Literature Review on the Employer-Employee Relationship

BACKGROUND

The Employer-Employee relations is no doubt an enormous topic in Human Resource Management that covers key areas of Employment relationship, Collective Bargaining, performance and reward management also Employee involvement which help to determine the nature of organisational commitment and performance.

The employment relationship aspect deals with the role and influence of law which determines the rights and responsibilities/rules that govern the behaviour of both employer and employee which has an impact on how relationship works out. However in recent years newer concept have emerged in Human Resource Management that has considerable changed relationship that was formally dependent upon interaction of formal legal regulations.(Beardwell and Claydon 2007)

Collective bargaining is a situation where representatives of both parties come together to negotiate on matters relating to pay, terms of employment and working conditions, in recent years there has been a shift from the traditional collective bargain to a more individualised method of bargaining.(Henderson 2008).

Performance and reward management relates to the use of individualised pay, performance-related pay and performance management. This factors determines behaviour in terms of motivation, communication and level of commitment.(Beardwell and Claydon 2007)

Employee involvement is a form of employer-employee relations that allows more participation of the employee in organisational decisions, this is when employees can influence decisions that are normally reserved for management(Marchington and Wilkinson 2008).

Employee relations is characterised by both conflict and cooperation, Marchington and Wilkinson (2008) described the management of employee relations as being vital to the success or failure of an organisation and it is seen as central to Human resource management.

(Dawson 1995)acknowledged that the achievement of organisational objectives depends upon employment relations, evidence from (Limerick 1992)suggests that individual empowering should be consistent in the event of strategic change.

Considering the competitive nature of industries and technological advancement, the importance of employer-employee relationship becomes more critical, reason being that to meet constant changing needs of consumers, effective human resource management becomes very crucial in achieving business success.

I am an MBA (General Management) Student and I am interested in this topic because as a future General Manager/business owner I want to have a better understanding on the effective ways developing positive employee relations, also to have an idea of the factors that motivates employees, how strategic objectives can be achieved through effective communication with employees? I am basing my research on a multinational company.

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The greatest asset of an organisation is considered to be the Human Resource and the greatest challenge of an organisation is how to manage these human resources efficiently and effectively so as to achieve set objectives of the organisation, my research objective will be to stress the importance of employer-employee relations, because in the UK the relationship is considered to be an employee to do a particular job in return for wage or salaries for the work they do and this goes beyond mere work for pay.

PRELIMINARY REVIEW OF THE LITERATURE

For the purpose of this research, my focus will be on the impact of employer-employee relations on key areas of Collective bargaining, performance and reward management which places emphasis on motivation and various reward systems, also emphasis will be placed on employee involvement and participation in the context of organisational commitment, all these variables constitute to the achievement of organisational objectives.

The literature review will be divided into four parts

• A brief history and Definition
• Theoretical and Empirical literature
• Benefits of mutual employer-employee relations
• Employer-employee relations within the UK including Ford

A brief history

In the early 70s the relationship between employers and employees in work place was more of a collective relationship which involves collective bargaining where representatives of both employer and employees meet to negotiate on matters relating to pay, terms of employment and working conditions, representatives of employees are known as trade union(Henderson 2008). Organisations were encouraged to recognise and work with trade unions so as to improve the employment rights of workers through collective bargaining(Marchington and Wilkinson 2005).

However, in the early 1990s, countries like UK where trade unionism were highly recognised witnessed a significant decline in trade unionism, employee relations changed from the traditional collective method of bargain to a more individualised method as a result of increase in sophisticated HRM style initiative in communication, participation and recognition(Henderson 2008)

(Edwards 2003) described the relationship between employer and employee as a system where both parties have common and divergent interest, this is a situation where employer and employee communicate their requirement and views to one another in terms of agreement on work related issues.

Theoretical literature

(Newell and Scarbrough 2002) posed different dimension on how organisations handle issues of employee relation and on this basis four management style have been suggested:

• Sophisticated human relations: employees are viewed as the most valuable resource of the organisation, emphasis employees’ appraisal and extensive method of communication aimed at enhancing employee loyalty and commitment. Trade unionism is discouraged. Many US companies adopt this style.
• Consultative approach: this is similar to the first approach only those trade unions are recognised. This style is mostly found in the European countries such as Germany
• Traditional style: employees are seen as a mere factor of production, it represents the Taylors management approach. Unions are opposed.
• Constitutional style: this is similar to the traditional style only that unions are recognised and accepted.

It limitation above theory is that different management styles can be used in the same organisation for example the sophisticated human relations style can be used when managing managers while the traditional style when managing other employee(Newell and Scarbrough 2002).

Considering theories that relate to performance and reward management, motivation theories like the Maslow’s hierarchy of need, his theory identifies five levels of needs. Level 1- physiological needs like food, water and comfort. The organisation provides financial reward. Level 2-safety needs: the organisation provides this by benefits. Level 3- social needs: the organisation satisfies employee’s social need through social gathering. Level 4-esteem needs: the organisation helps to satisfy employee esteem needs by showing employees appreciation of work done. Level 5:self-actualisation needs: deal with self needs, discovering individual’s full potential(Beardwell and Claydon 2007). Researchers have often criticised this theory following the proportion that there is no clear relationship between needs and behaviour. Alternatively Alderfer’s ERG theory suggested that needs could be classified into three instead of Maslow’s five; these types of needs are existence, relatedness and growth. Herzberg identified two factors based on his research namely motivators and hygiene factor(Beardwell and Claydon 2007).Several other theories of motivation will be examined in my dissertation.

Besides motivation, modern theory in employee participation known as employee engagement was defined by CIPD 2007 as ”the combination of commitment to the organisation and its values that goes beyond job satisfaction and motivation”. This can be linked to psychological contract which will be later discussed extensively, but this has to do with a stronger emotional attachment between employer and employee that helps in attracting and retaining employees(Henderson 2008)

The concept of ‘soft’ model HRM throws light to the positive attitude created from the use of appropriate HRM practices together with communication, motivation and leadership enhances commitment to the organisation and improved performance (Guest 2002). while the ‘Hard’ HRM model emphasizes on the effective utilization of employees, ensuring that HRM strategy are driven by overall corporate strategy(Keenan 2005).

Empirical literature

In a research carried out by (Edgar and Alan 2005)” they stated that effective HRM policies and practices should be measured by their perceived quality, not simply by the number of practices introduced.”

Another important issue raised by (Mac Mahon 1996) is that, even in small firms where the need for improved productivity is very important, reward systems was rarely tied to productivity and performance, and also conflict between employer and employee tend to be rare rather conflict was apparent on a personal level.

(Savolainen 2000)also linked employer-employee relations with the aspect of leadership and suggested three development strategies: 1)Trust building or participative strategy, 2)The entrepreneurial cooperative strategy, 3)Negotiative strategy. Findings also revealed how organisation change or move towards a new workplace and the role of line managers.

Another research suggest that the effective communication of information and ideas to employees should be developed through practice and commitment, findings also revealed that organisation should assess current culture to desired objectives and as a result new attitude often needs to be acquired by both employer and employees(Owusu 1999). In the work of (Dawson 1995) evidence suggest that human resource strategy has shifted focus of job design to career development, skill development which enhanced employee involvement.

From my findings I have discovered that most research on areas of employee relations have focused more on the impact of HRM practices on employee performance, however few researchers have worked on employee relations and how it affects organisational commitment and performance, the justification for this research is to shed more light on the impact of this relationship and how it can be improved to enhance organisational performance. I have decided to look at a car manufacturing company (Ford motor company).

Benefits

The mutual relationship between both parties increases motivation which in turn leads to increase productivity and profit maximization.

Estenson (1999) describes employer-employee relations as a key ingredient in the implementation of quality improvement(Savolainen 2000).

Furthermore, (Sadri and Lees 2001)said a positive relationship between both parties could lead to a competitive advantage over other firms in the industry and also provide enormous benefits to the organisation.

Employee Relations within the UK and Ford Motor Company

In the early 1990, the Workplace Industrial Relation Survey reported a decline in trade unionism in the UK, which was replaced by employee involvement in form of line managers who were responsible for HR activities(Henderson 2008).

Thus some empirical research in Britain confirmed a key role of line manager in handling human resource activities notable in areas of employee relations(Redman and Wilkinson 2006).

Finding of Hamill pointed out that a lower percentage of US owned plant in the UK recognized unions also that US owned company were more likely to have implemented individualized pay(Eric and Jonathan 1995).

Ford is the biggest selling motor company in the UK with several large plants located in the UK. Ford Britain and its dealers employ around 35, 000 people in areas of product development, manufacturing, sales and marketing and service departments.

However in recent times Ford launched a diversity strategy which has helped to them embrace the new employee relations in Employee engagement(FORD MOTORS COMPANY 2009).

RESEARCH QUESTIONS

The following question and objectives are based on findings from the background and literature review.

1. Should employers embrace employee involvement and participation?
2. Does mutual relations between employer and employee lead to organisational commitment?
3. What is the relationship between organisational commitment and organisational success?
4. Apart from pay, how else should employers reward performance?
5. Should employees be involved in setting organisational objectives?

RESEARCH OBJECTIVES

1. To critically analyse how positive employer-employee relationship can impact on organisational success.
2. To critically evaluate the benefits of employee involvement in setting organisational goals and objectives.
3. To critically analyse how different management style can impact on employee behaviour in terms of motivation and commitment.
4. To critically evaluate the relationship between employer and employee in Ford Motors company and how it affects their performance.
5. To recommend ways of improving employer-employee relations to achieve higher productivity and profit maximization.

RESEACH PLAN

Research perspective

According to (Jewell 2008)”states that the positivist approach is based on the experiment and desire to establish causality between variables.” However the positivism aspect of this research is to establish a relationship between employer-employee relations and the achievement of organisational objectives. There are two variables namely dependent and independent variables, the independent variable here is the employer-employee relation and the dependent variable is the achievement of organisational objectives.

Both quantitative and qualitative research will be done through primary (from questionnaires) and secondary data. Both deductive and inductive reasoning will be used.

Research Design

My research design will be a case study design which entails an extensive analysis of a single case. This would be an analysis of Ford Motor Company.

Data collection Method

Data will be collected in dept from different sources; I will use two different sources of data collection methods: Secondary and Questionnaire.

Secondary Data: This will be collected from existing sources such as textbooks, articles, internet, and journals.

Access to these Data will be done through the university’s online databases such as Science Direct, Emerald and the Internet; this will address the first three research objectives. However secondary data will limit to fully address the fourth objective that is why primary data will used.

Questionnaire

The fourth and fifth objectives of this research is to seek information from mostly employees of Ford Motor Company on how they are being treated by employers and how it affects their performance, this will be best achieved by a the use questionnaire. Questionnaires will be distributed to over 300 people and I expect a rate of return of 30-40 %. My questionnaire will be brief so as to achieve this.

However access to respondents will be achieved through a family friend in London whose friend is an employee in ford’s manufacturing plant in Dagenham, London. I have contacted him and he has decided to help with the distribution of the questionnaire bureaucracy

Sample

A Quota sampling method will be employed for my questionnaires because I won’t be able to send questionnaires to all the employees of Ford, so the study will be based on a small percentage of employees mainly in the engineering department of the company and my findings will then be generalized.

Analysis of Data

For the questionnaire I will use excel to present a descriptive and presentational analysis for data collected. The level of analysis will be more bivariate which will allow me analyse two variables together.

Limitations

The first limitation will be the generalisabilty of my research because it is a single case study and I will focus on a small percentage of a large population of Ford employees in the UK.

The second limitation will be the validity of my research work; I will make sure I go through the literature of my study frequently so as to guard against data not relevant to my research.

The third limitation will be the response rate and collection of questionnaires; in order to keep the response rate high like 40% more questionnaires will be distributed.

Concerning reliability to the research, I will try to ensure that a result of the research is replicable in future.

Another limitation might be that employee might be reluctant to disclose some information about their employers which might affect the reliability of the research.

Ethical Considerations

Research ethics

I have read and understood the BES ethics students’ handbook, and i will comply with the BES ethical guidelines and complete the ethics compliance and checklist forms. All documents regarding ethical approval will be submitted. Results from surveys will be kept confidential and safe. In addition I will seek approval of my questions for my questionnaire from my supervisor, also the reason and intended result for the research will be explained in front of the questionnaire.

Plagiarism

As for plagiarism, I understand what it means and the consequences, I will make sure I cite and acknowledge the work of others.

REFERENCES

• Anon. (FORD MOTORS COMPANY 2009) Ford Motors Company [online] [NOV. 11, 2008]
• Beardwell, J. and Claydon, T. (2007) Human Resource Mnangement: A Contemporary Approach. Essex: Pearson Education Limited
• Dawson, P. (1995) ‘Redefining Human Resources Management: Work Restructuring and Employee Relations at Mobil Adelaide Refinery.’ International journal of Manpower 16, (5/6) 47-55
• EDGAR, F. and ALAN, G. (2005) ‘Human Resource Management Practice and Employee Attitude: Different Measures- Different Results.’ PERSONAL REVIEW 34, (5) 534-549
• Edwards, P. (2003) The Employement Relationship in the Field of Industrial Relations: Theory and Practice in Britain. Oxford: Blakwell
• Eric, L. and Jonathan, M. (1995) Multinational Corporation and Employee Relations. Glamorgan Business School, Glamorgan: MCB University Press
• Guest, D. (2002) ‘Human Resource Management, Corporate Performance and Employee Well Being:Building the Worker in Human Resource Management.’ Industrial Relations 44, (3)
• HENDERSON, L. (2008) Human Resource Management for Mba Students. London: Chartered Institute of Personnel Development
• Jewell, S. (2008) How to Write a Research Proposal. Coventry
• Keenan, T. (2005) Human Resource Management. Edinburg: Edinburg Business School
• Limerick, D. (1992) ‘The Shape of the New Organisation: Implication of Human Resource Management.’ Asia Pacific Journal of Human Resources 30, (1)
• Mac Mahon, J. (1996) ‘Employee Relations in Small Firms in Ireland: An Exploratory Study of Small Manufacturing Firms.’ Employee relations 18, (5)
• Marchington, M. and Wilkinson, A. (2005) Human Resource Management at Work. london: Chartered Institute of Personnel Development
• Marchington, M. and Wilkinson, A. (2008) Human Resource Management at Work. London: Chartered Institute of Personnel Development
• Newell, H. and Scarbrough, H. (2002) Hrm in Context: A Case Study Approach. New York: Palgrave
• Owusu, Y. (1999) ‘Importance of Employee Involvement in World Class Agile Management Systems.’ International journal of Agile Management systems (1/2) 107-118
• Redman, T. and Wilkinson, A. (2006) Contemporary Human Resource Management. Pearson Education
• Sadri, G. and Lees, B. (2001) ‘Developing Corporate Culture as a Competitive Advantage.’ Journal of management Development 20, (10) 853-859
• Savolainen, T. (2000) ‘Towards a New Workplace Culture:Development Strategies for Employer-Employee Relations.’ Journal of Workplace Learning 12, (8) 318-326