The Future Direction of Employee Relations

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"The recent strike by Royal Mail workers has been unhelpful and will do nothing to solve the company's problems." Critically discuss this statement by making reference to appropriate theories.

The Royal Mail (RM) is the national postal service for the United Kingodm, it was founded in 1666, and is a public limited company owned by the British government, in affect a Quango. 'The RM is responsible for universal mail collection and delivery in the UK. Letters are deposited in a pillar or wall box, taken to a post office, or collected in bulk from businesses. Deliveries are made at least once every day except Sundays and Bank Holidays at uniform charges for all destinations within the UK. It was not until 2006 that the RM lost its 350 year monopoly' (Wikipedia 2010). A year later Industrial action took place over pay, conditions and pensions. This action was repeated more recently in 2009. In this essay I will touch on the main reasons for this industrial action by postal workers and discuss whether or not it will help RM's problems, looking deeper into the organisations structure and culture.

For years as the RM operated within a monopoly it was a good source of income for the Government of the day, due to this over the decades all profits were creamed off and reinvestment never took place to help modernise the RM. While globalisation meant the world around the UK was forever evolving, global postal services were emerging with more hi-tech and profitable services, benefiting from larger economies of scale. These two factors combined meant when the postal market became derestricted in 2006 RM had a lot of catching up to do with and no money to do it with; leading to a wave of cost cutting by RM as they tried to become competitive, becoming more automated and cutting jobs.

If you look back through RM's history not much has changed about how the organisation is structured, how they operate and their culture as an iconic British service. They have their own post boxes, their own trademark colour and brand, these have remained constant for decades…that is up until recently. As soon as RM came into contact with the full effect of globalisation in the form of multinational cross continental efficient postal services, culture and structure took a back seat. Run now by managers looking for bonuses and trying to increase competitiveness, employee relations became strained as disillusion and conflicts of interest became apparent between workers and management.

'Globalisation is the notion that countries are becoming economically, politically, technologically and culturally closer to each other.' (Knights and Willmott 2007: 538) Over the last two decades the internet and improving technology has enabled global communication to be instantaneous; this enables organisations and people to send information across the globe free and quickly. This causes organisations such as RM a problem and decreased demand for postal services, whereas firms outside the UK have adjusted to this and increased their efficiency and delivery speed, RM has been in the stone age for far to long, with resources outdated and obsolete. However on the other hand globalisation has swept in a new era of online shopping, these goods bought online need to reach their buyers, so package and parcel delivery demand has increased, its now up to RM to adapt to the new market demands, by restructuring and changing their decades of culture.

Management practices changed as new goals and objectives were formed, 'this put pressure on traditional management styles. Organisational structures and cultures are becoming increasingly complex, exacerbating challenges of co-ordination. Boundaries between professional specialisations are becoming blurred, complicating decision processes'. (Suddaby, 2008:2).

Organisational culture provides meanings for routine organisational events, thereby reducing the amount of cognitive processing and energy members need to expend throughout the day. An organisations culture can be something it 'has' or something it 'is'. Management can use an organisations culture to guide workers into making rational decisions. Smircich (1983:343) said that 'a culture is something an organisation has'. In essence Smircich believed that if an organisation had a positive culture that was in line with an organisation's objectives, employee's choices regarding an organisation's processes would become rational. It would create an identity that all employees belong to and work for rather than against, allowing managers to steer employees in a chosen direction. RM 'has' an engineered culture. (Jackson and Carter 2000:27). Within a mainstream structure managers at the top are believed to impose values that 'rule out particular courses of action or narrow the range of options for a decision' (Knights and Willmott, 2007:348). The broad alternative or competing perspective on organisational culture is that culture is something that an organisation 'is'. Meek (1988:459) said 'most anthropologists would find the idea that leaders create culture preposterous: leaders (according to anthropology) do not create culture, it emerges from the collective social interaction of groups and communities.' RM believe a 'has'type of culture will inevitably improve their bottom line.

However by controlling workers actions and behaviour by enforcing a culture, RM has left workers without a way of expressing any dissatisfaction without taking group action, they feel they have to 'put up and shut up'. A lack of choices for workers is what was intended by RM to increase productivity and decrease the amount of decisions made by workers; however this has backfired as workers become so dissatisfied it leads to ultimatums between RM and the Communication Workers Union (CWU) and therefore strike action. Striking is a last resort however because of lost income for the workers and a detrimental effect on relationships with both employers and customers. However workers have needs, both financial and psychological that has to be fulfilled to wish to work. Therefore if workers are dissatisfied industrial action and strikes will take place. Peters and Waterman are firm believes in 'is' cultures and summed up their views on the 'has' perspective by stating 'All that stuff you have been dismissing for so long as the intractable, irrational, intuitive, informal organisation can be managed. Clearly, it has as much or more to do with the way things work (or don't) around your companies as the formal structures and strategies do'. (Peters and Waterman, 1982:11) RM has put too much emphasis on controlling their culture; as opposed to listening to their workforce and realising it does not work.

On the other hand as Meek stated earlier, it may not be wholly RM's managers fault, an organisations culture is also decided by the employees. 'Culture is shared between organizational members; it is seen to provide a "natural" force for social integration' (Meek, 1998, 455). If therefore RM's workers share some of the responsibility for RM's culture today, should they be taking strike action and would this not make it worse? Yet this negative culture felt by RM's workers is exactly why they are taking strike action they are not happy with the 'modernisation' culture, thrust upon them by management. If they are indeed partially responsible and now that the situation has gone out of their control and not to their liking so going on strike, then they are making the situation worse. Striking for the sake of regaining control would be bad for RM as a whole, both employers and employees alike. It makes them more unproductive amplifying the situation. In 1973 Pettigrew stated that he thought politics and bureaucracy was as much a part of an organisation as it was society and government. In which case problems within an organisation are quite possibly inevitable, however by forcing changes in culture upon workers and trapping them RM management have made it worse.

From a workers prospective if they see the organisation they work for publishing profits that have doubled over a year, they are going to feel they need compensating. Workers feel RM's decisions and culture changes have cost them job security, flexible hours, pay and quality of life. Therefore they would strike to fight for a better deal. However this could just be workers being unreasonable and greedy. If we look at it from RM's point of view, they have produced increased profits, does this not therefore mean that the organisation is functioning correctly and efficiently and that the imposed culture by management has worked. Therefore should RM change at all, if it is working and they are becoming competitive, in the long run the workers will realise their jobs are safer with a more productive organisation. Meaning the strikes are not solving the companies problems but making them worse.

Organisational structure is defined as 'the ways in which it divides its labour into distinct tasks and then achieves coordination between them' (Mintzberg, 1979:2). Because RM has been set in its ways for so long not having to change its structure it has become redundant. It's difficult adjusting to changing times and a faster pace of business. Adam Crozier, Chief Executive of RM is reported as saying in an article by the Guardian Online, "Change is difficult for everyone but Royal Mail has no alternative but to change and modernise if it is to compete in today's highly competitive communications market and keep on delivering the postal service on which so many depend," (Thursday 10 December 2009). This shows just how much the RM must change to compete with competitors if the chef executive is publically acknowledging it.

RM has a very top heavy structure and the balance of power in unevenly distributed so all the power is at the top and the workers get little say in anything, this is a very classical approach to organisational structure. This makes workers feel like they get the raw end of the deal, and resent management. Organisational structures are defined by 'the ways in which it divides its labour into distinct tasks and then achieves coordination between them' (Mintzberg, 1979:2). As RM is so mechanical in its operations a hierarchical and administrative structure would work well. However if the structure was changed and distribution of power more balanced, this would not only affect structure of RM but also the culture as employees would feel they have more responsibility, and therefore once given more responsibility work harder.

'Economists have long focused attention on strikes as classic examples of breakdown in collective bargaining. A strike can be viewed as an investment - giving up of current resources in the hope of gaining larger returns in the future' (Davidson et al. 1988:387). By striking they hope RM will meet their demands and by doing so they will work more productively and therefore they argue RM profits and competitiveness should be maintained. This leads into the case of globalisation, while structure and culture of RM are important; surviving in a now free market is the aim of the game. Firms such as FedEx and DHL have been able to grow unhindered and with investment for years, allowing them to benefit from greater economies of scale and more efficient services. Strikes and poor service in 2007 led to RM loosing its second largest contract with Amazon, this shows how strikes can cause RM's problems to get worse. Amazon would now have the opportunity to go to a competitor to deliver its parcels, competing directly with Parcel Force worldwide, RM's parcel delivery service. As 'competition between firms is increasingly vigorous the balance is disturbed between commercial and ethical / professional values' (Hitt et al, 2006: 43). When RM realised it had to become more competitive, it cut costs to be able to offer lower prices. This cost cutting led to a restructuring and investment in machinery such as sorting machines that caused the redundancy of nearly 30,000 jobs. This may be considered unethical however it does increase RM's competitiveness and therefore secures the jobs of all the rest of the workers.

RM situation is out of its control in many respects, mainly due to the governments mishandling of the organisation when it was state owned. Every organisation during a recession is looking to cost cut RM is no different, but they do so to survive to enable others to keep their jobs and once business picks up they can rehire people. RM would argue that pay rises are not possible as it would mean more redundancies, however it is interesting that RM's chief executive Adam Crozier is on the highest wage of any government employed individual outside the banking sector, e.g. Northern Rock and RBS. Workers can be perceived as part of the problem as they ask for higher wages and better conditions in a time when RM has to concentrate on spending less money and being more efficient. The timing is the worst possible. By entering into the argument now and RM expectedly saying no to most of the demands, it forced the CWU to take industrial action, as they were left with no alternative. At the time on negotiations the media was very divided but given the environmental factors of the economy once RM put an offer on the table, support shifted towards the RM not the CWU, is was written 'that the union should accept the "perfectly fair and reasonable" offer which was on the table and return to work. Warning the row will cause "irreparable damage" to the Royal Mail if it goes on.' (London Evening Standard, 11th October 2007).

CWU industrial action will cause higher costs for RM and so therefore more cost cutting measures will have to be taken to recoup the losses; starting a vicious cycle that does not benefit either the workers or RM. If the workforce took a more positive stance and worked harder, being more productive, increasing performance then the RM will have more money from increased revenue to reinvest in restructuring and expansion, allowing more jobs, better pay and working conditions.

The RM has been hit just as much as any other organisation during the recent recession but they have also had to deal with external factors out of their control such as globalisation, modernisation, and increased competition on all service lines from parcels to couriered postage. Therefore restructuring undertaken is understandable and the best thing for RM as a whole, if they did not change their structure they would not be able to exists as an organisation. You could go as far as to say without their tight grip on RM's culture they could be producing much more inefficiently, and be in a much worse predicament. It has however backfired, and workers are rightly angry and feel undervalued for the hard work they do. Culture in an organisation is a bridge between management and workers, and it needs to be formed equally rather than dictated, therefore both parties get what they need.

RM has written to its workers and the CWU, explaining the situation and asking if workers would mind moving to different locations, positions or areas of the business, or take redundancy. "We want to work with our people so that we take into account their wishes and preferences as Royal Mail continue to modernize and transform its operations to meet the challenges of falling mail volumes and intensifying competition. In doing so, still having to expand with globalisation as it is part of the nature of the market" (The Telegraph - Finance, 6th February 2009). Despite this effort industrial action still took place and this causes problems with both the finances and public trust in the service RM provides.

The strike in 2009 was not the first by any means, as there have been many strikes over the years; it demonstrates that there are serious underlying problems with both the structure and culture of the RM. The CWU always give the same reasons and demands, about better working conditions and higher pay, they are not going to continually go on strike unless it was something they believed in. Chapman states that management 'often fails to learn from past mistakes and therefore continue to repeat avoidable errors' (Chapman, 2003:96). This is evidence of a poor structure and culture within an organisation, that communication is so poor past mistakes are not recognised and avoided. Unfortunately the strikes make the situation worse in the short run; they cause disruption that leads to loss of confidence in services and therefore contracts and revenue to competitors. This builds up and will not help in the long run when more job losses are caused by cost cutting, paying for strikes. However striking is now the only way to be heard by management at RM, they have formed a culture with such a grip there is no avenue for discussion or feedback on workers experiences. 'Long term commitment and motivation on the part of workers will be more likely to be secured if management are prepared to offer jobs that are stable, well paid, interesting and ones in which employees' views are adequately represented' (Blyton & Turnbull, 2004:365).

Bibliography:

  • Blyton, P. and Turnbull, P. (2004) The Future Direction of Employee Relations. The Dynamics of Employee Relations, 3rd Edition. Houndsmills, Basingstoke: Palgrave Macmillan, pp. 361-376.
  • Chapman M. R (2003) In Search Of Stupidity: Over 20 Years Of High Tech Marketing Disasters, Berkeley, CA: Apress
  • Hitt, M. A., Bierman, L., Uhlenbruck, K., & Shimizu, K. (2006). The Importance Of Resources In The Internationalization Of Professional Service Firms: The Good, The Bad And The Ugly. Academy Of Management Journal. 49, 1137-1157.
  • Jackson, N. And Carter, P. (2000) 'Rethinking Organisational Behaviour'. Pearson Education Limited. First Publication. Financial Times: Prentice Hall.
  • Knights, D. And Willmott, H. (2007) 'Introducing Organisational Behaviour & Management'. London. Thompson Learning 2007.
  • Meek, V. L. (1988) 'Organisational culture: Origin and weaknesses', Organisational studies 9(4):453-473
  • Mintzberg, H (1979) The Structuring Of Organizations: A Synthesis Of The Research. Prentice-Hall : NJ
  • No Reporter Named (2007) PM's post strike remark 'unhelpful', The London Evening Standard, 11th October 2007
  • Peters, T. J. Watermanm R. H, Jr. (1982) In Search Of Excellence: Lessons From America's Best-Run Companies, New York: Harper And Row
  • Smircich, L. (1983) 'Concepts Of Culture And Organizational Analysis'. Administration Science Quarterly. 28(3): 339-358
  • Suddaby, R. Greenwood, R. Wilderom, C. (2008). Introduction To The Journal Of Organizational Behavior's Special Issue On Professional Service Firms: Where Organization Theory And Organizational Behavior Might Meet. Journal Of Organizational Behavior. 29, 899-994
  • Wearden. G. (2009) 'Royal Mail profits rise despite postal fall', The Guardian online, 10 December 2009
  • Wikipedia 2010 ,,Royal Mail" http://en.wikipedia.org/wiki/Royal_Mail Accessed: 08/01/2010.

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