Impact of Institutional Systems on Approaches to HRM in the United States - Literature review Example

Impact of institutional systems on approaches to HRM in United States

Introduction

Employment relations are concerned with the matters of overarching workforce and employment policies that manage the relationship between employees and the employer. It is an aspect of employee management that is less focused than strategic integration of HRM practices in the organisations in countries like US, Britain. The present study aims at evaluating the impact of institutional systems as a framework for analysing the approaches to human resources management (HRM) practices in the perspective of multinational companies. There are numerous factors such as legislations, political and social systems, trade associations, powers of labour unions etc which influences the employment relations in the international organisations (Iles and Zhang, 2013). The different institutional approaches to HRM in the United States has been focused in this study to evaluate the role of trade unions or any other representative bodies of the employees in influencing employment relations in the multinational organisations.

HRM approaches and Employment relations

The origin of the concept of employment relations came into lime light during the period of industrial revolution where there was uniform movement of workers due to the creation of free market mechanisms (Harzing and Pinnington, 2011). The result was the immediate need for policies and forces which could regulate or manage the industrial relations, as employment relations in the past was more concerned with management of conflicts or managing the diversified agendas of the employer and employees. The employment relations within the context of organisations are determined how the managers perceive the relationship with the employees of the organisations or their representatives (Kramar and Syed, 2012). According to Brewster (2011), managers can adopt two basic perspective of the relationship which is unitary or pluralist. Under unitary perspective, managers consider themselves as the source of power and authority in the organisation that control the workforce. They envisage that all the employees follow the goals of the organisations and are committed towards the fulfilling the targets of the organisation. In other works, the HRM philosophy that emphasize on commitment and mutuality depends on this unitary perspective (Briscoe, 2012). On the other hand, in case of pluralists, negotiations were required between the two parties for establishing employment relationship and managers allow freedom of expression to all the members (Iles and Zhang, 2013). The managers to achieve good results seek joint participation from the employees, coordinate their efforts and motivate them. HRM incorporates the aspects of the pluralist theory through different forms of communication like team briefing and collective bargaining or by directly approaching the employees as a group instead of individuals (Harzing and Pinnington, 2011).

The main parties involved in management of international Employment Relations (ER) are shown in the figure below.

Figure 1: Main parties involved in international ER

(Source: Briscoe, 2012)

Role of Trade Unions in Employment Relations in USA

The role of Trade Unions is to grant equal and collective bargaining power to the employees with their employers who traditionally hold the authority to set terms and conditions of work. These unions represent the employees or workers from a given industry and comprise a group of employees so that they have a greater voice to the employers or managers than if they dealt with the employers individually (French, 2010). In the United States, unions are recognised widely for abolishing child labour practices in sweatshops and other industries. The National Labour Relations Act assured the right of the employees to bargain together through a representative chosen from the labour union (Briscoe, 2012). These unions can even organise boycotts, strikes, sit-ins or go-slows to compel the employers to consider their proposals. On the other hand, these labour unions or trade unions fight for better providing better terms and conditions to the workers and represent the interests of the workers (Levinson, 2013).

Unions started to form in different countries as a response to various economic and social impacts of industrial revolution (Lichtenstein, 2013). Trade unions were initiated in the US in the form of National Labour Unions during the post-civil War Era. The labour unions of the US today come under two large organisations namely: American Federation of Labour Congress of Industrial Organisations (AFL-CIO) and the Change to Win Federation (CtW) (Verma, 2005). The public sector unions are regulated by state or federal laws and have shown strong growth rates, as the working conditions and terms as well as the wages are fixed through negotiations with the state and local officials. Thus, the political power of the union comes to play which has made the role of trade unions stronger in enhancing employment relations. The impact of these unions on the HRM in the organisations of the USA can be studied from two perspectives: development of underlying preferences of the employees and enhancement of interaction between the two parties (employees and employers) for pursuing the goals of the organisations (Levinson, 2013).

These unions in the United States works for securing number of benefits for the workers such as higher wages, work-life balance, flexible working hours, reasonable work shifts, job security through pensions schemes, protection from any kind of arbitrary actions by the employers (Lichtenstein, 2013). It is due to the increased activities of trade unions that there has been significant decline in the discrimination at the workplace and workers got access to many benefits like health care, social security, safe working conditions etc. According to Shen et al (2009), the unions not only provide dignity to the workers in the workplace but also consistently seek to enhance the standards of living and wellbeing of the American employees.

Briscoe, Schuler and Tarique (2012) stated that labour laws, unionization and labour force values are some of the employment relations issues specific to the USA. The Government of the USA intervenes very less to control and regulate the labour market in the country than other institutions such as trade unions. The labour laws are not much intrusive and hence mainly focus on the ‘free market’ with greater scope for management over HR decisions and strategies of the organisations. However, there are strong federal laws in the state that gives the employees the strong protection at the workplace against unfair, discriminatory, unsafe employment practices. Particularly, there are anti-discrimination and affirmative action laws which protect the rights of the classified workers (French, 2010). The role of the HRM in the US is largely to monitor that the regulatory or legal reporting on the effectiveness of the anti-discrimination action laws (Briscoe, Schuler and Tarique, 2012).

According to Verma (2005), unions exercise their monopoly power and force the employers for paying adequate compensation and benefits to the workers. However, the trade or labour unions strive for achieving goals such as fair treatment from the management. This characteristic of unionism is vital while evaluating the impact of labour unions on management. The call for justice and equality in the organisation makes the unions get involved in almost each and every facet of daily managerial decisions at the work place.

The US has relatively low levels of unionisation as the membership of workers to the trade or labour unions was only 12% in 2010-11. However, it is much higher than the public sector where membership of trade unions stands at 37% (Verma, 2005). There has been a decline in the membership of trade unions as there were shifts from manufacturing to services sector raising the number of white-collar jobs where there is greater interaction of the staff with the management. Also, the increasing involvement of federal and state laws or agencies that provides employee protection has also caused a decline in the role of trade unions in the US (Nakamura and Steinsson, 2011). The US employees are more individualistic than any employees from other countries. The workforce HRM is more merit-based in the country and the staffing policies are largely influenced by ‘employment-at-will’ or hire and fire strategies in the organisation (Lichtenstein, 2013). However, the role of trade unions still stand significant as autonomy of the employers in designing practices and policies of HR for maximizing the value to the share holders goes against interests of the employees.

Briscoe, Schuler and Tarique (2012) while evaluating the role of HRM practices on the employment relations and trade unions, stated the HRM do not focus on group agreement as trade unions does which is the essential institution in employment relations. However, the power of collective bargaining among the employees in the US is not a narrow concept in the sense of negotiation with the employers on terms and conditions of employment that leads to a formal agreement. Instead it is viewed as a practice or a mechanism used for arriving at a consensus on matters involving two parties. Thus, in one way it helps in reducing the conflicts between the HRM and ER with the multinational organisations. Another area in which HRM poses a challenge to the labour unions is the flexibility issue which is absent in the employment relations factors.

Today, there is a major thrust for flexibility in the labour markets in the various matters of workplace such as working hours, functions, type of contracts, pay scale. As a result, the unions are compelled to include these changes in their aspects and the trend towards decentralization of the power of collective bargaining also compelled to view issues from the perspective of workplace. This henceforth provided some opportunities for the labour unions in the US to get involved in many other matters other than wages and benefits such as introduction of technology or new work process (Lichtenstein, 2013). On one hand, it involves the willingness of the employers in the organisations to deal with trade unions on these matters and on the other hand it involves the willingness of the trade unions to cooperate with them in legitimated matters for achieving competitiveness as the employees are willing to adapt to them at the workplace.

There is a third challenge which is also the principal objective of HRM originates from the aspect of employee loyalty and dedication to work. The core issue is regarding the possibilities of dual allegiance which means commitment to the organisational goals and contribution to its success of the organisation on one hand and on the other hand commitment to the views of the trade unions (Harzing and Pinnington, 2011). Thus, employment relations at this point become a crucial factor and in the USA workplaces with cooperative employment relations, such dual allegiance is possible.

There are some issues involving the unitarist approach of HRM and pluralist approach of employee relations. The major issue is regarding the pursuit of policies of HRM like communication, group activities, employee involvement and commitment. The integration of policies of HRM in the organisations objectives and business strategies posses a great challenge to the ER institutions such as unions and collective bargaining (Harzing and Pinnington, 2011). Also, pursue of HRM policies in the organisations can be looked upon as a strategy for union avoidance and that ER and HRM are not always compatible for achieving higher level of employee satisfaction in the organisations.

As pointed out by Kramar and Syed (2012), HRM is a concept developed in America and finds its presence in most of the well known and established companies of the US. However, it was studied by many that effective HRM model are often identified in companies without unions. There were many companies that provided adequate wages, effectively integrated employee satisfaction policies in their line management practices which reduced the role of unions. These companies even provided mechanism for expressing grievances by the individuals and monitor their reactions to different HRM policies. IBM is best known company in the USA with an effective HRM model and non-involvement in the unions.

However, this does not imply HRM practices are non-unionized but instead some effective HRM initiatives in line with trade union policies to develop the employment relations. The involvement of the policies of the unions in HRM is increasingly seen in large companies. For instance, General Motors (Saturn Plant) has involved trade unions as a move towards effective HRM. In this context Aidt and Tzannatos (2008) remarked that if an entire new set of work practices are introduced in an organisation, the role the union is not apparent. The most likely role is the policing various management practices and to deal with grievances that are almost predictable with the repetitive production lines of work and continuing pressures on the employees to raise their productivity. Thus by implication, if management is not practicing any effective HRM, then unions come forward to play a role.

Impact of HRM practices in managing diversities among employees

HRM initiates a number of distinct activities and functions that aims at managing and directing the assorted group of individuals in the company. The key practices of the HRM which are recruitment, selection, management of pay, performance evaluation, training and development includes the aspect of diversities and emphasize on providing equal opportunities to all (Briscoe, Schuler and Tarique, 2012). According to Brewster (2011), the role of trade unions are more focused in managing employment diversities as they are strictly formed for establishing power of collective bargaining, raising employee welfare, abolishing unfair and discriminatory policies and ensuring workers protection. Thus, trade unions play the role to eliminate the separation of the workers in the organisation on the basis of personal traits and background as they require joint and equal involvement from all the employees in the unions’ activities. Trade unions or labour unions resist the domination of the employers and their decision making over the employees by creating equal and collective bargaining power and representing the interests of the workers irrespective of their background or cultural differences (Shen et al, 2009). This has created a pressure on the HRM of the organisations as any discriminatory policies practiced by the organisations can initiate radical actions from the trade unions. This compelled the organisations in including management of employee diversities in and initiating strategies of HRM that promote equal treatment of the employees in the organisations. The measurement of diversity and diversity management practices are considered strongly as a primary step of HR diversity management practices in any organisation.

Managing diversities at the work place is a challenge for the HRM as a diverse workforce in an organisation comprises of multitude of beliefs, values, perceptions towards the work, views towards the world (French, 2010). The increased globalization and internationalization by the MNCs across the world resulted in number of corporations in the US to hire and promote employees and from talent pools of different countries and ethnic communities. Thus, this resulted in increase of focus of HRM on implementing strategies of managing diversities in the workforce in order to bring uniformity among them. The trade unions play a better role in managing the diversities across the world and employers and unions work together for promoting diversity and equality among the workplace through number of mechanisms. These involve conciliation with the employers or managers to make certain that any sort of bias is eliminated and equal opportunities are given, victims of bigotry are heard and supported and monitoring of any discriminatory practices in the workplace through their union’s representatives in the workplace.

Conclusion

The concept of employment relationship and the methods through which it is developed and controlled has become a central concern for most of the multinational organisations. The employment relations within the context of organisations were determined how the managers perceive the relationship with the employees of the organisations or their representatives. The primary concern was the role of institutionalisms such as trade unions, labour laws and regulations and wage policies that binds both the parties (employees and employers) together and thus how it has impacted or rather limited the role of HRM in the organisations. Trade unions or labour unions started to form in different countries as a response to various economic and social impacts of industrial revolution. These unions in the United States works for securing number of benefits for the workers such as higher wages, work-life balance, flexible working hours, reasonable work shifts, job security through pensions schemes, protection from any kind of arbitrary actions by the employers. Furthermore, trade unions also play an important role in managing diversities at the work place which created pressure on the HRM of the organisations as any discriminatory policies practiced by the organisations can initiate radical actions from the trade unions.

• Reference List

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