The Changing Employee Relations At Nat Bank


The notion of work place partnership was a key agenda of the New Labour Government's employment policy of 'modernisation' and gained impetus and became an integral element to define the feature of industrial relations for the new millennium (Martinez- Lucio and Stuart, 2004: 410). Ackers and Payne (1998) realized that partnership as a new HRM trend looked imperative to induce unions back to the center of employment relations (Cited in Johnstone et. al., 2009). Also it was at the core of the new agenda of 'fairness at Work' set out by the Blair Government (DTI, 1998). Although the UK partnership debate may be a relatively recent phenomenon, the topic has attracted a significant amount of research attention since 1998, including regular special streams at employment relations conferences (Johnstone et. al., 2009). So one can infer that since its evolution that is in late 1990s the partnership construct has been a topic of debate with its significance in strengthening employee- employer relationship.

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The paper has done the literature review in light of the case of NatBank, that's the major UK bank employing over 100000 people worldwide and 60000 in the UK. To brief about the scenario it is imperative to know that the bank got into a partnership agreement after a very poor climate of industrial relations of late 1990s, culminating in industrial action over pay in 1997 (Johnstone, 2009).

In light of the literature on 'social partnership', this paper has done elucidation of its significance, weaknesses and strengths as a means to develop sustainable employee - employer relationship for financial organization as NatBank. In the end the paper has provided certain vital recommendations to the Bank in order to develop and strengthen its employee relationship from a futuristic point of view.

Employee Relationship at NatBank

The relationship amongst employee and employer was wobbly during the 1990s. One of the reasons for the same was a sullen relationship amongst the Union and the Company leading to delays and long number of days spent to resolve problems, said one of the employee relationship manager of NatBank. This got aggravated with issues like performance related pay, staggered shift patterns, changing of contracts from the original NatBank contracts to Flexi contracts with little monetary rewards (Johnstone et. al., 2010). One of the reasons for such drastic change was the shift of the traditional banking from a conservative style of banking of post war period to new banking system of 1980s and 1990s which led to reforms in the industry due to increasing globalization and to be competitive attempts were made to change the organization culture, staffing and pay, got worsened with job redundancies due offshoring of business to India (Storey et. al., 1997, Stuart and Martinez-Lucio, 2008). Hence such revolution and change to the industry altogether led to an industrial action, which then led the Bank to get into a partnership agreement with the Union to address certain significant issues in the year 2000. The paper now discusses how those important issues were addressed, as those were the main causes of the changing employee relationship at the Bank.

Factors of changing employee relations


Offshoring was one main reason for the unrest amongst the employees, as most of the clerical work was then outsourced to India and people then were offered to work as telephone based customer advisors. This was a drastic change and a lot of old employees resisted to this change , also this led to job redundancies, worry due to job insecurity, which eventually led to employees think that the union is crap. One of the principles of social partnership was based on facilitating change management at the same time ensuring interest of the employees is secured (Johnstone et. al., 2010).

The partnership arrangement led to a framework of avoiding compulsory redundancies in case of offshoring for which there were key provisions made as the part of the agreement (Johnstone et. al., 2010) as follows:

Enhanced use of voluntary Job matching.

Redeployment to another department where the work is carried out by contractual or agency worker on trial.

In placement and out- placement support by consultants.

Additional training support to encourage possibilities of external retraining.

Now, all this was made possible as a result of discussion and involvement of the representatives with the management decision making process when it was in the design stage, which was not the case during pre-partnership days. Involvement of the Union in the process led to reduction of 1000 job cuts to meager 225, ensuring excellent severance schemes for the displaced (Johnstone at. al, 2010).

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Due the change of roles to more telephone based job, where most decisions were system based , this led to an re- evaluation of the grades with an intent to reduce it from grade 3 to grade 2, which would otherwise have had a adverse impact on the employee's morale. By involving Union in the decision making process, it was then decided to keep the grades of the existing employees at the same level and rather recruiting the new ones at the new grade of level 2. This would have otherwise been forced on the workforce with no or little consultation. Hence, one can infer that the arrangement of consultancy with the union had a positive and a successful impact on the employees on this front (Johnstone at. al, 2010).

Flexible Contracts

One other issue that drastically affected employee relation and was the main cause of changing relationship with the company is change to the employment contracts of the employees to make it more flexible from a regular 9-5 to more of 24/7 atmosphere. This move was essential from the business and customer services perspective; however it had a negative morale on the existing staff. So in order to keep the morale high for the long term success of the Bank, Union had a consensus with the company not to change the contract for the existing staff, but rather employee new people with new contract to serve this aspect of the business. So this another success of the partnership agreement and was of the core factors of changing employee relationship, and it eventually led to a win- win situation (Johnstone at. al, 2010).

Sales and Service Split

The culture was shifting from pure service oriented to more sales driven, where in staff members were forced or pressurized to put it nicely to make cross sales on most eligible calls. This led lot of employees, leave the organisation as not everyone could sell and hence could take the pressure of sales. This led Union to get into consultancy with the management to split the sales and service split, and allocating the staff accordingly based on individual skills which to an extent served the principle of the agreement of the partnership that is meeting customer expectations by having right people with the right skills in the right place. So, people with a nag towards sales were allocated towards sales and the rest were led to concentrate on the service part of it. This way again with the involvement in the process the union created win-win situation for the business and the staff (Johnstone at. al, 2010).

So overall one can assess the reasons for the change in employee relationship and the significance of the social partnership played by the union. However, the other side of the story lies in certain challenges faced by this kind of arrangement. Though the arrangement proposed consultancy at during the process at the design stage of any decision, however the final decision lied in the hands of the management. Representatives or actors of the union can assess the decisions made by the management in light of the 6 principles on which the arrangement was based and offer requisite comments or alternatives. However few actors found this kind of arrangement folly and difficult to understand. Also as a lot of times employees only get to hear the outcomes and are not posted about the process of the decisions involved, this posed a threat to a few representatives to be perceived to be in total control of the management and being biased. Hence, this paper has done a literature review of the concept of social partnership and then provides requisite recommendation to the union of NatBank to develop a sustainable relationship during the times of economic distress or organisational upheaval.

Concept of Social Partnership

The concept of social partnership as a result of inherent ambiguity has been described as

"An idea with which almost anyone can agree, without having any clear idea what they are agreeing to" (Guest and Peccei, 2001:207, cited in Johnstone, 2009).

Guest and Peccei (2001) also stated that mutuality and trust are two key elements of genuine partnership agreement. As per Stuart and Martinez (2005a) stated that partnership is an preposition for an employer which entails it to be both economically effective and ethically responsible to cooperative with Employees and Unions on the subject of strategic organisational change. There have been many a definitions and versatile views on the concept of partnership, however most seem to have a common theme of mutuality, cooperation, consultation, collaboration or joint working between the unions and the employer. Partnership is a kind of rejuvenating strategic tool for the unions by which they have argued that the contemporary capitalism needs to accommodate employees and unions as a constructive voice, negotiating and contributing to the overall organisational change and productivity (TUC, 1997, Cited Wills, 2004). The understanding of partnership UK is though is quite different from the traditional notion prevailed as regulatory European Social Model (Johnstone et. al, 2009) however it is based on six core components and those components are designed to ensure that unions can be effective without complacent about the organisational success (Wills, 2004) and those as per TUC (1997) are as follows:

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Guarantees of employment security.

Commitment to organisational success.

Openness and transparency.

Recognition of overlapping but distinct interests.

Enhancing the quality of working life.

Tapping the motivation, commitment and innovation of the employees to make the work interesting and value adding

Having looked the concept of social partnership, the paper now discusses the strengths and the weaknesses of the concept.

Strengths of Social partnership

Influencing decisions:

One of the key benefits of social partnership is its ability to influence decisions in the process stage by getting into consultation mode right from the initial proposal of change. This is quite evident from the case of NatBank the merits discussed earlier in this paper. This was primarily the main reason for effecting the changing employee relations at the Bank.

Mutual gains:

From the first part of the paper an inference can easily been drawn that partnership in case of NatBank has led to mutual benefits , as increasing or maintaining the morale of employees is essential for the long term financial success of the company (Stated earlier). In line with same notion Kochan and Osterman (1994) stated that mutual gains can one end lead to better bargaining power over flexibility, development, employment security and involvement and on the other end employers can be benefitted with improved relations with the union, assistance of facilitation of change (Johnstone et. al., 2009). Adding to the same argument Marchington (1998) added that this arrangement can help the unions to have greater access to information, job security and inter union cooperation.

Quality focussed competetive strategy:

Kochan (1995) argue that partnership agreement may lead to development of organisational structures that induce integrative, joint gains solutions will result in more employee friendly organisational cultures that may lead to high employee morale, better job satisfaction and will result in quality focused competitive strategy that may not be available in the abandonment of collective bargaining (Cited in Roche and Geary, 2002). This notion to a great extent has been exemplified by Gennard (2001) who while assessing the rationale for Public Policy Development (1997-2001) in one of his article, he observed that the Blair government in its quest to build a competitive economy focused on employee participation in management decision making process which enhances employee's commitment to their employer resulting in greater productivity, leading to being competitive.

Local decision making:

Another benefit reaped from social partnership especially in the case of NatBank is its ability to build solid cadre of local representatives. These representatives were close to the actual business, knowledgeable and as a part of their role could question, challenge and persuade the management to make necessary changes to the upcoming decision, avoiding escalation of issues and unnecessary delays in the whole process (Johnstone at. al., 2009).

Weaknesses of social partnership

Pseudo Participation:

Kelly (1996, 1998, 1999) has done critiquing of the social partnership based the fact that such partnerships were more employer dominated in terms of cooperation. Kelly (1999) also set out examining several other partnership in UK, where his finding were again bleak showing companies threatening to de-regularize unions as well as failing to honor collective agreements meant to maintain employee's employment security and competitive wages. Adding to the same notion Streeck (1992, 1994, 1995) stated his argument based on asymmetry of power between management and organized labour. He also stated that interest of the union in a partnership construct is seen to be accorded legitimacy by management only to the extent that they serve particular market functions. This was also evident in the case of NatBank when certain actors had problems with the fact that even though they had the opportunity to comment, question and propose alternatives, the ultimate decision still lies with the management.

Lack of Partnership culture and participation:

This was evident particularly in the case of NatBank that the company lacked the culture of partnership and participation. This was one of the reasons why even though there was perfect coordination amongst the senior management, the union officials and the representatives, there lied some sort of disconnect with the line managers, who were responsible to get the core job done. This was also evident from the fact that the even though the employees did appear to trust the union, however they showed little interest in them, as all they get to know is the final outcome of the process and not the consultation part of it. This eventually made the employees skeptical about the integrity of the representatives and the union as they might consider them to be just management poodles (Johnstone, 2009).

Conclusion and recommendation

From the literature review and the case of NatBank it is evident and clear that the purpose of a social partnership is to have a transparent, participative, collaborative and open culture in an organisation to make the decision making process more balanced in terms of the people and business aspects, hence protecting the interest of the employees as well as the ensuring business competitiveness. The whole process aims at discussions and understanding of any major decision to be made and to discuss the interest of the parties involved primarily, the business and the employees. However for the process of consultation and representation it is imperative to have complete and appropriate participation by the employees at all levels. This entails the very need of inducing a participative culture encouraging employees to directly voice out their concerns and apprehensions at all levels. The communication in the case discussed in this paper had majorly been top-down, which does not provide the right framework for direct participation of the employees. Hence the paper has certain recommendation to be made to NatBank or similar organisations in order to provide a framework for sustainable implementation of the social partnership construct:

The company needs to implement supportive HR practices together with the promotion of strategic integration between HR and strategic management.

The underlying management thinking and philosophy needs to be made conducive to promote the overall culture of participation at all levels.

The company should encourage participation of the employees by not just following the top-down communication approach, but should provide enough space and a frame work like a focus group, employee survey and other opportunities to the employees to voice out their views and concerns to be a part of decision making for the business.