Debates about human resource management practice in industrial relations were hot issues in management field. And individualism and collectivism in industrial relations were focused as well. First, look at the political and economic environment. From 1979 to 1997, The Conservative Government, which was elected during the time, insisted on weakening trade union power, reducing public expenditure. Except the government policies, employers faced a more competitive market. The globalization and recession made the situation worse than they had before. During this time, employers aimed to make great profits and reduce cost, instead of good industrial relations management. The types of corporation, labour market, competition in product market, organisation culture, and tradition were taken into account when employers intended to make industrial relations policies. A very important conception which was largely recognized in HRM was that labour is regarded as an asset or resource. Thus, employers need to explore employees’ potential through motivation, training, and development. Storey (1992) proposed two famous HRM versions: “soft” HRM and “hard” HRM. “Soft” HRM emphasis on employees’ needs, such as motivation, training and work-life balance while “hard” HRM more emphasis on economic factors. Many researchers agreed that HRM to some extent was a threat to trade union and was a new development in employee relations (Guest, 1989, Millward, 1994)
Turing to industrial relations management style, there are four types of management styles which were classified by Purcell and Sisson (Purcell and Sisson 1983 cited by Kessler, 1998): ‘traditionalists, sophisticated paternalists, sophisticated moderns, and standard moderns.’ Traditionalists “have one belief and are anti-union with forceful management”. Sophisticated paternalists “spend much time in ensuring that their employees have the right approach”. Sophisticated moderns management recognized the union role in certain areas. Finally, in standard modern management “Trade unions are recognized and industrial relations are seen as primarily fire-fighting and assumed to be non-problematic unless event prove otherwise”. (Sid Kessler, 1998, p.114) The industrial relations management may vary in different organisations or even in different groups in a company. Although the management style may vary according to the situations, one fact was that collective involvement had been shifted to individual involvement. After 1997, the employee relations management further developed. The findings of WERS 2004 show that positive contracts and communication with employees will contribute to high commitment performance and economic outcomes. Moreover, Employee involvement participation is greatly focused by employers, employee voice, teamworking, and work-life balance as well. (WERS, 2004)
Industrial relations management in 1979-1997
The economic environment for industrial relations from 1979 to 1997 changed greatly. Firstly, the decline of manufacturing industry was very obvious. Secondly, unemployment problem is dramatically severe. It was reported that the number of unemployment increased from 1.6 million to 3 million from 1987-1992. Although there was a small recovery after 1992, the number of unemployment still kept on 1.5millionn in mid-1997. The high unemployment reflected a severely competitive labour market. Furthermore, the structure of economy and labour force also changed. Manufacturing industry decreased; private service sectors increased; and increasing number of women was engaged in workplace; self-employment became popular; and part-time workers, and temporary workers grew fast in that period. Finally, there was a globalized competition in product market. Interaction of these economic changes influenced industrial relations in Britain. Except the economic changes, the Conservative Government’s policies and laws had great effects on industrial relations. The government restricted trade union power and weakened joint regulation. A series of legislative program was carried out during the time. The first legislative action was to restrict the closed shop in 1980. The Conservative thus, Government’s policies and trade union membership density was directly reduced by government’s policies and legislations.
Shifting to industrial relations management, a more important change was that employee relations specialists and line managers replaced traditional managers’ role: they are more likely to be responsible for employee relations issues in 1990s. If people intend to be employee relations specialists, they need to obtain professional qualifications. And such qualification requires long relevant working experience. This change may reflect a higher demand for professional knowledge such as employment law. The management of employee relations became more complicated. The conception of “human resource management” was widely accepted in the late 1980s. Millward et al (2000) noted that” those using the title “human resource manger” accounted for a third of specialists in 1998.(Millward 2000, p. 225) The employee relations specialists continued to rise in the following years. Millward’s findings showed that human resource managers and employee relations specialists’ responsibilities are similarly. They are both responsible for pay, training, grievance handling, and payroll management.
Another change was the shift of employee relations managers’ major work. In the early 1980s, many employee relations managers spent much time on dealing with collective industrial conflict. WERS’s (1998) findings revealed that employee relations mangers pay much attention to individual grievances, particularly related to legal proceedings. Moreover, workplace managers switched more attention to collect and deliver information to employees. They use information to review organisation performance and policies.
Another change was happened in industrial relations system. “Multi-employer agreements affected one third of the number of workplaces in 1998 that they had in the early 1980s”. (Millward , 2000, p. 227) In terms of pay, multi-employer agreements to most extent have been determined by employers themselves than workplace itself. The management became more centralized in an organisation during the 1990s. Higher authorities were more likely to make decisions than workplace managers. This could indicate that industrial relations were regarded as operational issue rather than strategic ones.
Trade unions had more chance to be involved in the relationship between employers and employees. Trade unions in Britain represent employee’s interest. But from 1979 to 1990s, trade union’s power gradually declined and lost much union membership. Employees’ support for trade union declined and support from management reduced as well. Many factors led to the phenomenon. The decline of manufacturing industry where were traditionally organized by trade union reduced the number of union membership. And the increasing number of women workforce and temporary workforce who have less possibility of being union membership also resulted from the decline. Another change was that there was less union recognition at workplaces, particularly in private service sectors, which increased during the time. Thus, fewer employees asked for collective bargaining to improve their pay and working conditions. Moreover, the impact of trade union on pay weakened during 1980s and 1990s.
During the 1980s and 1990s, when the collective representation declined, the management in industrial relations transferred to focus on communication with employees. Millward’s survey showed that “communication channels between senior mangers and employees have changed from joint arrangements to direct forms of communications” (Millward, 2000 p.230) Managers held regular meeting with workforce and team briefings to hear their suggestion and questions. And according to Millward’s point of view, this ‘management-dominated arrangements’ can improve employee treatment.
Industrial relations management in post-1997
After 1997, industrial relations in Britain continued to change due to the changing external environment. However, there were many employment relations retained: “the degree of numerical flexibility, the incidence of varies dispute, grievance and disciplinary procedures, the incidence of industrial actions and etc.” (WERS, 2004)
A variety of changes could be obtained from workplace employment relations. From WERS’s findings (2004), the practice of employment relations varies largely between small and large workplace and it also varies between different sectors of industry, especially between private sectors and public sectors. Private sectors shared more proportion in workplaces from1998 to 2004. The figures from WERS2004 showed that 70 percent of workplaces were operating in private sectors compared with two-thirds in 1998. Look at all workplaces, 49 percent of employees were female and 34 percent of them were in managerial positions. Women have more chance to be managers in public sectors (46 percent) than in private service sectors (30 percent).
Trade union also changed considerable and it had great impacts on industrial relations management. There was a considerable decrease in the proportion of union members. In 2004, 64 percent of workplaces didn’t have union members compared with 57 percent in 1998). Union density slightly declined from 22 percent to 18 percent. Public sector accounted for more proportion of union membership than that of private sectors. Union membership density had strong relationship with management attitudes. Public sectors were more likely to provide management support for union membership than private sectors. However, the relationship between public sectors and private sectors are similarly strong. Besides that, another change of trade union in British workplaces can be found from WERS 2004 report. The proportion of union recognition in workplaces continued to decline after 1997. Only 18 percent of workplaces recognized trade union in 2004. (28 percent union recognition in1998) Furthermore, compared with 1998, union representative in workplaces spent more time on representative works. And they did more representative works than their non-union colleagues. It was reported that 43 percent of union representatives spent five hours on representative work while 33 percent spent two and four hours. Union representatives pay more attention to working condition and dispute, such as pay level, working hours, holidays. About 76 percent of union representatives attempt to recruit new members in their workplaces. But a clearly change during the period was that employees had a low preference of being a union members.
In the period from 1979-1997, workplace managers were more concerned about collecting and delivering information. They continued to adopted direct communication with employees after 1997. Direct communication was further widespread between managers and employees. Figures could be found from WERS2004 report.
Table 1 Direct communication and information sharing, by sector of ownership. 1998 and 2004
Meeting with entire workforce or team briefings
Systematic use of management chain
Information disclosure over
Financial position of workplace
Financial position of organisation
(Source from Workplace Employment Relations Report2004)
From the table, we can see that there were different forms of direct communication in practice. Regular meetings with entire workforce or team briefings was still popular, accounting for a dominate proportion and slightly increased from 85 percent to 91 percent during the time 1998 to 2004. A new creation of these meeting was that a part of meeting time was left to employees. Employees were allowed to propose suggestions and questions during the meeting. “Suggestion scheme, staff attitude surveys and problem-solving groups” were adopted by many organisations in managing employment relations during the time. Moreover, In the “information disclosure over” part, mangers preferred to disclose information though staffing plans (64 percent) than others.
Shifting to pay determination, which is a major issue in managing employee relations, the most common pay determination was still by management unilaterally. 70 percent of workplaces used this way to pay. Only 27 percent of workplace asked for collective bargaining with unions to determine pay level. Similar to the situation of 1979 to 1997, the proportion of workplaces through collective bargaining in pay determination has continued to decrease since 1997. But public sectors were more likely to use collective bargaining than private sectors. Among 83 percent of public sectors workplaces, 82 percent of workers have their pay through collective bargaining. On the other hand, in private sectors, 26 percent of worker among 14 percent of workplaces use collective bargaining. From these figures, we can know that pay system was not unmilitary anymore. Different measurements were developed. Managers were more likely to determine pay through systematic performance and appraisal management to motivate employees. Performance-related pay, profit-related bonuses, and employee share schemes were prevalent at this stage.
The way manager dealing with workplace conflict was also a change during this period. It is obvious that collective conflicts gradually reduced while individual conflicts grew. Industrial actions were less used to solve workplace conflict. most of conflicts were solved through legal procedures. But there was no big conflict happened during the time.
Equal opportunities were concentrated by employers since 1997. A large number of industrial relations law was approved by government to enhance the equality in workplaces. Response to the legislation, managers implemented a range of equality policies. WERS’s report (2004) revealed that 73 percent of workplaces had a written policies regarding equal treatment in 2004. 9 percent increased from 1998. These policies are largely concerned about equal opportunities for different gender, race, and disability. When implementing some HRM practice such as recruiting, selection, pay rate system, managers are required to consider these policies in employee relations management.
Moreover, there was other legislation introduced to improve employer-employee relations, covering work-life balance, hours of work, flexible working arrangements, employee well-being and job satisfaction etc. All these legislation pushed employers to make some differences in industrial relations management. In the late 1990s, the relationship between employers and employees was firstly defined as “partnership”. Therefore, partnership practice was expected to be implemented by employers. But does partnership practice really promote the managers-employees relations. Evidence was shown in table 2 below.
Table 2 managers’ and employees’ perceptions of management-employee relations, 1998 and 2004
(Source from Workplace Employment Relations Survey)
Compared with managers’ view, employees thought relationship was slightly less improved. Except that, managers hold a relatively positive attitude towards management-employee relations. 47 percent of mangers thought they had” very good” relations with employees while only 19 percent of employees agreed. “Partnership relationship” requires mutual trust, but the reality was less satisfactory.
To sum up, industrial relations management showed considerable changes. Under the adopt of partnership relations between managers and employees, Less workforce want to be union members; direct commutation was widespread in workplaces; an decreasing number of workplaces recognized unions for bargaining on pay and conditions, and collective bargaining declined as well; an range of policies were implemented in workplaces to promote equal opportunities; and managers had wider responsibilities of caring their employees on flexible working conditions, work-life balance, security, job satisfaction etc.
The role and influence of employers
The most famous employer association in Britain is the Confederation of British Industry (CBI). Like TUC, CBI does not directly participate in collective bargaining. Its major work is to lobby to British government for employers’ interests. In the last three decades, employers’ association gradually lost their regulative power.
Since 1970s, the decentralized trend was shown in private sectors. A range of operational jobs were distributed to lower departments while head office only had strong control on certain key issues.
The employer power and freedom was greatly strengthened in the last few decades. There were many causes contributed to the situation. More competitive globalization in product market and government’s policies in weakening union power let employers have more power in labour field. Employers focused on performance improvement, cost reduction in labour filed. Employers play an important role in employment relations management. They formulate the management policies and style. Employers also have the rights to decide whether or not recognize unions. During the period, employers have sought to manage industrial relations with HRM techniques. They became to purse employee commitment, teamworking, and work hard in improving communication with employees. In terms of pay determination, their measures have been extended. Performance-related pay, profit related pay and employee share schemes were adopted in most workplaces.
As the maker and performer of these policies, employers’ decision and behaviors considerably influence industrial relations management. In workplaces, employers choose certain styles of employment relations management. Non-unionism prefers “Soft’ HRM or “bleak house” management style while unionism prefers “partnership at work”.
The role and influence of government
Government plays a key role in industrial relations. Its attitude towards industrial relations can largely change the current situation. It is mostly related to government’s role in law.
Government’s polices and legislation determined employers’ and trade unions’ attitudes and conduct of employment relationship. Since 1979, The Conservative Government canceled support for collective bargaining and attempted to decrease collectivism and regulation. The government published laws to regulate equal pay and opportunities at workplaces. When Labour Party took the government, they published National Minimum Wage, and were more concerned about employees’ rights. These actions made contributions to written equality policies in organisations and influenced pay system. On the other hand, government legislation reduced the power and ability of unions to control on industrial action, “closed shop” policies directly reduced trade unions membership.
The role and influence of trade union
In Britain, there was Trade Union Congress (TUC) and many affiliated unions. TUC don’t have the rights to make industrial relations laws, their major work is to lobby to government and employers on behalf of employees’ interest and benefits. For many HR specialists, dealing with trade unions issues was once an important work in their jobs. However, since 1979, the Conservative Government took part the government, a series of anti-union legislation dramatically weakened union power. The cause was not only the political change and economy recession. Metcalf (1991, p.22) noted that the result was interacted by five factors: “the economic climate, workforce market, government policies, the attitudes of employers, and union themselves”. Studies show that larger organisations have more chance of Trade union presence. 64% union density was shown in public sectors. White-collars are more likely to be union membership. Labour party’s return in 1997 has brought some changes, but the union power still towards a falling trend. The Employment Relations Act 1999 aims to promote union recognition. And Labour Government spent more efforts on employees’ interests. In the last three decades, trade union changed a lot to attract new employees. Except proving legal advice, training for representatives has been developed. And TU try to build a partnership with employers.
According to E.D.Ewing’s study (2005), trade unions have five major functions: “a service function; a representation function; a regulatory function; a government function; a public administration function.”(Ewing, 2005) A service function means trade unions plays a role of providing service and benefits to members. It takes twos forms. One is more traditional, comprising health and unemployment benefits, and even insurance. The other is more professional. Trade unions provide legal advice and representation to help workers. Trade union needs to recruit new membership for survive, the service functions are usually used as a recruitment toll as they provide a variety of service such as representation to those who has grievances at workplaces, which is much more important than collective bargaining now.
Representation function has gained much concern in recent years. A representation function means that trade union is responsible for employees’ interest and benefits. Different from service function, representation function offer much more professional support to employees. And also trade union can take the form of collective representation to assist employees. Collective representation has two major forms: consultation and bargaining.
Regulatory function is the most important role of trade unions. A regulatory function means that trade unions is responsible for making rules for union membership. The role can be achieved by two ways. One is directly performed through multi-employer collective bargaining, such as Joint Industrial Councils. Another way is indirectly performed through legislation. Because decentralized organisations increased in the past few decades, the role of trade union in collective bargaining on pay and conditions has declined. By contrast, regulatory legislation is more prevalent.
Government function means that trade union are involved in cooperating with government to ensure they can perform their functions under governments’ legislation and policies. And public administration function is similar to government function they are all engaged in implementation and delivery of government policies.
Trade unions’ attitude towards management has changed in recent years. Many trade unions now focus much on business. They attempt to develop flexible, motivated workforce and partnership not only equal treatment.
There have been great changes in UK’s industrial relations. During the 1979-1997 periods, Britain suffered a great recession. The proportion of manufacturing industry declined. Unemployment problem is dramatically severe. The competitive labour market worsens the unemployment problem. The structure of economy and labour force also changed as well. Public service sectors grew quickly during this time. and increasing number of women, self-employment, part-time worker and temporary workers grow were engaged in workplace. Besides the economic changes, government restricted trade union power. And a series of legislation was carried out in order to control the activities of organized labour. The interaction of economic and political factors reduced the trade union membership density. In workplaces, employee relations specialists and line managers replaced traditional managers’ role. They become responsible for handing employee relations issues. Compared with traditional responsibilities, it was reported that employee relations mangers pay much attention to individual grievances, particularly related to legal proceedings. Employees’ support for trade union and support from management both declined. Finally, when the collective representation decreased, the management in industrial relations transferred to focus on communication with employees. Direct forms of communications were more prevalent at workplaces.
In post-1997, Labour Party took the government; they attempted to enhance union recognition despite the gradual decline of union density. But they were increasingly concerned about employees’ rights, such as National Minimum Wage. Managers were more likely to determine pay level by diverse pay system: performance related pay, profit-related bonuses, and employee share schemes. Managers worked hard on improving employer-employee relations. Direct communications was widespread at the time. Managers actively listen to employees’ suggestion and questions. Management scheme covered more issues than before, such as work-life balance, flexible working arrangement, and equal opportunities.
Due to government’s support and the weaken power of trade unions, employers have more freedom and power. Employers can decide whether or not to be union members at workplaces and also can choose management style in industrial relations. Government as a law-maker plays a crucial role in industrial relations management. Trade unions represent the interests of employees, have five major functions: service function; representation function; regulatory function; government function; and public administration function.