For many years, acquiring and management of the human resources to the optimal desired performance and productivity level leading to a advantage to the organization and the worker had been an important subject to academic and practical fields. Industrial or employment relations come into play as it is related to studying of relationship between the main parties of production, who are the employers and employees (Rose,2008: p.9).
"By definition, employment relations are the study of the regulation of the employment relationship between employer and employee, both collectively and individually, and the determination of substantive and procedural issues at industrial, organizational and workplace levels" (Ros,2008: p.9)
When looking at the involvement in employment relations, the following parties should be considered due to their impact to the relations as a whole. Management and employer mean the people doing the actual management of the organization and who are responsible to run the business utilizing the capital and human resources to profitable outcomes in favor of themselves, employees and shareholders. Due to the fact that currently external organizations are present and affect the labour process, two important organizations looking after the interest of employers and employees in the industrial relations. Management organizations represent employers' interest and could be composed by firms in certain industry to look after its members. On the other side, employee organizations; such are trade unions; It gets the workers of certain occupation, profession or industry under this unity so the leaders of the union can talk on behalf of the members. The role of the state and state agencies can't be ignored here because of its direct influence on the entities above and so the industrial relations by imposing the laws which the state would see necessary for the national economic or political status (Rose,2008: P.10-20).
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These parties highlighted above represent the main players of a labour market, where workers do a job against a wage from the employer and the state put the general rules for such exchange. The labour market follows a similar mechanism for any market for goods, where employers demand labor service and workers are the supply for labor services. Labour market is like every market characterized by the two processes in each market, which are bargaining and competition. Once the employer and employee come to an agreement, they should get a written agreement or what so called an employment contract. In such contract both parties agreed to certain terms and conditions and the employee agreed to obey instructions and duties related to the job performance (Hyman,1975: P.19).
The unbalanced power of employers will lead to a significant influence in the contract contents and terms. Although the employee is not forced to get into such agreement, but there are no many options and time is of a great pressure on the worker here. While the employer obligations are definite (for example, example wages) or sometimes some obligations do not exist, the obligations on the worker by contract are imprecise (for example, example definite work product or work nature), not well defined and bring more risk to the worker. Management would see the employment contracts as a tool assisting them managing the business and make changes whenever required as a proactive or reactive action towards the dynamic changes in the economy (Hyman,1975:P.24)
The indetermination in the employment contracts could be made intentionally, or since it can't be determinate. This is the case for the terms which can't be of a magnitude and can't be specified with all external factors affecting it before the contract rather than during the performance of the work itself (Edward,2003: P.14).
"Employment relationship can be regarded as the power relationship". Power in industrial relations means that ability of one party to impose decisions on others while they may not behave in the similar way if left to act freely (Hyman,1975: p23).
Decisions taken by employers and managers such as opening or closing a division, determining the type and level of production, technology advancement, work organization structure, relocation, profit distribution. could sometimes act against the interests of workers. Management would argue that they have a wide range of stakeholders they do care about not only the employees, but also the shareholders, customers, the government and others. Management will use its power to take the decisions and impose its execution, but would maintain an acceptable level of concern for all parties and the decisions will be studied beforehand to asses the impact and reaction anticipated before decisions been taken. Workers participate in the trade unions to get more power to counteract the greater power of employers. Labour and labour unions can challenge the management decisions which they see as negatively affect them in a way or another, but management would usually argue that they exercise their rights and these decisions are very important to the organization's vision and growth plans although they can commit to its adverse impact to the employees at some cases. It is well understood by employees that individual actions will not be effective in industrial relations when trying to influence management power over deciding strategies and actions. Workers developed unions to seek their interests and rights when confronted with management authority. These unions had been growing over time and bring more power to workers (Fox,1966:p.4-5).
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Like any relationship in the economic context should be ruled, the relationship between different parties in the labour market should be governed by rules. That's why job regulations do exist in an employment relationship to set the rules for behavior. The full range of job regulations is important in shaping the industrial relations at the workplace (Hyman, 1975:P.10).
It should be noted that the formal way of setting rules through institutions and state and reflected in the employment contract is not the only way of rule formation, but there are informal rules created through the actual behavior of the different parties and through the employees themselves in the workplace maybe contradict with the formal ones to meet their shared interests and aspirations (Hyman,1975: P.15)
When looking at the management liberty in making decisions affecting labour and considering the limitations set by job regulations and how these regulations can be amended, there should be a differentiate between internal job regulations, which can be discussed and agreed between workers and management without searching for the confirmation of the external party like union power,, and external job regulations set by the external environment and external organizations as trade unions governing the relationship and cannot be deviated as safety regulations (Flanders, P.90). Obviously, the external job regulations will limit the liberty of the company and its members in their exercise to agree on corrected rules (Hyman, 1975:P.16).
When one party or another; trade unions or employers' associations; It is in a position to enforce its terms, this is perceived as a unilateral job regulation. This is a less flexible way of the formation of regulations and practically difficult for application. Job's regulations could be developed bilaterally after an agreement between employees and employers. It could also be developed tripartite if the state or a third party is involved in its formation. It should be noted also that there are regulations set outside unions and employers control and set by law or some sort of state authority (Flanders,1965: P.94).
Industrial relations are a mixture of substantive and procedural regulations. The substantive rules regulate the behavior of parties to the employment contract and could specify the standards in employment relationship (minimum wages, maximum working time and so on), while procedural regulations identifies the main actors and define the processes of interaction for which the substantive rules are to be defined. The substantive rules provide relatively standard regulations, while procedural rules could lead to different outcomes. The British system has a priority of procedural over substantive regulations (Flanders,1965: P86-87).
Three views affect industrial relations and are generally known as unitarism, pluralist and Marxism. Each has a different interpretation and expectations for the relationship at the workplace, involved parties, roles and job regulation. There is an expectation that management behavior would be aligned with the ideology adopted. Where behavior conflicts with ideology, we must sometimes expect irrational responses which management would be keen to avoid. On the other hand, the way job regulations either internal or external are formed and the degree of liberty is derived from the values by which the state legitimises and the public and society judges the system alignment and results. This has some relation to the society ideology, for example, in pluralistic society, a priority in employment relationship is to collective bargaining over other methods of external job regulation so trade unions and employers bilaterally from the rules (Fox,1966:P5-10).
In unitarism, the organization is seen as one unit or one team, where the workers and employers are teaming members worked together to achieve common goals. In the unitary system, there is only one source of authority by the leaders who are supposed to be an expert and had the leadership capacity so the workgroup would trust them in driving the team into the right direction for the advantage of all members. Team members would value this and be loyal to their leadership, even if sometimes the decisions are not well perceived by the team members. The team or the family doesn't need an external mediator so external entity such as trade unions is not necessary. Conflict is always bring troubledd and only result from third parties bad intervention, interpersonal friction and communication breakdown.
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Although this system will be ideal for management when taking decisions affecting industrial relations, the criticism to unitarism as being a vision of what should be rather than what is actually is in the real world and how industry is actually operated (Fox,1966:P.3-4).
Considering the fact that people are different, coming from the different social background and do have different aspirations, no expected consensus on ideal job characteristics either related to the job itself, to the job environment, job performance evaluation, etc. because simply people are different. Would the people always agree with the management decisions and always trust it is the right decisions, although it may affect the workers in one side or other (Wages, fringe advantages, leave,). Consequently, a conflict would be present and cannot be avoided in the real world which contradicts with the unitarism assumptions (Hyman,1975: P.17).
The organization should be seen as a "plural" society with different sections of different interests and the management is always trying to get them into equilibrium for the advantage of all. The management in such a system is not to unify and liquidate different views, rather to control and balance the activities to the ultimate advantage of the organization. The management would then use persuasion as an instrument and a technique for control and authorization of decisions. Involvement of external parties (such as trade unions) and consultants would be present as part of the collective bargaining towards a resolution for the conflict. Persuasion rather than force will be a better strategy in such a situation. (Fox,1966:,P.5)
As conflict would occur in such environment, so it is better to manage it and lead it to positive results. Conflict here will be dealt by collective bargaining and the trade unions as representatives of workers will play an important role with management to coordinate together for a conflict resolution. In pluralistic ideology, the role of trade unions is decisivee and it is not limited only to play a protective role in the labour market or maximise the advantage of their members, but have a voice in decision making jointly with the employers. Alternatively, in other words, regulating management exercise of authority to the workers in the workplace after being hired. If there is a proper organization of the unions to make sure that the labour issues and interest are well received, negotiated and handled, the unions would contribute to the problem solving. Management will be keen on work with unions to solve conflicts, which could lead to unfavourable behavior (like strike, absenteeism, labour turnover.), individual or organized and with different impact to the production and enterprise stability and healthy environment (Fox,1966: P.8)
In pluralistic conception, a management which fully accepts the reality of workgroup interests, objectives and motivations, which could conflict with their own will seek truthfully and patiently to understand the causes of particular group practices and so gives more liberty to parties to come to an agreement to all issues related to workplace (job aspects and job regulations). Full understanding will be a pre-condition of success in changing behavior. The criticism to Pluralistic ideology is the existence of many third parties external to the organization diverse trade unions, associations and institutes to which employees do owe loyalty outside their own management in the organization they are working for. This could get workers distracted into many sources of leadership, they are loyal to, while they should be unified under their leaders in the workplace and the introduction of trade unions is unnecessary (Unitarism view) and introduces interests foreign to the private affairs of the company and could lead to a battle of interests that might threaten the stability of the system (Flanders,1965: P. 101)
Would the existence of trade unions dealing with employers enough to manage conflict? Would the involvement of trade unions along with the employers or employers' associations lead to bi-lateral decision making in a fair way to all parties?
From a Marxist perspective, the existence of trade unions dealing with the employers or the involvement of trade unions along with the employers or employers' associations in a bi-lateral decision making in a capitalist economy will not bring fairness to workers when trying to begin a conflict to a resolution. Bi-lateral decision does occur when two parties of an equal power sit together to get an agreement. In the case of employer and workers relationship, the unbalanced power of the employers makes this assumption as void. It will turn that the trade unions are just legitimising the decisions made by employers who won't for any reason give away the control and leading of their business. This is clearer in the capitalist society were very few people own the money and capital to run the business and get the important profit and this adds power to them in the industrial relationship and decision making process (Hyman,1975: P.19).
From a Marxist perspective, there is an inequality of power between owners and employees and this is utilized by owners to exploit workers and increase owner's richness. As jobs are located within the labor market and so treated as a goods following the mechanism of supply and demand; It arises from many of the basic conflicts in the industrial relations, especially whenever the supply of labour is more than the demand in the labour market, as this will give the employers the extra power in the employment contract and industrial relation as a whole making conflict with an inevitable in such a relationship. In the capitalist environment and although workers are the means of production, they didn't gain a fair return rather the income goes to the owners keeping them with an upper hand with unbalanced power in comparison to employees or their unions and representatives. This fact would always create a conflict in the industrial relations. Having said that, the expenses of workers are always seen as a cost to the employer affecting the net profit and so will seek whatever alternatives to maintain these costs and even bring it down. The employer will be interested to retain a worker only if it is profitable to do so considering the technological advances and economic status. As long as workers are exploited by owners, the conflict will be a normal result to such an unfair situation. While there may be periods where parties come to a fair agreement and considering the positive role the trade unions can do to secure worker's worker's rights, the Marxist view would see unions by getting into an agreement with employers regarding workplace and rights (as job regulations,.); considering the higher power of employers; I would legal the owners use of unbalanced power (Hyman,1975: P.20).
The industrial businesss structure affects the management in handling industrial relations as this would determine how parties are expected to behave and the method to change behavior. Three main theoretical perspectives or frameworks, that are different in their understanding and division of workplace relations (Fox, 1966: P5-10). Many parties with different interest are involved and play different roles, which affect the industrial relationship and the mechanism for labour market. The unbalanced power of employers will lead to a important influence in the contract terms and job regulations. Three views affect industrial relations and are generally known as unitarism, pluralist and Marxism. Unitarism is giving management more liberty in taking decisions, but is unrealistic. Pluralist recognizes differences and favors collective bargaining for conflict resolution. Marxism sees conflict un-avoided in the capitalist environment where workers are exploited by owners of capital.