Human Resources Human Resources ManagementManagement

T.7. Employment RelationsT.7. Employment Relations

D. BorisovaD. Borisova

2

CONTENTSCONTENTS

1.1. Managing the employment relationship: Managing the employment relationship: concepts and theoriesconcepts and theories

2.2. The decline of joint regulation in UKThe decline of joint regulation in UK

3.3. Unionization in BulgariaUnionization in Bulgaria

4.4. Employment relations in non-union firms Employment relations in non-union firms

5.5. HRM and the “new” employment HRM and the “new” employment relationsrelations

6.6. Partnership or confrontation?Partnership or confrontation?

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DefinitionDefinition

““Employee relations (ER), or industrial Employee relations (ER), or industrial relations, are those areas of the relations, are those areas of the employment relationship in which employment relationship in which managers deal with the representative managers deal with the representative of employees rather than managing of employees rather than managing employees directly as individuals”employees directly as individuals”

Edwards, 1995Edwards, 1995

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Management frames of Management frames of referencereference

The main assumptions of managers towards The main assumptions of managers towards the labor force are:the labor force are:

1.1. UnitaristUnitarist2.2. PluralistPluralist

Differences between the three in beliefs Differences between the three in beliefs about:about:

1.1. Nature of organizationsNature of organizations2.2. The role of conflictThe role of conflict3.3. The task of managing employeesThe task of managing employees4.4. ““Involvement” or “participation” of Involvement” or “participation” of

employeesemployees

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Unitarist frame of referenceUnitarist frame of reference► Natural state of organizations is harmony and co-Natural state of organizations is harmony and co-

operationoperation► All employees belong to one team and work All employees belong to one team and work

together to achieve business goalstogether to achieve business goals► Conflicts arise from misunderstanding of goals Conflicts arise from misunderstanding of goals

and should be prevented by better and should be prevented by better communicationcommunication

► Other conflicts are caused by troublemakers and Other conflicts are caused by troublemakers and unwantedunwanted

► Unilateral regulation (the right to manage – Unilateral regulation (the right to manage – “managerial prerogative”) without help from “managerial prerogative”) without help from unionsunions

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Pluralist frame of referencePluralist frame of reference

►Organization consists of variety of groups Organization consists of variety of groups with divergent interestswith divergent interests

►Conflicts are inevitable Conflicts are inevitable ►They are institutionalized and resolved by They are institutionalized and resolved by

negotiations, collective bargaining, negotiations, collective bargaining, consultations…consultations…

►Trade unions have a legitimate role as the Trade unions have a legitimate role as the collective representative of employeescollective representative of employees

►The joint regulation of ER (i.e. it is not only The joint regulation of ER (i.e. it is not only managerial prerogative)managerial prerogative)

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Reasons to join trade unionsReasons to join trade unions

►Support workers when they have Support workers when they have problems at workproblems at work

► Improve pay and working conditionsImprove pay and working conditions►Workers believe in unionsWorkers believe in unions►Unions provide free legal advices to Unions provide free legal advices to

employeesemployees►Most people at the workplace are Most people at the workplace are

membersmembers

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Roles of trade unionsRoles of trade unions

►Negotiations with employers about pay Negotiations with employers about pay and non-pay issuesand non-pay issues

►Participation in collective bargaining on Participation in collective bargaining on behalf of employeesbehalf of employees

►Serve as communication and Serve as communication and information channel for employeesinformation channel for employees

►Participation in performance appraisals, Participation in performance appraisals, creation of payment systems, creation of payment systems, recruitment and defining training needsrecruitment and defining training needs

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Decline of trade unions in UK in Decline of trade unions in UK in terms of:terms of:

►Union presence (one or more union Union presence (one or more union members in a workplace)members in a workplace)

►Union membership density (percentage Union membership density (percentage of employees who are union members)of employees who are union members)

►Union recognition for negotiating pay Union recognition for negotiating pay and conditions of employment and conditions of employment

►Coverage of collective bargainingCoverage of collective bargaining► Joint consultative committees Joint consultative committees

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Decline of joint regulation of the Decline of joint regulation of the ER in UK 1980-2000ER in UK 1980-2000

union membership:union membership:►19791979 12 639 00012 639 000 53.4% of workforce53.4% of workforce►20032003 7 068 000 7 068 000 26 % of workforce26 % of workforce

►““End of industrial relations” Purcell, 1993End of industrial relations” Purcell, 1993

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Falling union density 1980-98Falling union density 1980-98Millward et al 2000Millward et al 2000

SectorSector//

yearyear

19801980 19841984 19901990 19981998 20042004

PrivatePrivate 56%56% 43%43% 36%36% 26%26% 22%22%

PublicPublic 84%84% 81%81% 72%72% 57%57% 64%64%

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THE DECLINE IN THE LEVEL OF THE DECLINE IN THE LEVEL OF UNION RECOGNITIONUNION RECOGNITION

Cully et al 1999, Millward et al 2000Cully et al 1999, Millward et al 2000

►Widespread phenomenon in the Widespread phenomenon in the private sectorprivate sector

►Particularly affected smaller Particularly affected smaller workplaces and newer workplacesworkplaces and newer workplaces

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The declining coverage of The declining coverage of collective bargaining collective bargaining Cully et al 1999Cully et al 1999

19841984 19901990 19981998All All establishmenestablishmentsts

71%71% 54%54% 41%41%

Private Private manufacturinmanufacturingg

64%64% 51%51% 46%46%

Private Private servicesservices

41%41% 33%33% 22%22%

Public sectorPublic sector 95%95% 78%78% 63%63%

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Reasons for the declineReasons for the decline

► Social trends (greater individualism) Social trends (greater individualism) ► Economic trends (rising real incomes)Economic trends (rising real incomes)► Demographic trends (changing composition Demographic trends (changing composition

of the workforce)of the workforce)► Political trends (the role of the State as Political trends (the role of the State as

public policy maker, legislator and public policy maker, legislator and employer)employer)

► Business trends (changes in the Business trends (changes in the management of employment relations)management of employment relations)

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Reasons for the declineReasons for the decline► Changes in industrial relations legislation and the Changes in industrial relations legislation and the

European Work Councils (1994)European Work Councils (1994)

► Changing nature of UK economy: balance of Changing nature of UK economy: balance of power, increase in the service sector and power, increase in the service sector and reduction of large manufacturing plants, manual reduction of large manufacturing plants, manual work and public sector; less unemployment; war work and public sector; less unemployment; war for talentfor talent

► Collective bargaining is disappearing with Collective bargaining is disappearing with individual bargaining becoming more widespreadindividual bargaining becoming more widespread

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Change in influence of trade unions on Change in influence of trade unions on organisations during the last three years organisations during the last three years

(CRANET, 2003 data)(CRANET, 2003 data)

0

10

20

30

40

50

60

70

80

France

Spain

Belgium

Italy

Sweden

Estonia

Hungary

Slovakia

Turkey

Bulgaria

USA UK

Increased Same Decreased No influence

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Change in influence of trade unions in Change in influence of trade unions in Bulgaria on organisations during the last Bulgaria on organisations during the last

three years three years (CRANET data)(CRANET data)

21

11 10.2

51

3836.3

2428

10.8

18

33.1

0

10

20

30

40

50

60

Increased Same Decreased No Influence

199619992003

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Proportion of total number of employees Proportion of total number of employees who are members of a trade union who are members of a trade union

(CRANET, 2003 data)(CRANET, 2003 data)0% 1-10% 11-25% 26-50% 51-75% 76-100%

Estonia 65.2 13.9 7.8 4.3 2.6 0.9Slovakia 41.6 5.5 6.3 14.1 14.1 7.8Greece 32.4 13.3 8.1 11.6 10.4 21.4Hungary 32.2 8.5 11.9 18.6 18.6 3.4Cyprus 13.1 2.4 2.4 4.8 6 70.2Finland 0.3 0.3 1.4 5.2 18.3 67.6Sweden 0 0.8 2.6 6.1 19.5 66.1Denmark 0 2.5 4.9 10.7 23.3 53.9EU Avg. 15.5 12.5 10.8 13.4 14.7 20.7Turkey 49.4 1.3 3.1 5.6 16.9 20.6Bulgaria 26.7 6.7 8 10.7 18.7 15.3USA 57 8.2 11.7 9.4 6.6 5.5UK 26.8 17.3 10.2 16.3 12.8 6.8

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Proportion of organizations in Bulgaria Proportion of organizations in Bulgaria recognizing trade unions as participants recognizing trade unions as participants in collective bargaining in collective bargaining (CRANET, 2003 data)(CRANET, 2003 data)

75

49.7

2236.9

0

20

40

60

80

100

Yes No

19962003

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The Partnership ApproachThe Partnership Approach

►Fairness at work - the right of all Fairness at work - the right of all stakeholders to have a say in any stakeholders to have a say in any decisions that could affect them directly:decisions that could affect them directly: The ownersThe owners The managementThe management The employeesThe employees Trade unionsTrade unions And also the customers, the suppliers, the And also the customers, the suppliers, the

Government, the community…Government, the community…

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Definitions for “Partnership”Definitions for “Partnership”

► ““Employers and employees working together Employers and employees working together jointly to solve problems” (ACAS, 1997)jointly to solve problems” (ACAS, 1997)

► ““Key components might include high degrees Key components might include high degrees of communication, personal development, of communication, personal development, employment security and emphasis on ethical employment security and emphasis on ethical people management” (Beardwell, 1998)people management” (Beardwell, 1998)

► ““Employment security and new working Employment security and new working practices; giving employees a voice in how practices; giving employees a voice in how the company is run; fair financial rewards and the company is run; fair financial rewards and investment in training” (Monks, 1998)investment in training” (Monks, 1998)

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The “Psychological Contract”The “Psychological Contract”

► The expectations that each party holds with The expectations that each party holds with regard to the otherregard to the other

► Includes the perceptions for:Includes the perceptions for: Fair treatmentFair treatment Motivation and LoyaltyMotivation and Loyalty Job securityJob security

► The “New” Psychological Contract: from job The “New” Psychological Contract: from job security to employment security and security to employment security and employability through more development employability through more development opportunities for the employeesopportunities for the employees

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Management Styles Management Styles (Handy, 1985)(Handy, 1985)

►Coercive: people are motivated to make Coercive: people are motivated to make an effort in order to avoid punishmentan effort in order to avoid punishment

►Calculative: explicit connection between Calculative: explicit connection between effort and rewardeffort and reward

►Cooperative: individuals identify with Cooperative: individuals identify with the goals of their organisationsthe goals of their organisations

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Participation or Involvement?Participation or Involvement?

► ParticipationParticipation: aims at changing the basic : aims at changing the basic authority structures in the company by authority structures in the company by legislating employee participation in the legislating employee participation in the boardsboards

► Involvement:Involvement: aims at getting support and aims at getting support and commitment of all employees in an commitment of all employees in an organisation to managerial goals, thereby organisation to managerial goals, thereby reinforcing a sense of common purpose reinforcing a sense of common purpose between management and employeesbetween management and employees

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Non-union ER Management Non-union ER Management StylesStyles

► Sophisticated Human Relations (a union Sophisticated Human Relations (a union substitution approach): invest in staff substitution approach): invest in staff development and wide range of HRM development and wide range of HRM policies (Marks & Spencer)policies (Marks & Spencer)

► Paternalism: seek the loyalty and Paternalism: seek the loyalty and commitment of staff through consideration commitment of staff through consideration for employee welfare (McDonalds)for employee welfare (McDonalds)

► ““Bleak House”: cost minimization and Bleak House”: cost minimization and avoidance of unions (Ryanair)avoidance of unions (Ryanair)

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Unions substitution by HR Unions substitution by HR through:through:

►Alternative procedures, such as: Alternative procedures, such as: no redundancy policyno redundancy policy single statussingle status equal opportunities policyequal opportunities policy merit paymerit pay performance assessmentperformance assessment

►Strong emphasis on internal Strong emphasis on internal communicationscommunications

►Grievance systemGrievance system

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UK Employment Relations Act UK Employment Relations Act 19991999

► Central aim: “replace the notion of conflict Central aim: “replace the notion of conflict between employers and employees with between employers and employees with promotion of partnership in the long term”promotion of partnership in the long term”

► Statutory route for union recognition by Statutory route for union recognition by introduction of works councilintroduction of works council

► Extension of rights for individual employeesExtension of rights for individual employees► National minimum wageNational minimum wage► Closer engagement with social policies of EUCloser engagement with social policies of EU

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European Works Councils European Works Councils (1994)(1994)

► Employees should be properly informed and Employees should be properly informed and consulted about major issues that will have impact consulted about major issues that will have impact on them (the economic status of their employer and on them (the economic status of their employer and any proposed changes in it)any proposed changes in it)

► Establishments with 50 or more employees are to Establishments with 50 or more employees are to have EWCshave EWCs

► The consultations include:The consultations include: Provision of timely and accurate informationProvision of timely and accurate information Opportunities for employees to put forward their viewsOpportunities for employees to put forward their views Managerial response to their views together with reasons Managerial response to their views together with reasons

for the responsefor the response An attempt to reach agreement on the decisions An attempt to reach agreement on the decisions

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Partnership or confrontationPartnership or confrontation

►Partnership: TU, HRM and the “mutual Partnership: TU, HRM and the “mutual gains enterprise”gains enterprise”

►TU, employers and “partnership TU, employers and “partnership agreements” (Tesco, Barclays, Legal agreements” (Tesco, Barclays, Legal and general…)and general…)

►Anti-unionism and union suppression: Anti-unionism and union suppression: “you can’t have union”, “keeping “you can’t have union”, “keeping unions out of McDonalds, unions out of McDonalds, Marks&Spencer, IBM…”Marks&Spencer, IBM…”

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Employee involvement Employee involvement techniques techniques

Category Category Areas for actionAreas for action

Sharing informationSharing information ►Team briefingTeam briefing►Internal publicationsInternal publications►Company videosCompany videos►Electronic news systemsElectronic news systems

ConsultationConsultation ►Staff suggestion schemesStaff suggestion schemes►Staff opinion surveysStaff opinion surveys►Works committees health and Works committees health and safety committeessafety committees

Financial participationFinancial participation ►Profit-related payProfit-related pay►Employee share schemesEmployee share schemes►Share incentive plansShare incentive plans

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Commitment to qualityCommitment to quality ►Continuous improvementContinuous improvement►TeamworkTeamwork►Total quality managementTotal quality management►Quality circlesQuality circles►Self-managed project groupsSelf-managed project groups►Employee award schemesEmployee award schemes

Developing the individualDeveloping the individual ►Performance managementPerformance management►Staff appraisal schemesStaff appraisal schemes►Employee development Employee development programmesprogrammes►Investors in PeopleInvestors in People►A qualified workforceA qualified workforce

Beyond the workplaceBeyond the workplace ►The communityThe community►The environmentThe environment

Category Category Areas for actionAreas for action

Employee involvement Employee involvement techniques techniques

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Tension on the Concept of Tension on the Concept of PartnershipPartnership

► Lack of long-term commitment of managers Lack of long-term commitment of managers working closely with trade unionsworking closely with trade unions

► Extent, to what managers and unions are Extent, to what managers and unions are able to commit fully to a single strategy of able to commit fully to a single strategy of co-operative industrial relationsco-operative industrial relations

► Is the partnership agreement part of a long-Is the partnership agreement part of a long-term strategy to marginalize unions instead term strategy to marginalize unions instead of an alternativeof an alternative

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New Patterns of ER New Patterns of ER (1998 UK ER (1998 UK ER Survey)Survey)

Non-union Non-union HRMHRM

3%3%

Union Union substitutionsubstitution

9%9%

PartnershipPartnership

2%2%

Paternalistic Paternalistic developmentdevelopment

30%30%

Weakening Weakening unionismunionism

13%13%

Strong Strong traditional traditional unionism unionism

14%14%

Bleak HouseBleak House

22%22%Struggling Struggling unionismunionism

3%3%

Industrial Industrial relations relations

conflict 4%conflict 4%

C O L L E C T I V I S M

Unions and negotiations

Unions but minimal negotiations

No unions

0-3 HC

practices

4-7 HC

practices

INDIVIDUALISM

8+ HC

practices

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Conclusion Conclusion ► The managerial perspective: the changing The managerial perspective: the changing

nature of work, HRM and further erosion of joint nature of work, HRM and further erosion of joint regulationregulation

► The union perspective: exploitation and The union perspective: exploitation and inequality in the employment relationship and inequality in the employment relationship and the need for employees to have an independent the need for employees to have an independent representation of their interestsrepresentation of their interests

► The statutory regulations and the compulsory The statutory regulations and the compulsory introduction of EWCs introduction of EWCs

► The business environment: economic, political The business environment: economic, political and social context of employee relationsand social context of employee relations

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Important notice!Important notice!

Please, remember:Please, remember:

Lecture 10 Lecture 10

“ “Equal opportunities and diversity” Equal opportunities and diversity” scheduled for the week of 8scheduled for the week of 8thth of of December December

will be held during the will be held during the same weeksame week,,

on 10on 10thth of December, Wednesday of December, Wednesday, , from 18:30, for from 18:30, for both groupsboth groups A31 and A31 and A32A32