INTRODUCTION TO IR /ER

HRM 501 1
Learning Outcome
◦ Understand the History of Industrial Relations
◦ Understand the fundamental nature of the employment
relationship
◦ Student will be able to recognize the different
perspectives and analytical focus of industrial relations
and human resource management
◦ Student will be able to critically analyze the changing
nature of work and employment

HRM 501 2
Industrial Relations
 IR is a multidisciplinary field that studies the
employment relationship

 IR is increasingly being called ER because of the

importance of non – industrial employment
relationships.

 IR is perceived as being concerned with male,

fulltime, unionised manual workers in large
manufacturing units involving restrictive practices
such as strikes & collective bargaining

HRM 501 3
 Employee relations is perceived to reflect the
development of more diverse employment patterns (non
manual, increasing participation of female in productive
work environment

 Example increasing part-time, with the growth of

employment in the ‘high-tech’ service & commercial
sectors and reduction of unionisation.

 ER management strategies are aimed at individualising

the employment relationship

 IR’s with the study of trade unions & collective bargaining,

coupled with the decline in union membership & power
has observed that IR’s has forced 3 major challenges:

HRM 501 4
I. The rise of non unionism (union density is
falling)
II. The emergence of HRM
III. A high concentration on quantitatively –
oriented labour economies

IR’s views the most effective way to manage the

relationship and their representatives as well as
parallel arguments about how governments
should frame Laws & policies to best encourage
efficient & equitable Industrial relations within
organisations

HRM 501 5
 REASONS FOR THE STUDY OF IR
Industrial relations is recognized as an important
management function at all levels of management within the
organization and thus there need for:-
1. Supervisors and line managers to acquire an adequate
knowledge and possess basic skills in people management
to be able to carry out their tasks efficiently.

2. Development of healthy relationship between workforce

and the management – a good chance of enterprise being
successful.

3. Building trust, confidence, and good personal relationship

between people involved; sensible and workable
agreements and willingness to work together.

HRM 501 6
 It is important to study ER because they have
powerful impacts on the economic efficiency of
enterprises, industries and nation and they are
central to equity and the welfare of employees

 Both managers & governments are opposed to

institutions like trade unions & arbitration
tribunals that reduce both the operation of
free market forces and the capacities that suit
their needs.

HRM 501 7
HISTORY OF IR
 IR’s has its roots in the industrial revolution which created
the modern employment relationship by spawning free
labour markets & large – scale industrial organisation with
thousands of wage workers.

 A society with these massive economic & social change,

labour problems arose. Low wages, long working hours,
monotonous & dangerous work, abusive supervisory
practices led to high employee turnover, violent strikes and
the threat of social instability.

 Many employees are redundant, unfairly dismissed, working

harder long hours, being treated unfairly & discriminated,
without an effort to vote their concern at work and thus
trade unions emerged.
HRM 501 8
 IR’s was formed at the end of the 19th century as a
middle ground between classical economics and
Marxism.

 Collective action by groups of employees seeking to

promote & protect their wages is an important part of
IR.

 However, Individual employees are constantly negotiating

with their fellow workers & their superiors over new
pattern of behaviour within the workplace or over
compliance with existing rules. The relationship between
individual employees & managers and within non – union
workplace is gaining its importance.

HRM 501 9
The ‘common-sense’ meaning & perception of IR’s comes
partly from everyday usage of the term by friends, family
and partly from mass media, it focuses on sensational
conflict between trade unions & employers

It becomes important to go beyond common sense

approach to a more considered & systematic definition of
a IR that captures the breadth of real world practice,
rather than narrow perception of the subject held by
many people and to confirm a broader theoretical
approach.

HRM 501 10
 The broader approach include a change in
terminology from ‘IR to ER’ – a change
that has gained widespread scholar
support in recent years.

 ER is also defined as ‘the study of formal

& informal rules which regulate the
employment relationship and the social
processes which create & enforce these
rules.

HRM501 11
Rules and the Employment relationship
 “Every IR system creates a complex of
rules to govern the workplace and work
community, i.e., to define the status of the
actors and to govern the conduct of the
actors at the workplace & work
community” (Dunlop)

HRM 501 12
 The “broad” approach to regulate rules &
regulation which have called ‘neo –
institutionalist’ mean rules that regulate
the ER on more diverse than ‘common-
sense’ often suggests.

 There are number of formal & informal

rules that regulate the employment
relationship

HRM 501 13
Formal rules – are usually written and the result of a
deliberate social process
Examples
 a collective agreement negotiated between union & an
employer & lodged under the workplace relations Act
 Company policy manuals
 Union rule book

Informal rules – are sometimes consciously negotiated,

but unwritten agreements between parties or even
accepted social practices at work.
Examples
 shared understanding between employers & managers
over appropriate behaviours,“custom & practice’.

HRM 501 14
Substantive rules - forces on the real terms under which
employees are rewarded for selling their labour & the condition under
which they work e.g. Wage rates, Working hours, Holiday
entitlements, Sick leave

Procedural rules - govern the processes by which substantive rules

are made & enforced e.g. grievance procedures, company practice
recruitment or dismissal of employees, the procedures followed by
conciliation & arbitration tribunals.

Example: if a dispute develops that cannot be handled by the superior.

Employees (either by themselves or with representative) must raise
the issue with their superior and then with the department Manager. If
the issue is not resolved, a meeting with the Manager of HR and the
GM is the final step before unresolved issue goes to private
arbitration

HRM 501 15
THE CHANGING NATURE OF
WORK AND EMPLOYMENT
Employment relations in Pacific, Australia, western
European countries , NIC’s is changing.

Decline of union membership, power & the emergence of

non union forms of employee representation.

Examples:
 Worker participation, consultation
 Team work has led to decentralization of collective rule
– making process

HRM 501 16
LABOUR MARKET RESTRUCTURING
 Decline in employment in the manufacturing
industry
There has been a major shifts in employment over the
last decades with a shift from manufacturing industry to
service sector e.g. Banking, finance, retail, property, hotel,
entertainment, travel, insurance, stock exchange market,
insurance, etc.
 Decline in permanent full-time work
A declined in manufacturing sector employment has brought
major changes in the stock of standard & non standard jobs
e.g. Standard jobs denote full time, permanent work, non
standard jobs refer part-time, casual work, self
employment. Increasing growth & development of
international call centres, have encouraged part-time jobs

HRM 501 17
 The growth of part-time job
 There is an increasing growth of part-time workers esp.
the females
 Growth of part-time job is a by – product of the service
sector
 The tendency of employers to convert full-time jobs into
part-time job is a typical trend in almost all countries
including Fiji e.g. shift work for cashier / sales assistants

 The casualization of the labour force

 The vast majority of these casual employees work on a
part-time basis
 Casual workers tend to work in lower skilled occupation
e.g. clerical, sales, service work

HRM 501 18
 Downsizing and delayering
Downsizing is a term used to describe the ‘planned
elimination of position or jobs which may occur by
reducing work or eliminating functions, hierarchical levels
or units e.g. removal of white collar jobs- managerial
positions.

The expected outcome of downsizing are:

1. Lower overhead costs
2. Less bureaucracy
3. Faster decision making
4. Greater entrepreneurship
5. Increase in productivity

HRM 501 19
Generally downsizing is accompanied by delayering

Delayering – involves the removal of one or more layers of

managerial or supervisory staff from an organisation .

The main objectives of delayering are to:

(i) Streamline decision making
(ii) Improve internal communication
(iii) Reduce labour costs

Manufacturing organizations had been more likely to

undertake downsizing activities than those in the service
sector

Downsizing & delayering are intended to improve

organisational effectiveness, productivity, competitiveness.

HRM 501 20
APPROACHES TO IR
1. Unitary Perspective
 Assumes organization is, or should be, an integrated
group of people with a single authority / loyalty
structure
 Managements prerogative i.e. (its right to manage &
make decisions) whether formal or informal, internal or
external.

 Underlying assumption is organisation system is in basic

harmony, conflict in unnecessary and exceptional

Conflict, when it arise, is believed to be primarily frictional in

nature such as:
(i) Clashes of personalities within the organisation
(ii) Poor communication by management of its plan &
decision HRM 501 21
(iii) Lack of understanding on employees part that
management’s decision & action are made for the good
of all within the organisation

 Unitary perspective regards trade union as ‘disruptive’.

Trade unions are unwelcomed into the organisation from
outside which competes for the loyalty of the employees.
Managements intention is to concentrate on human
relation approach.

 Trade union is not seen as importance, as they are likely

seen as little more than a political power

HRM 501 22
 2. Pluralistic Perspective
 views society as being ‘post – capitalist’

 Composed of individuals with their own interests,

objectives, leadership (either formal & informal)

 This perspective encourages competition which can

lead to a rise in the complex of tensions.

 The management group is responsible for the efficiency,

productivity, profitability of the organisation whereas
the main concern of the employee group is in terms of
better pay & working conditions, job security.

HRM 501 23
 The pluralistic perspective accepts employees
combining informal organisation such as trade union to
express their interest, influence management decision
or to achieve their objectives.

 Trade unions are much an internal part of the

organisation and its managerial processes as they are an
external body to the organisation. They do not
themselves cause the conflict within organisation but
provide highly organised and continuous form of
expression.

HRM 501 24
3. Marxist perspective
 Views society as capitalist
 The Marxist assumes the following:
(i) Class (group) conflict is a source of change,
without conflict the society would stagnate
(ii) Class conflict arises primarily in the
distribution & access to economic power
within the society. i.e. those who own capital
& those who supply labour

HRM 501 25
 Growth of trade unionism is seen as an
inevitable employee response to capitalism.
However, Marxist perspective, trade unionism
and IR’s is viewed as political activities.

 Inherits social & political conflict – between

those who own or manage the means of
production & those who have their labour to
sell.

HRM 501 26
 The defining feature of the labour process
under ‘capitalism’ is that capitalist own
machinery, technology & the raw materials, but
not labour – they must buy this from workers
in the form of labour

 The central task of management is to convert

a worker’s capacity to perform work (labour
power) into actual work effort (labour) in
order to contribute to profitable production &
achieve capital accumulation

HRM 501 27
4. System Model

 This is based on the analysis of system in an

attempt to identify the fundamental factors that
influence the system. Theorist, Dunlop, J. T.
identified the factors as:-

(i) Actors – people and the organizations involved

and include employee, trade unions, mangers,
employers, employer’s organization and
government agency

HRM 501 HRM501 28

(ii) Context – these actors create rules within which
the system operates the procedures to be used
and the substance of the agreements e.g. wages,
hours, holiday, etc. The rules are made within an
environment which is made up of three parts:

◦ Technological–determine the location of plant, number

and type of employees, skills required etc.

◦ Market and Budget Constraints–type of market (local,

national/international), economic factors and the
supply of money to the organization.

◦ Outside Power Relationships-the way in which power

is distributed in society among various groups.

HRM 501 HRM501 29

(iii) Ideology – Ideas that bind the actors
together in the system. While the actors hold
different ideas and views, their views must
coincide at many points for the system to
work - understanding and acceptance by each
other.

HRM 501 HRM501 30

THE END

HRM 501 HRM501 31