Wednesday, 12 October 2011

Industrial relations theoretical perspectives

Introduction
The employment relationship is a key aspect of managing human resources because it brings together the rights, power, legitimacy and obligations that both employers and employees seek from each other. The traditional view of industrial relations was to associate it with the rules and procedures relating to employment. Under this period, trade unions were seen as protecting the interests of their members, whom they negotiated through collective bargaining to gain improved pay and conditions from employers.
This rather narrow and somewhat outdated view of the employment relationship fails to take account of the informal social relations that are now acknowledged as influencing the effectiveness of how people work within the organizations.
Moreover, it fails to account for the role of the individual in employment relation. For this reason, the term employee relations is now more commonly used, and it takes account of the motives, ideologies and perspectives of both the organization and its employees.  Therefore, the effective management of employee relations is the prerequisite of positive psychological contracts and ensuring that employees feel involved in decision-making processes.
Unitarism perspective
The Unitarian perspective sees the business organization as a team integrated by shared values and interest, with senior management as the main basis of authority and center of loyalty. According to Nick (2010), unitarism represents the viewpoint that organizations are families or teams where management and workers share common objectives and in which conflict or dissent is deviant behavior. While Farnham and Pimlott (1995), view unitarism as that of workplace harmony arising from the fact that employees and employers are united in the achievement of common goals.
Organizations are seen as the natural unit of consideration within which objectives are aligned. Hence, organizations can be related to a family where, regardless of the different branches and functions that might exist, the family is of central and paramount concern for all members. According to Kelly (1998), conflict is something that signals a major breakdown in the normal and desirable state of affairs. This perspective therefore, suggests that conflict should be avoided if possible and eliminated if it arises.
This perspective according to John & Fellenz (2010), views conflict as emanating from members classed as deviant which should be dealt with severely as they endanger the overall harmony of the group. Because everyone supposedly has the same interests, managers with a unitary view expect employees to trust them to make correct decision, therefore, conflict should not arise between what is best for the company and what is best for employees.
Because of this integrative view of the workplace, management’s right to manage and make decisions is seen as rational, legitimate and acceptable to all (Salamon, 1987). Management decides the way work is organized and employees are expected to carry out the work as directed.

Weakness of unitarism
(1) This theory does not realize that there are power inequalities between employers and employees which will create different kinds of conflicts (Kessler & Purcell, 2003).
(2) Conflict is not seen as a force that reflects inequalities and which can be used as opportunities to regain work harmony rather conflict is negatively treated (Dzimbiri, 2008).
(3) Unitarism is normative and lacks description of how common interests can be identified and shared across organizations (Ackers & payne, 1998).
(4) It emerges in the context of the pre-industrial society and fails to comprehend the impact of technological, organizational and other changes characteristic of contemporary society (Teicher, Holland & Gough, 2006).

Pluralism perspective.
Pluralism has its philosophical origins in the Hobbesian view of man as a selfish being who will utilize any opportunity to dominate his fellows (Bendix, 2001).
It views the organization as being made up of powerful and divergent sub-groups - management and trade unions. Thus, it accepts conflict as inevitable and uncontainable through various institutional arrangements.
This theory believes that, since society comprises of a variety of individuals and social groups with each having their own social values and pursuing their own self-interests and objective, it is necessary that those controlling and managing workplace, similarly have to accommodate the differing values and competing interests within them. It is only by doing this that organizations can function effectively (Singh & Kumar, 2010).
It believed that none of these stakeholders (employers and employees) is dominant; as such there will be a point in time where balance between competing interests will be reach. This legitimates the right of any stakeholder to challenge management’s right to manage within a controlled structure that regulates these divergent views and interests. Therefore, Management’s role is to take account of these competing views and interests and attempt to settle them.
Weakness of pluralism
(1) Pluralism is inextricably linked to democracy but in reality, it is not democracy because there are no elections, opposition, and the government holds office permanently.
(2) It relies on negotiations and bargaining processes to overcome fundamental differences between management and labor, and when they cannot resolve it resort to the use of law.
(3) Its focus is upon a continuous description of the govern institutions of modern capitalist society, and thereby ignores the inbuilt biases and inequalities of power and control in modern structures (Teicher, Holland & Gough, 2006).
(4) It does not realize that the state also represents commercial interests and not just public interests (Kitay & Marchington, 1996).
(5) It dwells on the rules and procedures and disregards the processes that also contribute to the resolution of conflicts (Gennard & Judge, 2002).
Summarized differences between Unitary and Pluralist perspectives

Unitary perspective
Pluralist perspective
General philosophy
Argues that despite differences and conflicts, interests of capital and labor are supposed to be harmonious and ordered.
Argues that organization is composed of individuals with a variety of differing and sometimes competing interest. Therefore, unions based on interests, objectives and leadership are allowed
Power dispersion
Concentration of power with management is seen as logical and rational
No concentration of power in one group. Therefore, consensus is negotiated
View of conflict
Conflicts are irrational and should not happened
Conflict is rational and inevitable due to differing interests from various groups
Attitude towards unions
Unions should be avoided or marginalized
Unions are legitimate representatives of employees




Neo-institutionalism perspective
The neo-institutionalists used the term institution in synonymous with firm or organization and argued that the tools of the neoclassical economist could be used to interpret the behavior of individuals in such institutions. They argue that institutional arrangements traditionally considered as alternatives to market are really complementary to the market and serve to make it more efficient (Hills,1995).
They believed that apparent non-market behavior may really be quite rational and complement the efficiency objectives of a system of market prices. In the view of this perspective, for instance, it may appear that the rationale behind employees unions is for the non-market function of raising wages above the prevailing market rate. But in actual fact, unions may also serve the interests of their members for certain types of services. The union may help to evaluate complex wage and benefit packages for its membership. The union may also serve as a means of communicating to management the complex needs and preferences of its members. In situations of this kind, the union acts as an agent whose services both management and labor may value. They argued that, the union is not so much a means for establishing reasonable value outside the marketplace as it is a market agent to be valued by its members because of the services it provides to employees and to management.
Furthermore, they argued that, unions can also serves the efficiency objectives of a market system if a lack of information obscures the range of rational choices of individuals and if market encourage opportunism. Protection against opportunism can be obtained through contracts, which is defined as transaction costs.
According to this perspective, structure of governance comes about through individual and rational market behavior. As such, individuals agree to a quite limited form of participation in the decisions of the firm in exchange for protection of the skills that they acquire over the long term. Employees feel that they are an important part of the production process, hence, act as good agents for the employer by efficiently performing the firm’s profit-making activities. As a result, these employees gain long-term job security.
In this case, employees have not gained their job security collectively, but rather, the employer has granted these benefits because the production process/ service that are provided require it. Therefore, the employer has voluntarily created a limited governance structure that helps employees feel involved. The structure of governance could be seen as a subtle form of control created by the employer to solve the agency problem. 




Human Resource Management (HRM)
Human resource management (HRM) has two main forms of existence. One is the form of academic discourse and activity. This finds expression in conferences, journals, books, courses in business schools and so on. While the other is in the form of practice in organizations that employ people and hence have employment relationships. These two modes of existence at times intersect and trade-off on another. At other times they exist alternatively independently each fuelled by their own interests, priorities, prejudices and logics.
However, Armstrong (2008) defined HRM as a strategic and coherent approach to the management of an organization’s most valued assets, the people working there, who individually and collectively contribute to the achievement of its objectives. In another way, Boxall (2007) view HRM as the management of work and people towards desired ends. Meanwhile, Storey (2007) says that HRM can be regarded as a set of interrelated policies with an ideological and philosophical underpinning.
Storey (2007) went further to identify four aspects that constitute the meaningful version of HRM;
1.      A particular beliefs and assumptions
2.      A strategic thrust informing decisions about people management
3.      The central involvement of line managers
4.      Reliance upon a set of levers’ to shape the employment relationship.
HRM consists of two basic frameworks or models; the Matching model and the Harvard framework.
The Matching model school of thought believes that HR systems and the organizational structure should be managed in a way that is congruent with organizational strategy. While the Harvard framework school of thought believes that the problems of rhetorical personnel management can only be solved: “when general managers develop a viewpoint of how they wish to see employees involved in and developed by the enterprise and of what HRM policies and practices may achieve those goals. Without either a central philosophy or a strategic vision which can be provided only by general managers, HRM is likely to remain a set of independent activities, each guided by its own practice tradition.
Generally and characteristically, HRM is divided into two major parts; the Hard and Soft HRM.
Hard version of HRM
The Hard version of HRM emphasizes that people are important resources through which organizations achieve competitive advantage. Thus, these resources have to be acquired, developed and deployed in ways that will benefit the organization. The main focus is on the quantitative, calculative and business strategic aspects of managing human resources in as rational a way as for any economic factors.
According to this approach, the drive to adopt HRM is based on the business case of a need to respond to an external threat from increasing competition. It is a philosophy that appeals managements who are striving to increase competitive advantage and appreciate that to do this; they must invest in human resources as well as new technology.



Soft version of HRM
The soft version of HRM emphasizes communication, motivation and leadership, as such, it involves treating employees as valued assets, a source of competitive advantage through their commitment, adaptability and high quality (of skills, performance and so on). Hence, it sees employees as means rather than objects (Guest, 1999). The soft approach stresses the need to gain the commitment, the hearts and minds of employees through involvement, communications and other methods of developing a high commitment, high trust organization.









Summarized differences between Hard and Soft HRM

Hard
Soft
Model
Utilitarian instrumentalism
Developmental humanism
Fit
External
Internal
View of HR
Factor of product and variable cost that needs to be measured and monitored to gain competitive advantage
Valued asset that must be retained and developed to gain competitive advantage
Management focus
Enhancement of competitive advantage via integration of HR policies, systems and activities with short term business strategy
Enhancement of competitive advantage via the treatment of employees as valued asset and through employee commitment, adaptability and quality
ER context
Increase efficiency and reduce labour costs, thus emphasis on cost reductions, monitoring, ourtsourcing and downsizing
Build employee commitment to organizational goals thus emphasis on commitment, development and trust






HRM view from either perspectives (unitarist and pluralist)
HRM has its foundation in two US based models as mentioned above. The Harvard model also defined as hard HRM and the Michigan model also defined as soft HRM.
The hard HRM has a unitary perspective that incorporated the concept of mutuality including mutual goals, influence, respect, rewards and responsibility which leads to employee commitment, resulting in better outcomes for employees and the organization. Therefore, discourages the formation of unions.
While the soft HRM has a pluralist perspective of employee relations that argues that organization and employees interests are opposed and what advantages the organization will disadvantage employees and vice versa. Hence, encourages the formation of unions.
However, HRM is often considered unitarist and associated with strong managerial prerogative. In view of this, Keenoy (1990) describes HRM as a wolf in sheep’s clothing. While Fowler (1987) further argues that employee involvement under HRM is actually involvement on the company’s terms, and is actually a subtle form of employee manipulation disguised as mutuality. Meaning the ineffectiveness of unions in organizations where HRM exist actively.








Conclusion
It is clear from the above work that HRM as a discipline does not just emerge as a discipline or a term on its own. But has its roots from other earlier approaches to the workplace. Though, the approaches of HRM and earlier approaches maybe slightly different but all has the same goals of making the workplace (i.e. employer and employee) achieve its primary objectives, irrespective of the employee relations perspective HRM is viewed from.
















References
Ackers, P., Payne, J. (1998). British trade unions and social partnership: rhetoric, reality and strategy.  International Journal of Human Resource Management 9, (3) 529-550
Armstrong, M. (2008). Strategic human resource management: A guide to action (4th ed.). UK: Kogan Page Publishers.
Boxall, P., Purcell, J., and Write, P. (2007). Human resource management: scope, analysis and significance. Oxford: Oxford University Press.
Dzimbiri, L. B. (2008). Industrial relations in a developing society: the case of colonial, independent one-party and multiparty Malawi. Germany: Cuvillier Verlag
Farnham, D., Pimlott, J. (1995). Understanding industrial relations (5th ed.). USA: Casell
Fowler, A. (1987). When chief executives discover HRM. Jounal of Personnel Management, Vol. 4, Iss: 2, pp. 3.
Gennard, J., Judge, G. (2002). Employee relations (3rd ed.) UK; Institute of Personnel and Development
Guest, D. (1999). Human Resource Management: The Workers’ Verdict. Human Resource Management Journal, 9/3: 5-25
Hills, S. M. (1995). Employment relations and the social sciences. USA: University of Carolina Press
John, M., Fellenz, M. (2010). Organizational Behaviour & Management (4th ed.). USA: Cengage Learning EMEA
Keenoy, T. (1990). HRM: A Case of the Wolf in Sheep’s Clothing?. Personnel Review, Vol. 19, Iss: 2, pp.3 - 9
Kelly, E. J. (1998). Rethinking industrial relations: mobilization, collectivism, and long waves. USA: Routledge
Kessler, I., Purcell, J. (2003). Individualism and collectivism in industrial relations: theory and practice. Oxford: Blackwell Publishing
Kitay, J., Marchington, M. (1996). A review and critique of workplace industrial relations typologies. Journal of Human Relations 49, (10) 1263-1290
 Nick, W. (2010). An Introduction to Human Resource Management. USA: SAGE Publications Ltd.
Salamon, M. (1987). Industrial relations: theory and practice. USA: Prentice Hall International
Storey, J. (2007). Human resource management: a critical text (3th ed.). UK: Cengage Learning EMEA
Teicher, J., Holland, P., Gough, R. (2006). Employee relations management: Australia in a global context (2th ed.). Australia: Pearson Education


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