Assignment 83

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5: Managing the Employment Relationship

Dr. Mirna Safi

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Introduction

Managers are often placed at the ‘intersection’ between employees and employers.

They have the complex role of delivering the profit and performance expectations of employers, while ensuring that employees are satisfied and engaged in their jobs.

How managers undertake this role is influenced by many factors, including their view of the employment relationship and the extent of employment rights and obligations as determined by law and collective agreements.

The nature of the employment relationship

A manager’s role in managing the demands and expectations of their employees, their own senior managers and the employer is a very difficult one due to the complexity of the employment relationship.

In addition to factors such as personalities and human emotions, there are underlying structural reasons why the employment relationship is so complex.

One reason is that the exchange that takes place between an employer and employee is difficult to define or ‘pin down’ when the relationship begins.

The nature of the employment relationship

Some companies try to control employees’ behaviour through, for example, strict supervision and penalties for not complying with rules.

Other companies offer employees good pay and conditions, and autonomy for making decisions to try to encourage them to be committed to their job.

This vagueness in the exchange between employer and employee can lead to disagreements over what constitutes a ‘fair day’s pay’ (D’Art and Turner, 2006: 524).

The nature of the employment relationship

It is argued the differential in power between an employer and an employee is a key feature of the employment relationship (D’Art and Turner, 2006).

Employers’ resources are greater than employees

Power becomes particularly important when there are specific differences of interests.

For much of the employment relationship, employers and employees cooperate with each other however conflict can arise.

Many companies use mechanisms such as grievance procedures (Step by step process an employee must follow to get his or her complaint addressed satisfactorily) , collective bargaining (the method which is used by workers to get organised and negotiate working conditions with their employees) and other forms of employee voice to address differing interests.

The nature of the employment relationship

Theoretical perspectives

Unitarism

Employers and employees have the same interests, goals and values and because of this conflict should not exist in an organization.

There is only one source of authority in the organization, i.e. management.

There is no need for trade unions - they are seen as troublemakers (an association of workers in a particular trade, industry, or company created for the purpose of securing improvements in pay, benefits, working conditions)

Conflict is believed to occur because of reasons like personality clashes and poor communications.

Storey (1992) notes that many elements of human resource management are unitarist in nature

Unitarist management can manifest itself through two management styles: paternalistic and authoritarian (Wallace et al. 2013).

In paternalistic leadership, people may feel like the situation that they are in is democratic as workers are encouraged to discuss and comment and their questions are answered

Theoretical perspectives

Pluralism

The organization is made up of groups with different interests and goals.

Assumes conflict in an organization is inevitable.

Accepts the legitimacy of trade unions as representatives of employees.

Those organizations that negotiate with trade unions are based on a pluralist perspective of employment relations.

It is management’s role to balance the interests of different groups in the organization and it is legitimate to establish mechanisms to address conflict, such as disputes procedures and collective bargaining.

Theoretical perspectives

Marxism

Conflict in organizations merely reflects conflict between classes in society, i.e. employers (capitalists or bourgeoisie) and employees (proletariat).

Marx viewed the capitalist system as having negative and alienating effects on workers because they did not control what they produced, work involved mindless repetition and because workers competed against one another (Grint, 1991).

The value of the Marxist perspective lies in its sophisticated understanding of the employment relationship by relating it to conflict in the wider society; something unitarism and pluralism do not do.

Actors in the employment relationship

The regulation of the employment relationship in terms of how pay and conditions are set varies across organizations, industries and countries.

In some organizations, pay and conditions are unilaterally set by the employer and in others there is some scope for negotiation between an employer and individual employee.

In other organizations, employees are represented by a trade union and the employer may be a member of an employer organization and both sides negotiate and agree pay and conditions on a collective basis.

Employee representation

Historically, the primary representative of employees has been trade unions.

They act collectively because it is argued that acting collectively is the most effective way of challenging employer power (Kelly, 1998).

The most common ways in which they try to protect members’ interests are through:

Collective bargaining with employers

Lobbying the government for employee-friendly policies

Representing members in grievance or disciplinary issues

Providing advice to members.

Workplaces with a union usually also have workplace representatives or shop stewards.

Employee representation

A common feature of employment relations in most countries is the formation of one or more confederations of trade unions.

Trade Union Congress (TUC) in the UK

Irish Congress of Trade Unions (ICTU) in Ireland

American Federation of Labor and Congress of Industrial Organisations (AFL-CIO) in the US

Change to Win Federation (CTWF) in the US

Landsorganisationen i Sverige (LO) in Sweden

Australian Council of Trade Unions

African Regional Organization of the International Trade Union Confederation (ITUC-Africa).

Employer organizations

Employer organizations carry out the following to varying degrees across organizations:

Advise members on human resources and industrial relations matters.

Undertake research and represent members in negotiations with employees and in disputes.

Represent employer interests nationally and internationally.

In contrast to the tradition in Europe of employer organizations engaging with trade unions, some employer groups in the US have union avoidance as one of their objectives (Block, 2006; Bamber and Lansbury, 1998).

Employment rights

The growth in employment legislation was one of the most significant developments in employment relations during the twentieth century.

In Europe, many countries have introduced employment rights as a result of EU Directives, which EU countries are required to transpose.

There have been Directives on working time, health and safety, parental leave, maternity and adoptive leave, part-time, fixed-term and agency work, and equality.

There are still a number of areas of employment not governed by the EU which individual countries decide on, such as minimum wages.

Employment rights

Research shows that line mangers’ knowledge of employment law can vary significantly and that the effectiveness of law can be obstructed by managers’ limited knowledge.

HR practitioners can advise or command line management on the implementation of policies on employee rights and obligations.

Employees might have a grievance if they feel an employment right has been breached and this might escalate to the employee feeling disengaged, leaving the organization or taking a case against their employer to a tribunal or court.

The global economic crisis

The global economic and financial crisis, also referred to as ‘The Great Recession’, was the most severe economic downturn experienced by the US, and countries in Europe, Asia, Russia, Latin America and Africa since the early 20th century.

Effects of the crisis on employees have included increases in job insecurity and work intensity and decreases in working time, absenteeism and employee well-being.

The most significant impact has been increased unemployment.

Unemployment rose in the EU from under 7 per cent in 2008 to 11 per cent in 2013, before falling back to 8 per cent in 2017 (OECD, 2017).

The global economic crisis

During the crisis, the EU sought for national governments to undertake austerity policies such as reductions in public sector wages and expenditures.

A number of countries needed financial support from the so-called Troika (European Commission, European Central Bank and International Monetary Fund) and, in return for finance, the Troika demanded significant changes.

These included cuts and freezes in public sector wages, cuts or freezes in national minimum wages and changes in collective bargaining, such as restricting collective agreements from being extended to wider groups of workers.

Quality of jobs

International organizations such as the EU, OECD and International Labour Organisation (ILO) have called for jobs of high quality which foster sustainable growth.

It has been argued that whether workers choose a particular type of contract or not is an important consideration in examining their beliefs about the employment relationship and growing income inequality.

Atypical or ‘non-standard’ contracts include part-time, fixed-term, agency work, zero hours, ‘gig’ jobs ( temporary) and self-employment.

Employers hire people on atypical arrangements to reduce costs and to easily adapt workforce numbers to their business need.

Quality of jobs

Atypical jobs are not automatically of poor quality but research has found that they are more likely than standard jobs to be precarious.

Precarious employment is ‘characterized by uncertainty, low income, and limited social benefits and statutory entitlements’ (Vosko, 2010: 2).

International studies show that precarious jobs are particularly prevalent in certain sectors such as hospitality and retail.

Zero hours work has been described as an extremely precarious job because it involves employers giving no guaranteed hours of work and has received much public attention in recent years in Ireland, the UK, Finland and New Zealand.

Quality of jobs

A global study examining occupations since the 1990s has found that in Australia, China, Russia and South Korea, the greatest employment growth has been in well‑paid jobs and the lowest employment growth in low‑paid jobs (Eurofound, 2015). This change is known as upgrading.

In the EU, Japan and the USA, the greatest employment growth has been in well‑paid jobs, with modest relative growth in low‑paid jobs and a relative contraction of mid‑paid jobs (Eurofound, 2015). This occupational shift is known as polarisation involving the expansion of higher and lower occupations.

The ‘gig economy’

The gig economy can be deciphered into ‘crowdworking’ and ‘work on demand via apps’.

Crowdworking refers to online platforms through which workers complete tasks for organizations.

‘Work on-demand via apps’ refers to apps which connect people for the purpose of undertaking traditional types of work such as transport and cleaning.

There is no reliable national-level data available on the number of people who work in the gig economy.

The ‘gig economy’

One argument is that gig working is good for workers because it allows them to be 'entrepreneurs' who control the type and timing of work, thereby increasing flexibility.

An opposing argument is that gig working is exploitative, with workers having little income security and few employment rights.

At the core of these disputes is the employment status of the workers which is a critical issue in the employment relationship.

Establishing employment status is very important across countries because it determines not only employment rights but also tax and social insurance obligations.

Employee participation and voice

Employee participation occurs when employees have influence over decisions in an organisation (Busck et al., 2010).

Direct participation is through individual employees or teams.

Involves employees having an influence over operational issues such as job performance.

Indirect participation is through employee representatives.

Suggests more strategic level influence.

Employee participation and voice

Voice is an important issue for employees to facilitate their expression of opinions and grievances and to enable them to act as ‘industrial citizens’.

Employers have introduced voice mechanisms for a range of reasons, e.g. wanting to improve the employment relations environment, to improve productivity and quality and to prevent employees from joining a union.

Organisations’ choice of voice mechanism can be influenced by the country of origin of the company, the size of organization and the industry.

Employee participation and voice

The Works Council Directive requires large multi-national companies to have a works council, in which management consult with employee representatives across countries

Studies show the growing incidence of direct voice, where individual employees are involved in decisions affecting their jobs and immediate work environment (Lavelle et al., 2010:396).

The nature of conflict and its resolution

A pattern evident across developed and developing countries since the early 1980s has been a fall in the number of strikes and working days lost (WDL).

There have been significant reductions in WDL in the US, UK and Ireland.

Some suggest that the fall in strikes is reflective of a ‘better’ employment relations environment.

Others point to globalization and a more neo-liberalist political environment, which favours minimal state intervention in the employment relationship and is opposed to unions.

The nature of conflict and its resolution

Many countries have employment laws which require organizations to have procedures on issues such as dismissals and equality issues.

This is to ensure that all workers are treated fairly and consistently through due process and natural justice. In a disciplinary procedure, this means that:

Employees would be informed of company rules and what would happen if they’re breached

Employees must be allowed to defend themselves

Employees must be allowed representation

There must be an appeals mechanism if an employee is dissatisfied with a management decision.

State agencies for conflict resolution

Over half of countries in the OECD have special courts or tribunals to hear employment disputes (Venn, 2009).

In Ireland, the Workplace Relations Commission provides conciliation and mediation services and also adjudicates on employment rights cases.

Appeals of adjudication decisions are heard by the Labour Court

In Australia, the Fair Work Commission (FWC) is the national workplace relations tribunal which provides conciliation, mediation and adjudication services to resolve disputes.

In the USA, the National Labor Relations Board supervises employee elections on union representation and investigates claims by employers or employees of unfair labour practices.

Negotiating skills for conflict resolution

Managers often have to carry out performance management reviews, deal with grievance and disciplinary issues, bargain with trade unions and implement difficult measures such as redundancies, increased workloads and pay reductions.

Effective negotiation involves character and integrity.

In organizations, such agreements often involve commitments by management and employees to undertake a course of action in the future.

It is therefore important that any commitments made are adhered to and implemented.

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