Role of Power in Employment Relations - Literature review Example

Running Header: Role of power in employment relations Student’s Name: Instructor’s Name: Course Code: Date of Submission: Role of power in employment relations Introduction While power is one of the words taken for granted in practices of industrial relations, it has various benefits which includes instilling discipline among workers. It also has setbacks such as employees’ oppression and major cause of imbalances. Recent studies show a major problem in employment relationships involving a particular imbalance of power which lies between employers and employees. Abowd and Kramarz (2003, pp. 499-530) describes that employment relationship is not the same as ordinary contracts but it involves bargaining of power between various interests such as labour and capital. Managers especially those working in a profit maximisation firms posses the capacity and motivation to apply power in exploiting their workers. It is therefore necessary for every government to introduce labour law with strict regulations which protect employees from inequality of power which is inherent in every employment relationship. This study illustrates the influence of power in industrial relations. Power is a word that is applied in the academic and in the practices of industrial relations. Raymond et al. (2002) shows though the concept of power is normally assumed and taken for granted in most cases of its application. The effect of power is mostly demonstrated using the systems and Marxist theory of industrial relations. Power is therefore of central importance as it instills discipline in workers though theoretically it is neglected. This neglect affects the great understanding of the concepts of industrial relations. Employees should therefore get some alternative ways of dealing with the bargaining power of the labour markets. This would be through self-employment, making independent contracts or being involved in worker’s cooperatives which cater for the well being of employees. One of the factors that influence the relationship of employees and their employers is globalisation. The increase of globalization has led to countries becoming more interdependent economically since various barriers of trade have been abolished. Globalisation has also made states powerless in controlling information and technological flow across boundaries. The many regulations in the market have also been reviewed thus allowing free flow of goods, services and labour therefore influencing more employees to work in foreign countries (Lee 1996, 45-98). This also affects employees relations in a manner that changes are implement which have a direct or indirect influence to the needs of the workers. Friedman and Wood (2002) conclude that strategic management has also increased the bargaining power of employees. This is because workers are involved in decision making process and therefore their issues can be listened to by trade unions. The workers can now advocate for flexibility in their working hours as well as being able to change their job activities. This bargaining power of employees has resulted from the increased competition in the market and the changes in processes of products as a result of promotion and consumer preferences. These factors affect management policies and activities carried out in an organisation. Due to changes in the firm, employees’ involvement is also changed in that their skills have to be developed in order to meet the requirement of the management. Their skills have to be in away that they are able to produce products that are of high quality and those that meet the needs of consumers in the market. The governments in most countries apply the Employment Relations Act which aims at building productive relationships between employees and their leaders. The Act should be in a way that conforms to the International Labour Organisation (ILO) principles. This means that it should reflect a balance between workers and employer relationship. This belief that there has to be power imbalance have therefore influenced the labour markets in most countries. Stone (2005) describes that there are regulations introduced by the government to assist in labour market such include; the minimum wage that every employee is supposed to earn. These protect the workers from being exploited by their employers. The other regulation protects employees from unfair dismissal or transfer. According to Stone (2005) employees are protected from being dismissed due to discrimination of any kind such as due to race, sex or culture. The law also covers employees by advocating paid holidays, sick leaves and is also allowed to join labour unions where they can talk out their concerns. According to the economic analysis, as long as the employment relationship remains viable economically then parties have power constrain. This shows that the employment relationship should be in a manner that it benefits both parties and produces value as compared to other opportunity costs. The power of parties in the employment relationship influences each party’s behaviour. It also has various implications which may lead to a social problem Industrial relations show a collective relationship between the organizational management and its workers. Industrial relations involve a collection of various aspects such as trade unions, collective bargaining and how workers participate in increasing organizational output. It could also mean settlement of grievances among workers and the interpretation of labour laws meant to protect workers welfare. Freeman and Daniel (2009) describes that the National Commission of labour (NCL) advocates for such concepts though it states that employees should be capable of conforming to the labour laws implemented as well as the rules in the code of conduct of the particular organisation. Industrial relations is seen to affect the economic and the social goals of an organisation and in order to achieve this goals, management should ensure that workers well being is effectively maintained. Industrial retations encompass all the factors that influence individuals’ behaviour at work. Some of these factors include institution, character, methods and contents. According to Dubin (1998, p. 213) institution refers to the employers, trade union and other federations and associations or even government bodies that directly and indirectly affect the smooth running of industrial relations. Some of these institutions come with power and authority and this tend to change the culture of the organisation and the employees belief. According to Dubin (1998) character involves the study of the role of trade unions, federations and association. It also involves councilors’ role, judges at labour court and tribunals set for advocating workers working conditions. The roles of these individuals affect industrial relations since they have a direct impact on the employees’ character. Methods on the other hand involve collective bargaining and the workers participation in the promotion of industrial relations. Lee (1996) describes that it involves disciplines procedure, machinery used in addressing workers grievances, mad techniques used in settling disputes among employees or between employees and their managers. Other methods used in solving disputes may also involve protesting, reorganization or revisions of set policies. Contents include the reasons that would make employees feel unsatisfied with their job conditions such as due to poor pay, working hours, leave with wages, workers health condition and safety disciplinary actions used in a particular organisation. Such major factors cause disagreements among workers and their managers (Lee 1996). There are three major perspectives that analyse workers relations. In this perspective, the organisation is seen as an integrated and harmonious family. In this management and other staff share a common goal and this is attained through mutual cooperation. This theory demands loyalty from all the employees and therefore they should be manageable and should apply all the aspects of the organisation. Creighton and Stewart (2000) states that in this theory, the aspect of trade union does not apply since the employees are in loyalty with their employers and the relationship is considered as mutually exclusive. In this perspective, conflict and disagreements among workers is considered as a disruptive feature that hinders the organisation from development. In this power is applied by the top management who organises the workers activities and set rules and regulations to be followed. In this perspective, the organisation is perceived as a powerful institution comprising of divergent sub groups. These groups are said to posses their own legal loyalty with different objectives and varying leaders. Some of the most dominant groups in this perspective are the organisational management and the trade unions. The management for example has different goals to achieve and is headed with particular leaders who are different from the goals of trade unions which aim at meeting the needs of employees. Stone (2005) describes that the role of management involve more of influencing workers to follow set rules and coordinating them effectively and has less involvement in enforcing rules and controlling workers. Trade unions on the other hand are seen as organisations that represent workers and are meant to ensure that the workers needs are provided according to labour laws. Conflicts among workers are resolved through collective bargaining and if well managed it can result to a positive change. The role of power in this theory is to enable trade unions use their legitimate duty of advocating for the rights of employees. Trade unions influence unsatisfied workers to discuss their issues with the management and if the discussions do not work, other methods are used such as strikes or formations of tribunals. This perceives an organisation as a capitalistic society which consists of major division of interest. This division is applied in the capital and labour factors. Friedman and Wood (2002) show that in this perspective, industrial relations are seen as if it is against the capitalist society. There is perceived power inequality due to economic wealth which results from the capitalist system in the society. In this, conflict between employees and their employer is therefore inevitable. Trade union therefore has to intervene in order to respond to exploitation of workers through capital. According to Baker, Gibbons and Murphy (2002, pp. 39-84) the systems of adverse treatment as well as the factors increasing vulnerability of employees are investigated by the survey carried out in Fair Treatment at Work a conference which was organised in 2008. The survey involved individuals from the age of 16 who had worked for two years in a paid job. The participants were interviewed in various aspects involving the problems experienced at work and their working conditions. These problems included the issues identified by the employment rights legislation for example workers being entitled to leaves, processes involved in handling workers’ grievances and the perceptions of fair treatment during work. About thirty percent of these workers reported that power influence can led to major problems at work for example most of them had experienced working issues over the two years of working. The analysis was based on conceptual approach which showed that one of the factors of power imbalance was adverse treatment. The features of industrial relationship are said to be changing the balance of power between employer and employees. Adverse treatment is said to comprise certain elements such as employment rights, company rules and entitlements, organisational practice and the social values of the firm. Various governments for example the UK government has set laws that govern the rights of employees and the minimum standards in which employers are meant to set. The rights results from the democratic process used in formulation of laws and it considers a boundary which determines employer behaviour (Baird 1996). Conclusion Power is of importance as it instills discipline at work where the employers and employees both have equal powers. However, there has to be a new direction of the development of the concept of power as applied in employees’ relations. To solve the problem of power imbalance, the imperfections in product and labour markets should be reduced. These include barriers to entry into the labour market, restrictions on worker mobility, rigidity in wage fixing and finally the information asymmetry. Management should ensure that these factors are effectively managed as they affect the balance of power between employees and employers. Workers should be involved in decision making process to reduce information asymmetry. Management should also set a flexible wage rate system which should be according to the economic status of the state. The capacity of an individual to impose pecuniary or non pecuniary costs on another person is said to be the source of power. This is where the behaviour of one person is changed by the conditions set by the other party. Modernisation of organizations activities and systems has also increased crisis in the industrial relation. Though it is important to introduce employees’ rights which prohibit employers from exploiting them on the other hand expansion of these rights for example of individual workers has met various concerns. Various studies have shown that the employees’ rights may be misused in that they increase their bargaining power in the labour market. Once the employees’ power is increased, they might even harass their employers to provide them with conditions that would affect the organisational output. References Abowd, M & Kramarz, F 2003, The costs of hiring and separations, Labour economics, vol. 10, no. 5, pp. 499–530. (Retrieved 20 March 2011 Baird, W 1996, The Employment Contracts Act and unjustifiable dismissal, The economics of an unjust employment tax, Wellington: New Zealand Business Roundtable. Baker, G Gibbons, R & Murphy, J 2002, Relational contracts and the theory of the firm, Quarterly Journal of Economics, vol. 117, no.1, pp. 39–84. Retrieved 20 March 2011 Creighton, B & Stewart, A 2000, Labour law, An introduction, 3rd ed, Leichhardt, NSW: The Federation Press. Dubin, R 1998, The world of work, Industrial society and human relations, Prentice Hall, Englewood Cliff, p. 213. Freeman, B & Daniel, L 2009, Science and engineering careers in the United States, An analysis of markets and employment, University of Chicago Press. Friedman, S & Wood, S 2002, Employers’ unfair advantage in the United States of America, British Journal of Industrial Relations, vol. 40, no. 1, p. 113. (Retrieved 20 March 2011 < http: // papers.ssrn.com>) Lee, E 1996, Globalization and employment, International Labour Review, vol. 135, no.5, pp. 45–98. Raymond, M Ann, H & Kowalczyk, J 2002, Gender, part-time employment and employee participation in Australian workplace, Employee Relations, vol. 24, no. 2, pp. 129 – 150. (Retrieved 20 March 2011 http://www.emeraldinsight.com/journals.htm?articleid=879774) Stone, R 2005, Human resource management, 5th ed., John Wiley and Sons, Australia, p. 412-41. Read More