Introduction to HRM Lecture 2


An Introduction to Industrial Relations
Niels-Erik Wergin

What are Industrial Relations?
 “Interaction between employers, employees, and the government; and the institutions and associations through which such interactions are mediated”.
Source: The Concise Oxford Dictionary of Politics (OUP 2003)

 “The relations between the management and workforce of an enterprise, particularly bargaining through trade unions. This mainly concerns pay, hours and conditions of work (…). Many of these matters are affected by legislation.”
Source: A Dictionary of Economics (OUP 2004)


Typical topics
 Trade unions  Works councils  Collective bargaining  Strikes  Minimum wage  Apprenticeships

Why are IR important?

“If industrial relations are good, the whole workforce will be well motivated to work hard for the benefit of the organization and its customers.”
Source: A Dictionary of Business (OUP 2002)


IR: Main Actors
Executive, Legislature, Judiciary, Administration

Employees & Trade Unions

Employers & Managers


IR: Main Actors
Superstructure State
Executive, Legislature, Judiciary, Administration

Employees & Trade Unions

Employers & Managers

Economic base


Main Actors I: The State
 Government (executive)
• Central government (“Whitehall”) • Regional government (not very important) • Local Government

 Parliament (legislature) (“Westminster”)  Employment Tribunals (judiciary)  Administration  ACAS (Advisory, Conciliation and Arbitration Services)  Role of the European Union
• Legislation in the areas of employment, health and safety


Main Actors II: Capital
 Individual employers and their managers  Employers’ Organisation (less important now)
• E.g. EEF (Engineering Employers’ Federation)

 Umbrella organisations
• CBI (Confederation of British Industry, mainly large companies) • BCC (British Chambers of Commerce,mainly SMEs) • IoD (Institute of Directors, individual CEOs/MDs, more right-wing than CBI)

Main Actors III: Labour
 Trade Unions
• • • • e.g. TGWU, Amicus, UNIOSN (large unions) e.g. FBU, ASLEF, RMT (small but powerful) Paid union representatives: full-time officers Lay union representatives in companies: shop stewards

 TUC (Trades Union Council) – umbrella organisation
• Counterpart of CBI • Negotiates with governments

 European Level
• ETUC (European TUC) • European Industry Federations

Differences between IR and HRM
 Individualist vs. collectivist perspective
• HRM: relations between individual employees & management • IR: relations between all (or groups of) employees & management

 Focus on micro-level vs. focus on macro-level
• HRM: focus on the company and plant-level, external environment is seen as “given” (I.e. constant, not changeable) • IR: focus on companies, but also on whole economy and society, external environment not given – government as an actor

 Unitarist vs. critical/Marxist perspective
• HRM: employees and employers have same interest: well-being of company • IR: capital and labour have different, incompatible interests

Different Interests
 Employers’ interest:
• Higher profits

 Employees’ interests:
• Higher wages • Better working conditions

 Problem:
• Contradictory interests: Higher wages mean lower profits, and vice versa

 Common interest:
• Competitiveness and survival of the company


Collective Bargaining
 Collective bargaining is a process which attempts to accommodate these opposing interests (of capital and labour), by means of collective negotiations between the two parties  Definition: “The process of negotiation between unions and employers in respect of the terms and conditions of employment of employees” (source:

 With other words: trade unions negotiate on behalf of all employees with management, on topics such as wages, working hours etc.  Outcome: collective agreements


Collective Agreements: Types and Contents
 Different types of agreements:
• Multi-employer agreements
 Apply to a whole sector or industry

• Single employer agreements
 Apply to only one company, or even a plant

 Different contents:
• Procedural part
 Establishes how management interacts with both unions and individual employers  e.g. strikes, disciplinary and grievance procedures

• Substantive part
 Issues such as wages, working hours, conditions of work

Collective Agreements: Issues


 Collective agreements are not contracts, they are “gentlemen’s agreements” which are “binding in honour only”  Thus, collective agreements cannot be enforced legally  This is a peculiarity of British IR – and a result of voluntarism  However, the contents of collective agreements are usually included in individual employment contracts (which are legally enforceable) subsequently


Power in Industrial Relations
 The concept of power is central to understanding Industrial Relations  Reason: It affects the bargaining position of capital and labour  Depends on the economic, political, legal & technological environment  The balance of power changes over time as a result
• Late 1970s: unions were very strong • Late 1990s: unions weakened considerably by successive conservative governments


Human Resource Management and Industrial Relations (also called “Employment Relations”) are complementary subjects. If you want to become a good Personnel Manager, you need a good knowledge of both subjects (even if the posts is now more likely to be called “HR manager”). A good knowledge of HRM practices alone is not sufficient!

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