Employee relations as a substitute for industrial relations

The terms “industrial relations” and “employee relations” has always been associated with each other, to the extent of being synonymous with one another. Whilst it is difficult to define each term in a precise and universally accepted way, authors have frequently made an attempt to differentiate the specific meanings between them (Gospel, 1992; Salamon, 2000; Breadwell, 1996). For the purpose to address the question of this assignment, it is important to first make a clear distinction between industrial relations and employee relations. This will also help to demonstrate that despite contextual changes, the premise occupied by employee relations and industrial relations respectively is distinctive.

Dunlop (1958) defines “industrial relations” as being concerned with the processes and results of the employment relationship at the level of the workplace, the industry and society as a whole. “Employee Relations”, in contrast, involves the body of work concerned with maintaining employer-employee relationships that contribute to satisfactory productivity, motivation, and morale.

Salamon (2000) positioned industrial relations as being associated with “male, full-time, unionized, manual workers in large manufacturing units involving restrictive practices, strikes and collective bargaining while employee relations tend to reflect “the development of more diverse employment patterns (non-manual, female, part-time, etc), the growth of employment in the ‘high-tech’, service and commercial sectors and reduced level of unionization coupled with management strategies aimed at individualizing the employment relationship”.

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This view is also shared by Blyton and Turnbull (1994) and they see industrial relations as inevitably associated with trade unions, collective bargaining and industrial action and employee relations adopting a broader canvas to include non-union as well as union scenarios and relationships.

When comparing between industrial relations and employee relations, the notions on the collective and individual aspect of the employment relationship are often used to differentiate between them. Marchington and Wilkinson (1996) highlighted that the term “employee relations” has been increasingly used by personnel practitioners to describe a part of personnel and development that is concerned with the regulations (collective and individual) between employer and employee while Rose (2001) went further to suggest that industrial relations is geared toward the collective aspect of an employment relationship.

Collectivism is defined as “the recognition by management of the collective interests of groups of employees in the decision making process” (Purcell and Gray, 1986) and this is one of the key features in trade unions. Without collective organization or representation, employees are unable to influence and regulate the employment relationship effectively. Trade unions, therefore, become a key vehicle when managing the collective nature of industrial relations.

Salamon (2000) defines a trade union as “any organization, whose membership consists of employees, which seeks to organize and represent their interest both in the workplace and society and, in particular, seeks to regulate the employment relationship through the direct process of collective bargaining with management”. The results of collective bargaining between employers and workers (through the union) may or may not cover all aspects of the employee relations. Without unions, there is no collective bargaining, and employee relations prevail.

Job and pay practices in unionised establishments may however influence employee relations. The role of the state is constrained by the strength of the bargaining relationship between employers and unions. With weak unions, which is often the case in developing countries, the state has scope for a stronger role, and is expected to intervene by providing protection to workers. If both the unions and the employers are strong, the government has no cause for strong intervention.

Historically, although managements vigorously attempted to exclude trade unions from their workplaces, in practice the strength of union organization in many areas of the economy obliged them to try to sustain their prerogative by accommodating workers’ demands. During the twentieth century, employers often recognized unions for collective bargaining so as to mitigate disruption, and foster order and stability (Hyman, 1975). This was, however, in large part a reaction by employers to the pressure coming from workers themselves to organize unions (Clegg et al, 1964). Attempts to exclude unions caused too much disruption, given the collective power that workers were able to wield. Thus employers took a pragmatic approach, recognizing unions, but doing so in a way that disturbed managerial prerogatives as little as possible (Gospel, 1992).

Union networks also provide an effective communication infrastructure. It has been proposed that unions can add value by providing an efficient way of communicating and negotiating with employees. In particular, union networks have an infrastructure that facilitates lateral communication and coordination; union representatives act as a ‘lubricant’; and negotiations are also less expensive if the organisation only has to deal with union specialists (Black and Lynch, 2001; Bryson, 2005; Cutcher-Gershenfeld et al., 1989).

Indeed, research evidence suggests that there is a clear change taking place in employer

attitudes with a greater willingness among many companies to at least tolerate the prospect of having to deal with trade unions. In part, this reflects a growing belief among a number of employers that trade unions are much more sensitive to the business needs of enterprises than they ever were in the past and are more willing to cooperate with management in developing and helping to enforce workplace reform. However, the prospect of trade union being less “adversarial” in nature is still being viewed with much suspicion.

At the same time, there is also a discernible trend toward a greater individualisation of the employer-employee relationship, implying less emphasis on collective, and more emphasis on individual relations. This is reflected, for instance, in monetary and non-monetary reward systems. In industrial relations, the central monetary reward is wages and salaries – one of its central themes (given effect to by collective bargaining) being internal equity and distributive justice and, often, standardisation across industry. Increasingly, organizations begin to place emphasis on monetary rewards linked to performance and skills through the development of performance and skills based pay systems, some of which seek to individualise monetary rewards (e.g. individual bonuses, stock options, etc.). Individual commitment is secured through communication, consultation and participatory schemes underline the individualisation thrust.

Faced with pressure by both management and government strategies who are anxious to constrain, rather than support trade unionism, and to protect managerial prerogative, capitalism and the existing social order, trade unions will need to come to terms in an active way to a more individualised world of work so that they can maintain their relevance in their industrial relations role.

In a Cambridge study (Taylor, 2004), it was found that half the companies it surveyed said they intended to examine strategies designed to resist any advance by trade unions through the recognition procedures laid down by the 1999 Employment Relations Act. In addition, a further quarter were looking at ways to lessen any threat from recognition by seeking to manipulate the choice of trade union and the nature of the bargaining unit covered by any acceptable recognition agreement.

Despite an apparent acceptance of the pluralistic perspective, many managers still felt somewhat constrained by what they regard as restrictions place on their ability to do their job by trade unions, collective bargaining and the industrial relations system. The requirement to consult or negotiate about organizational changes is often perceived as an imposition which diverts time and attention away from their primary task of maintaining the productivity and efficiency of the organization. Consequently, it may be argued that there is a constant underlying pressure within management both to resist any extension of joint regulation and to restore unilateral regulation wherever and whenever circumstances allow.

So as far as management is concerned, the primary purpose of industrial relations is to support its strategies aimed at maintaining efficient and effective operations and improving organizational performance. Gospel (1973) argued that within this there is a further implicit objective of maintaining managerial security, which “is concerned with the distribution of power, control and decision making” within the organization. Such security may be achieved through safeguarding, and if possible extending, “managerial prerogative” or including employees in the decision-making process and “management by agreement”.

It is natural to assume that the efficiency of an industrial relations system can be judged by its ability to achieve compromises which resolve industrial conflicts. Implicit in the pluralistic relations is the view that good industrial relations requires all conflicts of interest between workers and workers, and between workers and management, be diagnosed, articulated and resolved (Dobson, 1982). The function of diagnosing, articulating and resolving conflict is the function of the trade unions, and not of paternalistic management with good communications.

In substituting good industrial relations with employee relations, it assumes that the management will take the necessary measures to make provisions in their policies, procedures, systems, communications or strategies such that the employer-employee relationships are constantly cordial and conflicts can be resolved in a harmonious manner.

This approach seems to subscribe to a unitarist view that the management and workers have identical interests and hence may be expected to pull together towards the same objectives. Hence the management expects workers to act as a team and assist the firm achieve its aims. Industrial action are not necessary since everyone should be working together for the common good and conflicts are assumed to be non-existent as a common set of values binds both parties together. Trade unions also become of no value to either management or employees as collective bargaining by union representatives are replaced by consensus building between the management and employees directly.

However, as in the criticism of the unitarist perspective, this approach assumes that the management’s prerogative is legitimate, rational and accepted. Moreover, employee relations approaches through emphasizing individualism (rather than collectivism), unitary (rather than pluralism), consultation (rather than uniformity), employee commitment (rather than simple compliance) and empowerment and ‘responsible’ autonomy (rather than direct control) may be seen as a re-assertation of managerial prerogative, albeit under an apparently more positive, developmental and humane guise (Salamon, 2000).

Also, while much of the above discussions have been centred around the employer, employee and their union representatives, the other actor in the industrial relations system – the specialized government agencies concerned with industrial relations, must not be ignored (Dunlop, 1958). Poole (1986) defined the state as indisputably the “third force” in the industrial relations system.

Government policies and strategies play a major, if not fundamental, role in shaping, directing and regulating the social structures and interactions which make up any society. As such, they have been an important factor in “defining” social problems and “setting the agenda” for national debates about employee relations (Winchester, 1983).

Poole (1986) has suggested that government strategies are directed towards the “problem of control” in three fundamental areas: employment levels (including job creation and protection), work relationships (including union rights, the role of collective bargaining and industrial democracy) and the distribution of economic rewards (including low pay and rate of wage increases). In other words, employee relations cannot be used to substitute such representative position of the government in industrial relations.

The second half of the twentieth century has witnessed tremendous changes in how work is performed, where it is undertaken, and the terms and conditions of employment of workers. A number of factors are altering fundamentally the basic nature of employee relations. The following trends are especially important .

The blurring of boundaries between occupations caused by technologies

Decreases in the average size of commercial establishment. Larger establishment have always been more prone to unionisation than small forms.

Greater use by firms of casual and part-time workers

Changes in public opinion away from collectivist and toward inidividualist values

Conventionally, the subject of employee relations has centred on bargaining between management employees, on the establishment of procedures for handling grievances, disputes and disciplinary matters, and on the introduction of new working arrangements and techniques. Such matters have often been associated with conflict between management and workers. However, it is increasingly recognized that in the modern world, employee relations need to focus on harmony and co-operation among all the firm’s interest groups, and on the common pursuit of business goals. Nowadays, employee relations need to be based on shared understanding of a company’s objectives and on mutual trust between management and labour.

As such, the modern approach to the management of employee relations is to emphasize co-operation rather than conflict and to integrate employee relations policies into the overall strategy of the firm (Bennett, 1997). Such strategic and more integrated approach to managing employee relations led to the emergence of human resource management (HRM) as the means to secure employee commitment through emphasis on mutuality of employer/employee objectives.

However, it was found to be difficult to marry “traditional” or “orthodox” industrial relations with HRM since industrial relations has a mainly collective orientation while HRM concerns are largely individualistic (Rose, 2001). This contradiction similarly reinforces the dilemma faced in attempting to substitute industrial relations with employee relations. Along with the contradictions between HRM and industrial relations, Legge (1995) posed a number of rhetorical questions:

“Can an employee be committed to both organization and trade union simultaneously, particularly of workplace employee relations are adversarial rather than collaborative? How does functional flexibility square with multi-unionism and associated demarcation lines between jobs with union territoriality? Can numerical flexibility ever be compatible with union positions on job security, and how does the unitaristic stance of HRM sit with the pluarism of ‘traditional’ industrial relations? Can HRM and ‘traditional’ British industrial relations cahabit?”

To circumvent this dilemma, academics begin to adopt the ideology of “new industrial relations” which encompasses some of the individualistic concerns of HRM (Beardwell, 1996; Clark, 1997). Clark (1997) offers the following interpretation of “new industrial relations”:

“New industrial relations represents three ideological images propagated by the contemporary state: first the promotion of managerial prerogative, employee compliance and a low strike level; secondly, a rejection of collective bargaining and trade union recognition as public policy and their replacement with managerial determined regulation and individualism in the employment relationship; thirdly, a prescription for management labour use strategies centred on flexibility and extra-contractual commitment through human resource management. Each image invokes the formative influences of libertarian laissez-faire… and rejects influences centred on pluarism, collective bargaining and trade union.”

In other words, the “new industrial relations” attempts to change working practices and unions to become less confrontational, more flexible, more accommodating. While there is little doubt that incorporating the “best” elements of an organisation’s industrial relation system into its HRM strategy is the way forward, the adoption of this “new industrial relations” remain a daunting task. This is partly attributed by the fact that the take-up of HRM in organizations has been “partial” and sporadic and the way HRM policies have been introduced within organizations has remained largely piecemeal.

In conclusion, as shown by Kessler and Purcell (1995), individualism and collectivism are not mutually exclusive categories but are separate components of the same relationship. In the same manner, although employee relations and industrial relations have been distinctively differentiated, each discipline plays a key role in ensuing harmonious and productive relationships between the employer and the employee. To achieve this state will require strengthening of employee relations through integrated HRM strategies as well as re-shaping of the industrial relations, just like the ideology offered by the “new industrial relations”.