Industrial Pluralism: A Theoretical Perspective

Abstract:

The term ‘industrial relations’ came to be used in the mid-20^th century to describe the involvement between industrial workers and industry owners. As employment diversified into non-industrial work, the broader term ‘employment relations’ began to be used to describe the functional interactions between workers and employers.  In an economy that is part capitalist and part socialist, the power dynamic between the workforce, management and business owners is based on the fact that these entities are differently motivated, which impacts who exercises the authority to allocate, organize, manage and compensate the work in the organization. Balancing the needs of the labour force with that of the organization is the challenge that human resources managers deal with on an ongoing basis. This article examines the evolution of industrial relations and various theories of labour, with a focus on Industrial Pluralism, its assumptions and suppositions; strengths and weaknesses; and application and relevancy.

Evolution of Employment and Industrial Relations:

The dictionary meaning of Employment is, the condition of paid work (dictionary.com)where one party is the ‘worker’ and the second, the ‘payer’. The relationship is the fulfillment of reciprocal needs. The paying side possesses an inherent authority over the workers receiving the payment for his efforts. Assumedly, during older societies were interdependent as well as, egalitarian. Those physically stronger  hunted and gathered food, clothing and shelter, which were shared between those who could not. It is likely that with agriculture becoming the mainstay, people became more settled and individuals who emerged as leaders may have been the ones who gathered more resources, leading to claiming rights to the land. The more they had, the more was the power they came to wield over those that did not. As societies became increasingly self-sufficient, the leaders assumed the role of the ‘protector’ and ‘provider’ and it became the harder for the weaker to break away. Gradually these protectors and providers went on to amass wealth and power, which granted them venerable status as ‘nobles’, by the lesser who became their ‘servants, peasants or serfs’. The nobles functioning like ‘lords and masters’ hired their most loyal servants as ‘bailiffs’ to manage and suppress the rest of the workers. This was the origin of the ‘feudal’ system under which nobility not only determined wages, but also the taxes for the right to rent and cultivate the land. The medieval period (years 1000-1500s) was a primarily agrarian economy in which economic relationships depended on land produce and early form of trade which was the exchange of surplus food for other necessities such as cloth and tools and implements, facilitated by the development of artisans and craftsmanship. Significant advancements in the area led to the establishment of ‘guilds’ dedicated to specific trades. These guilds enhanced production, training and compensation within the trade. It was believed that ‘guilds’ may have inspired the formation of ‘trade unions’ down the ages. Gradually  ‘generational transfer of power began to take place which divided society into distinct classes on the basis of prosperity and means of livelihood. In many parts of the world tough restrictions began to be imposed on the freedom of workers and by the mid 1600s bondage or ‘slavery’ came into existence. ‘Slaves’ were bonded workers who were bought and sold like commodities for the purpose of serving the masters, who owned them and descendants born to slaves remained slaves.  The practice continued for centuries before being abolished in the United States in the year 1865. Today, any form of forced exploitation of labour is still referred to as ‘slavery’.

The use of improved implements and inventions allowed agriculture to flourish and by the mid 1800 – 1900s industrialized economies became prevalent with marked social differences between farmers, artisans, and industrial workers. A commercial revolution ensued leading  the era of ‘capitalism’, under which the scale of power was tipped towards industry owners whose end goal was maximizing profits as they controlled  resources alongside a workforce that was more than willing to perform factory work in the urban centers, over agriculture since it saved them from taxes imposed by the controlling landlords. Industry work was seen as a more dependable means of livelihood due to mechanization and lesser input of physical labour as compared with agriculture. Workers became a voiceless means to the end goal making owners rich, in exchange for the freedom to work for anyone and anywhere. As capitalism matured, the forces of demand and supply became stronger. Economically, the owners’ single-minded focus was on maximizing profits with the lowest investment leading to poor working conditions in the factories involved with production.  As stated in the ‘History of Employment Relationships’, ‘the master and servant relationship was drifting towards an employer and worker relationship’. This dynamic was individualistic and less secure. The overall political power rested in the hands of capitalist owners. Employment practices were exploitative and workers had no control over how work was organized, despite the freedom to choose where to work and for whom, without being bound to masters or confined to occupations.  Socially the gap between the working class and capitalist owners was wide. That aside, slavery still existed in many parts of the world and employers tried to restrict workers through contracted terms of employment and bonding.

From mid-1800s skilled labour united to challenge the power wielded by the employers  to negotiate improved wages and working conditions and continued with unified protests despite facing prosecution on charges of conspiracy. In time  workers unions advanced sufficiently to have a positive socio-political influence on the development of legislations that would secure humane conditions of employment for workers at the cost of employers which employers frequently resisted through court ‘injunctions’ preventing unionization in their company, while acceding to the demands for improved wages and working conditions.  The substitution of labour force with mechanization lent to the industrial revolution as goods began to be mass produced efficiently and cost effectively after the initial capital investment was done. However it also divided the workforce between those who ‘managed’ and those who ‘performed’, which is the foundation of ‘top-down’ style of managing. By 1905, the Industrial Workers of the World association was formed in the United States, as the nucleus of 42 labour organizations, with the main agenda of mitigating the class conflict through a ‘socialistic’ approach, which advocated for democratic workplaces through shared control of capital and other resources used for production. Between the years 1900 to 1925, the socialist ideology for the overall well being, advanced the broad idea that production must be for the larger good of ‘society’ rather than blind self-interests. While some thinkers believed that a capitalist society could be reformed towards a socially just system through socialism, others like Karl Marx, inspired by Vladimir Lenin (1870-1924) believed that it was necessary to break off from capitalism completely and proposed the idea of ‘communism’ under which aimed at replacing private property with public ownership.

Industrial Pluralism

Industrial pluralism, gained momentum in the 1940s,  is the view that collective bargaining is a form of self –government under which management and labour jointly legislate rules for the workplace. The concept was propagated in the United States in the early 1940s, by an economist, John R. Commons. Commons regarded society as ‘a composite of a multitude of interest groups, each competing to obtain its goals. He identified the process of conflict and compromise among these groups in the labour market, product market and the money market’. This is the theoretical basis of pluralism in industrial relations, or industrial pluralism as it is called and is best described as a form of ‘partnership agreement’.  Groups pursue their goals and limit the abuse of power by each other. According to Bain and Clegg (1974), industrial relations refer to the rubrics that regulate employment and the ways in which rules are created, construed and administered.  Bruce E. Kaufman has a more structured definition stating, ‘to a large degree, most scholars regard trade unionism, collective bargaining and labour–management relations, and the national labour policy and labour law within which they are embedded, as the core subjects of the field of industrial relations.’ In another definition, Industrial pluralism is a manifestation of law, policy and industrial organization, which is specific to collective bargaining. 

The industrial pluralism theory incorporates principles of ‘mutuality’, in regards of shared interests; ‘plurality’, in regards to differences; ‘trust and respect’, for the intentions of the other party; ‘consensus’, in regards to obtaining agreement; ‘engagement’, in regards to involvement, all within the frame of social justice and working –class mobilization. As a theory of employment, industrial pluralism acknowledges the simultaneous  coexistence of multiple social groups with conflicting interests, in the workplace.  From a pluralistic perspective, the imbalance of authority and income, favouring management ranks, directly reduces purchasing power and thereby impacts perceptions of power and fairness among workers. The perceived unfairness consequently impacts morale, turnover, productivity and exerts pressure on the employer-worker (i.e. industrial) relations, creating conflict and industrial tension. Secondly, active in the theory is the notion that there are shared interests and common goals between employer and workers, which have to be balanced with the conflicting interests. While shared interests relate with the desire to achieve organizational vision since its links with overall economic prosperity and success, which lends to the existence and success of the employment relationship in the first place; the workers’ desire for higher wages, benefits, employment security and safe work environment, is in conflict with employers’ goals  to achieve  higher productivity, lower labour and production costs, and overall profitability. This interplay between the shared and conflicting goals creates the climate for the formation of labour unions, legislations, public policies and dispute resolution procedures, as the important institutions delivering equity under industrial pluralism.

Pluralism in industrial relations is about democratic relationships as much as it is about granting, protecting and balancing competing interests of employers  and workers. Uniting and collectively to match the impacts of imperfections of labour markets and the dominating power of employers is seen to be a natural solution to check unilateral decision-making that may be detrimental to the other party. When implementation of pluralism involves establishing  conjoined, mutually agreed set of rules for working and worker rights, it infers that joint bargaining is the form of self-governance for both, workers and the employer. A mechanism  is put in place to oversee the application of the rules of engagement, with tribunals directing the application of those rules to individual situations. That being said, the freedom to exercise democracy has been granted constitutionally to counteract the influence, authority and often, privileges enjoyed by the other group, often by some type of right. Freedom and rights are the coveted goals for the straitlaced image of pluralism. In practice although workers by freedom of association with unions take collective action against employer’s decisions to protect their interests, entitlements and other rights, neither parties enjoy the utopian concept of freedom omnipresent due to competing interests. In that environment the struggle to possess equality in power becomes a more relevant element, which forces business management take place through coordination and persuasion, rather than by enforcing and controlling which was traditionally the case. 

As a theory, Industrial Pluralism can be analyzed from three perspectives: economic, political and structural.  First, from the economic perspective, the employment relationship is focused on creation of economic gains for the parties through treating labour as an input and subject to market factors. The concept is based on employers and workers interacting in labour markets impacted by the constantly shifting demand and supply and fiscal monitoring. Second, the political perspective is based on the point that traditionally employers have had the authority to set the rules that govern organizations and have exercised greater bargaining power than workers. However it is workers who have the ability to control their output and their decisions are determined incorporating mutuality and consensus.  From the structural perspective, the organization is the entity at the micro-level and the state, at the macro-level create governance models within the limits of which the parties function and resolve conflicts.

The pluralistic approach in industrial relations has prominently inspired the development of the Systems Theory and the more recent, Strategic Choice Theory.

Systems Theory:

Within the frame of reference of industrial pluralism, John Dunlop (1958) analyzed the factors that create the chemistry of the relations between workers, employers and the oversight-providing governments. As per Dunlop, a web of formal and informal prefaces directs the interactions between these parties and affects all the aspects of employment such as, recruitment, wages and hierarchy of jobs and rights. The prefaces exercise influence ‘outside in’ and are logically arranged around the immediate layer of the direct players. They consist of the economic, technological and social environment reflecting the existing power differentials; the governing laws that seek to create orderliness and fairness in the society; and lastly the common philosophy of thought related with the beliefs, culture and norms, that bind the society as a whole.

Strategic Choice Theory:

This theory is an offshoot of industrial pluralism and has developed due to the rapid changes in the external environment, which have impacted industrial relations. According to  the American scholars of industrialism, namely  Kochan, Katz and McKersei (1986), Dunlop’s systems concept evolved considerably due to changes in the society and industry at large, therefore the importance of collective bargaining as a mechanism to resolve disputes and make the rules in an organization, reduced. The relevance of unions has been overtaken through transformational human resources management strategies that encourage combined sharing of the organizational vision, leadership and competency development, information sharing, team work, engagement in the workplace and drive the overall general outcomes of work teams.

Strengths of Industrial Pluralism theory:

Industrial pluralism concedes to the competing interests of employers and workers co-existing within the organization, and propagates democratic sharing of power. It creates the opportunity for presenting, discussing and fairly negotiating those interests in a non-adversarial environment, even while remaining united towards the shared goal of organizational success. 

The development of standards, policies and legislations favouring employees, including creating better, more secure and safer workplaces can be attributed to pluralism.

The pluralism theory clearly addresses the diversity between groups in the workplace. It supports unity and cohesiveness under the umbrella of the employer and, or the representing union, thereby giving a sense of security and belonging  towards the shared motives to achieve goals and other bargained outcomes.

The natural conflict that exists within the organization is dealt with through negotiations as part of the collective bargaining process. Deadlocks created due to divergent interests are cleared through third party, objective mediators. Discussions between the employer and the worker, involve give and take on issues. The parties hear each other out, gain understanding of the challenges, and develop strategies and tactics towards achieving a collective decision. The state creates the political system and functions as the ‘umpire’.  There is no option of walking away from negotiations until an agreement is reached. Hence, an outcome is thereby achieved between adversarial parties.

The welfare of workers is paramount since they are considered to be citizens entitled to all the rights and provisions under the law, as opposed to be being an entity to be exploited. For example, any worker is entitled to a conducive working environment, fair wages, salary increments and other benefits that an organization has the wherewithal to extend. Labour policies and program development is done keeping this basic principle at the forefront. Typically workers in nations with lower unionization, have fewer social benefits.

Last, but not least, pluralism encourages disadvantaged classes of labour to advance their abilities and protect their interests and job security. For instance, in a set up where the management group has higher power and control over the organization, workers have the privilege to demand of their rights if oppressed through the unions they form.

The overall intent of pluralism is to ensure that the best is attained in the workplace and work environment. 

Weaknesses of industrial pluralism

The biggest weakness of the industrial pluralism theory is that it assumes that the parties possess equal and uniform bargaining power which lends to a fair playing field for negotiating with consensus and mutual agreement.  In fact, the distribution of resources, power, privilege and influence is still mostly unequal which does not make for a level playing field due to social and political influences that the employer group enjoys. The groups are interdependent no doubt and therein lies the need to find meeting ground.

Another crucial weakness of the theory is that the system underplays the conflict between the parties, whereas historically equitable sharing of scare resources and outcomes has always created biases when dealing with conflict and change.  Also, negotiation is based on the assumption that there is generally room for giving in to the demands, which is not always the natural case.

Negotiations are centered on the process and procedures instead of on conflict resolutions. As labour becomes more diverse, unique and sophisticated, the process of obtaining a collective agreement gets more complicated, fraught with impasses, disagreements, and is frequently long drawn and costly.  However it remains the key justification for the identity of the unions to exist. According to Gennard and Judge, the pluralism theory mainly resides on the procedure and rules, thus forgetting the methods that also contribute to the resolution of conflict. Besides, taking into account the theorists that came up with the industrial relation, ignored the elaboration on the mechanism of conflict solving as they dwelt much on the formulation of the laws to be used but not the ways of resolving them.

There are weaknesses in the implementation and interpretations of the collective agreements when unions assume the protectionist role and limit the control of management in regards to operational matters.  Frequently the worker-employer rights, interests, and power are at variance with management organizational, and even government goals.

Finally, considering that the basis of industrial pluralism was to prevent the exploitation of workers at the hands of capitalists, fact remains that despite the existence of unions the gap between the rich and poor is wider than ever in many nations. Instead of achieving redistribution of income, political focus has been on pursuing economic growth. After adjusting for inflation, the increase in wages of an average worker has been minute, whereas the increased productivity has lined the pockets of employers more than ever before.

How industrial pluralism is used in terms of employment

Pluralism in industrial relations helps improve ‘job quality’ within the industry, going beyond advocating for fair job treatment, safe work places, benefits, wage increments, as well as several other workers’ privileges. Job quality references multidimensional aspects of employment that impact the workers life outside the workspace, including intrinsic factors such as, job satisfaction, well-being, work-life balance, income security, learning and development and overall socio-economic security. Pluralistic reasoning implies that lower quality jobs are the ones that lack one or more of the fundamentals.  In addition, workers unions are required not only to promote but also to protect high level of job quality to ensure that improvement of job quality is fulfilled. In other words, pluralism contributes to employment that takes care of the workers wants as well as understands their behavior, generating desired output in at the end. However in the events where the job neither understands or fulfills workers’ needs the job quality remains low.

Pluralistic relations help employers identify the problem areas, improve training, worker retention and overall working conditions, which in turn are essential cogs in the success of the organization. Organizational improvement benefits employers and workers, both, and helps to deal with competitive pressures, which are frequently the root cause of tension in workplace relationships causing undesirable behaviors to take place. Through establishing acceptable standards of employment in the industry, unions counterbalance the employers’ single-minded focus on increasing revenue, bringing in the responsibility towards the well being of the resource that affects that end. It views the overall quality of the employment relationship through the focus on the equality, efficiency and voice of the workers within the context of the institution.

The pluralist approach suggests that disagreement should always be handled across a common table, between the firm and the workers of the organization. In discussing matters across the table, the distribution of power is assumed to be universal and skirmishes are decided within foreseeable realms of negotiated collective agreements. For e.g. a worker who has been disciplined by his manager presents his case to his specific union in expectation of protection. The union through the principle of equal and collective bargaining works with the employer to investigate whether the worker is in the wrong or if the manager’s actions are violating the collective agreement in exercising management rights. In another example of a situation in which workers are given notice of termination, the unions move in to negotiate on the issues with the managerial body on behalf of the worker. The employer gives the reasons for termination notice and the party gives their views depending on the argument of the organization.

Application of different theories to an employment scenario

There are majorly, four theories namely Unitarianism, Pluralism, Radical or Marxism and Behaviorism. The theories have shown different output on how the employment aspect is carried out.

Unitarianism vs. Pluralism

The two theories have less in common in their assumptions and perceptions.

Unitarianism is based on the “happy family” concept as it shared interests and goals in an organization. On the other hand, pluralism appreciates diversity and conflicts of interests between the entities and the inherent conflict in regards to those, in an organization. Thus, power distribution is the major difference between the theories. Additionally the unitarists consider the unions as “intruder” while pluralism acknowledges it as “legitimate body” as part of the work place since they represent the workers via the collective bargaining. The unitary approach is patriarchal and there is an expectation of total loyalty from the workers.  The pluralists do not have authoritarian approach and hence have no such expectation of loyalty.  For

Radical/Marxism vs. Pluralism

The Marxist theory claims that capitalism breeds greed and corruption issues. In this circumstance, organizations profit at the expense of their workers. 

Additionally, emphasis is built on clashes of class between the capital and the labor. Both, the Marxist and pluralist theories are alike in reference to “multiple interest groups” existing in the working place and the conflict that arises between the worker/trade union and the management does exist. However, under Marxism the state plays a vital, controlling role in the protection of the workers and reducing the power of the employers.

Behavioral Economics vs. Pluralism

Theory of behavioral economics emphasizes social welfare management should be responsible for whatever is good for the workers, because human behavior is not rational and is focused on short term gains, as opposed to long term benefits. Behavioral relations tend to bring management close to the worker to induce understanding of the values, expectations, situations and goals of the individuals.

Pluralistic industrial relations involve two different groups with different goals in a firm and focus on sharing of power.

Industrial Pluralism in Canada and the United States:

Canada is a combination of socialistic and capitalistic economy, with the decentralized political landscape in which decision-making rests between national, provincial and municipal governments. The legal framework for unionization, in Canada, like the United States, is based on the American National Labour Relations  (Wagner) Act of 1935. The Wartime Labour Relations Regulations, adopted in 1944 was the first in Canada to legally recognize the existence of unions and to force employers to negotiate with organized workers. Within this realm in Canada also industrial relations are characterized by the existence of  ‘pluralism, or divergent interests’ and ‘voluntarism or having the right to representation by trade unions’, albeit selectively. Between the United States and Canada, there exist cultural and attitudinal differences which impact the treatment of unionization. The United States is more industrialized leading it to be characterized as a capitalistic society with pronounced class differences and marked importance of non-government authority. Canada has been more egalitarian and socially democratic, with more respect for government authority.  In Canada, the federal, provincial acts and labour codes guarantee Canadian workers the right to representation by unions, to bargain collectively with employers and this function through various labour relations boards in addition to agencies that mediate in case of disputes.  A union can become a certified bargaining unit through following a legislated process and employer interference with the formation of unions is deemed to be unfair practice. Furthermore, workers in a unionized organization are required to become members and pay union dues. In case of religiously imposed exceptions, the amount equivalent to the dues, as per the Rand formula, is deducted and paid to a charity of choice, to recognize that the worker receives benefits that have been negotiated by the unions for all the workers. The National Labour Relations Board regulates unions independently at the federal level and private sector workers’ unions are regulated differently. In the United States the right to unionize allows for the employer to participate actively and ‘campaign’ against the unions. The states have the authority to implement their own ‘right to work’ laws and prohibit mandatory union dues.  As far as dispute resolution is concerned, the legal outline for the collective bargaining gives the parties, lesser control than in Canada.

Conclusion

Industrial pluralism is based on the need to balance worker needs with characteristics of the labour markets, the economic and legal arena, and the dominating power of employers. To match the power of the employer unionizing is seen to be a natural solution because it supports achieving balance of power when dealing with competing interests of management and workers.  Balance is achieved when parties retain their ability to provide input during the collective bargaining process, and compromise to obtain agreement on issues related with equitable rights and conditions under which work will take place.  Differences of opinion or divergent interests are dealt with through negotiating and going through grievance and dispute resolution procedures. The result, a perception of fairness that stems from having a ‘voice on the table’, has a positive impact on overall job satisfaction as social and psychological needs are satisfied. In ideal world pluralism offers sound basis for developing public policy and stable partnerships between employers and workers. On the flipside, pluralism creates a chasm between the same players, when unions resort to populist and biased demands on behalf of workers they represent, and in that way they disengage with the needs of the organization itself.

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