British and German System of Employment Relations - Case Study Example

British and German system of employment relations

Table of Contents

Introduction3

Characteristics of British and German employment relations3

Employee relations and the labour market3

Role of Trade Unions and collective bargaining5

Employment relations system affecting international competitiveness6

Individual and collective employee involvement8

Conflicts in the workplaces and the developments9

Employee relations in multinational companies of Britain and Germany11

Conclusion11

Reference List13

• Introduction

Employment relations within an organization are the method followed by the management so as to address the employees (Brandl and Traxler, 2009). Maintaining healthy relations with the employees is the most important criteria for every organization to be successful. Employment relations deal with resolving the issues concerning the individuals that might arise within the organizations (Goerke and Madsen, 2004). Good employment relations indicate that the employees need to feel positive about their identity in working with the organization.

There are different types of employment relations that are maintained within the organization such as corrective action, performance evaluation, rules and policy interpretation etc (Goddard, 2011). If an employee requires a verbal warning or written documentation regarding any issue it is known as corrective action which is a type of employee relation. The evaluation of the employee performances helps in improving the quality of services offered to the customers in the international market (Jansen, Akkerman and Vandaele, 2014). The employment relationship is considered as the sum of prescribed functional activities and the interactions that take the form of collaborative interactions between the managers and the employees. The paper aims at discussing the employment relations in Britain and Germany. It also provides the researcher with the scope to understand the management approach to improving the employment relations within the organizations.

• Characteristics of British and German employment relations
  • Employee relations and the labour market

Employment relations deal with the individual as well as collective dimensions of the labour power and these are concerned with all aspects of the employment relationship (Bamber, et al., 2016). The labour market reforms have taken place where the workers are employed in the manufacturing sector and also where the workers are associated with the service industry (Wilkinson and Redman, 2013). Higher unemployment in UK in 1960s and 1970s has affected the employee relations (Bamber, et al., 2016). The emergence of trade union and the disputes within the manufacturing and the service industries have resulted in insecurity of the employees (Boxall and Macky, 2009). Some of the researchers have argued that that rise in the number of job responsibilities in the service sector relative to that in the manufacturing sector has increased the number of part-time jobs with low status. The lack of security related to this kind of jobs has compelled the individuals to join the trade unions (Brown and Cregan, 2008). As per the study the employment relationship is associated with the position of the employers and the employees in the product as well as the labour market and also to the division of labour within the workplace. The diffusion of the work systems in both Germany and Britain indicates that the employees in Germany are highly skilled as compared to those in Britain (Bamber, et al., 2016).

Many of the researchers have observed the strength of vocational training in Germany but have also encountered challenges of growing service employment and the pressure of the equity markets (Bamber, et al., 2016). In case of the long-term jobs the reduction in the job tenures would weaken the relationship among the employer and the employee and potentially increase the insecurity of the workers. In Germany despite the strong regulation of the employment opportunities and despite the measures undertaken to liberalise the labour market overall tenures of the employee jobs have remained stable both for men and women (Cox, Zagelmeyer and Marchington, 2006). On the other hand there has been decline in the male job tenures in Britain and rise in women job tenures. There are several theories related to the employment relations such as the scientific management theory and the human relations theory. According to the Scientific Management Theory the employment relations choices of management are expected to begin with the assumptions that the employees are immature in the ways of work and are prone to avoid their duties whenever possible (Dietz, Cullen and Coad, 2005). This result in conflicts within the organizations related to the work to be completed on time. Therefore, it is the responsibility of the management to lead rationally when recruiting and training the workers such that they are able to deliver quality performance (Bamber, et al., 2016).

Moreover, the Human Relations Theory is related to the fact that the tension within the organization is based on the ability to achieve self-fulfilment in the workplace (Dundon and Wilkinson, 2004). The management is responsible for manipulating the workplace relations in a way that the employees have a personal satisfaction regarding the quality of work that they have delivered. Moreover, the collaborative management practices take place within the organization through the implementation of the performance appraisal processes which would contribute to the welfare of the organizations (Brandl, 2012). The wages of the workers are also decided on the basis of the performance appraisals which would in turn motivate them to take up the challenges.

• • Role of Trade Unions and collective bargaining

The differences in the industrial relations of Germany and Britain lead to the differences in the collective wage formation (Bamber, et al., 2016). The first step involves the process of collective versus the individual wage determination. As per the study the wage formation in Germany is the result of collective bargaining that takes place within the organization (Brandl and Traxler, 2011). In UK there is no such bargaining process and it has become individualized in most of the cases. The management is responsible for setting the wages and they are agreed by the employees. It is evident that the collective bargaining provides a central role to the trade unions based on the wage formation in Germany. On the other hand in UK, the individualization of the wage formation indicates diverse role for the trade unions (Traxler, 2010). The role of the trade union is to monitor whether the employees are agreeing to the pay structures and represent the members in the disputes created by individuals. According to the study the income inequalities in Britain are the highest in EU and these are associated with the general industrial relations. On the contrary there are differences in the variable pay systems of UK and Germany. The proportion of the total pay as compared to the incentive payments is said to be three percent on an average in Germany. However, the differences in the collective wage formation in Germany and Britain have some similarity with the standardization of the wages. Furthermore, if the wage formation is compared with the legal framework in Britain and Germany it reflects the similarities and the differences separately.

• Employment relations system affecting international competitiveness

The researchers have studied that there has been legalization of the individual employment relationship in UK and this fact is in contrast with the jurisdiction of the collective labour relations in Germany (Barry and Wilkinson, 2011). The collective agreements in Germany including the no strike clauses are considered to be legally binding whereas there are no such legal ties in case of UK. In Britain the employees are ready to work any number of hours and there are extra payments made to the workers for the overtime working. This fact is in contradiction to Germany where the bargaining agenda is based on the basic rates. Another difference in the wage formation between UK and Germany is the Government policies in both the countries (Traxler, 1993). The trade unions in public services are strong in UK as well as in Germany but the public sector industrial relations in Germany has been less affected have been less affected as compared to that of the British public sectors. Collective wage formation that takes place in the public sector has affected the privatisation policies which declined as a result of the change in the legal structure.

It is evident that there have been some developments in the legal framework of the collective wage formation in UK and Germany. The industry-wide agreements that take place in Germany are challenged by the demand for more flexibility in the workplaces such that the workers are able to deliver better performance within the organization (Traxler, 2004). On the contrary in the modern world the union membership in Germany has shifted from the industrial sector to the service sector. Only the union members are eligible for the wages that are negotiated by them in the collective agreement. However, the wages are paid to all the employees regardless of the union membership which are part of the individual employment contract.

As per the study, the proportion of the employees whose employment terms are controlled by the collective agreements that take place in Germany has reduced from 82% in 1995 to 70% in 2000 (Charlwood, 2004). The shift of the collective bargaining system from the industrial sector to the service sector has resulted due to the rise in competition and the high demand for flexibility. The research suggests that the British trade unions are more experienced as compared to the German trade unions as a result of the decentralised collective bargaining system (Bamber, et al., 2016). It was further evident that the condition of the British trade unions has been worse after the process of decentralisation and this was concluded on the basis of the bargaining coverage. In 2009, the bargaining coverage in Germany was twice as compared to that of Britain as around 62% of the employees in Germany were ready to determine their wages through the process of collective bargaining (Schnabel, 2013). On the other hand only 33% of the British employees were part of the wage determination process through collective bargaining (Frege and Kelly, 2013). Further, the German union have gained success in pursuing with the wage policy and has maintained lower wage differentials within the industry.

• • Individual and collective employee involvement

One of the most important factors that lie behind the success and the failure of an organization is the efficiency of the employees that help them to deliver better performance. Employee involvement is a process used by the organizations to empower the employees in order to make them participate in the managerial decision making processes (Buttigieg, Deery and Iverson, 2008). The employees help the organization to deal with the three different issues such as communication, development and involvement and these issues are related to maturity of the organization in employment relationship. Empowerment indicates that all the employees consider themselves responsible and have the authority to participate in the decision making process (Bamber, et al., 2016). Therefore, it is necessary that the HR managers of the organization hires skilled workforce so as to improve the overall performance of the organizations in the global market.

The concept of empowerment can be explored in order to define the reasons for the management to empower the employees and the techniques that are used for the empowerment (Stiglitz, 1974). Also the empowerment process involves the risks as the management has to hand over some of the responsibilities to the employees working in the organizations. An empowered organization is expected to undertake better teamwork as the skilled employees deal with the challenges faced by the organization (Bechter, Brandl and Meardi, 2012). Employee involvement as well as empowerment is a long-term commitment that is made by the employees and this is considered as a new way followed by the organizations in doing their business (Kelly, 2004). The employees who are trained by efficient managers have their own ways of doing business and they contribute to the success of the organization. The process of employee involvement can be assessed by conducting surveys on the employees of a particular organization (Bechter, Brandl and Meardi, 2012). The theory of the employee engagement suggests that organization must ensure that all the staff members are assigned with their jobs and they are fully engaged. The facts indicate that the staff members are fully committed to the jobs assigned to them and they try their best to determine a solution for the problem (Frege, 2005).

• • Conflicts in the workplaces and the developments

Conflicts are the most common factors in every organization and it results in healthy exchange of ideas as well as creativity proposed by the other employees. However, the counter-productive conflict results in the dissatisfaction of the employees, reduced the productivity and raised the turnover intentions of the employees within the organization (Bechter, Brandl and Meardi, 2012). Conflicts can be resolved within the workplaces through communications and building relationships between the managers and the employees.

Figure 1: Conflict resilient workplace pyramid

(Source: Bechter, Brandl and Meardi, 2012)

The base of the pyramid indicates that focusing on the conflict resilient workplaces helps in strengthening the relationships among the team members. The next stage involves dispute resolution practices that are accompanied by the responsibility of solving a conflict. Methods used for resolving the interpersonal conflicts are usually based on the feedback collected from the employees regarding the work process within the organization (Bechter, Brandl and Meardi, 2012). The ultimate step is related to the formal processes followed in resolving the conflicts when there are allegations of serious misbehaviour either by the team leaders or the team members. Researches on the UK firms indicate that people find the impact of the conflicts to be stressful and experience a reduction in the motivation. Some of the employees witness the reduction in their productivity that in turn affects the level of firm output (Ackers, 2002). The major impact of the conflict is on the employee well-being that is a part of good employment practice. The survey also indicates that interpersonal conflicts are likely to be experienced more often in the public and the voluntary centres and these can be resolved through proper communication with the employees (Bamber, et al., 2016).

• • Employee relations in multinational companies of Britain and Germany

The research suggests that many of the MNCs from UK are not linked to the multi-employer bargaining with the home countries whereas 85% of the workforce in Germany is still under the multi-employer collective bargaining process (Ackers, 2007). There are no compulsory work councils in UK and the employee representatives are not represented at the board levels. On the other hand the private sector firms in Germany posses the work council that are elected by the non-executive employees. The study suggests that the management has to get approval of the work council before it can bring in change within the organization (Colling and Terry, 2010). Most of the companies in UK do not offer vocational training at the basic level whereas the large sized firms in Germany actively participate in the vocational training processes that have enhanced the performance of the organization. Furthermore, the system related to the vocational training followed in Germany is highly regulated and has reduced the autonomy within the organization (Bamber, et al., 2016).

• Conclusion

The employment relations in Germany suggest that the employees within the public sector organizations undergo collective bargaining process in order to earn appropriate wages for their productivity. On the other hand there is no bargaining process in Britain and the workers accept the wages that are offered to them through Government policies. According to the researchers there has been legalization of the employment relationship in UK and it is in contrary to the situation in Germany. Moreover, the power of the trade unions is high in UK as compared to that in Germany. The trade unions in Britain are more experienced in dealing with the managers as compared to those of Germany. Furthermore, the paper has also discussed regarding the employee involvement and success of the organization depends on the commitment made by the employees. The inter-personal skills of the employees also help in resolving the conflicts that take place within the organizations. Enhancing the relationships among the employees and the managers helps in understanding the viewpoints contributed by each of them and derive an ultimate solution.

• Reference List

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