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Written by Prof. Barney Jordaan

The objectives of the employment relationship

According to John Budd, the objectives of the employment relationship are efficiency, equity, and voice - elements that he regards as imperatives in democratic and moral societies. The ideal employment relationship is one that results in the efficient production of goods or services, provides employees with equitable and fair conditions and circumstances of employment and ensures that employees have both an individual and collective voice in deciding issues of concern to them.

Budd asserts that the rights and responsibilities of workers and their employers go significantly beyond typical HRM concerns relating to productivity, competitiveness, economic prosperity, the effective use of scarce resources, and the like (concerns that he groups together under the shorthand heading of efficiency). In particular, he states, employees are entitled to fair treatment (equity) and opportunities to have input into decisions that affect their daily lives (voice). Equity concerns fairness in both the distribution of economic rewards (such as wages and benefits) and the administration of employment policies (such as fair treatment, non-discrimination and protection against unfair dismissal). Voice is the ability to have meaningful employee input into decisions that affect them both individually and collectively. This includes not only freedom of association and speech, but also direct and indirect participation in workplace decision-making. The ideal is to find a balancebetween the three elements. (He defines balanceas the search for arrangements that enhance one or more dimensions without undue sacrifices in other dimensions.)

The objectives are complementary: efficiency is maximised in environments where employees are treated equitably and are engaged (i.e., given voice). Yet management and labour typically regard these objectives as mutually exclusive. The traditional divide between HRM and ER contributes to this.

The HRM / ER divide

Employment relations is defined as the field of study involving not only union-management relations, but all aspects of the employment relationship. HR management involves a series of integrated decisions about the employment relationship that influence the effectiveness of the organisation and its employees. These definitions reflect both the overlap and possible convergence of these two fields of study.

The following commonalities exist between the two fields:

 

  • both HRM and IR are concerned with the process, organisation and structure of work, as well as the relationship between employers and employees;
  • both HRM and IR recognise that labour is embodied in human beings, both are thus a social science; and
  • both HRM and IR are applied, multidisciplinary fields of practice.

The key differences are the following: HRM focuses on the employers solution to employee issues; makes increased organisational effectiveness the primary goal; and examines the role management and HRM practices can play in this process. While ER also considers organisational effectiveness an important goal it emphasises, in addition, the independent importance of protecting and promoting the interests of employees. Hence, while ER views the employer as a key actor in the employment relationship, considerable attention is also given to workersinterests through trade unions and collective bargaining as well as societys interests through labour legislation and social security.

This traditional divide between HRM and ER contributes to a significant degree to the way labour and management engage around Budds three objectives: HRM, with its focus largely on the interests of management, would typically develop and implement strategies and practices aimed at improving corporate efficiency and equity through investment in the individual employee (performance measures, reward systems, etc.). ER,  on the other hand, with its orientation towards collective relations, would typically focus on ways to ensure that the collective voice of employees are heard in the determination of equitable working conditions and employment terms (through collective bargaining, worker participation systems, etc).

Yet both fields suffer from whats been called normative blind spotsin their research agendas and problem-solving recommendations. As Kaufman points out:

By seeking to promote the employers solution to labor problems, HR inevitably takes on the interests and perspectives of management. In doing so, HR researchers lose a certain degree of objectivity and neutrality, leading to a number of problems such as neglect of research issues that reflect badly on management, adoption of a managerialist ideology and approach to theorizing, and advocacy of practices and policies that favor management interests over those of employees . IR is guilty of the same sins, but in the opposite direction. IR researchers, by emphasizing the workersand communitys solutions to labor problems, become unduly critical or neglectful of management, often have a predisposition to favor collectivistsolutions to labor problems, and too frequently turn a blind eye to the abuses and shortcomings of unions and government.

Because of these normative blind spots, both fields lack a sufficient sense of contingency with respect to their preferred means to resolve labor problems. For example, many HR researchers become so advocatory of strategic, high involvementHRM that they lose sight it is neither appropriate for nor practiced by the majority of companies, while IR researchers similarly seem to advocate collective bargaining and union representation as a broad-brush policy without adequate consideration of the benefits and costs across different employment situations. The mixing of normative and positive also leads to a confusing melange of descriptive, prescriptive, and conceptual analysis.

Management style in employment relations

The question therefore arises whether HRM has to equate to a non-union individualistic model of employment relations or can there be a form of dualismwhere HRM coexists with ER? John Purcell already suggested in 1987 in a seminal article on management styles in employment relations that a de-siloingof the disciplines is possible through the adoption of what he calls a sophisticated consultativeapproach to employment relations. This involves an ideal state of a fully integrated HRM and ER strategy that pays equal attention to substantive outcomes (efficiency and equity) as well as procedural interests (voice and engagement at both individual and collective level). It involves, amongst others, an attempt to build constructiverelationships with trade unions and incorporating them into the organisational fabric. Emphasis is also placed on techniques designed to enhance individual employee commitment to the company through, e.g., share option schemes, profit-sharing, briefing systems, joint working-parties, joint employee-management councils, and the like.

 

Approaches to employee voice as the key difference between HRM and ER

The elements of equity and efficiency refer to substantive outcomes for employees and management, respectively: in other words, the what. Voice, by contrast, is concerned with the how: how to maximise efficiency while ensuring this is done in a manner that is equitable. Voicebecomes the central pillar for trying to achieve a balance between efficiency and equity.

While ER and HRM both acknowledge the need for equity and efficiency in the workplace, a key difference arises in relation to the how. HRM assumes that through enlightened management and alignment of objectives the end goal of maximum organisational effectiveness/efficiency will serve the interests of all parties to the employment relationship. This makes separate and independent consideration of employee goals largely redundant: whats good for the business is good for the employees. ER researchers, on the other hand, believe that managers, no matter how ethical or professional, will in many situations be led by the goal of organisational effectiveness and survival to implement HRM practices that are inimical to employees, human values, and the social interest.

As Purcells research has shown, voiceis a necessary condition for ensuring both employee well-being and organisational effectiveness. The central concern for both ER and HRM should be how to achieve higher levels of employee engagement:

Employee engagement is worth pursuing, not as an end in itself, but as a means of improving working lives and company performance. The evidence of positive business outcomes is as strong as you can get it, even if it is never conclusive. And employee engagement is a classic win-win initiative since it is associated, when done properly, with better employee well being as well as wealth creation. It puts employees at the heart of the enterprise since it is they who judge their managers for their fairness, trust and acting with justice and who, in return, work better in their job, cooperate in innovation and change, and support the organisation which employs them. As such, if we ever doubted it, it returns employment relations to its proper place in business.

The benefits, therefore,include greater satisfaction with work and the job; improved levels of performance, efficiency and commitment; a sense of achievement from work and, critically, improved employee trust in management.

 

De-siloing HRM and ER

The research suggests that trust is a key determinant of peoples perceptions about the organisation, their role within it and their motivation to contribute to it. It has also been shown that voice is essential for the development and maintenance of trust. But what does voice mean in practice?

From an HRM perspective, virtually all of the emphasis on employee voice is focused on direct communication andinvolvement through team briefing, workforce meetings, problem solving groups and, to a much lesser extent, via employee surveys. Employees get most information from their line manager and well run briefing group meetings allow for questions, discussion and some dialogue.

However, voice in Budds terms (procedural justicein Purcells) goes further than this: it also means understanding the need for decisions and why certain actions were necessary (i.e., being supplied with relevant information), being allowed an opportunity to influence decisions, and being to judge how fair they were (by being given reasons for not accepting employee ideas and inputs). If voice is given this extended meaning, whether one is concerned with individual or collective workplace relations, the line that separates HRM and ER begins to fade. Thus, whether one is concerned with a discussion with an individual employee about her performance, or with a trade union in the context of restructuring, voice means the same in both instances.

When should employees be heard?

Legislation sometimes compels employers to engage with employees or their representatives. In the SA context, for example, the duty to apply procedural fairness is very strong when employees face possible dismissal. Similarly, if an employer wants to amend agreed terms of employment, or the terms of a collective agreement, there is a common law duty to reach consensus before changes can be effected. There is also an obligation to apply procedural fairness when making decisions about promotion. demotion, benefits and sanctions short of dismissal.takes account of both the individual and collective aspects of workplace relations;

  • cedes ownership of the process of engagement to those affected or potentially affected by management decisions, while leaving the locus of control over decisions where it falls;
  • sees voice / engagement as essential for building trust and thereby raising levels of employee commitment and efficiency;
  • emphasises the need for disclosure of relevant information to improve the quality of decision-making (“informational justice”); and
  • allows not only for employee voices to be heard but also shows - through feedback on suggestions received - that employee suggestions, ideas, inputs, concerns etc. have actually been heard. Ultimately the quality of engagement will be judged by the quality of the feedback received.  

For managers, the challenge is to use Budd’s objectives of a pluralistic employment relationship as benchmarks for measuring current HRM and ER practices and as a framework for developing “good” ER and HRM practices and policies. Second, giving effect to the elements of voice, efficiency and equity, would require a strategic decision about the management “style” of the organisation. As was stated above, a sophisticated consultative style applicable in both unionised and non-unionised environments represents something of an ideal state. This requires careful analysis of existing HRM and ER policies and procedures to determine the extent to which they support the above goals; the development of new and appropriate consultative structures, policy frameworks and - where applicable - modernised collective agreements; and investment in trust-building initiatives at all levels of the organisation.

 

Conclusion

Synergy between HRM and ER can be achieved by focusing on the purpose of the employment relationship and searching for ways to give effect to it.

The employment relationship is the common denominator between HRM and ER. Budd’s analysis of the purpose of that relationship - equity, efficiency, voice - applies equally to both disciplines. The real dividing line seems to lie in their different approaches to voice / engagement / procedural justice with HRM adopting a management-orientated perspective to it while ER is more concerned with employee perspectives on it. Purcell’s analysis of management styles provides a framework for approaching HRM and ER in a strategic manner that integrates individual and collective dimensions of the employment relationship. Trust is a key ingredient in this endeavour, with voice serving as the main driver for creating and maintaining trust.

 

Bibliography

 

Budd, J.W. (2004). Employment with a human face: balancing efficiency, equity and voice.

Ithaca: Cornell University Press.

 

Kaufman, B.E. “Human resources and industrial relations: commonalities and differences” available at http://faculty.mu.edu.sa/public/uploads/1360248405.7529human%20resource140.pdf)

 

Kim, W. C., & Mauborgne, R. Fair Process: Managing in the Knowledge Economy. Harvard Business Review, January 2003, pp. 127 136.

Purcell, J. (1987). Mapping management  styles in employee relations. Journal of Management Studies, 24(5), 533 548.

Purcell, J. (2012). ACAS Future of Workplace Relations. Discussion paper series. Available at http://www.acas.org.uk/media/pdf/g/7/Voiceand Participation in the modern workplace: challenges and prospects.pdf

 

Purcell, J. The limits and possibilities of employee engagement, Warwick Papers in Industrial Relations 96. Available at http://www2.warwick.ac.uk/fac/soc/wbs/research/irru/wpir/wpir_96.pdfAccessed 24 January 2015.

 

Saks A (2006), Antecedents and consequences of engagement,Journal of Managerial Psychology, Vol. 21(7), pp. 600-61


[1] See s 186 of the LRA: unfair labour practices. Although the obligation to hear affected employees is not specifically mentioned in the section, the CCMA generally requires both a fair reason and a fair procedure before employees are, e.g., demoted or denied promotion or benefits.