The Contrast Between Individualistic And Collective Approaches - Coursework Example

 MANAGEMENT OF EMPLOYMENT RELATIONS: THE CONTRAST BETWEEN INDIVIDUALISTIC AND COLLECTIVE APPROACHES Introduction Employment relationship is a social, economic and political relationship between an employee and the organization where he is employed. “The employee provides manual and mental labor in exchange for rewards allocated by the employer”(Bratton & Gold: 336). In workplaces where the employees are represented by a trade union, the compensation that the employee receives in return for his work, is determined through the collective bargaining process. Traditional patterns of employment relations management were based on collectivism. Due to the forces of change, these are now co-existing with or being replaced by emerging patterns of human resources management which are based on individualism (Purcell: 536). Collectivism involves cooperation with other members of the group, and the term refers to the way in which interests, orientations and behaviours are based predominantly on group rather than individual reference points. Collectivism requires that interests pertaining to the common good are given priority in the place of individual self-interest, at least for a period. Not only in respect to employment relations, but also in other areas such as community activities, home, family, and even in nature, cooperative behaviors, collective interests and orientations play a part. Contrastingly, individualism refers to “the extent to which interests, orientations and behaviors are based on predominantly individual rather than predominantly group reference points” (Peetz: 6). Decisions are based solely on self-interest, and no other person is taken into consideration. In practice, a combination of individualism and collectivism in attitudes and behaviour are manifested by people. Individualism and collectivism are two extremes in the range of approaches in the management of employment relations; they are two possibilities on a coninuum of various combinations of the two concepts, rather than the only two possibilities. The purpose of this paper is to compare and contrast the individualistic and collectivistic approaches to the management of employment relations. Further, the importance of the public policy framework and the part played by trade unions will be included. Discussion Employment relations are undertaken by centralized personnel departments of organizations, and pertain to employee management in areas such as handling grievances, recruiting or selecting employees, equal opportunities, staffing or manpower planning, training employees, health and safety, performance appraisals, conditions of employment, and systems of payment (Farnham: 30). Two separate dimensions of management style are identified; these are individualism and collectivism. Individualism is the extent to which the firm gives credence to the feelings and sentiments of each employee, and “seeks to develop each employee’s capacity and role at work” (Purcell: 536), and collectivism is the extent to which the organization recognizes the rights of employees to voice their ideas in those aspects of management decision making which concern them, and allows them to have their say in those matters. Collectivism and Individualism Companies that recognize their own employees’ right to collective representation will consider the existence of democratic structures supporting employees to be legitimate. The collective relationship will be seen as cooperative, for example where the emphasis is based upon developing constructive relationships through integrative bargaining with trade unions. The collective relationship will be seen as conflictual where the emphasis is placed on adversarial bargaining, or unitary where the legitimacy of collective arrangements is questioned by managers. On the other hand, though the concepts of individualism and collectivism are analytically distinct, they are unlikely to be mutually exclusive features of employment relations management. Both are likely to be present in any employment relationship in varying degrees, and firms may alter their approach along both dimensions at the same time. Thus, there is more likelihood of there being a mix of individualistic and collective approaches that would be difficult to disentange for examining separately. However, attempting to locate management styles in these terms does have analytical usefulness (Clark: 178). In the workplace, collective behavior is manifested in “collective bargaining” and related actions such as meetings, campaigns, bans, strikes, and institutions such as unions. Collective bargaining is resorted to when there is an imbalance of power between individual employees and the corporations that employ them. Without the support of the group, the individual employee has very little bargaining power in the situation that he or she is not happy with the terms offered or required by the corporation. Collective bargaining is “the method of fixing the terms of employment and settling grievances arising from those terms by negotiation between union and employer” (Peetz: 7-8). Collective bargaining is also described as a rule-making process. Through collective bargaining, unions undertake the regulation of wages as well as raising them, and also the regulation of other issues related to the employees’ working lives. With the conclusion of bargaining, workers’ terms and conditions of employment are finalised, by which employees are covered by a collective agreement. Collectivism is operated through trade union organization, or other forms of employee representative system, “thus giving employees a collective voice in organizational decision-making” (Farnham: 38). There are two dimensions to collectivism: whether employee participation is high or low, and the degree of legitimacy given to collective organization by management. High-level employee participation such as co-determination, pension fund trustees, and employer-wide collective bargaining takes place at the corporate level. On the other hand, low level employee participation takes place at workgroup, departmental or workplace levels. Further, management tolerance of collectivism ranges from willing cooperation at one extreme to grudging acceptance at the other. Individualism in employment relations has many meanings. The most important term in this connection is individual contracting, which is the opposite of collective bargaining, Sometimes it is also known as procedural individualization, and it includes the removal of collective mechanisms for determining the terms and conditions of employment. In this approach, employees sign an individual contract which sets out their terms and conditions of employment. The contents of the employee’s contract of agreement are usually governed by the enterprise bargaining agreeement (EBA) or the collective employment contract at his or her workplace. Every employee has a contract of agreement under common law, irrespective of whether they signed such a contract or not. The key issue is whether there is a collective mechanism that determines conditions in the contract of employment. “In most countries this mechanism would be a collective agreement” (Peetz: 8). Farnham (p.37) states that individualism focuses on the feelings and sentiments of each employee, and encourages the abilities of individual employees and their roles in the workplace. High individualism focuses on the resource status of employees with employers support for improving and nurturing their employees’ talents and abilities. Related employment policies include careful selection, internal labour markets, staff appraisal, merit pay and extensive communication systems. Low individualism emphasises the commodity status of employees, with employers’ focus being on controlling labor costs and the labor process. The priority is placed on achieving profits, employment policies include recruiting in secondary labor markets, high levels of workplace discipline and little security of employment. Between high and low individualism is paternalism which synthesizes caring, welfare employment policies with the relegation of the subordinate position of lower level employees in the organizational hierarchy. Farnhams views are supported by Clark (p.178), who also believes that a management style which emphasizes the value of employees as individuals, will view them as a resource to be developed and nurtured, and individual relationships between managers and employees will involve a strong human resource component. A firm which does not emphasize the value of the individual contribution of its employees, with little priority given to security of employment and a clearly manifested emphasis on managerial control and the cost of labor, will tend to view them as a commodity. The paternalisitc management style is more moderate in approach. In employment relations, there are other ways in which the term individualization is used. For example, it can mean substantive individualization or the differentiation of individual employees’ employment contracts, which refers to significant differences between employees in a corporation with reference to their pay and other terms and conditions of employment. Substantive individualization is different from individual contracting because it does not need to go with procedural individualization, and is more often the reverse. In most cases, individual contracting leads to increased standardization of non-pay terms and conditions, and increased similarity of terms and conditions between managerial and non-managerial staff, with diversification only in pay which is normally based on performance. Individualism is sometimes used for describing the extent to which personnel policies are focused on the rights and capabilities of individual workers. This is a different dimension of management style to collectivism which could co-exist with individualism. Further, there is no factual evidence that individual contracting focuses on the needs and talents of individual workers (Peetz: 10-11). Purcell (p.541) makes the important point that links between individualism and collectivism in employment relations are complex, and that “management styles operate along the two dimensions; action in one area, towards individualism for example is not associated with changes in the collectivism scale”. While some employers have more individualist management styles such as American-owned companies, and some have more collectivist management styles such as larger United Kingdom companies, components of both individualism and collectivism are integrated together in certain management styles as in some Japanese and British companies. In practice, it is found that individualist styles of employee relations management are more inclined towards non-unionism, while collectivist ones lead to union recognition. Hence, whether an employer recognizes trade unions as representational, consultative, negotiating, or co-determinational, is a critical and evident expression of management’s approach to employment relations. However, this does not exclude internal training, promotion ladders, and welfare provisions for individual employees (Claydon: 214 ). The results of the research conducted by Ramamoorthy and Carroll (p.573) support the hypothesis that while individualism encourages individual interests and competitiveness, collectivism encourages collective interests and cooperative behavior patterns. Further, a research study by Cox et al (p.827) again confirmed that the members of collectivist oriented groups exhibited a greater tendency to cooperate, than those belonging to individualistic groups. This is supported by Wagner (p.152) who states that collectivism is found to be positively associated with cooperative behaviors, as manifested by group members on a group task. Trade Unions and Employment Relations Ironically, both individualization and collectivization of employment relations are adhered to by collective institutions. In order to understand the move towards individualization of employment relations, it is necessary to understand the two collective institutions in employment: the “collective of capital” and the “collective of labour” (Peetz: 12). The collective of capital occurs when an individual holder of capital who is limited in what he or she can do with it, increases their ability to generate further wealth from their capital by aggregating their capital with that of other owners of capital, through the corporation. The owners of the capital are shareholders in the corporation. The second collective is the collective of labour in which workers form unions to increase their power in dealing with capital. A union is defined as a “continuous association of workers for the purpose of improving or maintaining the conditions of their working lives” and it is free from the influence of an employer or employer organization (Peetz: 14). Unions are composed of members, not shareholders, and they have multiple objectives that need to be prioritized. The main goal of unions is to improve their members’ economic conditions such as wages, hours of work, leave entitlements and any other benefits that are the employees’ dues. Unions also aim to promote safety and comfort of working conditions, to protect the job security of members, to enable members to have an understanding of various issues that affect them at work, and to have control over these issues, to the extent possible. Many unions also work towards achieving changes towards greater justice in the society in which they operate. This altruistic behavior manifested by unions is in sharp contrast to that of the corporation, whose main aim is to maximise profit. Trade union practice is based on trade union policy. The essential role of trade unions is providing collective representation for employees in their relations with employers, in areas which are of common concern to their members, employment status or occupational interests. The objectives and methods adopted by trade unions vary according to the circumstances facing any trade union at that time. The success of the methods used and the level to which the objectives are achieved, depends on a number of contingent factors: the state of labor markets, employer policy, management style, the law and public policy (Farnham: 279). A decline in aggregate trade union membership since 1979 has been recognized, which has fuelled the increasing interest in the new human resource management techniques, which offers corporate management effective methods of managing without trade unions. By adopting human resource management techniques, a significant benefit is said to be greater employee commitment and flexibility which gives rise to technical change in the workplace (Clark: 175). Employment Relations and Organizational Policy One of the reasons for the relative decline in importance of employers’ associations is political. Since the late 1970s, governments have adopted market-centered economic policies in place of corporatist ones. For example, in Europe, along with moves towards greater European Union integration and a single European market for capital, goods, services and certain types of labor, the role of industry-wide employers’ associations is further weakened (Farnham: 44). Regulated collectivism which involves collective processes that are underpinned by the law include wage boards, conciliation, arbitration and mediation, trade union rights, pension fund trustees, industrial sanctions, and co-determination (in the European context). Employment relations policies which provide guidelines to effective managerial action are implemented through appropriate procedures, handbooks and manuals. These policies help management to take consistent decisions in employment relations, subsequently reducing the possibilities of conflicts between employers and trade unions; and managers and their staff. The management develops policy guidelines on areas that cover: recognition or non-recognition of union, “collective bargaining units, levels and scope, information for the purpose of conducting collective bargaining, time-off arrangements for in-house union officials involved in employee relations, pay and conditions, equal opportunities, appraisal, training and development, recruitment and selection, promotion, grievances” other factors (Farnham: 40). There are four possible policy choices for management: first, a policy of worker subordination which is based on low degrees of both individualism and collectivism, combined with high levels of management discretion, which is underscored by firm management control. Secondly, the policy of union incorporation is seen where there is a comparatively high degree of collectivism, a low degree of individualism, and policy is operated in key employment areas through combined management and union regulation. The third system of policy choice is where there is employee commitment which introduces a high degree of individualism and a low degree of collectivism, with policy being made functional through programmes fuelled by human resource management and employee involvement. Fourth is the policy of worker participation which involves high degrees of both individualism and collectivism, with policy being operated through management-employee co-determination, which is related to policy involvement measures. Worker participation policies are usually compatible with union incorporation and employee commitment policies. Management has the right to adopt different employment relations policies for different groups of workers, or different policies for the same group of employees at different times (Farnham: 38). Employment Relations and Public Policy Public policy and governmental legislation have had the power to shape employment relations and in other contexts of human resource management. Moreover, the political environment was continuously changing, especially in the area of regulatory requirements. Most human resource activities including selection, training and rewards were impacted by employment legislation, human rights, pay equity, occupational health and safety, industrial relations legislation and pensions. The government could equally intervene in the economy to influence economic activity and consequently change labour market trends. Since the early 1980s, supporters of supply-side economics advanced the theory that economic growth and employment creation is best achieved by governments withdrawing from economic intervention policies and from regulating the labor market. A “tough love” policy was adopted; to ensure that organizations functioned profitably a soft approach was used, and at the same time, toughness with regard to non-protection and support was used to help organizations to strengthen all aspects of employment relations in order to compete in the global market (Bratton & Gold: 88). In recent times in the United States of America, domestic fiscal policies, declining foreign investments, inflationary pressures, revenue shortfalls as well as the global political situation are causing massive budget deficits, and fierce competition for available resources. The organized labor movement and workers’ voice in the political system offer appropriate avenues for expressing employees’ concerns to the government (Hogler: 273). The Change in Employment Relations from Collectivism Towards Individualization The change in employment relations towards individualization is not an inevitable one, states Peetz (p.4). Collectivism is a normal state of being, and those who seek to promote the individualization of employment relations, do not actually attempt to remove collectivism. In order to suit particular interests, the try to reshape collectivism by altering the identities of workers from identifying with a collective of fellow workers to the “collective of capital referred to as the corporation” (Peetz: 4). However, it is observed by the author that even in the circumstances of workers having a collective identity as a group, they are normally hard-working and dedicated employees. But reshaping identities away from the collective aspirations of workers helps to focus aspirations in a narrow area, and prevents any challenges to obstruct the decisions of corporations. Fundamentally, the capacity of workers to organize collectively is challenged by the individualization of employment relations through individual contracts. Individualization hampers their freedom of association which is enshrined in international conventions as well as in federal legislation. The increasing emphasis on individualization of employment relations is for the purpose of achieving greater productivity, which in turn would help to increase employees’ pay. However, since individual contracts represent a transfer of power from workers to corporations, they usually lead to lower wages and poorer conditions for ordinary workers, as compared to their compensation in a collective organization. This does not mean that all workers on individual contracts will be financially less sound than those workers not on them. Some workers will be offered incentives to move to individual arrangements. “Others will already have enough power in the labour market to do well anyway; mostly professional and managerial employees, and, most starkly of all, chief executive officers” (Peetz: 5). D’Art & Turner (p.535) found from their research that there is little evidence of the disuse of trade unions or collectivism, even after their decline. Both groups in the research study, collectivists and individualists agreed on the utility and necessity for trade union representation. This distinctly indicates the unchanged nature of employment relationship in the market system. The main reasons for the earlier emergence of trade unions had been conflicting interests and asymmetrical power being characteristic features of the employment relationship. Consequently, it was found that under new employment arrangements which focuses on individualization, increased job autonomy, and employee involvement in decision making, the conflictual and cooperative elements which are characteristic of the employment relationship still persist, although in a milder form. In many corporations in Australia, New Zealand, the United States and Britain, there is a weakness or disintegration of worker organizations, because of which the corporations have succeeded in individualizing employment relations. For workers to challenge individualization, they need to have the necessary skills and confidence. For workers to reclaim power at work, some of the changes can be undertaken at the workplace, and other changes can be implemented only through reforms in legislation and public policy (Peetz: 5). Conclusion This paper has highlighted employment relations management in organizations, and compared the individualistic and collectivist approaches pertaining to employment relations management. The transformation from the collectivistic to the individualistic approach, the relevance of trade unions in promoting the rights of employees through collective bargaining and the contribution of public policy have been examined. Some scholars (Peetz: 5) believe that the term “individual” is a misnomer in relation to individual contracts. There is not much that is individual about these individual contracts, not only because corporations often use them as part of a strategy of simply re-orienting identity from one collective to another; but also that all the individual contracts offered in a corporation are similar in core issues. Moreover, usually there exists an integration of both individualism and collectivism in varying proportions, in any employment relations management system. Therefore, it can be concluded that to promote employee welfare and consequently, the welfare of the organization, a judicious synthesis of the two approaches should be implemented. This will require the formulation of appropriate public policy as well as the promotion of trade unions, with adequate limits placed on the parameters within which the unions can function, to protect the organization’s goals and work policies. 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