4.5k-word paper(3rd)

The Future of the Employee Voice

Introduction

The ‘employee voice’ is currently a topical debate within the employee relations field. When considering the decline in trade unions within the UK during the 1980’s and 1990’s, Millward et al (2000) ask ‘have employees lost their voice?’ With the recent introduction of the Information and Consultation Directive (2005) it provides a basis on which to explore this concept further within the contemporary business environment.

This essay will consider how over the years, changes in employment relations have impacted upon the decision-making processes within organisations. In order to consider this, the essay will look at how movements in government parties have influenced policies, and in turn seen a shift in employment relations ideologies. The essay will then analyse how these government ideologies influence the processes and structures by which decisions are reached within the organisation. This will then provide the ability to evaluate the formal and informal voice mechanisms used within organisations such as employee participation and involvement, in order to adapt to these changes. The power between each actor will be considered in order to effectively analyse how the employees are able to contribute, directly and indirectly, to the decision-making process within the organisation.

Employee Relations

Employee relations is the “relationship between employer and employee, both collectively and individually, and the determination of substantive and procedural issues at industrial, organisational and workplace levels” (Rose, 2008, 9). A highly significant concept within employment relations is Dunlop’s (1958) Industrial Relations System; providing a framework for analysing the various component parts of employment relations and the extent to which they interact with each other in order to produce certain outcomes.

This essay will concentrate upon the environmental context, the actors and processes within this model. The environmental context will consider governmental influence, as the political machinery within which officials make decisions has a massive impact upon the employment relationship. These policies will in turn impact upon the different decision-making processes implemented by organisations, which will as a consequence affect employees, employers and the trade union. The industrial relations system does not guarantee an equality of power or influence amongst the actors or rules. Therefore the balance of power between each of the actors will also be considered. Power can be defined as “the ability to get someone to do something you want done or to make things happen in the way you want them to happen” (Gibson et al, 2000, 11).

Collectivism: Labour Government 1946-1979

Government Policy

The ideologies of the two main political parties within Britain have traditionally operated to serve very different and opposing interests of the actors within the industrial relations system. From 1946 to 1979 the government adopted a liberal collectivist and corporatist policy; serving the interests of both trade unions and employers. The Labour governments prior to the 1980’s have tended to enact protective and enabling legislations favouring collective organisations. Trade union membership rose steadily during this period; from 8 million in 1945 to a peak of just over 13 million in 1979 (Certification Office Annual Report, 2007). During this period employers and trade unions were expected to deal with matters concerning the employment relationship through the process of collective agreements. Rose (2008) suggests that this pluralist perspective is concerned with the diffusion of power within society and encourages a system of ‘open’ power groups, participating in the power game.

The Donovan Commission (1968)

The principle recommendations of the Donovan Commission (1968) were in relation to the reform of collective bargaining; to formalise all representation such as shop steward activities. Participation was subsidiary to the main proposals as the commission were “unable to agree on changes which might be expected to have the desired effect” (Donovan, 1968, 257). The majority of recommendations within the report were voluntary and management were encouraged to incorporate these suggestions into decision making as part of a move towards co-operative bargaining.

Bullock Report (1975)

In 1975 a Committee of Inquiry was established in order to consider how “a radical extension of industrial democracy in the control of companies by means of representation on boards of directors” could be achieved (Bullock, 1977). The report paid attention to employee participation within the workplace and recommended trade union representation as an essential element of employee participation. The Bullock report was however rejected and as a consequence participation remained voluntary.

Employee Participation

Participation can be defined as the “influence in decision making exerted through a process of interaction between workers and managers’” (Wall and Lischeron, 1977). Employee participation is likely to manifest itself in the form of formal and elected representation on established organisational decision-making bodies, such as board level participation, or through the machinery established for collective bargaining. As a result of the failed attempt in the 1970’s, the UK did not develop a statutory framework for employee participation. Prior to this period, other forms of participation had been recognised below board level.

Collective bargaining was traditionally the primary means for participation at this lower level. The strength of trade unions during the period promoted the development of employee participation through these collective agreements. Collective bargaining is fostered by the trade unions through interventionist style governmental and European Union regulation. It is “an agreement concerning pay and conditions of work settled between trade unions on the one hand and an employer or association on the other” (Donovan Commission Report, 1968, 8). It thus covers any negotiations in which employees do not negotiate individually, and on their own behalf, but do so collectively through representatives. It is regarded by Webb and Webb (1920) as an effective substitute for bargaining with each employee individually; rather than the employer making a series of separate contracts with isolated individuals, the employer will meet with a collective will.

It is pluralist and rights-centred and collectivist in nature; acknowledging the presence of divergent interests between different organisational stakeholders (Beardwell and Claydon, 2007). It “emerges from a collective employee interest to optimize the physical security and aspirational conditions under which employees are contracted to serve” (Hyman and Mason, 1995, 29) and is intended to gain powerful representation via employee representatives (Harley et al, 2005). Approaches to collective bargaining can take the form of collective employee share schemes, work councils, representation on company boards and joint consultative committees. Fernie and Metcalf (1995) describe how it is an exchange between the collective workforce and provides employees with a voice through participation of the trade union.

Employee Participation in Practice

Salamon (2000) describes how during this period the British Steel Corporation (1967) and the Post Office (1977) introduced worker directors as part of their reorganisation. This allowed employee participation and collective representation on the board. Both organisations advocated a ballot of the employees in order to secure a one-third employee representation on the board. The introduction of collective bargaining by way of worker directors was centred around the report of the Bullock Committee of Inquiry on Industrial Democracy (1977).

In the British Steel experiment, worker directors were appointed only to lower level boards, whose responsibility was simply to advise the divisional manager, rather than to the main board. This main board of directors were the only body with authority to make major policy decisions. Salamon (2000) noted that the worker directors were in reality a ‘third channel’ divorced from the main union bargaining procedure and consultative process. Salamon (2000) comments of the British Steel experiment that the introduction of workers directors is unlikely to significantly influence the power and decision-making of senior management due to the level of participation. The approach provided a method for representing employees’ interests rather than to influence any operational or strategic decision-making on the board.

Balance of Power

Brannen (1983) suggests that participation provides employees with the ability to exercise power over management. Bargaining power is central to the relationship in determining the outcome; “the final outcome of a collective bargaining situation is determined in some way by the relative bargaining power of the parties involved” (Levinson, 166, 92). Webb (1902) suggests that the larger the size of the bargaining unit, the greater the advantage secured by the union and workers; Flanders (1968) agrees that this can influence the power relationship.

The degree and depth of participation will determine the level of power and influence employees have over management (Poole, 1975). The British Steel example emphasised low level power sharing and regulatory ability in relation to the process of decision-making. Pateman (1970) has categorised the different degrees of participation; full, partial and pseudo. British Steel demonstrated partial participation, however Pateman (1970) argues that full participation is the only proper form of participation as partial and pseudo forms exercise less than equal influence in decision-making.

Marchington (1980) and Marchington et al (1992) describe how the scope of decisions that are subject to employee participation are also crucial in assessing the nature of employees power, influence and locus of control in an organisation. Poole (1975) and Brannen (1983) highlight the significance of participation at a board level, allowing employees influence over strategic decisions such as pay. In this example, the representatives were not engaging in decision-making regarding strategic and operational issues and consequently provided employees with a low level of influence and control of the situation. Although, scholars such as Eldridge et al (1991) and Cressey et al (1985) indicate that even when participation occurs at a strategic level, the scope may be limited by logistical and attitudinal problems. Greater management familiarity with, and in-depth knowledge of strategic matters, as well as control over information provides management with a significant advantage over employee representatives.

High level collective participation would generally lead to an increase in power and the ability influence high level decision making within the organisation. It is fundamentally power orientated and gives employees, usually by way of representatives such as trade unions, access to a relatively higher order range of decisions. Delbridge and Whitfield (2001) suggest that workers who experience higher levels of representative participation over issues beyond their daily tasks perceive themselves to have greater influence over their work.

Workers organised within a trade union “meet the employer on a more equal footing than the individual, and confront the employer with collective power” (Kelly, 1998, 9). Beardwell and Claydon (2007) suggest that conflicts are however more likely to occur within collective bargaining; taking the form of strikes, stoppages or working-to-rule. As seen during the late 1960’s and 1970’s with the industrial strikes and more recently in 2009 with the Royal Mail; collective workforces can enforce a great deal of power, not only over the employer but over the whole society. The power and influence that the trade unions and employers are able to exert can become disruptive in terms of strikes.

Collectively workers have much greater power than individuals and thus collective participation may provide the employee with equal power in comparison to management when determining the outcome in decision-making.

Individualism: Conservative Government 1979-1997

Government Policy

From 1979 until 1997 the succession of Conservative government adopted more radical policies of liberal individualism and neo-laissez-faire, with the emphasis on individualism rather than collectivism. This ideology involved a “concerted attempt to weaken the fabric of collective bargaining in order to allow market forces much greater impact on pay and conditions of employment” (Rose, 2008, 207). This anti-collectivist ideology aimed to reduce the influence and power of the trade unions. Millward et al (2000) confirm that “there has been a major shift from collective, representative, indirect and union based voice, to direct, non-union channels” (Millward et al, 2000, 124).

McIlroy (1991) observes that since 1979 Britain’s trade unions have been hit by a wave of trade union legislation. Prior to this, there had been relatively little legislation directly affecting the conduct of industrial relations; “employees’ rights were derived primarily from their contracts of employment” (Rose, 2008, 239). This government intervention and legislations were introduced in order to reduce the influence and power of trade unions and put constraints on the freedom of unions to organise and use industrial action in the bargaining process.

The recommendations of the Donovan Commission and Bullock report for formalised collective representation were not widely implemented throughout the 1980’s and 1990’s. In the 1980’s there was more of an emphasis on voluntary consultation by way of the Employment Act 1982. Brannen (1983) describes how the conservatives were committed to encouraging employee involvement through consultation, communication and financial involvement; thus diminishing collective trade union power and encouraging employee involvement. Terry (1995; 2003) argues factors such as the role of the state and the new approaches implemented by employers created an ever-widening collective ‘representation’ gap and suggests that this gap has been filled by more unitarist strategies.

The post 1979 legislations increased the extent of legal regulation with industrial relations. Dickens and Hall (2003) argue that this “period has seen the final death to voluntarism, under which law was essentially an adjunct to an autonomous, self-regulated system of industrial relations” (Dickens and Hall, 2003, 127). Whereas Wedderburn (1986) argue that the legislations were motivated by the need to dilute trade union power in order to emphasise individualist rather than collectivistic views and thus reinforce employer prerogative. The 1980’s and 1990’s witnessed a serious weakening of the trade union movement nationally, along with a dramatic decline in membership. After trade union membership hit its peak in 1979, membership fell from 13.289 million to 7.801 million in 1997 (Certification Office Annual Report, 2007). Hayek (1984) advocates individualism arguing that trade unions contributed to the economic decline of Britain due to their unwarranted power and legal privileges.

Employee Involvement

Lewis et al (2003) describe how the principle change during the Thatcherite period relates to the growing use of employee involvement. After the 1980’s collective bargaining was increasingly undermined as a result of government policy. Channels for a collective representative voice, such as shop stewards, were in considerable decline (WERS 1998; 2004) as employers began to depart from collaboration with unions to one of bypassing them in favour of direct links with employees. Beaumont (1987) suggests that this is the main contributor to the decline in union density. Involvement is fostered by employers or managerial interests and is unitarist in nature. This approach is aimed at allowing management to introduce forms of involvement as they see fit and is intended to generate employee commitment and contribution to the employing organisation. Ramsay (1977) suggests that firms pioneered to detach their workers from their trade unions in order to negotiate with employees directly.

The rise of ‘managerialism’ and resurrection of managerial prerogatives during the 1980’s together with the dominance of Human Resource Management (HRM) practices considers employee influence as the dominant process in order to achieve organisational goals. The concept of involvement is an essential component of a range of other individually focused human resource strategies such as performance and reward management. Marchington et al (1992) describes how this unitarist approach has resulted in a greater willingness to communicate directly with employees and an enhanced recognition of the potential contribution employees could make to organisational performance through initiatives, such as team briefings, quality circles, suggestions schemes, profit share and shared ownership. This has in turn ‘individualised’ the employment relationship, marginalising the shop steward influence and collective bargaining; underpinned by the evolution and increased sophistication of HRM techniques, policies and strategies. Few employers can afford to be deflected by employee objections and obstacles constructed by their unions; thus it could be argued that “HRM can serve to reduce or eliminate the potential of trade unions to materially interfere with management decision making processes or outcomes” (Hyman and Mason, 1995, 6) and increase the employee voice. However Rose (2008) argues that management did not appear to seek to share control, but to purely assert their prerogatives.

Employee Involvement in Practice

During my professional experience placement at The Walt Disney Company, it was evident that they encouraged employee involvement in order to promote awareness of, support for, and commitment towards their organisational objectives. This was emphasised by the underpinning unitary nature of their involvement initiatives. Gallie et al (1998) recognises three forms of involvement: task-level, communicative and financial involvement. The most widely used within Disney is task-level and communicative involvement. These involvement initiatives were enforced within a paternalistic style of management. Benefits such as health care were offered to employees at Disney which aimed to further re-enforce the organisations caring nature.

Departments within Disney conducted regular team briefings and forums which would generally encourage two-way communication, with the scope to ask questions, provide suggestions and feedback. These communicative involvement initiatives provided employees with information and provided management with the ability to gain cooperation and opinions. Downward communication was also used, with scope to receive information about management strategy in relation to decisions taken at strategic and operational levels, but not to engage in these decisions. This involvement strategy is used by Disney primarily to create awareness and understanding of these decisions, with the opportunity to discuss what is communicated. This form of involvement has the aim of engendering cooperation and commitment and exerting power through the explanation and justification of the decisions made by management in order to influence employee opinions.

Task-level involvement was also encouraged using initiatives such as those suggested by Geary (1994); work groups and team working. During my placement, employees were involved in task forces for key Disney brands. Group decisions were made at a localised level within the UK market, and involved only low level task issues. These groups made employees feel involved and increased motivation levels. Management were able to benefit from employees knowledge and generate greater efficiency and effectiveness. However, group recommendations were not all taken on board by management which thus had a negative impact as it effected motivation and morale. This type of involvement granted employees with some local level influence over the way in which work is undertaken, therefore Lewis et al (2003) suggests that this type of direct involvement is capable of leading to a higher level of employee influence in comparison with the communicative involvement explored previously. However this influence is very localised and may be more “illusionary than real” (Lewis et al, 2003) and therefore could be a tokenistic way of involving employees in order to increase their motivation and commitment levels.

Balance of Power

This example demonstrates that the scope of decisions subject to employee involvement is limited to task-level issues; these initiatives therefore generate only a low level of employee influence; to the point at which any influence is granted, the locus is restricted to work based decisions. Employee involvement schemes “extend little or no input into corporate or higher level decision making” (Hyman and Mason 1995, 22). Marchington et al (1992) suggest that any access to higher order decisions is restricted to top-down information provision. Townley (1994) describes how involvement is about exercising management prerogative and is an information provision aimed instead at generating employee attitudes that are congruent with those of managers.

Information through involvement schemes such as the dissemination of information, offers employees very limited influence and are thus are “soft on power” (Blyton and Turnbull, 2004, 272). This is a sharp contrast to the nature of strategic or operational decisions that are intended to be the subject to employee participation. The intention behind such involvement initiatives is to develop employee cooperation, commitment and contribution, but not to share power (Schuchman, 1957; Poole, 1975; Kessler and Bayliss, 1998), and concerned with generating employee attitudes that are congruent to those of the managers (Marchington and Wilkinson, 2000).

It may also undermine the standing and influence of the union as management and employees will resolve conflicts internally and thus reduce their power to control the situation. Parker & Slaugther (1988) and Wells (1987) have both condemned the unitarist approach, suggesting that these rights subvert trade unionism. This therefore questions whether involvement is sufficiently representing the needs of the employees. Management’s right to make decisions is not subject to any formal regulations and thus employees do not exercise any right of veto; thus limiting again employee power.

Cohen-Rosenthal & Burton (1993) and Bluestone & Bluestone (1992) however both celebrate employee involvement as an important aspect of workplace rights by expanding the workers voice. Freeman and Kleiner (2000) also report findings that those employees who have involvement feel satisfied and have benefited by having greater influence on their job. Rose (2008) cites the WERS 1998 report; one of the most significant conclusions concerning employee voice is that no matter how much management initiated involvement practices proliferate and are emphasised, employee perceptions of fairness in relation to decision-making depend heavily upon union recognition and representation.

The ‘Third’ Way: New Labour 1997-Present

Government Policy

Since 1997 trade union membership has continued to decline from 7.801 million to 7.473 million in 2006 (Certification Office Annual Report, 2007). Howell (2005) describes how the New Labour’s ‘third way’ incorporates the notion of partnership, and embodies the characteristics of inclusiveness and fairness. Smith and Morton (2001) suggest that in some areas New Labour have taken over Conservative policies; veering at times towards individualistic ideology. The DTI (1998) issued a report which described how New Labour believed in order to be economically successful Britain must harness the talents of the workforce to the full. This is to be achieved through trust, consultation, team working and offering people real security.

Consultation within the workplace was introduced as a legal obligation with the introduction of the Information and Consultation Directive (2005). This directive provides all employees with the right to receive information and to be consulted on a range of employment and business related matters. This has enabled organisations to develop their own arrangements however they must negotiate with elected representatives over the consultation arrangement where 10% of employees request it. The directive states that employers are obliged to consult on closure and relocation, significant change in the organisation of the company, major restrictions modifications or extensions of company activity, setting up or ending of long-term relationships with other companies and creation of subsidiaries or holding companies.

Consultation

Dickens and Hall (2003) explain how the new legislations strike a balance between employment protection on one hand and employer prerogative on the other, offering a more integrationist approach. The Employee Relations Act (1999) proposes modernisation of employment relations within Britain with the aim of promoting a new culture of partnership at work. Lewis et al (2003) suggests that this provides the potential for a distinct shift in the balance of power in favour of the employees. Smith and Morton (2001) argue that the legislation has not, however, altered proposals significantly in response to promoting and strengthening workers collective organisation and individual rights.

This formal framework for informing and consulting employees may encourage employers and employee representatives to work “in a spirit of co-operation rather than conflict” (Rose, 2008, 335). “Information and consultation is an essential part of a partnership agreement” (Gennard, 2002, 593). Smith and Morton (2006) suggest that these partnership agreements entrench employers’ power and suggest that these changes towards the partnership paradigm should extol the benefits of new, less conflict prone relationships between employers and trade unions. Consultation is about collectivism but using consultative methods, such as team briefings and consultative committees, which aim to get the collective on board and loyal to the company.

When considering the effectiveness of consultation with regards implementation, Millward et al (2000) indicate that only 3 out of 10 consultation committees engaged in both consultation and bargaining. Cully et al (1999) found that, where consultative arrangements exist, employee participation was also very restricted in both degree and scope. Consultation therefore appears be more indicative of employee involvement ideologies rather than that of employee participation. In order to fit with the directive, Wilkinson et al (2006) report that managers are implementing schemes which are more focused towards information not consultation.

Consultation in Practice

Consultation is evident at The University of Hull by way of the staff-student committee. Student representatives are present at the committees in order to discuss and consider matters which directly affect the collective student population. The student representatives have the potential to comment upon events, in two-way communication, relating to academic or administrative matters, before final decisions are taken by management. This joint form of consultation is, as identified by Farnham and Pimlott (1995), that of classic consultation. Management will make the final decision within the classic consultation process, and therefore ultimately have a higher level of power to that of the student representatives.

After interviewing a sample of forty students at the university, the consensus is that students are not aware of this student-staff committee. Students do not know who their representatives are in order to air views and concerns, or exactly what matters are discussed at the committee. This therefore questions whether these committees are really representative of the staff and student population. Eleven of the students interviewed had heard of the committee; however none of these students knew the name of the representative in order to get in touch to voice their opinions. There is no dissemination of information prior to the meeting or as a follow-up which would generally be a requirement within the consultation process.

The key question is therefore the extent to which these consultative committees permit participation or influence in the decision-making process. It may be that they are a tokenistic form of involvement in order to gain student confidence and commitment and get students on board with the university decisions and policies. The university, however, is not obliged to act upon these suggestions and consequently students do not appear to have any power over management in order to influence decisions.

Balance of Power

Cox et al (2006) comment upon the arrival of the legislation and suggest that the regulations provide for both direct and indirect consultation. This therefore enforces employer power by way of deciding on the best ways of implementation. Hall (2005) suggests that while managers may ‘buy into’ a notion of information-sharing policies which reinforce togetherness, they are much more reluctant to embrace processes based on consultation as these threaten their prerogative (Hall, 2005). Regulations do not appear to be accomplishing a way of ‘true’ consultation. Employees are concerned that these information and consultation arrangements are not addressing their interests and are therefore an ineffective way for employees to voice their opinions (Gollan, 2005). Management are only obligated to consult which consequently means that they could dictate decisions to employees which may have already been decided upon.

The scope for employees to participate in decision-making will further be constrained by the restricted presence and strength of trade unions. Consultation committees may contribute to the decline of trade unions even further, with well established consultation committees taking on the role of the union. Kersley et al (2006) addresses this issue, considering the effectiveness of voice mechanisms from the employees’ perspective. The study reveals that perceptions of fairness and fair treatment were positively associated with union channels of communication and a well-established union presence.

Dundon et al (2006) suggest that this new statutory framework does provide potential levers for employees to exert some pressure. Pateman (1970) argue that high-level consultation is the only level at which management will take the workers views seriously and are thus more likely to modify plans accordingly. This therefore provides the worker with a high level of power and influence over the employer. However within low-level consultation employees have little power and influence; resembling that of employee involvement. Wilkinson et al (2006) explain that any organisation that does not have formally approved information and consultation agreements could be vulnerable to having the regulations’ standard for informing and consulting employees imposed upon them. Employees therefore have the power, should 10 per cent of employees agree, to make this request. Employers would then be required to negotiate new arrangements and as a consequence this gives power back to the employee.

Beardwell and Claydon (2007) suggest that the new directive allows systems for employee representation however the degree of participation permitted through this approach falls short of power sharing.

Conclusion

This essay has provided a critical understanding of a contemporary issue within employment relations. The essay aimed to answer the question ‘have employees lost their voice?’ by considering the mechanisms of employee participation and involvement within the decision-making process. Dunlop’s (1958) Industrial Systems Model was considered and implemented throughout the essay due to its importance within the employment relations environment. Various component parts of this model were analysed along with the extent to which they interact with each other within organisational decision-making. The essay then analysed the balance of power between each of the actors in order to consider how the power and influence of each impacts upon employee participation and involvement. Organisational examples were included in order to apply the theories within a real business context.

The ideologies of the two main political parties within Britain were considered in order to analyse their opposing interests of the actors and how these have changed over the years. These political changes have impacted upon the representation of employees and their ability to influence decision-making within the workplace. It is evident that during the collectivist ideologies of the Labour government, employees had power and influence over the employers by way of employee participation. Power and influence then shifted during the individualist ideologies of the Conservative government; favouring employee involvement and employer prerogatives, resulting in a decline of employee influence. Currently, the New Labour ideologies have favoured a more integrationist approach and encouraged equal power share between employees and employers. The introduction of the Information and Consultation Directive (2005) has encouraged employee voice through methods of consultation, and at the same time provided employers with the flexibility on how to implement this.

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