Business in Society

7/10/2016
Understanding Business
BUSS1001
Industrial Relations and

Human Resource Management
Presented by
Dr Chris F Wright
The University of Sydney Business School
Discipline of Work and Organisational Studies
The University of Sydney Page 1
Industrial Relations & HR Management | BUSS1001
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1
7/10/2016
Some definitions
What are Human Resource Management and Industrial Relations?
HRM
HRM assumes that all personnel activities are integrated with each other,
and strategically with organisational objectives (Nankervis et al)
an approach to the practice and study of the employment relationship that
focuses on the role of management in eliciting effort and value from
employees (Bray et al)
IR (employment relations)
The study of the formal and informal rules which regulate the employment
relationship and the social processes which create and enforce these rules
(Brady et al)
Why study HRM and IR?
Importance of people to organisational success
Finite skills/talent in labour market
Career in IR/HRM
Career in Finance, Marketing, etc
Can give you the knowledge to work in a wide range of organisational

contexts (public/private sectors, local/international)
The employment relationship is:
An economic exchange in the labour market
But:
Labour is not (necessarily) a commodity in the same way as other
commodities
Employees bring their labour power or capacity to work in return for
wages
Employers hire this capacity to work, not actual work effort
The management process is crucial to turning labour power into labour
effort and productivity or commitment, effort and compliance
Employment is a power relationship employee submits to authority
Thus the employment relationship is an open ended relationship and an inter-

dependent one
2
7/10/2016
The employment relationship is:
An economic exchange in the labour market
But:
Labour is not (necessarily) a commodity in the same way as other
commodities
Employees bring their labour power or capacity to work in return for
wages
Employers hire this capacity to work, not actual work effort
The management process is crucial to turning labour power into labour
effort and productivity or commitment, effort and compliance
Employment is a power relationship employee submits to authority
Thus the employment relationship is an open ended relationship and an inter-

dependent one
Industrial Relations & HRRelations

Industrial Management
& HR | BUSS1001 | BUSS1001
Management
The employment relationship is also:

Contracts of employment
Legal
contract
Social
contract
Psychological
contract
The employment relationship is also:
A legal relationship or contract between an employee and employer;

A psychological contract between an employee and employer;
"The perceptions of both parties to the employment relationship, organisation
and individual, of the reciprocal promises and obligations implied in that
relationship" (Guest, 2007)
A social contract that sits within a range of
contextual factors (society, economy, ideas)
and institutions (organisations themselves, employer associations,
governments, courts, unions etc)
that regulate the employment relationship and some of the many issues that
arise in that relationship (e.g. recruitment, pay, performance etc).
3
40.0
45.0
50.0
55.0
60.0
65.0
70.0
75.0
80.0
85.0
Fe b- 19 78
M ar - 19 78
A pr - 197 8
M ay -1 97 8
Ju n- 197 8
Ju l- 19 78
A ug- 1 978
S ep- 1 978
O ct - 197 8
N ov- 1 978
D ec- 1 978
Ja n- 197 9
Fe b- 19 79
M ar - 19 79
A pr - 197 9
M ay -1 97 9
Ju n- 197 9
Ju l- 19 79
A ug- 1 979
S ep- 1 979
O ct - 197 9
N ov- 1 979
D ec- 1 979
Ja n- 198 0
Fe b- 19 80
M ar - 19 80
A pr - 198 0
M ay -1 98 0
Ju n- 198 0
Ju l- 19 80
A ug- 1 980
S ep- 1 980
O ct - 198 0
N ov- 1 980
D ec- 1 980
Delivery
Ja n- 198 1
Fe b- 19 81
M ar - 19 81
The University of Sydney

A pr - 198 1
M ay -1 98 1
Ju n- 198 1
Ju l- 19 81
A ug- 1 981
S ep- 1 981
O ct - 198 1
N ov- 1 981
D ec- 1 981
Ja n- 198 2
Fe b- 19 82
M ar - 19 82
A pr - 198 2
M ay -1 98 2
Ju n- 198 2
Ju l- 19 82
A ug- 1 982
S ep- 1 982
O ct - 198 2
N ov- 1 982
D ec- 1 982
Ja n- 198 3
Fe b- 19 83
M ar - 19 83
A pr - 198 3
M ay -1 98 3
Ju n- 198 3
Ju l- 19 83
A ug- 1 983
S ep- 1 983
O ct - 198 3
N ov- 1 983
D ec- 1 983
Ja n- 198 4
Fe b- 19 84
M ar - 19 84
A pr - 198 4
M ay -1 98 4
Ju n- 198 4
Ju l- 19 84
A ug- 1 984
S ep- 1 984
O ct - 198 4
N ov- 1 984
D ec- 1 984
Ja n- 198 5
Fe b- 19 85
M ar - 19 85
A pr - 198 5
M ay -1 98 5
Ju n- 198 5
Ju l- 19 85
A ug- 1 985
S ep- 1 985
O ct - 198 5
N ov- 1 985
D ec- 1 985
Ja n- 198 6
Fe b- 19 86
M ar - 19 86
A pr - 198 6
M ay -1 98 6
Ju n- 198 6
Ju l- 19 86
A ug- 1 986
S ep- 1 986
O ct - 198 6
N ov- 1 986
D ec- 1 986
Ja n- 198 7
Fe b- 19 87
M ar - 19 87
A pr - 198 7
M ay -1 98 7
Ju n- 198 7
Ju l- 19 87
A ug- 1 987
S ep- 1 987
O ct - 198 7
N ov- 1 987
D ec- 1 987
Ja n- 198 8
Fe b- 19 88
M ar - 19 88
A pr - 198 8
M ay -1 98 8
Ju n- 198 8
Ju l- 19 88
A ug- 1 988
S ep- 1 988
O ct - 198 8
N ov- 1 988
D ec- 1 988
Ja n- 198 9
Fe b- 19 89
M ar - 19 89
A pr - 198 9
M ay -1 98 9
Ju n- 198 9
Ju l- 19 89
A ug- 1 989
S ep- 1 989
O ct - 198 9
N ov- 1 989
D ec- 1 989
Ja n- 199 0
Fe b- 19 90
M ar - 19 90
A pr - 199 0
M ay -1 99 0
Ju n- 199 0
Ju l- 19 90
A ug- 1 990
S ep- 1 990
O ct - 199 0
N ov- 1 990
D ec- 1 990
Ja n- 199 1
Fe b- 19 91
M ar - 19 91
A pr - 199 1
M ay -1 99 1
Ju n- 199 1
Ju l- 19 91
A ug- 1 991
S ep- 1 991
O ct - 199 1
N ov- 1 991
D ec- 1 991
Ja n- 199 2
Fe b- 19 92
M ar - 19 92
A pr - 199 2
M ay -1 99 2
Ju n- 199 2
Ju l- 19 92
A ug- 1 992
S ep- 1 992
O ct - 199 2
N ov- 1 992
D ec- 1 992
Ja n- 199 3
Fe b- 19 93
M ar - 19 93
A pr - 199 3
M ay -1 99 3
Ju n- 199 3
Ju l- 19 93
A ug- 1 993
S ep- 1 993
Males
O ct - 199 3
N ov- 1 993
D ec- 1 993
Ja n- 199 4
Fe b- 19 94
M ar - 19 94
A pr - 199 4
M ay -1 99 4
Ju n- 199 4
Ju l- 19 94
A ug- 1 994
S ep- 1 994
O ct - 199 4
N ov- 1 994
D ec- 1 994
Ja n- 199 5
Fe b- 19 95
M ar - 19 95
A pr - 199 5
M ay -1 99 5
Ju n- 199 5
Ju l- 19 95
A ug- 1 995
S ep- 1 995
O ct - 199 5
N ov- 1 995
D ec- 1 995
Ja n- 199 6
Fe b- 19 96
M ar - 19 96
A pr - 199 6
M ay -1 99 6
Ju n- 199 6
Ju l- 19 96
A ug- 1 996
S ep- 1 996
O ct - 199 6
N ov- 1 996
D ec- 1 996
Ja n- 199 7
Fe b- 19 97
M ar - 19 97
A pr - 199 7
M ay -1 99 7
Ju n- 199 7
Ju l- 19 97
Females
A ug- 1 997
S ep- 1 997
O ct - 199 7
CONTEXT
N ov- 1 997
D ec- 1 997
Ja n- 199 8
Fe b- 19 98
M ar - 19 98
A pr - 199 8
M ay -1 99 8
Ju n- 199 8
Ju l- 19 98
A ug- 1 998
S ep- 1 998
O ct - 199 8
N ov- 1 998
D ec- 1 998
Ja n- 199 9
Fe b- 19 99
M ar - 19 99
A pr - 199 9
M ay -1 99 9
Ju n- 199 9
Ju l- 19 99
A ug- 1 999
S ep- 1 999
O ct - 199 9
N ov- 1 999
D ec- 1 999
Ja n- 200 0
Fe b- 20 00
M ar - 20 00
A pr - 200 0
M ay -2 00 0
LABOUR MARKET
Ju n- 200 0
Ju l- 20 00
A ug- 2 000
S ep- 2 000
O ct - 200 0
N ov- 2 000
D ec- 2 000
Ja n- 200 1
Fe b- 20 01
M ar - 20 01
A pr - 200 1
M ay -2 00 1
Ju n- 200 1
Ju l- 20 01
A ug- 2 001
S ep- 2 001
O ct - 200 1
N ov- 2 001
D ec- 2 001
Ja n- 200 2
Fe b- 20 02
Proportion of Population Aged 65 Years and Over

M ar - 20 02
A pr - 200 2
M ay -2 00 2
Ju n- 200 2
Ju l- 20 02
A ug- 2 002
S ep- 2 002
O ct - 200 2
N ov- 2 002
D ec- 2 002
Ja n- 200 3
Fe b- 20 03
M ar - 20 03
A pr - 200 3
M ay -2 00 3
Ju n- 200 3
Ju l- 20 03
A ug- 2 003
S ep- 2 003
O ct - 200 3
N ov- 2 003
D ec- 2 003
Ja n- 200 4
Fe b- 20 04
M ar - 20 04
A pr - 200 4
M ay -2 00 4
Ju n- 200 4
Ju l- 20 04
A ug- 2 004
S ep- 2 004
O ct - 200 4
N ov- 2 004
D ec- 2 004
Ja n- 200 5
Fe b- 20 05
M ar - 20 05
A pr - 200 5
M ay -2 00 5
Ju n- 200 5
Ju l- 20 05
A ug- 2 005
S ep- 2 005
O ct - 200 5
N ov- 2 005
D ec- 2 005
Ja n- 200 6
Fe b- 20 06
M ar - 20 06
A pr - 200 6
M ay -2 00 6
Ju n- 200 6
Ju l- 20 06
A ug- 2 006
S ep- 2 006
O ct - 200 6
N ov- 2 006
D ec- 2 006
Ja n- 200 7
Fe b- 20 07
M ar - 20 07
A pr - 200 7
M ay -2 00 7
Ju n- 200 7
Source: ABS Cat. 3101.0 - Australian Demographic Statistics, Jun 2013

Ju l- 20 07
A ug- 2 007
Male & Female Labour Force Participation Rates: 1978-2013

S ep- 2 007
O ct - 200 7
N ov- 2 007
D ec- 2 007
Ja n- 200 8
Fe b- 20 08
M ar - 20 08
A pr - 200 8
M ay -2 00 8
Ju n- 200 8
Source: ABS (2011, June), 6291.0.55.001 Labour Force, Australia, Detailed - Electronic
Ju l- 20 08
A ug- 2 008
S ep- 2 008
O ct - 200 8
N ov- 2 008
D ec- 2 008
Ja n- 200 9
Fe b- 20 09
M ar - 20 09
A pr - 200 9
M ay -2 00 9
Ju n- 200 9
Ju l- 20 09
A ug- 2 009
S ep- 2 009
O ct - 200 9
N ov- 2 009
D ec- 2 009
Ja n- 201 0
Fe b- 20 10
M ar - 20 10
A pr - 201 0
M ay -2 01 0
Ju n- 201 0
Ju l- 20 10
A ug- 2 010
S ep- 2 010
O ct - 201 0
N ov- 2 010
D ec- 2 010
Ja n- 201 1
Fe b- 20 11
M ar - 20 11
A pr - 201 1
M ay -2 01 1
Ju n- 201 1
Page 12
Page 11
Page 10
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4
7/10/2016
M and Bell
100.00
90.0
90.00
80.0
77.9
80.00
70.0 69.8 70.7 69.4
63.0 70.00
60.0
55.6 60.00
50.0
50.00
43.7
40.0
40.00
30.0
30.00
20.0 20.6
20.00
10.0
10.00
3.1
0.0
0.00
15-19 20-24 25-34 35-44 45-54 55-59 60-64 65+
15-19 20-24 25-34 35-44 45-54 55-59 60-64 65+
Jun-1978 Jun-1988 Jun-1998 Jun-2011
1978 1988 1998 2011
Labour force and immigration
900000
We are a nation and a workforce of
immigrants 800000
Around 25% of the workforce in

Pacific Seasonal (temp)
Australia is foreign born 700000
Since 1945, the Australian population 600000

Humanitarian (perm)
has more than tripled, and immigration

accounts for 50% of this growth 500000
Family (perm)
50% of the population is either a 457 (temp)

direct immigrant, or the child of an 400000
immigrant Skilled (perm)

300000
The channel by which immigration
WHM (temp)
occurs, is becoming more and more 200000
connected to labour force / supply Student (temp)

issues 100000
Annual immigration intakes for permanent, temporary

work, and international student visas 1988/9-2014/5
Components of annual population growth, 1990-2015
5
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Union Membership
Working days lost per 1000 employees to industrial disputes
Wages and profit shares in Australia, 1959-2011
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7/10/2016
Distribution of value in the iPhone
Trade union membership density by characteristics (%), 2013

Gender % Industry %
Females 18 Education & training 37
Males 16 Public administration & safety 34
Electricity, gas, water & waste services 29
Age Transport, postal & warehousing 28
1519 7 Health care & social assistance 26
2024 9 Mining 16
2534 13 Construction 16
3544 17 Manufacturing 15
4554 23 Retail trade 14
5559 28 Information media & telecommunications 11
6064 24 Arts & recreation services 10
65+ 18 Financial & insurance services 9
Other services 8
Sector Administrative & support services 6
Public 42 Accommodation & food services 5
Private 12 Wholesale trade 4
Professional, scientific & technical services 3
Rental, hiring & real estate services 2
Agriculture, forestry & fishing 2
7
7/10/2016
Recruitment
& Selection
T
Pay & H
Reward E
F
I
Performance
Management R
M
Termination
Recruitment
& Selection
T
Pay & H
Reward E
E/ers &
F
E/er Associations
I
Performance
Management R
M
Termination
1. RECRUITMENT &
SELECTION
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7/10/2016
Recruitment & Selection
RECRUITMENT ATTRACTION
SELECTION DISCRIMINATION

Contexts and ways to approach R&S
From an Organisational/HR perspective:
Interest in quantity and quality of applicants
War for Talent, Employer of Choice, Branding
Search for ideal worker not always based on hard skills and
qualifications but also on soft skills and interpersonal competencies
From the individual perspective:

exchange perspective also recognises individual needs
From the social/critical perspective:

recognises external influences such as the state of labour market as well as
parties (eg unions, regulators), markets, the law and social norms.
(see Tony Royle on Maccas)
Importance that employers of skilled migrant workers place on hard skills

compared with interpersonal competencies during the selection process
Total 87%
79%
Professional, Scientific & Technical Services 88%

81%
Other Services 86%

77%
Mining 84%
79%
Interpersonal
Manufacturing 89%
77% competencies
Information media & telecommunications 88%

82%
Hard skills
Health Care & Social Assistance 87%
79%
Education & Training 81%

84%
Construction 90%
75%
Accommodation & food services 90%

71%
0% 20% 40% 60% 80% 100%
9
7/10/2016

Recruitment Internal -v- External
Internal Sources
Existing employees transfer / relocation or promotion
Existing employees - tell friends, relatives, contacts in the community
Former employees (eg recall from layoff) or past applicants
External Sources
External labour market local, regional, international etc

The selection process
The securing of adequate data to make to right decision

Understanding criteria: qualifications, work experience, ability to perform given
tasks
Excluded criteria: race, sex, age, religion, family responsibilities etc. (legality)
(Attempting to have) valid and reliable predictors (& utility)
Understanding and applying the best techniques

Most frequently used test in Australia
Selection Tool Always used by the organisation
Interview 91%
Reference Checks 77%
Application forms 60%
Personality tests 12%
Cognitive tests 11%
Biodata 9.5%
Assessment centres 2.4%
Handwriting (graphology) 0%
Astrology 0%
(Dessler, 1999: p.257)
10
7/10/2016

Validity of selection techiniques
The main aim of all selection techniques is to predict future job performance or
organisation fit.
Meta-analysis of literature on personnel selection methods over past 85 years

shows the top five methods are:
o Work sample tests .54
o General Mental Ability Tests .51
o Employment interview (structured) .51
o Peer ratings .49
o Job Knowledge tests .48
Reference: Schmidt, F.L. and Hunter, J.E. (1998) The validity and utility of selection methods in
personnel psychology: Practical and theoretical implications over 85 years of research
findings, Psychological Bulletin, 124, 262-274.

Validity of selection techniques
The top three pairs of predictors are:
General mental ability test + integrity test (.65)
General mental ability test + work sample test (.63)
General mental ability test + structured interview (.63)
The five poorest predictors:

Assigning points to training and experience (.11)
Years of education (.10)
Interests (.10)
Graphology (.02)
Age (-.01)

Hot Topic
Discrimination
Not just in recruitment but an important step
Federal and State legislation prohibit discrimination in relation to recruitment,

selection (and promotion) on numerous grounds including:
Race Family responsibility

Sex Pregnancy
Sexual preference Political opinion
Physical or metal disability National extraction or social origin
Religion Physical features (Vic.)
Marital status Trade union membership
11
7/10/2016

Hot topic
2015 Survey of International Students
o 19% worked in the 2 weeks prior to the survey
o 60% paid under national minimum wage
o 31% paid $12/hr or less (NB: nat. min. pay $17.29/hr)
o 60% of employers withheld no tax (NB: $18,200 threshold)
o 50% received a pay slip
o 35% have felt threatened or unsafe at work
o 53% aware of rights under Australian employment law
Findings
Minimum wages
83% of workers in restaurants paid under minimum award rate
Restaurant Industry Award (2010) Minimum Pay
Food & beverage attendant grade 2: undertaking general $18.47/hr

waiting duties of both food and/or beverage including cleaning
of tables
Casual Loading - 125% $23.09/hr
Saturday and Sunday penalty rate - 150% (including casual $27.71/hr
loading)
Public holiday penalty rate - 250% (including casual loading) $46.18/hr
Migration status as a ground for discrimination (Tham 2015 - Submission to
Senate Inquiry into the impact of Australias temporary work visa programs on
the Australian labour market and on temporary work visa holders)
2. PAY & REWARD
12
7/10/2016
Pay & Reward

Overview
The employment relationship
An employment relationship is:

o Between employers and employees (different parties or actors)
o Each with interests and rights
o In conflict and cooperation
o Ongoing, continuous (assumed?)
o Open ended; an exchange a bargained relationship
Pay & Reward

Many ways to set rules:
Four of the main ways:
1. Managerial prerogative
e.g. take-it-or-leave-it contract; company policies/HRM policies
2. Individual contracting or bargaining
Joint decisions of management and an employee
3. Collective (or enterprise) bargaining
Joint decisions of management and more than one employee - often
represented by a union
4. Decision by 3rd parties
e.g. NES; modern awards
Pay & Reward

Hot topic
Penalty rates
http://www.smh.com.au/business/the-economy/roundtheclock-consumption-no-
reason-to-cut-weekend-penalty-rates-20151001-gjzlv4.html
http://www.smh.com.au/business/workplace-relations/penalty-rates-are-absurd-
20151005-gk1s9w.html
How does this affect students? (local and international)
13
7/10/2016
PERFORMANCE
MANAGEMENT
Performance Management
a) Discretionary effort
In the open-ended employment relationship:
Effort that employees volunteer over the minimum amount required to keep
their job.
Balnave et al, (2007, p.243) refer to this as discretionary spend
b) Effort bargain (or wage-effort bargain)
Any adjustment in work effort by workers having regard to their views

regarding the adequacy of their level of pay
If workers perceive that the balance between what they are required to do and
what they are paid to do is unfair, they may deliberately reduce their effort.
(Sutcliffe and Callus, 1994)
Employers, on the other hand, may perceive that employees do not expend
enough effort in return for their pay
14
7/10/2016
c) Performance management
The process through which managers ensure that employees activities and outputs
are congruent with the organisations goals
(Kramar et al, 2014:323)
Activities undertaken by management ensure that all employees are doing their job
properly and to the best of their ability to achieve the goal of the organisation
(Balnave et al, 2007:243)
d) Performance appraisal
Process that allows for assessing progress towards the achievement of the desired
goals or other performance standards
(Kramar et al, 2014:323)
The technique designed to monitor the performance of individuals in relation to

organisational objectives.
(Gardner and Palmer, 1997:332)
5 aspects of a performance management system
Defining performance
o which aspects of performance are relevant to the organisation
Facilitating performance
o by removing obstacles that limit performance
Encouraging performance
o providing sufficient rewards that are valued by employees
Measuring performance
o measuring those aspects of performance important for achieving competitive
advantage and organisational strategy (e.g. performance appraisal)
Feeding back performance information
o providing feedback to e/ees so they can adjust their performance to
organisational goals
15
7/10/2016
Hot topic
Performance appraisals - are they worth it?
http://www.smh.com.au/small-business/managing/work-in-progress/are-
performance-appraisals-worth-it-20150219-13jvez.html
TERMINATION
Termination
How to terminate an employment relationship
1. By giving notice under contract

2. By agreement
3. Repudiation
4. Frustration/Impossibility
5. Wrongful dismissal
16
7/10/2016
Termination
Equity -v- Efficiency

Harsh, unjust or unreasonable (Fair Work Act)
o Harsh - disproportionate to the actions/misconduct/performance of the
employee
o Unjust - not guilty of alleged conduct
o Unreasonable - decided on inadequate information
Who is entitled to a fair dismissal?
17

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7/10/2016

Industrial Relations and

The University of Sydney Page 1

Industrial Relations & HR Management | BUSS1001

Please go to socrative.com and answer the brief questions:

The University of Sydney Page 2

Industrial Relations & HR Management | BUSS1001

The University of Sydney Page 3

Industrial Relations & HR Management | BUSS1001

The University of Sydney Page 4

Industrial Relations & HR Management | BUSS1001

Why study HRM and IR?

Importance of people to organisational success

Finite skills/talent in labour market

Career in Finance, Marketing, etc

Can give you the knowledge to work in a wide range of organisational

Industrial Relations & HR Management | BUSS1001

The employment relationship is:

An economic exchange in the labour market

Thus the employment relationship is an open ended relationship and an inter-

The University of Sydney Page 6

Industrial Relations & HR Management | BUSS1001

The employment relationship is:

An economic exchange in the labour market

Thus the employment relationship is an open ended relationship and an inter-

The University of Sydney Page 7

Industrial Relations & HRRelations

The employment relationship is also:

The University of Sydney Page 8

Industrial Relations & HR Management | BUSS1001

The employment relationship is also:

A legal relationship or contract between an employee and employer;

The University of Sydney Page 9

The University of Sydney

Proportion of Population Aged 65 Years and Over

Source: ABS Cat. 3101.0 - Australian Demographic Statistics, Jun 2013

Male & Female Labour Force Participation Rates: 1978-2013

The University of Sydney Page 13

Labour force and immigration

Around 25% of the workforce in

Since 1945, the Australian population 600000

has more than tripled, and immigration

50% of the population is either a 457 (temp)

immigrant Skilled (perm)

connected to labour force / supply Student (temp)

Annual immigration intakes for permanent, temporary

Components of annual population growth, 1990-2015

The University of Sydney Page 15

The University of Sydney Page 16

Working days lost per 1000 employees to industrial disputes

The University of Sydney Page 17

Wages and profit shares in Australia, 1959-2011

The University of Sydney Page 18

Distribution of value in the iPhone

The University of Sydney Page 19

Trade union membership density by characteristics (%), 2013

The University of Sydney Page 21

Industrial Relations & HR Management | BUSS1001

The University of Sydney Page 22

Industrial Relations & HR Management | BUSS1001

The University of Sydney Page 23

Industrial Relations & HR Management | BUSS1001

The University of Sydney Page 24