The Perspectives On The Employment Relationship Business Essay

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In the economic world, people can broadly be put into two categories- Employers and Employees. In most organizations there are work level hierarchies and based on hierarchies there are further categories- managers and workers. Different organizations have different types of organizational structures and hierarchies. This hierarchy system makes a manager worker to the manager above him/her. Primary objective of any commercial organization is profitability therefore managers have been keen on keeping the workforce in control so as to drive the operations to maximum profitability (Clegg. 1979. pp.444-447).

Fox, A. (1966) and Harry, Braverman (1998. pp.37-39) explain the managerial mindset of keeping 'Control' over the labour as necessity to ensure organizational profitability. Primary objective of all organizations is and always has been profitability of operations and engagements. Efficiency of the organization has been marked by scholars as directly proportional to operations/production activities/services offered by the organization. Incontrovertibly, efficiency of organizational operations depends upon efficiency of its workers. Therefore labour management and control has always been a subject of critical importance for managers. Wedderburn et al. (1986) mention that governments have attempted to ensure fair labour management practices through labour laws and strict compliance guidelines for companies which include minimum wages, holidays and facilities etc. Although despite all the rules and regulations, conflicts between labour and management occur. Often management decisions don't seem to work as 'good for all'. Historically and in contemporary organizations, there are numerous examples of conflicts between labour unions and management. Quite simply the common reason has always been conflict of interests of the two parties- managers and labours.

In this essay employment relationship and the perspectives of Unitary, Marxist and Pluralist have been elaborated. Next labour process and problems have been explained along with workplace rules and regulations.

The Perspectives on the Employment Relationship

Industrial Relations (IR) and Employment Relationship (ER) terms are used interchangeably. Clegg (1979. pp.444-445) compiles the three perspectives of Industrial Relations- Unitary Control, Marxist and Pluralist. The author explains that during the nineteenth century and even in the interwar years the unitary controlling power over employment terms and conditions of skilled workers lied with the trade unions. The reason is attributed to the reluctance of the employers to get engaged in collective bargaining. In the aftermath of the Second World War, the plant managers realized necessity of centralized employment regulations and payment procedures. Post war conditions paved way for industry managers attempting to gain Unitary Control over manpower and organization of work in the plants. Shop stewards were introduced and decision making authority shifted to the employers as they overcame reluctance for collective bargain. The Unitary Control of management over labour spread to the public sector as well. For conflict situations in private industries, the state refrained from intervention in the interwar period. British Industrial Relations act 1971 was a strong step towards controlling collective bargain and curb labour union strikes (Clegg. 1979. pp.444-447).

The attempts of Unitary Control are backed by theories of Ideological perspective. Ideological perspective is primarily an extension of beliefs and systems passed on through generations of organizations and families of workers. Managerial right to control is based upon factors like social status, and being in the capacity to make decisions where it is assumed the labour must obey and follow the instructions to the word. This is also backed by legal and functional perspectives. Managerial cognition imprints authority over workers whereas workers' cognition is about very personal goals of remuneration, facilities and collective benefits (Harry, Braverman. 1998. pp.31-34). Marxist view encourages workers to stay united, and use their collective power to revolt as and when necessary. In the Marxist definition trade unions become integrated with the organizations and the capitalist society; this assimilation with organizations is completely optional to trade unions. Although in private sector labour unions mostly lose the situation of collective bargain as they are ill-developed and are not much resourceful. On the other hand the Pluralist view talks more about social democracies rather than capitalist societies (Clegg, H. A., 1979, p452-453). Flanders (1975), and Hyman, R. (1975) contradict each other in their explanations for the two perspectives of Marxist and Pluralist. The notions of institutions, regulations and systems create the base for the contradiction between the two explanations. Although Clegg (1979) also identifies similarities as both Marxists and Pluralists are concerned with stability and conflict. Conflicts at work place are deemed inevitable by both as the underlying interests of the two parties- employers and employees are countering by nature. If workers could work more for less pay it will be in the interest of the employers. On the other hand if workers could get higher pay for lesser work, that would be in their interest without any doubt.

The industrial relations as a formal entity in the social sciences goes back to the early 1920s in North America, the late 1940s in the United Kingdom, and one to two decades later in most other regions. As a recognizable area of research, its origins extend far back into the nineteenth century. Over the last century, researchers have tried to identify the core principles that extricate the subject of industrial relations from other labour fields and build upon these models and theories that describe key labor/employment processes and outcomes (Hyman, 1975. pp.9-13; Flanders. 1975. pp.83-86). IR originated as a response to the worldwide Labor Problem that emerged and grew aggressively in industrializing regions in the period of 1870-1920. The principal goal of policy makers was to solve the Labor Problem but within the framework of a democratic capitalist economic system. Early industrial relations program was thus put forward as a middle way program between socialist revolution and capitalism. The IR analysis of the Labor Problem was that it grew out of the non-adaptive and vicious aspects of traditional labor management methods and competitive capitalism (Clegg. 1979. pp.443-446).

The non-democratic and ineffective nature of occupation in traditional firms is an unavoidable consequence of imperfect labor markets, positive transaction cost, and the legal power at the disposal of managers to determine unilaterally how they manage their enterprise. Employers are effectively monarchs with comparatively unhindered rights to employ, fire, and compensate as they deem appropriate; constrained only by the workers' feeble threat to exit (Clegg. 1979. pp.443-447; Hyman. 1975. pp.11-15). The two essential gears of the employment relationship are labor markets and firms. Cooperation and objectivity are arguable issues because workers are perceived as commodities. In contemporary organizations, fairness and cooperation are significant constituents to higher efficiency and do not occur just spontaneously. Rather, they have to be created through far-sighted managers, progressive HRM practices, and supportive institutions (Flanders, 1975, p84-85).

Nature of Employment Relationship

Vlachoutsicos, Charalambos (2011) explains that most managers realize that empowering employees improves their performance. The realities of management hierarchy and excessive control can cloud the motivation of employees. Organizations in the western Europe and the U.S. are increasingly ending the top-down, command- and-control model of management. Despite the changing trends many managers still apply the control model, prompting a vicious cycle. Harry (1998. pp.34) further explains that mankind is the product of labour and purposive action driven by human intelligence. The transition of man from ape was aided by different forms of labour, which was limited by the science and knowledge of that period. The author deems the labour transcended from instinctual activity the force that created the world and the capitalist enterprises we see today.

Gintis, H. (1987, pp.68-69) explains the Marxist view on capitalist enterprise that a capitalist organization is the outcome of a struggle between capital and labour over the rate of exploitation of the workforce. The Marxist theory for capitalism blames the managerial prerogatives that are assumed as birth rights to exploit the labour to maximize the profitability at the cost of the interests of the lowest paid sections of any enterprise. The essence of capitalism is the exploitation of the workers by the employers which entails capital control as well as system of wage labour. The Marxist notion explains the labour process as a commodity whose material attributes includes the capability of performing certain types and intensities of production activities. Marx further elaborates that labour is the active living process carried on by the workers. The expression of labour is determined by labour power as well as exploitation capabilities of the capitalists.

Marxist theory identifies the reasons behind the class struggle in the capitalist society as considering the workers as a commodity. The primary contradiction in a capitalist organization is between the capitalists' perception about the labour as an object of profit and control and labour as self-actualizing subject. The capitalist opinion entails that efficiency of any organization is derived from control of the labour force. Labour productivity and efficiency can be thinly linked to wages and freedom to exercise the decision making; although not much of the research in this field can prove the same or otherwise (Gintis, H., 1987. pp.72-73).

Presenting a case for the managerial control, Gintis (1987. pp.75) quotes Batt, as mentioned in Coase (pp.350), that in order to maximize the efficiency of organizational operations, the employers must have right to manage and control the work timings, nature and all allied activities of the labour force at the workplace. Social aspect of labor markets makes them significantly less impeccable than most commodity markets and that individual labors as a result often bargain at a shortcoming. This deviation between a human and commodity market is for theory inconsequential. Therefore the differences between the two are not central from the point of view of capitalist theory. Dismissal of the labor commodity principle and supply/demand notion of employment was prevalent among labor activists and early creators of industrial relations. Early IR researchers evenly rejected the labor commodity principle (Fox, A. 1966. pp.4-11). The machine which produces its services to people is itself a commodity, and is only a resource to an end, while the worker who parts with labor is no longer a commodity in civilized world, but is an end in himself, for man is the foundation and end of all commercial activities. Capitalists are fond of declaring that labor is a commodity, and that the payment contracts are a bargain of sale and purchase like any other object. But question arises that why a labourer is expected to touch his or her hat to his/her manager or employer, and to say sir without an exchange; whereas the manager meets on terms of fairness the persons (Gintis, H., 1987. pp.70-77).

Not astonishingly, another group who sought to substitute a commodity theory of labor with a human conception was trade unionists. Above all the dogmas of demand and supply, there is a greater principal of humanity. Trade unionists argue that the labor of a human being is not a commodity or an object of economics. They further insist that the outcomes of the capitalist law are unfair and detrimental to the interests of both workers as well as employers and are socially unwelcome. The capitalist opinion endorses in disbursing the labourers the minimum possible pay, and nothing more than the lawfully essential provisions for their physical and social wellbeing. Marxist theory entails that under these employment conditions the typical relation between workers and employers can only be one of resentment (Gintis, H., 1987. pp.70-77; Harrry, B., 1998. pp.31-35).

Rules and Regulations at Workplace

Extending the debate over capitalist mindset and labour interests, Wedderburn et al. (1986) explain that there was little of law in Britain to govern the employment terms and conditions. Most employees seek a trouble free workplace and timely payment of their wages, rather than recovering it through court settlements. In Britain the factory act and other laws e.g. Employment Protection (Consolidation) Act 1978 (EPCA), Employment Protection Act 1975 (EPA), Employment Act 1980 and 1982 (EA 1980, 1982) the Trade Union Act 1984, Trade Union and Labour Relations Act 1974 which was amended in 1976, Sex Discrimination Act 1975, Equal Pay Act 1970, Race Relations Act 1976, and Health and Safety at Work Act 1974 did little to ensure that. In order to protect rights of the workers, Government of UK has enforced law of National Minimum Wages. Rates have been clearly defined at £6.19/hour for persons 21 and above, £4.98/hour for age group 18-20, £3.68/hour for under 18 and £2.65/hour for apprentices (Gov.UK. 2013). Employment Rights Act 1996 has also been updated to protect the employees against any unauthorized deductions from salary. The employer must clearly explain any deductions in the Pay-slip (Government of UK Legislation. 2013). Jop regulation

Fredman et al. (1989) explain that in theory of perfect competition, supply and demand, without friction, optimally apportion resources to their most effective use, agreements and promises are perfectly applied, all sides gain from trade, and labor and capital are paid for their contributions to the enterprise. These are, of course, theoretical predictions and not literal statements of fact; nonetheless, these predictions represent in most situations useful first estimates to behavior of aggregates of people in real world markets. Wedderburn et al. (1986) establish the ideal conformation of all terms and conditions of occupation, including not only the pay and hours of work but also safety and health conditions, pace of work, and other benefits. Thus, free-enterprise labor markets lead to an outcome in which making one person better off is not possible without bargaining on interests of another, which may be reworded as the best possible state of the world in given situations and conditions. Evidently, in an ideal state of the world labour problems do not occur to study and any formal interference in the market is destined to lower productivity. But in reality labor problems do exist, sometimes small, sometimes bigger. Many a times these real labour problems are man-made, e.g. practices of governments and labour unions, misguided policies etc.

Contract of Employment

Brodie, Douglas (2011) quotes Lord Steyn who gave a judgment in the House of Lords regarding employment contract and deemed it as 'relational'. Another opinion comes from Kahn-Freund (1983. pp.18) who defined the employment contract as, "the relations between an employer and an isolated employee or worker is typically a relation between a bearer of power and one who is not a bearer of power". On the other hand the governments have attempted to balance the power and authorities of employers with the interests of workers. In order to balance between the rights of the labour and industrial productivity, the governments in the UK and other countries have formalized the nature of the relationship between the workers and employers in the form of mandatory contract of employment. As clearly marked by the Government of UK (2013) workers must have an employment contract with their employer. 'Employment Contract' is an agreement between the employer and employee that sets out an employee's rights, roles and responsibilities and employment conditions; also called the 'terms' of the contract. Workers and the employers must stick to the agreed contract signed in the beginning of the engagement, until it ends. The contract of employment can be ended by the employer or worker by giving notice or the employee being terminated or until the employment terms and conditions are changed by agreement between the employee and employer.

Critical Analysis and Conclusions

In this essay employment or industrial relationships in the context of employers and employees have been elaborated and analyzed; the third stand is that of the government who presumably act as unbiased governing agency on both; though British industrial history is full of examples when Government enforced policies supporting the capitalism, ignoring the interests of the blue collar workers.

Unitary control perspective of employers is supported by Gintis (1987. pp.75), who quotes Batt and several other scholars that in order to maximize the efficiency of organizational operations the employers must have right to manage and control the work timings, nature and all allied activities of the labour force at the workplace. The attempts of Unitary Control are also backed by theories of Ideological perspective. Ideological perspective is primarily an extension of beliefs and systems passed on through generations of organizations and families of workers. Managerial prerogative or right to control is based upon factors like social status, and being in the capacity to make decisions where it is assumed the labour must obey and follow the instructions to the word. This is also backed by legal and functional perspectives. Managerial cognition imprints authority over workers whereas workers' cognition is about very personal goals of remuneration, facilities and collective benefits (Harry, B., 1998. pp.32-38).

On the other hand the Marxist view on capitalist enterprise explains that a capitalist organization is the outcome of basic difference of opinion and struggle of interests between capital and labour over the rate of exploitation of the workforce. The Marxist theory for capitalism blames the managerial mindset over their presumed prerogatives to exploit the labour to maximize the profitability at the cost of the interests of the lowest paid sections of any enterprise. The essence of capitalism is the exploitation of the workers by the employers which entails capital control as well as system of wage labour (Gintis, H., 1987. pp.68-69). The Pluralist view encompasses social democracies at workplace rather than capitalist societies (Clegg, H. A., 1979. pp.452-453). Other scholars e.g. Flanders (1975), and Hyman, R. (1975) contradict each other in their explanations for the two perspectives of Marxist and Pluralist on the basis of the notions of institutions, regulations and systems.

Author of the essay concludes that among prevailing realities making one person better off is not always possible without bargaining on interests of another, which may be rephrased as the best possible state of the world in given situations and conditions. This may mean that conflicting workplace situations between the organizations and employees will persist and are inevitable given the basic nature of conflicting interests. At one issue the organization and the labour unions may achieve a resolution, but then sooner or later some other issues will arise that will put both parties again at confrontation.

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