Employer-Employee Relationships and Firm Performance



Employee relations, industrial relations and labour relations: are all terms that refer to those aspects of HRM where employees are dealt with as a group through collective agreements with trade unions. It covers all the relations between employers and employees in industry. Some scholars however see employee relations which is a more recent term as broader and includes employee participation in management decisions, communications, policies for improving coorperation and control of grievances and minimization of conflicts.

The philosophy of HRM has led to a shift towards individualism rather than collectivism due to increased competition hence leaner and more efficient organizations, restucturing, the market economy and free enterprise are changing trade union legislation.

This relationship is complex and multi-dimensional - e.g. it is influenced by the economic, social, political, psychological, ethical and legal factors.

Employee relations covers the following issues;

•  Development, negotiation and application of formal systems of rules and procedures for collective bargaining, handling disputes and grievances, and regulating employment.

•  Concerned with the formal and informal processes, which take the form of continuous interactions between managers and shop stewards, trade unions etc.

•  The bargaining structures, recognition of trade unions and procedural agreements and practices, i.e. the collective relations between employers and trade unions.

Importance of Employee Relations

•  Improves cooperation between employers and employees

•  Minimize unnecessary conflict

•  Enable employees to play a part in decision making

•  Keep employees informed of decisions that concern them

The Sources of Power

Power is the ability of a party to influence another to change its position or behaviour. It is a sly and elusive phenomenon. A party has power only if perceived as such by the other party and is acknowledged consciously or unconsciously.

Power is the capacity to influence others through the control of instruments of reward and punishment - which can be tangible or intangible. Negotiation efforts entail showing that one possess power and are able to exert it.

French and Raven (1968) have listed several sources of power:

•  Legitimate power - derived from the position e.g. kingship, managerial

•  Reward Power - derived from control of resources e.g. promotion, recommendation, training etc

•  Referent power - derived from association with powerful people

•  Coercive power - uses the ability to force other people to act against their wishes through the fear of punishment.

•  Expert power - derived from the possession of expert knowledge or information that others need but have no alternative access.

•  Personal power - derived from the personality

The Negotiation Process

Negotiation is a process used to resolve conflict by civilized societies. The process involves:

•  recognizing that there is conflict

•  preparing to meet with one another

•  communicating with the aim of persuading the other party to change its position by using strategies and tactics as instruments of persuasive communication

•  reaching agreements which if implemented successfully will eliminate the conflict

This process can be divided into:

  • The pre-negotiation stage
  • The negotiation stage
  • The Agreement

The Collective Bargaining Agreement (Contract)

Successful negotiation lead to collective agreements which are sealed by the signing of a contract which runs for 2-3 years. This consists:

  • Security of the union and its members
  • Grievances procedures and dispute handling e.g. provision of arbitration
  • Promotions transfers and layoffs
  • Wages, fringe benefits etc.
  • Working conditions e.g. Leave, holidays etc
  • Incentive pay, study leaves etc
  • Safety and health insurance etc
  • Management responsibilities
  • A miscellaneous clause which keeps the rest of the agreement valid.

Unsuccessful collective bargaining/negotiations can lead to industrial action by the union. Trade unions use strikes, pickets, boycotts or go slow to pressure management to yield to their demand.







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