Questions on human resource advantages and bargaining

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According to Michael Armstrong in his book Human resource management practice, he define human resource management as a strategic and coherent approach to the management of an organisations most valued assets: the people working there who individually and collectively contribute to the achievements of objectives. It can also be define as a means of achieving high performance through people. Human resource management sees humans as the most vital assets in the organisation.

Parcel et al (2003) believe that: Intangible assets such as culture, skill and competence, motivation and social interaction between people, teams and business units, are increasingly seen as key sources of strength in those firms which can combine people and firms together.

It is the role of the human resource manger to ensure that, human resource management is effectively carried out in the organisation.

Managers responsible for the success of an organisation are concerned about the effect that

factors in the external environment have upon it.

Although they cannot control the external environment due to its complexity in nature, they need to identify, evaluate and react to those forces outside the organisation which may affect them. There is therefore a need to carry out an analysis of these forces, by an in-depth study of the general environment. The way in which managers attempt to achieve this is by means of a qualitative assessment of signals they receive which are relative to outside influences.

In order to understand the functioning of an organisation as it interacts with its environment,

five key elements have been identified which, taken together, make up the total environment.

These are political, economic, social, technological, environmental and legal/regulatory elements, hence the acronym PESTEL.


Organisations are influenced by government policies such as taxation, political

orientations, legislation, trade unions power. They may attempt

to influence government thinking in these and other relevant areas to their own

advantage by lobbying, providing party funds, etc. In a the case of a dispute, like in the recent situation of the British Airways the human resource management may influence management to increase salaries and other incentives, which might motivate employees and in turn help to prevent strike actions, that are very costly to managers and the organisation as a whole. ABE Manual (corporate strategy and planning)


In the Global economy, exchange rates have an effect and stock markets throughout the world are linked to one another. These affect the ability of firms to compete with overseas markets. Organisations have to operate in conditions of boom and bust (recession) at times.

Interest rates change, tax rates change, the money supply can alter, investment levels

Go up and down, as people try to guess likely future market movements, etc. Energy costs can also play a significant part in business activity. On the other hand the pricing and pay policies of large organisations can affect the wider economy. When there is a boom in the economy it is more likely that the human resource manager will motivate staff, by increasing their bonuses and give them incentives. He can also enhance the skills of its workers by sending them on professional training to make them more efficient. The human resource manager will normally cut down its staff when there is a recession. Motivation and Incentives will normally prevent staff from running to other organisation, when there is competition. Example during recession LLYODS, HSBC, reduced its workforce/personnel. ABE Manual (corporate strategy and planning)


The culture of an organisation is affected by the culture of the society in which it

operates. Changes in lifestyles affect the market and thus the running of an

organisation. Social mobility, demography, family size, etc. can all contribute an effect

on the human resources inputs and the market(s) in which an organisation operates. The human resource manager must take into consideration these changes, and adjust on the age group of it employees, that is the age group of people to be recruited in the organisation. He should be able to ask questions as, do we employ the aging population or the young. Statistics has proven that people do live longer now our days. When recruiting he must take into consideration the equal opportunity act, this will help to prevent conflict in the workplace such as, racial discrimination, sex discrimination, which could adversely affect the output of the organisation. ABE Manual (corporate strategy and planning)


The level and focus of both government and industrial research and development

expenditure have an effect on technological changes in the environment. The nature of

such changes and the speed of technology transfer will have an impact on an

organisation's own technology. Product life cycles, which seem to get shorter and

shorter, particularly in the electronics industry, also play an important role in this area. For example in the introduction of a new technology the Human resource manager will need to recruit and train staff who are able to carry out the operation, they might as well train present staff who are suitable for the task. New technology could also lead to some employees being obsolete for example replacing post - sorters in the post office with a post sorting machine. ABE Manual (corporate strategy and planning)

Environmental factors: With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. Environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. For example tourism industries the human resource manager will go in for temporal employees to meet up with the organisations wealth maximisation, during peak periods like summer and end o year festivities. ABE Manual (corporate strategy and planning)


There are several laws and regulations which do affect business organisation.

Strategies must reflect and take account of legal/regulatory factors. For example in the UK the minimum working age is 14 years old, as the human resource manager you have to make sure that no one below this age is working with the organisation whether directly or indirectly, so as not to violate the law and destroy the reputation of the organisation.

ABE Manual (corporate strategy and planning)

Definition of competitive advantage

Competitive advantages give a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.

The term competitive advantage is the ability gained through attributes and resources to perform at a higher level than others in the same industry or market (Christensen and Fahey 1984, Kay 1994, Porter 1980 cited by Chacarbaghi and Lynch 1999. The study of such advantage has attracted profound research interest due to contemporary issues regarding superior performance levels of firms in the present competitive market conditions. "A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player" Barney (1991) cited by Clulow et al (2003)

Cost leadership

The companies that attempt to become the lowest-cost producers in an industry can be referred to as those following a cost leadership strategy. The company with the lowest costs would earn the highest profits in the event when the competing products are essentially undifferentiated, and selling at a standard market price. Examples of companies following a cost leadership strategy include Ryan Air, and easy Jet, in airlines, and ASDA and Tesco, in superstores. (Lynch, 2003).


The differentiation strategy is When a company differentiates its products, especially from thos of its competitors, these enable charge a premium price for its products or services in the market. Examples of differentiation include better service levels to customers, better product performance etc. in comparison with the existing competitors. McDonalds ,is a good example of a company using the differentiation strategy by its very brand name and brand images of Big Mac and Ronald McDonald. Porter (1980)


Companies employ this strategy by focusing on the areas in a market where there is the least amount of competition (Pearson, 1999). Organisations can make use of the focus strategy by focusing on a specific niche in the market and offering specialised products for that niche. Therefore, competitive advantage can be achieved only in the company's target segments by employing the focus strategy. For example Ferrari car company. (Lynch, 2003)

Achieving competitive advantage is a corporate objective in an organisation, meaning it is the duty and responsibility of all managers, including the human resource managers. As humans play an important role in the organisation, it is the place of the human resource manager to make sure that, jobs are clearly defined, recruitment policies are put in place and right persons are selected for the job. There are however certain practices that he needs to put in place, in order to gain sustainable competitive advantage.

Work Environment

A safe and happy working environment makes the employees feel good about being there, there is a great sense of belonging, and employees are motivated to put in their best, they do not see the organization as their organization, but as our organization. Importance is given to everyone and provided with security that gives them the motivation and incentive to stay with the organization. Internal surveys are carried out to find out if employees are satisfied and if not what they think needs to be changed. .../human-resources/top-ten-hr-practices - India

Open Management

Employees feel motivated and develop enthusiasm when the management opens up to them and discusses the company policies, sales, clients, contracts, goals and objectives. Unlike emplyess no one likes to be kept in the dark,they like to know about whats going on in the company. This encourages them to be more participative in management..../human-resources/top-ten-hr-practices - India

Performance Incentives

Even though it is the job of the employ to perform well in the organization, managers needs to show appreciation for a job well done. Every good performance should be appreciated with bonuses a pat on the back, and other ways to encourage the employees. ..../human-resources/top-ten-hr-practices - India

Performance Feedback

The opinion of everyone in the organization matters, especially for someone who is in a leadership role at any level. Each person in the team is responsible for giving constructive feedback.. .../human-resources/top-ten-hr-practices - India

Employee Evaluation

Every company has an employee evaluation system in place but a good system links individual performance to the goals and priorities of the organization. This works well when achievements are tracked over a year. This ensures a fair and accurate rating of each and every employee. .../human-resources/top-ten-hr-practices - India

Sharing of Knowledge

Capturing, organizing, interconnecting and providing access to organizational intellectual through intellectual and information technologies, such as knowledge organization. This helps to prevent re-inventing the wheel.

Publicize Good Performances

Making public good performance in an organization is a great motivator, as some employees will always perform better than others. Such performances should be highlighted and displayed where other employees can look at them; such as on the display boards and intranet etc. This will encourage others to give their best. A proper system should be set up to make a list of high performances at specific times in a year. .../human-resources/top-ten-hr-practices - India


The management should have discussions with employees to get these ideas out of them. Successful organizations nurture ideas and they understand that employees who are actually working and know the business can provide the best ideas.suggestion boxes is a good idea. .../human-resources/top-ten-hr-practices - India


As well as good performance, recognition has to be made public and what better way than holding ceremonies and announcing to the whole world (the employees), the achievements of a fellow employee. There can be nothing better for an employee than the good feeling from a resounding applause. .../human-resources/top-ten-hr-practices - India

Surprise factor

This surprise doesn't have to be limited to the best performers, but it can be randomly given to others as a motivating factor too. It could be a gift certificate or a small reward of some sort. Anyone can be given this surprise reward. .../human-resources/top-ten-hr-practices - India

Putting all this practices in place will give an organisation and edge over it's competitors and rivals.


Collective Bargaining Defined

Good-faith process between an organization's management and a trade union representing its employees, for negotiating wages, working hours, working conditions, and other matters of mutual interest. To the management, this process presents (usually) one set of people to negotiate with; to the employees, it gives greatly enhanced bargaining-power. Collective bargaining is the fundamental principle on which the trade union system is base. (business Dictionary)

Compensation packages

Sum of direct benefits such as allowance, salary, bonus, commission and indirect benefits such as pension plans, insurance, vocations that an employee receives from an employer. (Business dictionary)

Advantages of Collective Bargaining

Collective bargaining agreements often lead to settlement through dialogue between both parties.

With collective bargaining there is the advantage of settlement through the dialogue process and consensus rather than through confrontations and conflicts. The solution most definitely comes from both parties in dispute, rather than a third party in the case of arbitration. Arbitration because of its win/loss nature may displease one party or even both parties.

The concept of social partnership should strive collective bargaining agreements.

The settlement of disputes through trade union action is sometimes limited by Collective bargaining agreements. Industrial peace is usually guaranteed by such agreements for the duration of the agreements, either more usually on matters covered by the agreement or generally.

Collective bargaining usually has the effect of improving industrial relations. This improvement can be at different levels. The continuing dialogue tends to improve relations at the workplace level between workers and the union on the one hand and the employer on the other. It also establishes a productive relationship between the union and the employers' organization where the latter is involved in the negotiation process.

Most importantly Collective bargaining and consequent agreements tend to stabilise union membership, In societies where there is a multiplicity of unions and shifting union loyalties. For instance, where there is collective agreement employees are less likely to change union affiliations frequently. This is of value also to employers who are faced with constant changes in union membership and consequent inter-union rivalries resulting in more disputes in the workplace than otherwise.

Looking at the advantages of collective bargaining, we may conclude that it limits our ability to compete in the international markets. This is due to the fact that the employees need their employers much more than the other way round. The costs of switching jobs (including the risk of not finding a new job and the loss of job-specific investments) are normally much more significant for the employee, compared with the employer's costs of finding a substitute worker. Moreover, the employer normally has much deeper pockets to sustain struggles than the individual employee. The employment relationship is thus often characterized by inequality of bargaining power.

This inequality, together with the necessarily incomplete nature of

the contract of employment, lead to the inability of individual employees to take part

in decisions that directly affect their lives; employees are commonly subjected to the

control of their employers/managers over different aspects of their work life.

Otherwise put, the employment relationship is characterized by democratic deficits.

By joining forces and acting in concert, workers can rectify this situation, to one

extent or another, since the employer can be expected to be much less nonchalant

about the prospect of losing the work of all her employees (even if only for a limited


A union can also provide some financial backing for a prolonged struggle. By

bargaining collectively employees are thus able to gain some bargaining power -

"countervailing power" to the power of their employer. This does not necessarily

mean that both parties to the negotiations possess equal bargaining power, but the

imbalance of power can be expected to be much less dramatic under a regime of

collective bargaining. And once the bargaining position of employees is improved,

the problem of democratic deficits is also expected to be alleviated.

More specifically, collective bargaining has two separate attributes that can be

considered democratic. One is its "civilizing" impact on employment relationships, or

the subjection of the employer to a "rule of law." Collective agreements commonly

set rules on how workers should be treated, thus limiting the arbitrariness of being

subjected to the complete control of the employer. There are rules on who is entitled

to a raise and other benefits (usually based on seniority); how to evaluate and promote

employees; why and how to discipline and dismiss; and so on.

There are also commonly procedures for arbitration by a neutral third party in case of disagreements. This completely changes the situation of the individual employee, who was previously subject to the whims of his managers, lacking both the contractual right and the

bargaining power to challenge arbitrary decisions. Under a collective agreement,

management decisions must conform to the rules and procedures set out in the

agreement, and accordingly are bound to be less arbitrary. And if they are not, the

union will challenge such decisions in the name of the employee before a neutral

arbitrator. Collective bargaining thus ensures that the employer will not be able to do

anything it pleases (like a ruler in a dictatorship), but will rather be subject to a "rule

of law," albeit privately negotiated, at least to some extent and with regard to some

decisions. This makes the relationship between the employer and its employees much

more democratic.

The second democratic attribute of collective bargaining is found in the ability

it gives employees to voice their views, concerns and demands, and more generally, to

participate to some extent in the self-government of the workplace. Acting

individually, an employee can only convey her dissatisfaction by exiting (and looking

for another job), as most employees have to "take it or leave it." Exit, however, is

hardly a satisfactory option given the risks of loosing job-specific investments and not

finding another job. When organizing collectively, employees have another option to

convey dissatisfaction; together, they can voice their concerns without fear of loosing

their jobs.

It can also be a necessary bridge for politically active workers into higher democratic institutions. But most importantly, self-government - in the workplace as elsewhere - is intrinsically valuable. Indeed, by giving effect to the value of self-determination, it is "the mark of a truly human community." The ability to bargain collectively is thus not merely

instrumental; it is rather an important component of, as well as a mean towards,

human freedom. This explains why the right to bargain collectively is increasingly

being considered a basic human right.

The process of collective bargaining has been criticized for (undemocratically)

giving more weight to those who have more bargaining power because of their wealth

or their specific - often accidental - work environment. Indeed, the voices of large

employers, and of some specific groups of better-positioned employees, are more

strongly heard. But this is hardly unique to the collective bargaining sphere. It is not a

failure of collective bargaining itself, only a failure to correct an injustice that

Characterizes the democratic process at large.

They can change the way their workplace operates, and the way they are

being treated, rather than just quit. The collective voice can be concerned with the

smallest day-to-day actions, or with the broader view on the future and management

of the firm, or even with the yet broader sphere of society at large.1 Indeed, it is

concerned with all of these at the same time. The ability to freely voice concerns is

democratically virtuous in itself, but collective action offers more than that. By

joining forces and threatening to withhold their services together, employees can force

the employer into a framework of (albeit limited) joint government. When the union is

strong enough, decisions on some issues are only taken after negotiations, with the

final outcome representing a compromise between the interests of shareholders (or

managers) and those of the employees. And at least to some extent - often more than

in the larger political sphere - employees actively take part in this process, thus

participating directly in making decisions on matters that affect their daily lives, and

indeed, exercising some democratic self-government. Such participation can be

instrumental in educating people to the value of democracy and improving their

participation in the larger-sphere democratic process.

Conclusively we can say that the process of collective bargaining is far from being democratically perfect. But it is nonetheless a clear and significant improvement compared with the system of individual bargaining. Critics of collective bargaining further assert that in practice, unions are often

undemocratic, detached from the true interests of local employees, and corrupt. There

is probably some truth to such accusations - unions are not immune to the ills of all

large bureaucratic organizations - and indeed, different regulatory reforms can and

have been suggested to address these concerns. But the prevalence of such problems

should not be overstated. Overall, the democratic benefits of collective bargaining -

and certainly the potential democratic benefits - far outweigh the pitfalls.

.References [i]