Human Resources Management Issues of Labor Dispute between the Owners Ineos and the Workers - Case Study Example

Using a business news event no longer ago than April as a ‘case study’ you are required to undertake an analysis of the HRM issues involved, drawing on the theories, models and ideas covered by the two of the following topics : Conceptual models The Case chosen for this assignment is the Labor dispute between the owners Ineos and the workers, represented by their union (Unite). The news article is attached in the Appendix. Tony Blair once famously said: “I see trade unions as a force for good, an essential part of our democracy, but as more than that, potentially, as a force for economic success. They are part of the solution to achieving business success and not an obstacle to it.” (Hippler) Trade Unions should do exactly that, help an organization achieve its goal and harmonize the demands and objectives of the workers as well. However, recently, workers threatened to go on a strike in Grangemouth oil refinery because of the owners Ineos allegedly mistreated a union convener. This could potentially lose the owners millions of pounds and even the Conservative MP for Harlow Robert Halfon warned that the strike could result in diesel and petrol prices rising throughout the country. The Dispute: The condition of the relations between employees and employers in UK has been brought into focus by the labor dispute at Grangemouth oil refinery. A trade union convener Deans was dismissed allegedly over rigging selection of a Labour candidate in Falkirk, where he is chairman of the constituency party. (Dominiczak, 2013). The Union (Unite) is cleared from any wrong doing but Mr Deans is to face an internal inquiry. With the workers threatening to go on strike (Dominiczak, 2013), the management reinstated Deans, but later brought in new pay and conditions regulations and wanted the workers to individually sign the agreement (Simon Johnson, 2013), bypassing the Union completely. The workers again protested and threatened to go on strike. The owner, Ineos, had earlier said that the Grangemouth Oil Refinery was losing up to £10 million every month and these new agreement was done to protect share holder interest and increase profitability. (Cramb, 2013)The workers rejected the agreement and stood firm on their threat to walk out. Although they soon called off the strike, Ineos went ahead and shut part of the plant citing that it was incurring losses. Moreover, it has re-iterated that the workers have 48 hours to agree to the new pay and conditions agreement or they will shut down the refinery completely. Conservative MP for Harlow Mr Halfon warned that any strike could push up fuel prices across the country. (Dominiczak, 2013). The onus of social responsibility befell on the union and the workers, however, Ineos who has considerable political clout in Scotland, and who dealt the situation with a high hand, was quite openly lackadasical in their attitude towards spiralling fuel costs. He said: “Unions are supposed to care about the cost of living. Why are they threatening to close an oil refinery? (Cramb, 2013) While the truth of the matter is that even though initially the union did threaten to close operations, they backed out and in turn, the management themselves shut part of the operation with a threat of closing operations altogether if the workers do not sign on the dotted line regarding the new pay and conditions agreement. Mr Halfon has not commented on the actions of the management. The trade union (Unite) was impelled to back off over a dispute into pay and conditions. If the refinery’s disputes are an indicator, it highlights the shift in power from the union to the employer. (Storey, 2007) The paper attempts to analyze the dispute with regards to HRM conceptual models, and how such a situation could have been possibly avoided or resolved earlier. The study shall further examine the Industrial Relations prevalent between the management and the workers. HRM Concept Application: HRM believes that policies regarding human resources be unitary in nature. It is assumed that the employer and the workers have a common goal, which is the benefit of the organization they work for. (Truss, 1997) However, the HRM objective of ‘employee commitment’ has its share of critics who say that the normal HRM model and trade unions are in contradiction of each other. They argue that there cannot be two commitments in the trade union, one to the workers priorities and the other to the goals of an organization. However, the pluralist model of HRM says that ‘dual commitment’ is possible. (Truss, 1997).This dual commitment assumes that only with the success of the personell, can the organization succeed and vice-versa. In the case in discussion, we can see that that the HRM model poses a threat to the trade union by asking the workers to sign individual contracts thus nullifying the role of the union, it intensifies work by shutting down a part of the plant on the pretext of labor problems and non-proditability. There is a death of solidarity collectivism within the organization due to the rigid attitude employed by the management. The Union has thus employed ‘simple opposition’ to this strategy. (Storey, 2007). The simple opposition refers to simply ignoring the concerns of the union, then an attempt to bypass them altogether by asking workers to sign individual agreements and agreeing not to go on a strike any time during the year. There is a supposed failure of the HRM model in this case, as it is not a case of mutual benefit. The union finally relented but because of the burden the Nations economy would have to bear, this has showed tremendous social responsibility on their part. The management though has failed. This can be cited as a typical example of a foreign company’s opposition to Unionization in UK. (Guest, 1990). A ‘hard model’ of HRM has been employed by Ineos and it has simply not worked. The standoff could have been easily avoided with a partnership strategy, a move to involve the workers in the decision making process and learning from mutual mistakes. The question to be asked is that did the offense deserve the punishment it was given. Is using a work e-mail for personal political work offensive enough to demand suspension? A simple reprimand would have suffice. Needless to say the entire episode has now gone out of control with neither side backing down and the Nation being subjected to a rise in the fuel prices. A poor example of ‘Employee Relations’ (Wilton, What is HRM, 2013) can be outlined from this conflict. The management has tried to supress ‘employee voice’ (Wilton, What is HRM, 2013). The management continually ignored any objections raised by the workers or the union. This is the exact opposite of what they should have done. They should have invited union leaders and select influential and respected workers for a discussion, taken their objections seriously and come to a mutually beneficial solution. A solution where the role of the union was not undermined and the company too was not at any risk of sustaining losses or losing operational time. The conflict could have easily been resolved earlier or completely avoided had the management considered HRM in the scheme of their strategies. (N W. , 2013). In this case, it is clear that Human Resources are often viewed as silent spectators to employed as a quanititave rather than qualititative measure. (Legge, 1995) As it is evident, personnel managers, have collectively failed to be a part of the firms strategic planning, and when the human resource problems surfaced, they proved to be ineffective given by the few resources they had at their disposal. (Wright, 2011) The strategy of the firm should have integrated the concerns of the workers and the union, however when this crisis erupted, instead of handling it with care, the management decided to exploit the situation and enforce new labor schemes and shut part of the Refinery. As per Tom Newcombe, The struggle between Ineos and the Union- Unite made quite a few headlines. However this is not a one-off incident.He goes on to add that in 2013, several major disputes have occurred between big companies and Trade Unions and the Governement.He goes on to cite examples of teachers going on strikes regarding pay and pensions, employees of the Royal Mail striking and even strikes at the airport, London Transport, and even fire brigade employees going on strike all over the country. Moreover, he says that unions have criticized the Governement regardinf employemnt tribunal fees and zero-hour contracts. (Newcombe, 2103) Industrial Relations: The crisis at Grangemouth oil refinery is a classic example of broken Industrial Relations. Firstly, the management entered into a situation with the Trade Union that threatened to disrupt the operations of the Company and which could cause losses both to the owners as well as the country. Secondly, there was a lack of empathy and communication between the management and the Union, with both resorting to hard-line tactics. Neither the union nor the management tried to amicably resolve the situation. The EU Directive (2002/14/EC) requires all member states to establish a general statutory framework for information-sharing and consultation with the employees. Particularly, employers are required to inform and consult the representatives of the employees who have been elected on (a) Provide information on new developments on the firms recent activities and financial position (b) Consult and inform the elected representatives regarding the position, system and any future alterations regarding the work, especially if any employees are at risk of losing their jobs in their work. (c) Measures that may lead to major changes in the organization, including any changes regarding total superfluous nesses or atmosphere of the work place. Employers are required to inform and consult on this measure. (Hall, 2005). There is no evidence to suggest that the EU directive was enforced or followed as per protocol. As the labor market in UK has intensified over the past few years, there has to be a focus on the needs and demands of the workers. Employees should be actively involved in the decision-making process (Gollan, 2007). In this case, the management adopted the complete reverse stance. A decision made by the Trade Union Convener was overturned and the converner himself was suspended as the decision did not suit the management. All over the world, and especially in the UK, there is a sharp decline in recognizing the Employee voice. Some strategies employed by the management puts the focus on negotiations that do not involve trade unions. (Dundon, 2007) Given the situation, Mr. Deans suspension can be attributed to politics. The trade union had only two options; either to accept the situation and move on with Deans suspension or protest against it. They did the latter by protesting. There is a case of an International company with local workers who do not recognize unionization. (de Nijs, 1995) Ineos is essentially a Swiss company with operations in the UK and worldwide. What can be inferred is that this provocation seems intentional. The company Ineos has neglected to pay taxes in the UK in the recent past. Moreover, it is evident that the owners were on the lookout for a reason to shut down operations. The union later called off the strike ‘in the interest of protecting the natural assets of the Nation’. However it was Ineos who went ahead and shut down the plant anyway. This raises several questions regarding Corporate Governance in the UK. Moreover they laid down some rigid terms for the workers to sign and derecognized the union and asked the workers to sign fresh contracts individually. By excluding the workers from the decision-making process and thus concentrating power in the hands of the management, along with supressing the voice of the union, the management has adopted Authotarian Unitarism (N W. , 2013) in dealing with the issues of the union.. A simpler approach would have been discussing the problem face to face with the union leaders and coming to an amicable solution. Shutting down part of the plant for this reason seems highly suspicious and perhaps the motivation behind this move has nothing to do with labor problems, rather, it is the financial situation of the company that dictated this measure. In order to maintain the working relationship between the union and the management, HR managers must learn to “respect” the union, understand how it functions and be a part of its working environment. A deep connection is required between the union and the HR team because the union is a representation of the workers that the HR department has to manage. (Newcombe, 2103). Yes, if an organization can lessen the indluence of unions, then the task for the HR managers become easier, however, unions help workers perform better through their negotiating powers. Moreover, if HR managers work in close unison with the unions, they can be in sync with the workers perspectives and serious human resource conflicts as demonstrated in the case of Grangemouth Oil Refinery can be avoided. Conclusion: This incident has brought to notice various ambiguities and flaws that are prevalent in today’s Labor market in UK. For example how companies continue to ignore the demands and concerns of the workers. How any strike is dreaded by the management and dealt with extreme high handedness. The management at Ineos should apply the various HRM models to good strategy and implement them in order to have a successful operation. After all a happy worker is a productive worker. Needless to say productive workers result in productive environment within the organization, which leads to higher and efficient outputs. References: Cramb, A. (2013, October 16). Future of Grangemouth oil refinery at stake as management appeals to workforce. Retrieved March 15, 2014, from The Telegraph [online]: http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/10383942/Future-of-Grangemouth-oil-refinery-at-stake-as-management-appeals-to-workforce.html de Nijs, W. (1995). International human resource management and industrial relations: a framework for analysis. In J. (. A.-W. Harzing & J. van Ruysseveldt, nternational Human Resource Management: An Integrated Approach (pp. 271-290). Sage, in association with the Open University of the Netherlands. Dominiczak, P. (2013, October 15). Oil refinery strike caused by Labour dispute with union could cause fuel price rises, MP warns. Retrieved March 14, 2014, from The Telegraph [online]: http://www.telegraph.co.uk/news/politics/10381375/Oil-refinery-strike-caused-by-Labour-dispute-with-union-could-cause-fuel-price-rises-MP-warns.html Dundon, T. &. (2007). Reconceptualising voice in the non-union workplace. International Journal of Human Resource Management, 18 (7) , 1182-1198. Gollan, P. &. (2007). Contemporary developments in information and consultation. nternational Journal of Human Resource Management, 18 (7) , 1133-1144. Guest, D. (1990). Human Resource Management and the American Dream. Journal of Management Studies 27(4) , 149-176. Hall, M. &. (2005). Trojan horse or paper tigers. In J. H. B. Harley, Participation and Democracy at Work (pp. 204-221). Houndmills: Palgrave Macmillan. Hippler, D. T. (n.d.). Human Resource Management . BE433 . Johnson, S. (2013, October 22). Scottish ministers turn up heat on Ineos in Grangemouth crisis . Retrieved March 15, 2014, from The Telegraph UK: http://www.telegraph.co.uk/news/uknews/scotland/10172354/Scottish-ministers-turn-up-heat-on-Ineos-in-Grangemouth-crisis.html Legge, K. (1995). Legge, K. ‘Chapter 1: What is personnel management? In K. Legge, Human Resource Management: Rhetoric and Reality (pp. 1-29). Hampshire: McMillan. N, W. (2013). Employment Relations. In W. N, An Introduction to Human Resource Management (pp. 275-306). London: Sage. N, W. (2013). HRM, strategy and performance. In W. N, An Introduction to Human Resource Management 2nd ed (pp. 58-88). London: Sage. Newcombe, T. (2103, December 20). http://www.hrmagazine.co.uk/hro/features/1141244/unions. Retrieved March 15, 2014, from HR Magazine: http://www.hrmagazine.co.uk/hro/features/1141244/unions Simon Johnson, a. A. (2013, October 17). Alex Salmond demands an end to dispute that threatens future of Grangemouth refinery. Retrieved March 15, 2014, from The Telegraph [online]: http://www.telegraph.co.uk/news/10387136/Alex-Salmond-demands-an-end-to-dispute-that-threatens-future-of-Grangemouth-refinery.html Storey, J. (2007). ‘Human resource management today: an assessment’. In i. J. (ed), Human Resource Management: A Critical Text (pp. 3-20). London: Thompson Learning. Truss, C. G.-H. (1997). Soft and hard models of Human Resource Management: A reappraisal. 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Appendix: Oil refinery strike caused by Labour dispute with union could cause fuel price rises, MP warns A prospective strike at an oil refinery caused by Labour’s Falkirk selection row could lead to higher fuel bills and “misery” for millions of motorists, a Conservative MP said yesterday. By Peter Dominiczak, Political Correspondent available at http://www.telegraph.co.uk/news/politics/10381375/Oil-refinery-strike-caused-by-Labour-dispute-with-union-could-cause-fuel-price-rises-MP-warns.html 7:14PM BST 15 Oct 2013 Robert Halfon, the Conservative MP for Harlow, warned that the dispute at the Grangemouth oil refinery could hit petrol and diesel prices across the country. Members of the Unite trade union are planning to walk out on Sunday in a row over the treatment of a union convener. Unite leaders are embroiled in a row with the sites owners Ineos. The dispute centers around Stephen Deans, who was suspended by the company following the dispute about the selection of a Labour candidate in Falkirk, where he is chairman of the constituency party. Labour cleared Unite after an investigation into allegations of rigging the selection of a party candidate. He was later reinstated but faces an internal inquiry by the company. Ineos has warned that Grangemouth is losing £10 million a month and will close by 2017 without fresh investment and reduced costs. Ineos has said it is “extremely disappointed” at the lack of progress at talks this week and criticized has the inclusion of Mr Deans in the Unite delegation, saying it was "completely inappropriate" that he should be at the meeting. Mr Halfon warned that any strike could push up fuel prices across the country. He said: “Unions are supposed to care about the cost of living. Why are they threatening to close an oil refinery? “This could hit petrol and diesel prices causing misery for millions of hard-pressed motorists. It’s an internal dispute. It shouldn’t lead to a strike action. They should think again.” A Labour spokesman said: “Rather than stoking up this dispute the Conservatives should be sorting it out. “We have talked to both the union and the employer in recent days to make clear we expect this dispute to be solved as soon as possible.” Calum MacLean, chairman of Grangemouth Petrochemicals, who will lead the talks for the company, said: "We came to Acas in good faith and remain determined to resolve the issues facing us if at all possible. "Unfortunately, Unite seems determined to insist on one rule for union officials and one rule for everyone else, which is completely unacceptable to the company. It also seems determined to ignore the fact that a strike could destroy Grangemouth and cause significant damage to the whole of Scotland." Pat Rafferty Unites Scottish secretary, hit back, saying it was "ridiculous" for the company to express disappointment at the presence of Mr Deans. He said: "Stephen is a senior Unite representative at Ineos, a crucial part of the negotiating committee and a trusted and respected advocate of the workforce. "Company representatives were told yesterday by Acas that if Stephens presence created any conflict of interest then he would leave the talks. The company agreed fully with his attendance at these talks and posed no objection. "Unite also offered through the auspices of the Acas senior conciliator a firm proposal that would end the dispute at Grangemouth and avoid damaging strikes. Ineos rejected this proposal and offered no alternatives. "Unite has made all of the running to resolve this dispute. Ineos has offered nothing and its getting increasingly difficult to take the company seriously." Staff at Grangemouth have already begun shutting down the plant in readiness for the planned walkout this weekend. Read More