Unilateral decision making in Human Resources

‘Human resource management is a series of activities which first enable working people and the organisation which uses their skills to agree about the objectives and nature of their working relationship and secondly, ensure that the agreement is fulfilled’ Torrington and Hall (2002: 13). There has been an argument about who are the decision makers in the organisation. Is it the Management who are responsible for strategy forming and implementing the strategy or is it the employees who are the life line of the organisation who have the knowledge about the product. Who are best capable of making the decisions? In the essay there is the discussion about the various perspectives and the way decisions are taken. A brief introduction of three types of perspective:

Unitary Perspective: A Unitary perspective has one source of authority and one focus of loyalty, which is why it suggests team analogy. Each accepts his place and his functions gladly, following the leadership of the one so appointed. Fox (1966) ( pg 2).

Pluralistic Perspective: A Pluralist frame of reference recognises that the legitimacy and justification of trade union in our society rests not upon their protective function in labour markets or upon their success, real or supposed, in raising the share enjoyed by their members, but on social values which recognise the right of interest-group to combine and have an effective voice in their own destiny. This means having a voice in decision making.

Marxist Perspective: the Marxist perspective sees the process and institution of joint regulation as an enhancement rather that reduction in management’s position; at best they provide only limited and temporary accommodation of the inherent and fundamental division within capitalist based work and social structure.

In the essay we would be concentrating more on unitary perspective and pluralistic perspective as they have closer relevance to the statement/argument. The essay gives the outline of how various perspective effect the decision making process. The effects of various factors on factors like employee relations, employee contract, job regulations, and perspectives have been discussed representing them with a few examples.

The corporation is the “master”, the employee is the “servant”. Because the corporation owns the means of production without which the employee could not make a living, the employee needs the corporation more than vice versa.

Peter Drucker – Business – Capitalism – Work

Management regards its own unilateral decision-making over Human Resource issue as legitimate and rational; any opposition to it, either internal or external to the organisation, is seen as irrational.

Managements unilateral decision making over Human Resource issue is legitimate and rational can be accepted only if the employer and employee feel that they are one big family (unitary perspective). As fox has summarised that the unitary perspective can be justified when employees and employers have a common goal and objective i.e., to maximise the success of the organisation and workers willingly accept to obey the decision taken by the management. Armstrong (1999) says that the philosophy of Human Resource Management with its emphasis on commitment and mutuality is based on the unitary perspective.fox also states that in unitary perspective ‘there are no teams. Nor are they any outside it; the team stands alone, the members (employees) have an obligation of loyalty to their leader’ Fox (1966) (p.03).

Therefore from the above references it is clear that the decision taken by the management is legitimate and rational and it’s the duty of the employees to follow it without opposing it. The employers are responsible for the effective running of the organisation and they would have a long term plans of the organisation and the decisions would be taken according to the company vision and objectives. The employees need to understand that the employers would always think to better the company and maximize the profits, opposing decisions taken by them would not only be disloyalty shown towards the organisation but also unethical practise to go against the people who have provided them with food and shelter which are the basic needs (Maslow’s hierarchy). The above statement is very strong in countries like India where the trade unions have more political view than the welfare of the members of the trade unions. The trade unions go on strikes just to overpower the management. States like West Bengal where the trade unions have the upper hand to the management. That is the main reason why no multinational company wants to set up their base in west Bengal. Whereas states like Karnataka where the unions are discouraged have come up because the IT industry does not encourage trade unions. ‘It may not affect the Industry, but there would be change in the perception and image of the industry if trade unions are introduced. We must seriously consider whether it is the right time to have trade unions in the IT sector. It might hurt the industry’ Kris Gopalakrishnan, CEO & MD, Infosys Technologies (Forbes rated Infosys among the 5 best performing companies in the software and services sector in the world). The success of the organisation has been unitarist approach. Unitary perspective also overcomes the problems of disputes between rivalry unions. In this method the accountability becomes clear because everyone is assigned a responsibility.

Unitary perspective approach towards job regulation is unilateral in internal regulations. A unitary approach manager takes all the decisions without the consultation of the employees as the employer would know best for the employees. If the decision would be put forward to the employees there would be conflicts of interest. For example during the recent recession period, when the companies had to lay off employees it would not be advisable for the organisation to consult its union about whom and how many are to be removed. The union which is formed for the welfare of the employees would not agree to such decisions and hence it would result in strikes (Jet Airways employees calling for a strike because 150 of its employees were given the pink slip. The organisation was going through huge losses and the only way it would reduce its loss would be by reducing its man power which was not accepted by the Union, hence it resulted in strike). Therefore it is necessary for an organisation to limits the powers of trade unions in decision making. When the Theory X and Theory Y- Mc Gregor’s is taken into consideration it proves that employees of Theory X would oppose any decision taken by the management as the employees under theory X dislike work and do not care about the organisation goals. Thereby it becomes necessary for the management to take the decisions and employees opposing it are seen as irrational. But the organisation does not have any control over the external Job Regulations because external job regulation consists of forces which are partially outside the enterprise. Therefore, the organisation does not have complete control over the external job regulation.

In context with the labour contract, the unitary perspective manager recruits the employees for a particular assignment and when an employee enters into a contract with the employer it’s his/her duty/responsibility to follow instructions given by the employer, as the statement refers anyone opposing it is seen as irrational would be true because when an employee goes against the contract it is irrational or not fulfilling the terms of the contract. The method of negotiations and bargaining is not encouraged in unitary perspective because the organisations face the problem of firstly recognizing the right union (multiple numbers of unions in an organisation has increased). Therefore the only way to solve this problem would be non recognition of unions. If the management needs to make unilateral decisions which has to be accepted by the employees’ the decision makers need to have a few traits in them. Firstly they should have a problem solving ability and how they can fit into the wider scheme. Secondly they should have a strong desire to achieve the goals, they should be self confident and self disciplined, they should have the ability to listen and communicate effectively. Finally they should be analytical and intelligent (not to intelligent). Robert.H. & David Wilson. Managing organisations. (Pg198)

When Unitarism is related to the labour process it becomes clear that the management has the whole authority to make all the decisions because in it is perceived that all the raw materials, means of production and the product of labour belongs to the management. Therefore the decisions taken by the management are legitimate and rational as they own everything and anyone opposing would be considered as irrational. The statement holds true in this situation because once a person/organisation is the owner of a particular thing, he/they should have the freedom to do what he/they want to do with it, without anyone’s interference. When there is a problem with the organisation it is the management that is held responsible for it. For example even if an employee has faulted in his work and the customer may have some problem with it is the organisation that has to pay the compensation to the customers not the employee.

The statement is only applicable for a unitary approach organisation but it has its own draw backs which are low employee morale, low productivity and absenteeism, negative attitude towards work/ job, management rivalry, disagreement, incompatibility, incongruence. There may be various reasons for the following. But to avoid the following there has to be a two way communication between the employee and the employer. The above theory can be accepted but to a certain extent as the external factors cannot be controlled by the organisation. Factors like supply, demand, government policies all play a major role in the working of an organisation. Therefore external factors cannot be considered as irrational. The organisation needs to be flexible and change accordingly to the change in external factors. According to Dunlop (1950) industrial relations system consists of three agents – management organizations, workers and formal/informal ways they are organized and government agencies. The Dunlop’s model gives great significance to external or environmental forces. In other words, management, labor, and the government possess a shared ideology that defines their roles within the relationship and provides stability to the system. The Dunlop’s theory projects that all the actors have to a common understanding; they cannot work without each other’s support. The effect of a decision taken will have an effect on the other actors; therefore considering there interference is irrational will not help in the smooth running of the organisation. This is the reason why trade unions were formed which represents the employees. Trade unions have been recognised by all the governments. In a free market unions are encouraged as it is a symbol of democracy which allows the employees the right of expression. In the modern day business there are new techniques like Delphi method; Quality Circles are introduced for the betterment of the organisation. This shows employee participation in the decision making process of the management has become very important; therefore the management considering any opposition from the employees as irrational will be wrong.

A unitary approach becomes really hard when the company is a Multi National Company, because the business market would be different in different countries therefore having a unilateral approach may not suite the organisation. To gain a competitive edge the organisation needs to make the best use of its resources and there are more chances of mis communications in unitary approach, which may result into conflicts.

A pluralistic perspective completely agrees with the above said statement as a pluralistic manager believes conflicts are inevitable. It is something that cannot be avoided. The only way the conflicts can be solved is by collective bargaining. In a collective bargaining, it’s a Win-Win situation for both the employers and the employees. It keeps the morale high and even the productivity high. Therefore considering any interference of the employees of the organisation as irrational cannot be justified, it’s the right of the employee to have a say in the decision taken by the employer as it will be the employees who would be following those decisions. Ex. If an employer decides to extend the shift (working hours) it has to be consulted with the employees as it will be them who would be working for long hours. If the decision is taken without consultation it would result in conflicts. Every organisation has a member representation of the employees because the organisations have understood the importance of employee satisfaction. Therefore the above statement cannot be agreed on if the organisation follows pluralistic approach. Workers in various countries have been opposing the unilateral decision making process. They feel the managers have been mis using their powers. Even though the management owns the organisation it can only buy the labour power it cannot buy labour because labour is not saleable, therefore the management can restrict its decisions to labour power not labour. Therefore any decision taken which affects the labour can be opposed and it would be considered as rational.

When pluralism is related to job regulation as stated by Bean (2000) (p.370) ‘it is generally conceded in the liberal democratic world that working people should have the right to participate in the making of decisions that critically affect their working lives’. From the above quote it shows the importance of employee involvement in the decision making process. The employers need to understand that employees play a major role in functioning of the organisation, by involving them into the decision making process not only increases the motivation of the employees but also increase the productivity of the employees. In the modern techniques there are various methods adopted like to increase employee participation in the organisation. It may sometimes result in new fresh ideas which may work in favour of the organisation. Therefore considering ideas from the employees while making decision can be very useful. Sometimes these ideas may contradict the decisions of the management, the management needs to analyse the suggestion and implement it if it is for the betterment of the organisation. The management cannot consider these ideas as irrational.

While making rules for the organisations various factors influence them, factors like State, the availability of labour. Supply and demand etc. play a crucial role and none of them can be considered as irrational when they oppose the decisions made by the organisation.

The draw backs with pluralistic approach would be rivalry between the trade unions, it makes it hard for the organisation to negotiate when there are more than one trade unions’ and hence the unions and the management would loose valuable time and money in negotiating the problems. It is the duty of the unions to act as a mediator between the employees and management, but the unions have become so political that they just see how the party(the political) party they represent is benefitted. Example. TATA Nano project was shifted from Singhur (West Bengal, India) to Gujarat (India) because the opposition party wanted to put the ruling government down. There was loss of employment for the state (west Bengal) when the company made the decision to move out, and the union did not achieve any gain out of it. Therefore it can be concluded that the unions no longer work for the welfare of the employees, they have diverted themselves to work for the political party that is supporting them.

The Marxist approach states that the management makes profit by exploiting the labourers, i.e. by paying them low wage compared to the work they have done.

Conclusion.

From the above arguments and analysis it becomes clear that the argument is an Management regards its own unilateral decision-making over Human Resource issue as legitimate and rational; any opposition to it, either internal or external to the organisation, is applicable only in Unitary Perspective but this can be implemented in very Public/Private sectors. Some organisations have been successful after adopting such approach but this method cannot be adopted in all sectors as in this fast growing business world and the rate of attrition increasing it becomes very essential for an organisation to take care of its employees and other concerns which are attached to the company, considering their opposition as irrational can be very easily be a reason for the downfall of the organisation. An organisation may enjoy supreme authority when they have a unitary approach but the organisation to decide its transfers and promotions very carefully. It would play a major role because if a manager is recruited from outside the organisation may not be able to adapt to the organisations culture and there would be regular oppositions for his decisions.

From the above essay we can argue that no one type of perspective is suitable for all organisations. Some companies may adopted a particular perspective and been successful but it does not confirm that all companies will be successful by following such a perspective. An organisation may have both Theory X category employees’ and even Theory Y category employees, it is the responsibility of the managers to use the resources available and make the best use of them.

To conclude from the above essay it can be concluded that an organisation needs to be flexible but also needs to have authority over its employees. The management needs to take suggestion from its employees but the final decision needs to be taken by the management and it’s the duty of the employees to follow the decisions as they are under contract/agreement with the employer to render there services to the organisation. The management can have complete control over its internal part of the organisation and anyone opposing it would be going against the contract therefore can be considered as irrational but this can be said the same towards the external forces, the management does not have complete control over them, and considering their opposition as irrational would not be appropriate. Both the perspectives have their own advantages and disadvantages, it’s the responsibility of the management to balance their business and make profits after all- ‘The only and only social responsibility of a business is to make profits’- Milton Friedman (Noble Prize in economics).