Managing Employment Relations: Oxford Health Care International (OHCI) - Essay Example

 Managing Employment Relations: Oxford Health Care International (OHCI) Table of Contents Introduction 2 Background to OHCI 2 Analysis of OHCI’s Employment Relations Practices 2 Unitarism 2 Scientific Management Theory 3 Human Relations Theory 3 Human Resource Management Theory 4 Pluralism 4 Systems Theory 4 Strategic Choice Theory 5 Marxism 5 Labour process theory 6 Feminist Theories 6 Postmodernism 6 Recommendations 7 Employee and trade union engagement 7 Employee growth 7 Performance-based compensation 8 References 9 Managing Employment Relations: Oxford Health Care International (OHCI) Introduction There is considerable difficulty in defining employment relations, also called industrial relations [Abb06]. The difficulty mainly stems from the term "employment relations" itself that has been the subject of much debate over the years. In American HRM literature, the term is used to refer to the collectivity of HRM activities and the associated interactions that occur between individual employers and their employees at the workplace level. British HRM literature, on the other hand, gives the term a broader perspective: it describes employment relations as going far beyond the workplace to encompass the multitude of interactions between employers and their associations, employees through their unions and the state. In this paper, the latter view of employment relations is adopted. This paper uses the various theories of employment relations to analyse the employment relations practices of Oxford Health Care International (OHCI). The theories fall into three broad categories: unitarism, pluralism and Marxism. Based on the analyses, the author makes a number of recommendations for the improvement of OHCI’s employment relations. Background to OHCI OHCI is an Oxford UK-based manufacturer of medical gas equipment. The company was established fifty years ago as a small family business. Over the last five years, under new management, the company has experienced considerable growth and opened a French subsidiary called Dijon Health Care (DHC)[Rep]. DHC is managed by Stefan Borcieu a cousin who married into the family that owns OHCI. OHCI mainly serves EU hospitals, although expansion in recent years has seen the company export to countries outside Europe. A year ago, for the first time in its history, the company recruited a Personnel Officer, charged with handling the company's HRM issues. Analysis of OHCI’s Employment Relations Practices Unitarism Unatarists see the relationship between the employer and employees as one of cooperation, even though they recognise that time and again, conflicts may arise between the two parties[Abb06]. Unitarists see the interests of the two parties as being common such that no conflict may reach the point of rendering the firm insolvent; the two will always work their way out of the conflict as it is in their best interest to do so. Any division that might exist between management and employees is seen as a product of personality disorders, flaws in the recruitment and promotion procedures, social deviance or poor communication. In order to ensure that such division does not disturb the otherwise healthy relationship between management and employees, management should do due diligence to stamp out elements of trouble at the earliest possible opportunity, usually during recruitment. The three unitarist theories of employment relations are described below briefly and OHCI analysed against them. Scientific Management Theory This theory starts off from the assumption that, by their nature, employees are lazy and pursue narrow, short-term goals[Abb06]. Thus, given the opportunity, they will avoid work whenever possible. These attributes of the employees are inimical to the interests of the firm. Therefore, management should move with speed and exercise firm control over the employees if the goals of the organisation are to be realised. Better still, during recruitment, the managers should do due diligence to make recruits understand what the firm expects of them[Hef12]. There is evidence to show that OHCI’s management subscribes to the scientific management school of thought and sees OHCI employees as inherently lazy and, therefore, needing to be shoved around. OHCI’s MD exemplified that attitude when he said that the job of management is to spell out to employees what is expected of them and no more than that [Rep]. Stefan Borcieu, the DHC MD, is said to have echoed the same sentiment. However, there is no evidence that OHCI employees are lazy or in pursuit of short-term goals that are injurious to OHCI’s goals. Human Relations Theory This theory posits that employee self-satisfaction holds the key to a peaceful workplace[Bru11]. Autonomy in performing their daily work is a major ingredient in achieving employee satisfaction[Bru11]. The primary job of management is to create an environment in which employees derive satisfaction from their involvement with the firm[Bru11]. A primary way through which management can create that kind of environment is by ensuring employees influence the way they are governed. Management should also create opportunities for employees to improve their skills. While OHCI MD would like to believe that all the company’s employees enjoy the same status, something that should contribute to their satisfaction, there is evidence that the contrary is happening: employees are getting more demoralised and quitting as a result [Rep]. As far as employee skills improvement is concerned, the company is doing virtually nothing. For instance, while the company is busy replacing old computers with new ones, the move is not accompanied with any training. As a result, many employees struggle to use the new machines [Rep]. Human Resource Management Theory The essence of the HRM theory of employment relations is collaboration between managers and employees to achieve the firm’s goals[Iti11]. The collaboration is achieved through the elimination of social classes in the work place and opening up of lines of communication between managers and employees. OHCI has made some strides in this area. For instance, there is no preference as far as parking is concerned; managers and staff alike use the same parking on a first-come-first-served basis[Rep]. However, the configuration of OHCI’s head office tends to propagate class segregation; while production and dispatch are located on the ground floor, management occupies the upper floors. In the area of communication, OHCI performs poorly; in the past years, there have been only three personal letters by the two MDs addressed to staff. The poor communication has led to some embarrassing situations. An example is when a client asked employees for directions to OHCI’s new warehouse and the employees did know its location[Rep]. Pluralism Pluralist theories of employment relations differ from the unitarist theories in the sense that they take off from the point of view that conflicts are inevitable in the workplace[Abb06]. The inevitability of conflicts in the work place is because business organisations are complex social settings comprising different actors, each group of actors pursuing different interest. Management and employees are only two of those actors. The situation gets more intriguing when, as is often the case, individuals in the same group of actors pursue different interests. Given the various interest groups, there are bound to be multiple sources of authority in the organisation. Proponents of pluralist theories regard workplace conflicts desirable as they bring to the surface workers’ grievances. Systems Theory Dunlop’s systems theory is by far the most prominent theory of employment relations that draws from the pluralist frame[Fre11]. The theory argues that employment relations are best understood if looked at a sub-system of the wider social system. The theory sees work as being governed by a host of rules and regulations, both formal and informal. These rules and regulations are made by a system that comprises four components: the actors that include industrial actors (employers and their associations), employees and their representatives (that is, trade unions) and the state; the environmental context – prevailing economic and technological conditions; the rules that govern work and the ideology of each actor[Fre11]. OHCI subscribes to the unitary view and does not recognise trade unions. For instance, while the company has over 100 employees, only three of them are unionised. A recent event at OHCI may be interpreted as a gesture of the company’s intent to open up its employment relation to other actors. The company’s Board resolved to complete EFMD Investors in People questionnaire, even though the move was met by the head office’s MD who claimed the move was a bad one as it opened the company to outsiders. EFMD Investors in People is a prestigious European award that recognises organisations with effective HRM policies and practices. The company scored very poorly in test, partly because it has no express policy on employee relations. Strategic Choice Theory The strategic choice theory was developed in 1986 by Kochan and his colleagues to accommodate changes in industrial relations practice that earlier frameworks had not anticipated[Ros09]. Three of those changes stood out: the decline in trade union membership and the emergence of non-unionised industries; changes in approaches to collective bargaining; and the emergence of new managerial values and HRM practices that eliminated the need for trade unions[Ros09]. In what might be seen as a strategic move to discourage its employees from joining trade unions, about a year ago, OHCI hired a Personnel Officer for the first time in its fifty-year history. The Officer first task was to develop three documents: Contracts of Employment, Confidentiality Agreement and Company Handbook. From an employee relations perspective, the development was a step in the right direction. However, there are concerns among employees that managers are already flouting these documents that they took part in preparing[Rep]. Marxism Karl Marx argued that capitalist societies are characterised by the perpetual class struggle between those who own the means of production and those who work for them[Abb06]. The struggle is as a result of the inequitable distribution of wealth between the groups. Applied to industrial relations, industrial conflict is seen as the struggle between the two classes, as it plays out in the workplace. Labour process theory According to this theory, the primary function of management is to organise the factors of production, especially labour and machinery, so as to produce consumable goods out of raw materials[Vid11]. The only way management can achieve this end is by exercising control over people so as to convert their potential for work into actual work effort[Vid11]. It is only once this conversion has taken place that profit can be made and capital accumulated. On the flipside, the use of control by management to compel people to work necessarily leads to exploitation that in turn elicits resistance, either active or passive, from the employees. The resistance hampers the labour process and jeopardises the firm’sinterests. OHCI’s introduction of employment contracts and the proposal to introduce performance-based pay can be seen as the management’s efforts to gain greater control over employees. In particular, the management was keen on curtailing instances where the company lost business to former employees who set up rival firms. While the management successfully introduced the employment contracts, performance-based pay was met by much employee resistance and shelved[Rep]. Feminist Theories While there are several strands of feminist theories, the common thread that runs through them all is the ways in which men conspire to keep women in inferior roles[Mot11]. Feminist theorists see employment relations, especially trade unions, as vehicles of empowering women to hold higher managerial positions in their workplaces. Unfortunately, women employees at OHCI do not have this privilege as the company has a policy against trade unions. This policy, it may be argued, has disadvantaged women employees in the company such that they seem excluded from holding senior managerial positions: the MDs are both men. Then, in what would make early feminists turn in their graves for discomfort, female employees at the company are paid less for doing the same type and amount of work as their male colleagues[Rep]. A female employee who complained to her manager on the matter was reminded that her job was less skilled. Had OHCI female employees been unionised these are issues they might have handled better through their unions. Postmodernism As a theory that explains employee relations, postmodernism rejects the notion that workplace behaviour can be understood through theories that assume objectivity and generalise behaviour in the workplace; workplace behaviour, even in a given workplace is as varied as the number of people there are[Jen11]. At best, postmodernism is vague, at least as far explaining employment relations is concerned. However, the theory is true to the extent that employee behaviour varies greatly from one employee to another. This fact can be seen in the case of OHCI: in the face of low wages in spite of growing profits, many employees have been demoralised and left the company. However, some employees have stayed on for over twenty years, confirming the management’s notion that OHCI is a noble employer whom every employee should be glad to work with[Rep]. Recommendations Two major problems stand out from the analysis of OHCI’s employment relations: poor communication between the managers and staff and the absence of schemes to help employees sharpen their work skills. In order to address these problems and improve the company’s employment relations, three recommendations are hereby made. First, the company should seek to engage more with its employees and other employment relations actors. Secondly, the company should create opportunities for employee growth. Finally, the company should consider reintroducing performance-based compensation. These are discussed below in some detail. Employee and trade union engagement The importance of employee engagement in solving many of the conflicts between managers and staff in the work place cannot be overemphasised. A major step toward employee engagement is the opening up of the channels of communication between OHCI has made some steps, in recent years, in this direction by communicating directly to employees through personal letters by the MD. However, much more needs to be in this area, including allowing the company’s employees to join trade unions of their choice. Having joined trade unions, the company will be able to engage with employees more fully and meaningfully[Pur12]. Engagement willcreate an environment of mutual trust and common understanding between the management and employees and their union[Box11]. Mutual trust and common understanding are important if the company is to meet its employee obligations in the face of competing demands on company resources[Far11]. Employee growth One of the best practices in employment relations is for employers to provide opportunities that enhance the skills, motivation and behaviour of employees. Doing so has a number of benefits both to the employer and the employee: it increases staff productivity[Jos12] and enhances employee satisfaction[Asa11] that in turn reduces employee turnover, which is unacceptably high for OHCI at about 30%. Over the years, OHCI has adopted new production technologies that have increased production and profitability[Rep]. However, the move has not been accompanied by efforts to train employees and raise their skills. OHCI should introduce training programmes starting with basic ones designed to enhance employee computing skills. Performance-based compensation Performance-based compensation remains one of the most effective ways of achieving employee satisfaction[van11]. To the employer, the scheme represents value for money as the employer is certain that they are paying for work done. Besides, given the current situation where OHCI employees are not unionised, performance-based pay becomes a powerful alternative to collective bargaining. Unfortunately, OCHI’s attempts to introduce the scheme failed mainly due to poor communication between management and staff. In particular, staff were concerned that the scheme would replace their annual pay increments [Rep]. In reintroducing the scheme, the management should clear the air on this and other concerns. References Abb06: , (Abbott, 2006), Rep: , (Anon., n.d.), Hef12: , (Heffernan, 2012), Bru11: , (Bruce, 2011), Iti11: , (Itika, 2011), Fre11: , (Frege, et al., 2011), Fre11: , (Frege , et al., 2011), Ros09: , (Ross & Bamber, 2009), Ros09: , (Ross & Bamber , 2009), Vid11: , (Vidal, 2011), Mot11: , (Motta, et al., 2011), Jen11: , (Jensen, 2011), Pur12: , (Purcell, 2012), Box11: , (Boxall, et al., 2011), Far11: , (Fardale, et al., 2011), Jos12: , (Jose & Mampilly, 2012), Asa11: , (Asad , et al., 2011), van11: , (van Wanrooy, et al., 2011), Read More