Human Resources Management T.7. Employment Relations D. Borisova

2 CONTENTS 1. Managing the employment relationship: concepts and theories 2. The decline of joint regulation in UK 3. Unionization in Bulgaria 4. Employment relations in non-union firms 5. HRM and the “new” employment relations 6. Partnership or confrontation?

3 Definition “Employee relations (ER), or industrial relations, are those areas of the employment relationship in which managers deal with the representative of employees rather than managing employees directly as individuals” Edwards, 1995

4 Management frames of reference The main assumptions of managers towards the labor force are: 1. Unitarist 2. Pluralist Differences between the three in beliefs about: 1. Nature of organizations 2. The role of conflict 3. The task of managing employees 4. “Involvement” or “participation” of employees

5 Unitarist frame of reference ► Natural state of organizations is harmony and co- operation ► All employees belong to one team and work together to achieve business goals ► Conflicts arise from misunderstanding of goals and should be prevented by better communication ► Other conflicts are caused by troublemakers and unwanted ► Unilateral regulation (the right to manage – “managerial prerogative”) without help from unions

6 Pluralist frame of reference ► Organization consists of variety of groups with divergent interests ► Conflicts are inevitable ► They are institutionalized and resolved by negotiations, collective bargaining, consultations… ► Trade unions have a legitimate role as the collective representative of employees ► The joint regulation of ER (i.e. it is not only managerial prerogative)

7 Reasons to join trade unions ► Support workers when they have problems at work ► Improve pay and working conditions ► Workers believe in unions ► Unions provide free legal advices to employees ► Most people at the workplace are members

8 Roles of trade unions ► Negotiations with employers about pay and non-pay issues ► Participation in collective bargaining on behalf of employees ► Serve as communication and information channel for employees ► Participation in performance appraisals, creation of payment systems, recruitment and defining training needs

9 Decline of trade unions in UK in terms of: ► Union presence (one or more union members in a workplace) ► Union membership density (percentage of employees who are union members) ► Union recognition for negotiating pay and conditions of employment ► Coverage of collective bargaining ► Joint consultative committees

10 Decline of joint regulation of the ER in UK union membership: ► % of workforce ► % of workforce ► “End of industrial relations” Purcell, 1993

11 Falling union density Millward et al 2000 Sector/year Private56%43%36%26%22% Public84%81%72%57%64%

12 THE DECLINE IN THE LEVEL OF UNION RECOGNITION Cully et al 1999, Millward et al 2000 ► Widespread phenomenon in the private sector ► Particularly affected smaller workplaces and newer workplaces

13 The declining coverage of collective bargaining Cully et al All establishments 71%54%41% Private manufacturing 64%51%46% Private services 41%33%22% Public sector 95%78%63%

14 Reasons for the decline ► Social trends (greater individualism) ► Economic trends (rising real incomes) ► Demographic trends (changing composition of the workforce) ► Political trends (the role of the State as public policy maker, legislator and employer) ► Business trends (changes in the management of employment relations)

15 Reasons for the decline ► Changes in industrial relations legislation and the European Work Councils (1994) ► Changing nature of UK economy: balance of power, increase in the service sector and reduction of large manufacturing plants, manual work and public sector; less unemployment; war for talent ► Collective bargaining is disappearing with individual bargaining becoming more widespread

16 Change in influence of trade unions on organisations during the last three years (CRANET, 2003 data)

17 Change in influence of trade unions in Bulgaria on organisations during the last three years (CRANET data)

18 Proportion of total number of employees who are members of a trade union (CRANET, 2003 data)

19 Proportion of organizations in Bulgaria recognizing trade unions as participants in collective bargaining (CRANET, 2003 data)

20 The Partnership Approach ► Fairness at work - the right of all stakeholders to have a say in any decisions that could affect them directly:  The owners  The management  The employees  Trade unions  And also the customers, the suppliers, the Government, the community…

21 Definitions for “Partnership” ► “Employers and employees working together jointly to solve problems” (ACAS, 1997) ► “Key components might include high degrees of communication, personal development, employment security and emphasis on ethical people management” (Beardwell, 1998) ► “Employment security and new working practices; giving employees a voice in how the company is run; fair financial rewards and investment in training” (Monks, 1998)

22 The “Psychological Contract” ► The expectations that each party holds with regard to the other ► Includes the perceptions for:  Fair treatment  Motivation and Loyalty  Job security ► The “New” Psychological Contract: from job security to employment security and employability through more development opportunities for the employees

23 Management Styles (Handy, 1985) ► Coercive: people are motivated to make an effort in order to avoid punishment ► Calculative: explicit connection between effort and reward ► Cooperative: individuals identify with the goals of their organisations

24 Participation or Involvement? ► Participation: aims at changing the basic authority structures in the company by legislating employee participation in the boards ► Involvement: aims at getting support and commitment of all employees in an organisation to managerial goals, thereby reinforcing a sense of common purpose between management and employees

25 Non-union ER Management Styles ► Sophisticated Human Relations (a union substitution approach): invest in staff development and wide range of HRM policies (Marks & Spencer) ► Paternalism: seek the loyalty and commitment of staff through consideration for employee welfare (McDonalds) ► “Bleak House”: cost minimization and avoidance of unions (Ryanair)

26 Unions substitution by HR through: ► Alternative procedures, such as:  no redundancy policy  single status  equal opportunities policy  merit pay  performance assessment ► Strong emphasis on internal communications ► Grievance system

27 UK Employment Relations Act 1999 ► Central aim: “replace the notion of conflict between employers and employees with promotion of partnership in the long term” ► Statutory route for union recognition by introduction of works council ► Extension of rights for individual employees ► National minimum wage ► Closer engagement with social policies of EU

28 European Works Councils (1994) ► Employees should be properly informed and consulted about major issues that will have impact on them (the economic status of their employer and any proposed changes in it) ► Establishments with 50 or more employees are to have EWCs ► The consultations include:  Provision of timely and accurate information  Opportunities for employees to put forward their views  Managerial response to their views together with reasons for the response  An attempt to reach agreement on the decisions

29 Partnership or confrontation ► Partnership: TU, HRM and the “mutual gains enterprise” ► TU, employers and “partnership agreements” (Tesco, Barclays, Legal and general…) ► Anti-unionism and union suppression: “you can’t have union”, “keeping unions out of McDonalds, Marks&Spencer, IBM…”

30 Employee involvement techniques Category Areas for action Sharing information ► Team briefing ► Internal publications ► Company videos ► Electronic news systems Consultation ► Staff suggestion schemes ► Staff opinion surveys ► Works committees health and safety committees Financial participation ► Profit-related pay ► Employee share schemes ► Share incentive plans

31 Commitment to quality ► Continuous improvement ► Teamwork ► Total quality management ► Quality circles ► Self-managed project groups ► Employee award schemes Developing the individual ► Performance management ► Staff appraisal schemes ► Employee development programmes ► Investors in People ► A qualified workforce Beyond the workplace ► The community ► The environment Category Areas for action Employee involvement techniques

32 Tension on the Concept of Partnership ► Lack of long-term commitment of managers working closely with trade unions ► Extent, to what managers and unions are able to commit fully to a single strategy of co-operative industrial relations ► Is the partnership agreement part of a long-term strategy to marginalize unions instead of an alternative

33 New Patterns of ER (1998 UK ER Survey) Non-union HRM 3% Union substitution 9%Partnership2% Paternalistic development 30% Weakening unionism 13% Strong traditional unionism 14% Bleak House 22% Struggling unionism 3% Industrial relations conflict 4% C O L L E C T I V I S M Unions and negotiations Unions but minimal negotiations No unions 0-3 HC practices 4-7 HC practices INDIVIDUALISMINDIVIDUALISM 8+ HC practices

34 Conclusion ► The managerial perspective: the changing nature of work, HRM and further erosion of joint regulation ► The union perspective: exploitation and inequality in the employment relationship and the need for employees to have an independent representation of their interests ► The statutory regulations and the compulsory introduction of EWCs ► The business environment: economic, political and social context of employee relations

35 Important notice! Please, remember: Lecture 10 Lecture 10 “Equal opportunities and diversity” scheduled for the week of 8 th of December “Equal opportunities and diversity” scheduled for the week of 8 th of December will be held during the same week, on 10 th of December, Wednesday, from 18:30, for both groups A31 and A32 on 10 th of December, Wednesday, from 18:30, for both groups A31 and A32