BUS332 Week 2 Employment Theory and Context

Overview Part 1

 Definition of theory and be able to discuss its value to employment relations

 Describe patterns of employment relations

What is theory?

 ‘an attempt to account for given phenomenon, that is, to show what, how and/or why it is’
 Theory helps understand the world of employment relations
 Aims to explain all situations
 Different types of theories e.g. Lewins ‘five levels’ of explanation

Lewins’ five levels of explanation

Level Type of explanation

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Description An account of an event or phenomenon from a particular stand point, whether it

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is adopted consciously or unconsciously.

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Taxonomy A classification scheme designed for a particular purpose that groups together events
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or phenomena on the basis of similar characteristics.
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Model A simplification or representation of relationships between events or phenomena that is
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designed to provide a clearer picture of the world.

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Law A statement of a relationship between two or more variables that inevitably produces
the same outcome, in terms of events or phenomena.
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Causal theory A complete answer to the ‘why’ question, which not only identifies the inevitable
relationships between variables but also provides an account of the process by which
one determines the other
(Lewins 1992, pp.19–27).
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Describing patterns of employment relations

Employment relations

‘formal rules and informal rules which regulate the employment relationship’

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 BUS332 Week 2 Employment Theory and Context

Formal rules vs Informal rules

Formal rules Informal rules

Official, consciously determined and enforced
through deliberate social processes
Usually written down
Eg.
 Usually these are formalised in writing,
such as collective agreements approved
under the FWA 2009
 Written individual employment
contracts
Frequently more unofficial, sometimes
consciously negotiated but often accepted
unconsciously
Less recognisable and enforceable because they
are not in writing such as;
 Unwritten agreements between union
job delegates and supervisors
 Shared understandings between
employees and managers over
appropriate behaviours or ‘custom &
practice’

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Substantive rules vs Procedural rules

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Substantive rules Procedural rules

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Govern the essential or material terms under Govern the processes or actions to be taken in
which employees sell their work response to different circumstances at work

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Examples:
 Wage rates
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 Grievance procedures
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 Minimum Standards e.g. NES  Modes of expected behaviour – open
door
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Parties in the employment relationship

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Rulemaking

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 BUS332 Week 2 Employment Theory and Context

1. Unilateral rule-making
a. Creation and enforcement of rules by a single party
2. Bilateral rule-making
a. Joint creation and enforcement of rules by two parties
3. Multilateral rule-making
a. When three or more parties jointly make and enforce rules

Authorship of rule-making is vital:

 Indicates where the power lies in the employment relationship

 Can have important consequences for the effectiveness of rules in influencing the behaviour
of the parties to the employment relationship

Dunlop’s Model industrial relations system

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Agency explanations

 Social actors (individuals/organisations) are capable to act as a result of their choices

 Humans are conscious beings and do not react automatically to stimuli – they are capable of
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exercising choice
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 Different individuals/organisations perceive external factors differently and respond

differently
 Effective causal explanation can only come about through a combination of ‘context’ and
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‘agency’
 We must pay attention to the parties in rule-making in employment relations:
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o People
o Organisations
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 BUS332 Week 2 Employment Theory and Context

Overview Part 2

 Define and compare the three types of values:

o Unitarianism
o Pluralism
o Radicalism

Understanding values

 ‘One’s principles or standards’

 ‘One’s judgement of what is valuable or important in life’
 Fox’s ‘frame of reference’:
o Each person perceives and interprets events by means of a conceptual structure of
generalisations or contexts, postulates about what is essential, assumptions as to
what is valuable, attitudes about what is possible, and ideas about what will work
effectively.

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Taxonomy in ER

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Fox’s (1966; 1974) taxonomy in employment relations identifies three distinct sets of values about
the employment relationship:

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1. unitarism
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2. pluralism

3. radicalism
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General assumption ER – Unitarism

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 The employment relationship is essentially harmonious.

 employees and employers share common interests, which are embodied in organisational
goals.
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 The most conservative of the three categories of values.

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Main features of Unitarism

Aspect Unitarist perspective

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•
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General Philosophy Employment relationship is essentially harmonious

• Employees and employers share common interests – embodied in
organisational goals
Role of Management • Provide strong leadership
• Effectively define organisational goals
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• Ensure commitment of employees to role and organisational goals

Role of employees • To be loyal to the organisation and management

Industrial conflict
Role of unions
Role of the state
Conflict is pathological – results from: poor management, work of agitators
or employees who fail to grasp commonality of interests
External ‘third parties’ that disrupt relationships and complete with management for
the loyalty and commitment of employees
External force whose agencies are unwelcome, except to the extent that they
promote cooperation in the employment relationship

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 BUS332 Week 2 Employment Theory and Context

Unitarism and HRM

 HRM embodies the unitarist frame of reference

 Employers and employees – similar goals and interests
 Manage people by emphasising goals of organisational commitment and policy integration
with business needs
 Management role’s is to define goals and harness (control) minds, emotions and efforts of
employees
 Involves ‘top-down’ communication to ensure employees understand organisational goals
and expectations
 ‘Bottom-up’ communication (‘employee voice’) conceived narrowly
 Advocate non-unions forms of representation

General assumptions ER – Pluralism

 The ER has the ever-present potential for conflict

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 Employers and employees sometimes have different interests;
 Conflicts are legitimate and can be accommodated by an appropriate network of procedural

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and substantive rules
 Underlying social structure creates sectional groups in the ER

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 Potentially brings these groups into conflict with each other as they seek to achieve their
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separate interests
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 Diverse interest groups and multiple forms of loyalty and attachment

Main Features of Pluralist perspective

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Aspect Pluralist perspective

vi y re

General Philosophy • Employment relationship always has the potential for conflict
• Employees and employers have different interests
Role of Management • to advance interests of the organisation
•
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recognises separate and legitimate interests of stakeholder groups.

• Advance their personal and sectional interests
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Role of employees
• recognise legitimacy of management’s interests
Industrial conflict • An understandable and resolvable outcome of conflict of interest
inherent in the employment relationship
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Role of unions • Legitimate representatives of employees

• Sometimes challenge management but maintain responsibility and
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seek compromise
Role of the state • important in creating policies and laws that protect ‘public interest’
• protect the weak in the employment relationship
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• constrain the powerful

• promote a compromise

Pluralism and practice of ER

 Influence of pluralist values can be seen in:

o Public statements of politicians-policies and laws they support
o Language used by employers and their representatives and trade unions
o Actions of employers and trade unions at enterprise level

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 BUS332 Week 2 Employment Theory and Context

 In Australia, Accord between ACTU and Labor governments during 1980s and 1990s can be
seen as practice based on pluralist values

General assumptions ER – Radicalism

 The ER as subject to enduring conflict

 Control exercised by employers over employees is
illegitimate – only end with major social change
o there exists a radical conflict of interest, which
underlies everything that occurs in industrial
relations’ (Hyman, 1975)
 According to Marx, class struggle in capitalist labour
process explains social relations within the workplace

Main Features of Radicalism aka Marxism

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Aspect Radicalism perspective

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• Fundamental and inherent conflict of interest between workers

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General Philosophy

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and employers
• Conflict arises from the private ownership of the means of

o.
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that results
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Role of Management • to control workers in order to produce profit

Role of employees • inevitably hold a subordinate and unequal position unless they
realise their situation and rebel
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Industrial conflict • Inevitable outcome of an unequal employment relationship

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reflecting an unequal society

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Role of unions • represent employees in the struggle against employers.

Role of the state • to protect the interest of employers.

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Criticisms of Fox’s taxonomy

 Three main issues:

o The three categories do not completely capture the key differences in values that are
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important in ER
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o Can be imprecise at the boundaries between categories – can be difficult to separate

o Few people are completely consistent in their statements and actions; they shift
between categories over time or according to an issue
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 The limits: values aren’t everything

o Need to understand different types of values because:
 Values influence theories adopted, diagnosis of problems in employment
relations and solutions offered
 Values held by parties affect their decision, behaviours and actions in
practice
o Should not accept/reject scholarly work purely because one disagrees with
underlying values
o Values are important in explaining behaviours of parties, but many other factors to
consider

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 BUS332 Week 2 Employment Theory and Context

Summary table of general assumptions of ER – Unitatism, Pluralism, Radicalism

Aspect Unitarist perspective
General Philosophy  Employment relationship
is essentially harmonious
 Employees and employers
share common interests –
embodied in
organisational goals
Pluralist Perspective Radicalism Perspective
 Employment • Fundamental and inherent
relationship always conflict of interest between
has the potential for workers and employers
conflict • Conflict arises from the
 Employees and private ownership of the
employers have means of production and
different interests the unequal distribution of
power and income that
results

Role of Management  Provide strong leadership  to advance interests • to control workers in order
 Effectively define of the organisation to produce profit
organisational goals  recognises separate
 Ensure commitment of and legitimate
employees to role and interests of
organisational goals stakeholder groups.

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Roles of Employees  To be loyal to the  Advance their • inevitably hold a

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organisation and personal and sectional subordinate and unequal

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management interests position unless they realise
 recognise legitimacy their situation and rebel

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rs e of management’s
interests
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Industrial conflict Conflict is pathological – results • An understandable • Inevitable outcome of an
from: poor management, work of and resolvable unequal employment
agitators or employees who fail to outcome of conflict of relationship reflecting an
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grasp commonality of interests interest inherent in unequal society

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the employment
relationship
vi y re

Role of unions External ‘third parties’ that disrupt • Legitimate • represent employees in the
relationships and complete with representatives of struggle against employers.
management for the loyalty and employees
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commitment of employees • Sometimes challenge

management but
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maintain
responsibility and
seek compromise
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Role of the state External force whose agencies are • important in creating • to protect the interest of
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unwelcome, except to the extent policies and laws that employers.

that they protect ‘public
promote cooperation in the interest’
employment relationship • protect the weak in
the employment
sh

relationship
• constrain the
powerful
• promote a
compromise

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