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Employee Relations

Employee Relations

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Published by: umarch on Aug 25, 2009
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Role and Impact of Employment Relationship onthe overall success of an organisation
‘Employee relationsis a modern term alternatively used for former ‘industrial relations’ in present times. A move from manufacturing sector to service sector along with increased number of white collar jobs in place of blue collars and trends of individual protection and rewards havenarrowed the scope of collective efforts(bargaining) and consequently lent the introduction of employee relations term (Daniels, 2006). It seems sophistication of different writers to usedifferent terms interchangeably for employee relations such as Rose (2008) used ‘employmentrelations’, Lewis et al. (2003) used ‘employment relationship’ while other prominent authors(Daniels,2006;Blyton and Turnbull,2004;Hollinshead et al.,2003) seek to agree on ‘employeerelations’ notion. Moreover, employment relationship is a quite broad and complex area whichencompasses many concepts and dimensions and many external and internal factors influence therelationship, therefore it is hard to precisely define it (Daniels, 2006). However, Lewis et al.(2003: 6) quite convincingly view employment relationship as ‘an economic, legal, social, psychological and political relationship in which employees devote their time and expertise tothe interest of their employers in return for a range of personal financial and non-financialrewards’. The overall success of an organisation depends on many factors and employmentrelationship is certainly the one which extensively play very vital role in the organisationalsuccess. In order to explore the concept of employment relationship along with its implicationson the success of organisation, I intend to discuss it in three stages. In the first part of essay, thetheoretical approaches to employee relations will be discussed, a relationship between employee(worker), his work and his expectations and role of organisation’s features on employmentrelationship will be explored. Secondly, the impact of external environment and role of differentstake holders, processes and employee involvement practices on employment relationship will bediscussed. Finally, the discussion will be summarised and hence conclusion will be drawn.Although, there are various theoretical approaches to employee relations which have beenevolved over the time. However, three basic theories i.e. Unitarism, Pluralism and some principles of Marxism and two evolved approaches Collectivism and Individualism in employeerelations have been considered important by Daniels(2006). Furthermore, the process of changein society in general and employee relations in particular since the mid-1960 seek to focus ontheoretical perspectives of Collectivism and individualism, and specifically the last 20 years have
 
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seen significant move to individualism (Lewis et al.,2003). The concept of Collectivism can bedescribed as group of “workers mobilising their interest through collective action” and involvesthe role of trade unions as representative of employees. On the other hand Individualism perspective of employment relationship mainly focuses on individualised rewards for employeesand seems to discourage need for collective efforts. (Daniels, 2006).In this regards, Daniels(2006) believed that the new legislation regarding individual protection and the availability of instant information to individuals has encouraged the trends of individualism in modern era. Inthe1990, “this shift towards individual relations was most noticeable in parts of Cadbury-Schweppes, the Co-operative Bank, in the first wave NHS trusts, and especially in NationalPower”; for example Cadbury-Schweppes derecognized APEX and MSF for the purposes of pay bargaining involving 400 clerical and administrative staff and 350 managerial staff (Bacon andStorey, 2000).However, Daniels (2006) argued that Collectivism is not even irrelevant in today’stime and explained that the demise of MG Rover Group in 2005 resulted in 5,000 redundanciesfor workers whom all experienced ‘collective experience’. Furthermore, teamwork is bringingemployees together as ‘collective group’ and teamwork at ASDA and WS Atkins is evident of this collective approach and higher success for organizations.In the employment relationship the relationship between employers and employees is builtandregulated on the basis of contract of employment. The employment contract represents atraditional and legal way of defining employment relationship. Besides, this legal contract of employment there is a non-legal aspect (contract) of relationship as well which is built andflourished among employees and employers upon years of mutual understanding and itassociates certain expectations from each other, called psychological contract(Lewis et al. 2003).With regards to the expectations of employee’s from their employers, they range from a job, jobsecurity, promotion, care and high salary (rewards) to employability, flexible contract andindividual rewards whereas employer’s expectations from employees range from loyalty,compliance, accountability, flexibility and long hours to learning ,learning to earn and clear added value for organization(Daniels,2006).The psychological contract of employment defined by Rousseau (1994) as “the understandings people have, whether written or unwritten, regarding the commitments made between themselvesand their organization(Cited by Hiltrop, 1996). Furthermore, Shore and Tetrick(1994)explained psychological contract as“ employee’s perception of the reciprocal obligations existing
 
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with their employers; as such, employee has beliefs regarding organization’s obligations to themas well as their own obligations to the organization”. However, the concept of psychologicalcontract is considered to be subjective, voluntary, dynamic and informal due to individualcognitive and perceptual limits and due to changes in the external environment (Shore andTetrick, 1994; Hiltrop, 1996). A same view is upheld by Daniels (2006), who believed that theexpectations of the employees and employers have changed over the time. However, all prominent writers and commentators in the field of employee relations seek to developconsensus on the point that the violation or breakdown of psychological contract results in bademployment relationship which in turn results in “many employees experience a growing senseof insecurity, distrust and even betrayal in relation to their employer” (Hiltrop1996), therefore,resulting into negative impact on the success of organization. In the UK 2007, Royal Mail’s plansof modernization and mergers of its some post offices with WH Smith stores were thought toresult in the loss of jobs for a number of employees while reallocation of duties and roles for others. Moreover, its plans of cuts in pensions for employees and reluctance to raise the pay, allcontributed to growing sense of insecurity, distrust and even betrayal in the minds of employeesin their relation to employer (royal mail).This was example of the violation and breakdown of  psychological contract which was built up on the basis of loyalty and commitment in response to job security and progression among employees and employers over the years. In this case,employee relations were highly violated and disrupted thus economic success and performanceof the company and whole economy of UK was badly affected as result of various industrialactions and strikes taken by employees (trade unions) over the above discussed issues. Source:BBC NEWS, [Online]In another example, The Birmingham Midshires Building Society (BMBS) was going throughthe process of restructuring and downsizing from the period of 1991 to 1993 and almost a thirdof senior management left the BMBS and other staff was also reduced from 2500 to 1500 byselling part of the business. Some of the old workers were not expecting redundancies being partof the organization for years were also made redundant and many others were reassigned jobsand roles with lower level of pay. Moreover, most of the remaining employees at BMBS wereclose friends of fired (redundant) employees, experienced “Survivor syndrome”. This is the name professionals used to describe the stress-related behavior and the feelings of guilt, anger andresentment often exhibited by the remaining employees following redundancies in theiorganization. In this case the psychological contract was violated and broken hence resulting in

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