introduction to employment relationships

7/28/2019 Introduction to Employment Relationships

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Employment Relations

Introduction to Employment

Relations


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What is Employment Relationship?

Employment relationship could be defined as the work

relationship between en employer and an employee.

Each time an employer and employee wish to enter into awork relationship, an exchange takes place.

The term employment relationship refers to the conditions

under which the employer decides to hire labour and theemployee decides to sell his manpower to the employer.


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How is exchange in labour market different

from exchange in product or financial

market? The nature of exchange

The position of the parties to the exchange

The regulation of the exchange


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Analysis of the

Employment Relationship


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Barbashs Analysis of Employment

Relationship

The interaction between employer and employee islargely aimed at regulating the employment relationship.

There is a degree to which the behavior of managementand employees/trade unions is determined by marketforces.

Management behavior is determined by fluctuations in

product market and guided by the social principle costdiscipline .

Employee behavior is heavily influenced by labor market

and guided by the social principle equity.


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Cost Discipline & Management Behavior

Efficient Use of

Labour

Constant Pressure on

Prices on Product Market

Low Labour Cost

HR

Systems

Willingness & Effort

of Labour


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Equity & Employee / Trade Union Behavior

Price & Effort of

Labour

Labour Market Situation

Efficiency of Labour

Equity


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Barbashs Analysis of Employment

Relationship

Product

MarketManagement

Collective

Bargaining

Employees/

Unions

Labour

Market

The State

CostDiscipline

Price

Effort

Equity


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The Nature of the Exchange


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Dimensions of Employment Relationship

The employment relationship covers every aspect oflabour either explicitly or implicitly.

Time, Qualificationsand Wagesare three centraldimensions to employment relationship.

Hence, the employment relationship is based on anexchange between

work and non-work hours,

required and available qualifications; and

wages and performance


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Time as the Central Dimension of


Means of Competitive Advantages (traditional) Through

Price (Cost Leadership)

Quality (Differentiation)

Flexibility & Innovation

And today, Means of Competitive Advantage alsoincludes

Speed. For example;

The shorter product life cycle The rapid commercialization of R&D efforts

Shorter delivery times


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Industry PracticeTime/Workpace

Lean Production

Assumptions of lean production

The emphasis on planned use of labour aimed at reducing unit costs ofproduction.

While labour is a valued resource it has to be deployed as efficiently aspossible.

Production systems which minimise overhead costs by stripping out

jobswhich dont contribute directly to production.

Looking for ways to economise on the use of directly productivelabour.


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Time and Workpace

Time influencesPerformance The total duration of the task,

The amount of time to be worked in a working day,

Recuperation time (meaning the time required for

recovering from earlier efforts)

Working time as an important bargaining issue


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Qualifications as the Central Dimension of


Employees must have an operational knowledge of notjust one, but multiple specialist areas.

Cognitive-abstract qualifications are becoming moresignificant.

Socio-normative qualifications are becoming moreimportant.

Shift from classical social norms like accuracy, punctuality andloyalty tomodern social norms creativity, customer orientation,responsibility and cooperation.


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Wages and Performance as the Central

Dimension of Employment Relationship

Employment relationship provides scope for continuousbargaining over the wages to be exchanged for a certaineffort.

The relationship between wages and performance is oftenformalizedas a system of appraisal and compensation.

Trends in Appraisal and Compensation

Task based appraisal to Skill Based Appraisal Individual Job Descriptions to Group Task Descriptions Individual Job Evaluation Schemes to Pay for Performance

Schemes.


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Macro Changes and Support Mechanisms

Source: Terry Wallace. (2000). Work Organization, Competencies and

Payment Systems in the Volvo Commercial Vehicle Division, Int. Journal of

HRM.

SUPPORT MECHANISMS MACRO CHANGES

Payment

systemsPiece or MTM-based

systems to pay for

knowledge systems

Organizational

structure

From hierarchical to

flatter structures

Training Task based to

competence based

Divisional

structure

Autonomous to blurred

responsibility

Skills Craft artisan to multi-

skilled technician

Organizational

functions

Single to multi-

functional

managerial

responsibility

Production

technology

Long single to shortmulti-functional

lines

Production

chains

Branch plant of regional

to global structure


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Wage group Theory and knowledge Experience

TrackOperationInstructor

K

Labour law, co-determination law,company issues, working withquality

Operator can replace the foremanand is responsible forassigning work, time reportsand leave of absence

QualityInstructor

J

Supervision, work environmentand quality work

The operator can replace trackinstructor and is responsiblefor ensuring that thedepartment works towards

product and quality goals

AssemblyInstructor

I

Instruction methodology, generalbusiness studies, automation,calibration systems and leaktesting

Responsible for departments,contacts and incominginformation. Is mobile andable to move betweendepartments

Group LeaderH

Presentation skills, techniques,training for co-operation andproblem solving

Knows all tasks in the department

and has product responsibilityand for track start.Responsible for faultfeedback and must have atleast 30 months experience

Competence ladder at Volvo Skvde

Source: Terry Wallace. (2000). Work Organization, Competencies and

Payment Systems in the Volvo Commercial Vehicle Division, Int. Journal of

HRM.


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Competency Based Pay in an Indian

Manufacturing Company

CADRE X CADRE Y

Performance level Point rangeCompetency

reward

Performance

level

Point

range

Competency

Reward

9 35 37 7000 9 25 28 5000

8 33

34 6600 8 22

24 4560

7 31 32 6000 7 19 21 3150

6 29 30 5400 6 16 18 2880

5 27 28 4800 5 13 15 2610

4 25 26 3360 4 10 12 1560

3 23 24 2880 3 7 9 1380

2 21 22 2400 2 4 6 1200

1 1 20 1200 1 1 3 600


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The Position of the Parties in the Employment

Relationship


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The Position of the Parties in the


The behaviour of the parties in the employmentrelationship is affected by developments in the market(Barbash, 1984).

The behaviour of employers by their position in thelabour, product and financial market and the behaviour ofemployees by their position in the labour market.

More than market, the behaviour of the parties to the

employment relationship is also affected by the divisionof labour within the company and to the control systemof which governs behaviour of employees.


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Williamsons Analysis of Employment

Relationship

Loose Relationship Market-like aspects of employment relationship dominate.

Temporary employment to perform a specific job; or

Contracting out the jobs to small independent businesses orsubcontractors outside the company when

Qualifications required are not firm-specific; and Performance can measured easily and regulated by coercive power of

contract

Permanent Organizational Relationship Organization-like aspects of employment relationship dominate

Permanent full-time job when Qualifications required are firm-specific; and

Performance is difficult to measure and regulated by intricate controlstructure having control systems like promotion ladders, compensationsystems etc.


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Watsons Analysis of Employment

Relationship

Restrictive Employment Relationship

More specification of implicit employment contract bygiving detailed instructions to employee

Employment relationship is based on mistrust Cooperation achieved by direct control

Diffuse Employment Relationship

General specification of implicit employment contractby giving employee more discretion and autonomy

Employment relationship based on mutual trust.

Cooperation achieved by responsible autonomy


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Watsons Analysis & Organizations Choice

An organization can, incidentally, have both types ofemployment relationship as well as control systems fordifferent types of work:

Restrictive employment relationships for simple, manual tasks inparts of the organization with a strict division of labour and anextensive hierarchy of managers supporting a regime of directcontrol.

Diffuse employment relationship for more complex work in partsof the organization with a modest division of labour and a regimeofresponsibleautonomy.


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Transition from Restrictive to Diffuse


Implications for Employment Relationship Dimensions

Time

More autonomy in determining the relationship between working

time and recovery time or to a more intense level of work?

Qualifications

More responsibility and pressure on individuals in developing newskills and competencies required for continuous development?

Wages and Performance

Will the employee take charge of his own performance or will newcontrol systems evolve to replace supervisory hierarchy like careerplanning and group compensation?


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Employment Relationship as a Power

Relationship

Employment relationship is a power relationship and itcan lead to conflict since Employers desire to control employee behavior.

Employees desire to control conditions of employment.

Employees dependency on wages will always be moredisadvantage to him / her than to employers dependencyon employees performance.

Therefore, the relationship between employer andemployee in the labour market is uneven, asymmetrical.

Asymmetry in relationships between parties is apreconditions for the exercise of power.


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Power in Sociological Exchange Theories

The basis for power (Pfeffer and Salancik) interms of dependence.

A has power over B in so far as: The resources in question are more important to B

than A

B will have more trouble than A obtaining the same

resources elsewhere B is unlikely to find a substitute for the resource in

question to satisfy its need.


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Ownership Vs. Market Capacity - Decoding

the Power Relationship

The basis for power relationship

Marx

Ownership i.e., employer owning the means of production and

employee owning the manpower.

Giddens

Market Capacity i.e., employers ability to replace an employee than

employers ability to secure a new job and a new employer at the

same or higher wage level.

The conditions of labour market will restrict or extend the behavior

alternatives available to both parties.


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Regulating the Exchange


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Internal and External Regulation

Employment relationship is a regulated relationship through rules andregulations governing the exchange which takes place on acontinuous basis.

Internal regulation takes place within the company and with a

specific employer.

External regulation takes place at levels above the company.

The region;

The industry; or

Central level

The employment exchange dimensions (Time, Qualifications, Wagesand Performance) can be regulated at one of these levels or multiplelevels.


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Employment Exchange Regulation Models

Internal Regulation Only The conditions of employment determined unilaterally by the employer

Predominant External Regulation The conditions of employment determined by collective agreements and

in legislation with little or no scope for regulating the exchangeinternally.

Mixed Regulation

The conditions of employment determined by both external and internalregulation with the employer having the power to make supplementarywith his employees while complying with collective bargainingagreements.

The supplementary agreements can be established either unilaterally orin consultation with the employee(s).


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Intra and Inter-organizational Relations

Intra-organizational relations

The relationship between members and interestorganizations.

Why do people join interest organizations and under whatconditions people participate in collective action?

Inter-organizational relations

The existence of mutual and partial dependentrelationship between interest organizations.

The leadership of trade unions and employer associationsneed each other to gain recognition by relevant third parties(like govt.) and to continue attract members by recognizingeach other as legitimate representatives.

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