Individual and Collective Bargaining - Essay Example

Individual and Collective Bargaining 1. Introduction Employment Relations is a wide concept that encompasses the management of overall interactions and relations between employees and employers as well as among the employees in order to manage work and enhance productivity and to keep the organizations’ members motivated and in high morale. Employee relations management requires planning for better cooperation and coordination and pre-empting or resolution of conflicts in a constructive manner that further leads to sustained good relationships. Employee relations is however a newer concept, as traditional HRM that was juxtaposed with Unionization of industrial workforce could not work in the changed business environment that had greater share of the service sector, more mobility of the employees and greater work opportunities for them. Employee relations therefore had to become a more dynamic and pro-active approach to personnel management and it gives consideration to not only the legal contractual agreements between the employees and the employers, but also to the psychological and the emotional contract that a worker gets into once he or she enters the employment (Taylor, 2003). The United Kingdom has emerged from the 1980s ‘neo-liberalism’ perspective on employment relations to progressively embrace the concept of ‘new realism’ where employees’ and the trade unions’ rights and benefits were greatly enhanced through legislation (Philpott, 2010).The improved legislations for employee rights have however not changed employee relations for the better. The UK public sector workplaces are perceived as unfair by the employees and there is widespread lack of engagement or loyalty shown by employees (Coats, 2010). The UK labour market is not highly regulated, as in some other European companies, and the employees face problems not only related to their legal contracts with their employers, but also with the workplace culture (Coats, 2010). In addition, the 2008-2009 recession placed additional pressure on both the trade unions and the government to survive and make the best of the disastrous downtrends. There were job cuts and salary slashes that the government had to enact in the public sector in order to meet its vast fiscal deficit (Coats, 2010).Though there has been a steady decline in the membership and power of the Trade Unions (which is hailed as a world-wide phenomena based on the presumption that trade unions are not compatible with the changed economic structure due to liberalization and globalization (Schifferes, 2004)) the UK public sector is still a stronghold of the trade unions (Philpott, 2010). In the year 2008, the public sector employees involved in labour disputes were responsible for 94 per cent of all working days lost. They also exhibited a strike rate or the strikes per 100,000 employees of 124 which is vastly bigger than the strike rate of just 2 for the private sector employees (Philpott, 2010). While their were lesser number of strikes in the year 2009, and the employees seemingly appeared to be cooperative with pay cuts or flexi hours, this cooperation is at best superficial in an attempt to save their jobs. With the current government slated to cut down over 500,000 jobs in the next few years, the panic, unrest and discontentment is brewing and may manifest in massive backlash by the employees and the trade unions in the near future (Philpott, 2010). This paper aims to analyse the roles and expectations of all parties involved in the employment relations – the government, the trade unions - and to discuss the different approaches to individual and collective bargaining. It will begin with a brief discussion on employee relations, concepts and theories and then move on to assess the current stakeholders in the UK employment relations management. Next, it will also evaluate the concepts of ‘individualism’ and ‘Collectivism’ and assess the impact of these approaches on employee relations. 2. The management of employee relations with reference to all parties to the employment relationship 2.1 Introduction Employee relationship is based on a legal, moral and psychological contract between parties involved in the relationship. These parties are the primary parties like the business owner and the employees; the secondary parties like the management or the owner’s associations and the trade unions; and the third parties or statutory or ad hoc agencies created by the State (Farnham, 2004). The parties to the employment relations have their specific roles and obligations as well as expectations as discussed in the following paragraphs. 2.2 The Individual Roles of Parties in Employment Relationship The primary parties in an employee relations setting consist of the employer and the employee. The employer and the employee are bound by a legal contract that covers their employment contract and terms of payment, employment handbooks, grievance procedures and promotional and disciplinary process (Corby and White, 2001). They are also bound by informal contracts about customs and behaviours to be adopted. These contracts are based on the concepts of economic and legal validity, and moral and ethical conduct, and are enforced by the constitution of the land. Both the parties are expected to accept their obligations and rights and to work under the mutually agreed conditions. The legal contracts work as a preventive force for any potential conflicts and provide the framework for employment in any organization. In addition to the primary parties, there are also secondary parties like the employers’ associations or the organization’s management and the trade unions. These parties are also bound by contractual agreements that are enforced by the constitution and that dictate the rights and obligations as well as spell out the process of collective bargaining and reaching agreements on conflicts. In UK, the unions have been strengthened progressively through various legislations enacted during the Tony Blair and later Gordon Brown governments (Philpott, 2010). Next, the employee relations also encompass the concept of the third parties. The third parties are made up of agencies, commissions or other set-ups as decided by the government. These parties act as negotiators or arbitrators and ensure that the primary parties or the secondary parties are following the process and protocol and that the balance of bargaining power between the parties is fair and acceptable. Third parties come into play when the normal contracts and legal obligations and rights of the primary or the secondary parties are not respected or are not understood leading to a conflict that cannot be resolved on its own. 2.3 The Expectations of All Parties in the Context of the Employment Relationship All the parties in the employment relationship have certain expectations, the lack of fulfilment of which may result in discontentment and conflict. For the primary parties, the employer expects that the workers put in the designated number of hours and work at their optimum level to provide for the productivity requirement of the organization. The employees expect that the employers give them fair compensation that is equitable to their counterparts. Differences arise when the employees perceive inequality - as in the case of the high bonus being paid out of the bailout packages to the bank employees while the public servants were left stranded with minimum pays (Philpott, 2010). This sense of being treated unequally may fuel resentment and cause breakout of open conflicts between the primary parties. In the case of the secondary parties, the management expects that the union understand their limitations to pay or maintain jobs in the event of recession or outsourcing. The unions on the other hand are tuned in to extract the maximum benefits for their members as can be seen in the fact that the unions were able to get 5% more out of the public sector organizations than the employees got from the privately owned enterprises in the years preceding the economic downtrend (Philpott, 2010). The third parties to the employment relations are not directly or personally involved, though their credibility and trust is maintained by the effective resolution and peaceful follow-up of the decisions that they have helped the primary or the secondary parties to arrive at (Smith, 2009). 2.4 Conclusion The latest developments in Greece where public sector cuts sparked enormous demonstrations and strikes indicate that the UK public sector may be in for robust opposition from the employees when it moves in to enact the pay and job cuts in the coming years (Philpott, 2010). These cut backs are perceived as breakdown of the contract between the parties of the employment relations and are therefore expected to lead to outburst of oppositions or demonstrations. It is however, envisaged that an approach that is more focused on preventing the conflicts, rather than resolving them is more beneficial. 3. Individual and collective influences on Human Resource Management 3.1 Introduction This section discusses the different models of human resource management and how they influence the employee relations. The discussion dwells on the underlying premises of the two approaches, the individual and the collectivistic approach, and then assesses their utility to deal with the current labour situation in the United Kingdom 3.2 Employee Relations Models – Collectivism and Individualism and their Impact on Employee Relationships There are basically two models of managing employee relations that can be used for smooth functioning of the workplace as well as quick and easy conflict resolution if the need arises. The basic differences between these two approaches lay in the premise of each – one being ‘collectivism’ and the other being ‘individualism’. The traditional model of Industrial is based on the work structures that resulted due to the rapid industrialization during the middle of 20th century. This was the time when a large number of blue collar workers were getting organized and increasing their bargaining power Vis a Vis the private or government employers by joining the trade unions. A pluralistic or a collective approach to managing the relationships between the employees and the employers was advocated based on the assumption that workplace is a setting that has an inherent propensity to bring forth conflict between the employers and the workers. As such, a collectivistic approach as suggested by the Donovan Report in 1968 (Turner, 1969) requires that the organization should be prepared to build up formal and informal structures that facilitate conflict resolutions. The assumption called for the development of systems and processes to be enacted so that ‘collective bargaining’ could be facilitated. For collective bargaining, the parties involved included the employer on the one side, and the trade unions or the employees on the other side. Here the issues are undertaken under a legally defined process where the employer and the trade union representing the employees interact, discuss and resolve their issues. The collective bargaining approach also makes room for third party negotiations, where a conciliation agency arbitrates the dispute. Fig 1: Collective Bargaining Process (Irish Congress of Trade Unions, 2010) The results of collective bargaining process are legally binding on both the parties (Gennard and Judge, John Gennard (Au2006). An example of the collective approach to managing relationships has been seen repeatedly in the case of Royal Mail and British Airways (Philpott, 2010) where the unions’ presence is still substantial. However, with the rise of the services sector and the IT revolution and inclusion of more white collar workers, as well as with the introduction of better HRM practices emphasising on teamwork and performance linked incentives, there was a shift in thought about how the relations between employees and the employers are to be managed. The changed internal and external environment of the organization led to the development of individualistic or unitarist approach that stresses the importance of managing the one to one relationship of each employee with the organization (Blyton, 2004). This approach is based on the presumption that in a dynamically changing business environment where the competition is intense, the employees are the greatest assets and their skills can create the much desired competitive advantage for the organizations. An individualistic approach therefore dictates that the employers understand and assess each individual employee and ensure that two way communications is maintained with each employee. In return, the employees also understand that their survival and growth in the organization are dependent on his or her performance. Here the contract is not only the legal contract of the terms and conditions related to the employment, but also am operational contract that ensures that both the employer and the employee agree upon performance targets, assessment criteria and that both accept the results of the assessment. In the case of individualistic model, the relationships are based on an underlying sense of cooperation and trust, as seen among the public sector organizations and their workers in Ireland (Philpott, 2010). 3.3 Conclusions The above discussion has highlighted the differences in the two approaches to managing relationships between the employees and the organization. It has also showed that the dynamic and changing business needs and environment call for a more individual approach to employee relations where the organizations focus on developing an intimate relationship with each individual employee based on the concept of partnership. Mutual agreements, understanding and cooperation should be used to make the two parties understand each other and to work together towards a win-win situation. 4. Conclusion The above paper highlighted the concept of employment relations and also discussed the various parties in the context of employment relationship. The two basic approaches to employment relationship, namely the individualistic and the collectivistic approach were discussed and assessed in terms of their utility in the changed business environment post globalization and also in terms of the changing work dynamics and resource constraints post the 2008-2009 depression. It was seen that the collectivistic approach, that involved reckoning with the trade unions and making employment continuity promises to the employees do not work in an environment that is volatile and dynamic. The purely individualistic approach where the employment relationship is a one on one contract between the employer and the employee too is not suitable as the employees may end up being treated unfairly, and ultimately think of joining forces with the trade unions. The recent demonstrations in Greece provide an eye-opener for the UK government to foresee that the trade unions may gain rapid strides leading to mass demonstrations in the near future when the government unrolls more severe and drastic cutbacks in employee benefits and salaries (Philpott, 2010). A more cooperative and partnership based approach is needed where the employees are treated as confidants and accomplices by the employers and where their trust and faith is met with genuine efforts on the parts of the employers. The case of Irish public sector is an excellent example of how cooperative and peaceful employee relationship settings enable the organizations as well as the employees to bear and face the hardships of adverse times (Philpott, 2010). References Blyton, P. (2004). Dynamics of Employee Relations (Management, Work and Organisations. UK: Palgrave Macmillan Coats, D.(2010). Time for a rethink: A new employment relations system for the UK. Retrieved on September 30, 2010 from: http://www.ipa-involve.com/news/time-for-a-rethink-a-new-employment-relations-system-for-the-uk/ Corby, S, and White, G. (2001). Employee Relations in the Public Services: Themes and Issues (Routledge Studies in Employment Relations. UK: Routledge. Farnham, D. (2000). Employee relations in context. UK: Beekman Books Inc. Gennard, G. and Judge, G. John Gennard (Author) (2006). Employee Relations. London: Jaico Publishing House Irish Congress of Trade Unions. (2010). Collective Bargaining. Retrieved on November 9, 2010 from: http://www.ictu.ie/partnership/irprocess/bargaining.html Johnson, G., and Scholes, K. (2003). Exploring Corporate Strategy. London: Prentice-Hall. Lambert, R. (2010). Labour Market and Employment Relations Beyond the Recession. UK: The Warwick Papers in Industrial Relations Philpott, J. (2010). Trade unions: New politics, old problems. People Management. Retrieved on November 1, 2010 from: http://www.peoplemanagement.co.uk/pm/articles/2010/06/trade-unions-new-politics-old-problems.htm Schifferes, S. (2004). The trade unions' long decline. Retrieved on November 4, 2010 from: http://news.bbc.co.uk/2/hi/business/3526917.stm Smith, S. G. (2009). The Industrial Conflict: A Series of Chapters on Present-Day Conditions. MI: University of Michigan Library Taylor, F. W. (2003). Scientific Management: Early Sociology of Management and Organizations . UK: Routledge Turner, H. A. (1969). The Donovan Report. 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