Comparison of SEMCO with Classical Organisation Approach to Industrial Relations - Essay Example

Task one: compare and contrast SEMCO to ical organisation’ approach to industrial relations Introduction SEMCO is a Brazilian company that deals with the manufacture of hundreds of different types of appliances, such as cooking units, dishwashers, and pumps. Since it changed ownership, it has excelled in the last 10 years leading to a lot of media interest in its industrial relations. Some of the factors contributing to its success include the ability of employees to set their own working hours, the ability of employees to determine their salaries, the opportunity to choose their own bosses and ability to determine which office to occupy in their work. Additionally, employees have the opportunity to take early retirement, meaning that they can take one day off during the week in exchange of promise to work for one day a week after their retirement. The employees are granted an opportunity to appraise and rate their bosses twice yearly and bosses who consistently exhibit poor performance are squeezed out. SEMCO have policies that ensure openness of the financial statements that enable low level employees such as secretaries, receptionists and factory workers understand the financial performance of the company. The salaries of employees are available to the public unless the concerned employee is willing to maintain his or privacy. SEMCO has allowed all employees to set their own individual production quotas, thus motivating employees to voluntarily work overtime. The company has implemented a profit sharing policy that includes all workers even the factory workers and senior managers are not entitled to large bonuses. The company has implemented six types of rewards that include commissions on the gross margin, stipends, bonuses, profit sharing and royalty on sale of profit. A classical organisation with a traditional approach to industrial relationships is Interserve plc of the United Kingdom. Interserve is headquartered in Reading, UK and has an estimated workforce of more than 50,000 employees. The company employees are members of the UCATT, a trade union that is dedicated at fostering the welfare of construction workers through lobbying for workers representation in decision making, better salaries and security of tenure. Union of Construction, Allied Trades and Technicians (UCATT) is the only trade union that caters for only the needs of construction workers in the UK. Its membership spreads across Wales, Scotland, Northern Ireland and England. Construction industry in the UK has continued to exploit the workers through low wages, dubious employment agencies and poor working conditions (Dunlop, 1993 p. 50). Industrial relations can be defined as the institutions and processes that establish and foster rules and regulations in the workplace. Industrial relations dates back to the industrial revolution era that was characterized by low wages, limited markets and capitalist thoughts of business owners (Batstone, 1988 p. 10). According to human resource management perspective, industrial relations involve employment contracts, government agencies, and conflicts that arise due to interactions in the workplace. According to Bean (2004), industrial relations refer to the nature of relationships among employer, employees, the trade unions, and management p. 47). Industrial relations established democracy in the organisation and improves the morale of employees. Industrial relations will also foster enactment of sound labour laws, ensure fair employment practices and ensure efficient use of human capital in the organisation (Harcourt and Wood, 2006 p. 100). Industrial related conflicts result from diverse social economic, political and psychological factors. There are different approaches to industrial relations in an organisation. One of the approaches is the psychological approach that asserts that perceptions of workers, management and trade unions contribute to job related conflicts in the organisation (Salamon, 2000 p. 41). For instance, the beliefs and values of workers will result in employees’ negative perceptions towards the management. According to this perspective, the work related conflicts in the organisation can be understood by reviewing the different in perceptions between the management and workers on issues surrounding employment such as wages, benefits, working hours and security of tenure (Edwards, 2003 p. 50). The second approach is the sociological approach that asserts that manager’s goals, attitudes of employees, and changes in the industry are determined by external factors that may contribute to conflicts in the organisation. Social changes like industrialisation, urbanisation, housing problems, stress, and changes in family structure create new demands for workers and the management thus leading to differences in perception of the employment matters (Kelly, 2002 p. 25). The third approach is human relations approach that views industrial relations and related conflicts as consequences of natural human behaviour. For instance, employees naturally desire freedom of movement, expression and association in the organisation. If such natural demands are denied, the employees may express dissatisfaction in their work through industrial strikes that may even affect the entire industry. According to this approach, employees should be provided with good working conditions, fair disciplinary systems and efficient communication mechanisms in organisation (Deery, 2001. P 12). SEMCO has a unitary perspective of industrial relations and a humanistic approach to human resource management. According to unitary perspective, trade unions are unnecessary since employees are loyal to the organisation and conflicts hardly occur due proper communication in the organisation (Prasad, 2010 p. 61). On the other hand, Interserve plc has a pluralistic approach to industrial relations since trade unions in the organisation arbitrate disputes and members in the organisation have divergent perceptions and personal invested interests. SEMCO management and employees share common objectives of ensuring efficiency and effectiveness of the organisation. According to SEMCO industrial relations, the working relations are flexible since the employees plan their working hours and determine their salaries. The employees can retire early but still work in their retirement in the organisation by taking one hour off during weekdays and promising to work for one hour after their retirement. SEMCO workforce is multi-skilled since employees can choose which office to work from and the role of union is to facilitate communication between the management and employees. Accordingly, SEMCO industrial relations have facilitated cordial employment relationships and sound working conditions. On the other hand, Interserve plc has industrial relations encourage the role of trade unions in arbitrating disputes in the workplace and collective bargaining on the fair wages of employees. Interserve plc employees have no opportunity of determining their working hours and determining their offices of work. Interserve plc has strict rules of hours of work, overtime pay and working conditions (Dransfield, 2000 p. 87). Conclusion SEMCO staffing policies are motivating to employees unlike Interserve plc policies that have created numerous employment related conflicts in the organisation. Interserve plc does not communicate the organisation objectives to junior employees like casual labourers unlike SEMCO industrial relation polices whereby the duty of strategic decision making is left to senior managers. According to Interserve plc approach to industrial relations, disputes on pay, working conditions are inescapable since employees perceive inequity in pay and power distance thus the company has to maintain specialists to arbitrate in case of go-slows thus increasing operating costs to the organisation. Task two: Compare and contrast SEMCO approach to that of your organisation, and how chief executive can successfully implement some of SEMCO’s ideas Introduction SEMCO and Interserve have different approaches to industrial relations in the organisation. SEMCO has unitary industrial relations perspective since the organisation is harmonious and integrated in relation to management of human resources. Unitary perspective assumes that both management and employees share common objectives and interests of the organisation (Thompson, 1989 p. 13). All the members of the organisation have shared mutual goals and trade unions are irrelevant in the organisation. From the employee point of view, the working practices are flexible and purpose of trade union should be facilitating communication between the company and employees (Purcell, 1981 p. 77). Employees feel that management cares for their interests through participation in decision making and providing good working conditions (Joseph, 2004 p. 17). From the management point of view, the employment policies unify and motivate employees towards higher productivity while individual interests are integrated with the organisational-wide objectives (Sheldrake, 2003 p. 71). On the other hand, Interserve has a pluralistic perspective of industrial relations. According to this perspective, organisations have divergent groups (management, employees and trade unions). Additionally, conflicts in the organisation result from different perceptions on the distribution of profits. In this perspective, employment related conflicts are inescapable since the role of management is enforcing rules and not persuading the employees. Budd (2005. p. 71) asserts that unions act as legitimate representatives of employees’ interests thus comprehensive collective bargaining agreements involve the trade unions. Furthermore, external arbitrators are used to resolve disputes (Monappa, 1985 p. 38). Since 1996, the profits of SEMCO have tripled due to humanistic industrial relations since the organisation has eliminated the hierarchical organisation structure and strict rules and policies other than those geared at maintaining health and safety of workers. SEMCO employees determine their own production quotas, decide the ideal time to attend work and employees have the opportunity to redesign their products. Centrally, Interserve plc has a high hierarchy that consists of several levels of managers and supervisors. Employees at Interserve are expected to follow strict rules of working hours, procedures and policies in the organisation. SEMCO Unit managers run their own units without interference from top management and also make their own marketing plans and budgets. On the other hand, Interserve plc unit managers must follow pre-determined budgets and follow all the decisions of the top management. Unlike at Interserve plc, SEMCO encourages open discussion of all financial performance information. The level of power distance in Interserve plc is high since from personal experience, I noticed executive dining halls and personalized parking lots that should only be occupied by the senior managers. Employees at SEMCO are self-managing since no close supervision and employees can decide whether to work overtime or weekends depending on their individual production lot. SEMCO industrial relations allow employees to work at different paces depending on their unique needs since individual interests have been aligned with organisation mission and objectives. On the other hand, Interserve plc employees have strict working hours and performance targets every day. SEMCO working environment allows employees to change their working departments as they wish since one can move from painting walls to operating machines depending on his or her unique changing needs (Sivarethinamohan, 2010 p. 63). From my experience, I have noticed that SEMCO offices have receptions and secretary rooms, but actually no particular employee is expected to occupy that room on a daily basis as the secretary or receptionist. SEMCO employees can freely joint any trade union and participate in strikes without fear of reprimand. Additionally, SEMCO employees have not gone on strike due to cordial relations with management and good working relationships (Storey, 1999 p. 41). SEMCO has ensured job security since workers who have been working for more than three years or have attained the age of fifty years can only be dismissed after a long process of approval by colleagues. On the other side, Interserve plc employs staff on short contracts and most of the employees are casual workers with no job security. SEMCO has informal dress code and appearance is not factored in hiring or any other employment matters. Women have equally opportunities in employment matters such as remuneration and promotions unlike at Interserve plc whereby majority of the employees at senior management levels are men (Jackson, 1991 p. 88). Company loans in case of emergencies, purchase of homes or cars are available at SEMCO unlike at Interserve whereby such loan facilities are not extended to casual labourers. However, the Chief Executive of Interserve plc, Adrian Ringrose, can implement some of the SEMCO’s ideas on industrial relations. The Chief Executive officer should first solve the problems that have led to poor industrial relationships such as unhealthy working environment, poor wages, intolerant attitude towards the employees and lack of interpersonal skills in the organisation. Other associated problems include heavy workloads and poor interpersonal skills in the organisation. The chief executive officer should encourage cooperation of employees and management through establishing proper channels of efficient communication and removing the tall hierarchy in the organisation. For instance, SEMCO reduced its hierarchy from 12 levels to only three levels. Interserve plc should recognize the human rights of employees by prohibiting discrimination in employment and ensuring proper termination of dishonesty workers through the disciplinary mechanisms (Tustin, 1996, P. 2). The Chief Executive should recognize the collective bargaining efforts of the employee trade union and ensure problems are solved freely and honestly without reprimanding the affected employees. The Chief executive should also ensure employees earn fair wages and have bonuses such as transport and housing allowances on their salaries. Additionally, performance appraisal systems should encourage higher productivity through rewarding loyal and high performing employees for their extra efforts in the organisation. The organisation should also encourage training and development of employees on new skills and job rotation in the organisation (Poole, 1984 p. 201). Conclusion SEMCO has a unitary perspective of industrial relations unlike Interserve plc whereby the industrial relations are pluralistic. The ideas of SEMCO on industrial relations will ensure Interserve plc employees participate in decision making and enhance their motivation and productivity. These ideas will also improve the living conditions of the employees and safeguard the interests of the organisation through reduction industrial conflicts. Interserve plc should facilitate cordial relationships through allowing employees to participate in decision making and rewarding fair wages according to individual productivity in the organisation. The Chief executive should also eliminate the tall chain of command and implement employee grievances resolution policies in the organisation. References: Batstone, E. (1988). The reform of workplace industrial relations: theory, myth, and evidence. London: Clarendon Press. Bean, R. (2004). 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