Human Resource Management - Essay Example

Human Resource Management History of trade Unions: During the era of industrialization, working communities of employees lived in mining and industrial towns near their workplace, with trade unions being a critical part of employee lives and where “leisure, industrial relations, local Government and home town consciousness were inextricably linked.” (Hobsbawn, 1987:38). Unions thrived on the solidarity and closeness among workers, best demonstrated during political and industrial action (Calhoun, 1982) and through the British miners strike (Samuel et al, 1986). The twentieth century in the UK is notable in that trade unions and socialist parties became part of the new Labour party which pushed working class politics to national levels, with the trade union represented in the community through the political voice of the Labour Party (Savage and Miles 1987). However, in recent decades there has been a move towards de-industrialisation, with workplaces being increasingly pressured by downsizing and outsourcing, global competition and resulting changes in management. As pointed by Turok (2000), Britain as a whole lost 32% of its manufacturing jobs between 1981 and 1996. Public sector organizations in particular demonstrate a strong union presence and have traditionally been known as employee champions. However in the modern day environment, as reduced resources and outsourcing have resulted from more market based arrangements, the responsibility for the welfare of employees has shifted from the HR department the trade unions depended upon, to line managers. (Whittaker and Marchington 2003). In a market based, individualized framework, the role of trade unions has been increasingly sidelined, as white collar workers proliferate in a digital environment. The declining role of trade unions: Globalization and the age of the Internet has produced a surplus of white collar workers as opposed to the blue collar workers who were well represented by unions. Unions have played a significant role in the past through the organization of strikes to compel employers to provide better benefits and working conditions. Machin and Stewart (1984) undertook a study of performance measures of workers vis a vis financial performances during plant closures in 1984. Their findings showed that in the case of companies reporting a below average financial performance, closure of the plant due to strikes was likely to have occurred. Therefore a direct correlation may be said to have existed between employee productivity and union activity. With de-industrialization, some firms have also moved towards the introduction of employee profit sharing and such share ownership firms demonstrate high productivity due to lower employee turnover and the maximization of returns from available human capital (Wilson et al, 1990). As a result, the requirement for trade unions to aggressively represent the interests of employees is being subverted by the arrangements between individual employees and employers, thus undermining the group solidarity that existed among workers in the industrial era. Verma (2005:415) has examined in detail the effect of unions and their impact upon managerial practices at the workplace. Although the core activity of unions has remained in the workplace, they have also been instruments of social change and have brought about significant changes in the workplace, notably in the impact that they have had upon the development of human resource practice within organizations. While the role of skill in enhancing performance of employees and the value of competition in such skills is accepted, organizational practice rarely produces the kind of job growth or work design that are geared towards enhancing this aspect (Bach and Sisson, 2000). Wright et al (2003) point out that performance metrics are designed to evaluate employee performance on the basis of financial and organizational outcomes while human resources outcomes such as absenteeism and individual/group skill based performance are rarely used. Therefore, in a market based economy, the actual structure of corporate ownership within a firm is geared towards profit maximization (Demsetz and Lahn, 1985:1155). Faced with a tough and competitive global environment, corporations are increasingly resorting to outsourcing and hiring of independent contractors as opposed to dealing with trade unions. Belfield and Heywood (2004:279) have pointed out that with the transition to a market based economy where information is the driving factor, non unionized employees may not even desire membership in unions and this particularly so in Great Britain, where workers express less dissatisfaction with the level of their control over variables in the workplace. The role of the Human resource department: Unions have traditionally depended upon HR personnel to address the demands of employees. Human resource management is meant to generate high performance and motivation among employees, however there is no clear role that defines exactly what it really is (Legge 1995; Redman and Wilkinson, 2001; Storey 1992). However, in modern organizations, this function is increasingly being delegated to line managers, while individual employee access to personal records is being facilitated through the intranet thereby limiting the role of HR personnel and the role of trade unions. The downsizing of HR personnel is perceived as a problem by trade unions because this department was viewed as vital to promote consistency and fairness within the organization (Renwick, 2003). When employee issues have to be handled directly by the trade unions, the result may sometimes be that the management takes action through external legal processes, which creates an adversarial environment in the employee relationship. Trade unions seek to defend the skill of employees and thereby earn higher benefits for them and it is this worker skill that can “successfully defend against the challenge of employers.”(Cockburn, 1983:113) However, within a digital environment which is diffused across wide geographical boundaries, comprising workers from all over the world, the question of employee skill in a particular geographical area may be difficult to use a basis for trade unions to stand on. In a global environment, a cross cultural management style is likely to be propagated which seeks to understand and improve the interaction of co-workers, managers, clients, suppliers, alliance partner, etc from countries and cultures around the world. As a result, the localized influence of trade unions is paltry at best and trade unions are increasingly becoming redundant in an environment of direct interaction between individual employees and their employers. The effectiveness of the HR department in an organization is now being measured by its contribution to organizational effectiveness rather than being focused on ensuring “employee comfort” (Ulrich, 1997:126) and balancing needs of employees with the needs of the organization. As a result, organizational goals are likely to be geared towards profit maximization rather than padding benefits for employees, since such practices are likely to detrimentally affect profits. The role of third party mediator and referee between the employees and the management is one that belonged to the HR department but is increasingly being undermined; thus the reduced contact of HR staff with employees is viewed by trade unions as detrimental to the employee behaviors that are required to deliver improvements in organizational performance. Advantages to employers: The revised role of the HR departments to sustain employee performance with the single objective of organizational efficiency which may be seen to be an advantage to employers since it reduces the ambivalence associated with the HR role (Legge 1988). As pointed out by Bandzak (1992) in an analysis of the reasons for declining unionization in the United States, employers may actually view strikes in today’s global age as a boon because it gives them an opportunity to rid themselves of existing union contracts with employees and hire a new and less expensive set of employees. Furthermore she also points out that structural changes within organizations and in the style of operation within a global information based economy, coupled with a higher level of import of foreign workers is yet another reason for the declining influence of unions. Such structural changes as outsourcing and the declining role of unions are thus advantageous to employers in that it enables higher profits to be accrued through payment of lower employee benefits. When employees are hired as independent contractors, this produces further benefits for employers from a tax perspective as well as in reduced costs through non payment of perks and benefits claimed by employee unions. Conclusion: In conclusion, it may therefore be noted that the role of unions has changed considerably in past decades since the onset of globalization. The decline of the industrial age has also brought about the decline in union activity and existing unions are now engaged in community based activity through a more actively cooperative role with managerial personnel and partners in the community (Gapasin and Wial, 1998). With the decline in strong occupational communities and the emergence of a diffused global environment, unions appear almost redundant. With the evolution of a market based economy, there is a higher level of interaction between individual white collar employees and their employers, thereby negating the necessity for a union to represent the common interests of workers that arose with a particular industrial community. Therefore unions are facing an erosion of their previously strong role in employee management, including their relationship with intermediary HR personnel. With the devolution and downsizing of HR personnel, the mediator role of the HR department in ensuring employee welfare is also being reduced as employee share arrangements are worked out by employers. Therefore, on an overall basis, it may be stated that in a market based, individualized system, employers stand to gain because they are able to eliminate union workers altogether and thereby avoid the payments of perks, benefits and allowances negotiated by trade unions. Through a restructuring of their firms by outsourcing work or by hiring independent contractors, employers are able to cut down considerably on their costs, which enables them to derive greater profits and compete more effectively within a global environment. 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