MBA 820 Employee Relations - Topic 5
MBA 820 Employee Relations - Topic 5
MBA 820 Employee Relations - Topic 5
Topic Objectives:
• Explain the meaning and importance of employee relations
• Distinguish between and explain the various approaches to employment
relations
• State and explain requirements for good employee relations
• Discuss the tripartite role of employee relations
• Explain the importance and functions of trade unions in employee relations
• Distinguish between collective bargaining process and collective bargaining
agreement
• Discuss the importance of preparation by negotiating parties
• Identify and discuss the causes of industrial disputes
• Identify and discuss the procedures for preventing and resolving industrial
disputes
• Explain the role of the industrial court in dispute resolution
Definition of terms
Employee relations, industrial relations and labour relations: are all terms that refer
to those aspects of HRM where employees are dealt with as a group through
collective agreements with trade unions. It covers all the relations between
employers and employees in industry. Some scholars however see employee
relations which is a more recent term as broader and includes employee participation
in management decisions, communications, policies for improving coorperation and
control of grievances and minimization of conflicts.
The philosophy of HRM has led to a shift towards individualism rather than collectivism
due to increased competition hence leaner and more efficient organizations, restucturing,
the market economy and free enterprise are changing trade union legislation.
• Concerned with the formal and informal processes, which take the form of
continuous interactions between managers and shop stewards, trade unions
etc.
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• The bargaining structures, recognition of trade unions and procedural
agreements and practices, i.e. the collective relations between employers
and trade unions.
NB: Conflicts between employees and their employers arise because of different
interests. For industrial peace to prevail, the employees and organizational interests must
be merged or integrated.
These values include basic beliefs about how to treat employees, what motivates people
and the role of unions in the workplace. Thus managers can be either opposed or
supportive of unions.
Purcell and Sisson (1983) refereed to two primary cognitive frames of reference unitary
and pluralist perspectives.
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interest. This view is in aligned to the HRM philosophy of commitment and
mutuality.
• Pluralist perspective: Management recognizes that conflict is inevitable with
rival sources of leadership and even a triple personality: economic, political and
social. It accepts that “there is an opposition which does not seek to govern” The
conflict can be managed through a formal system of negotiation and collective
bargaining.
Substitution approach is the use of good management practices such as fair play, job
satisfaction, training and development opportunities and employee benefits to discourage
trade unionism
Suppression approach is the use of both legal and illegal means to discourage trade
unionism such as threats of victimization, refusal to recognize unions, intimidation and
failure to honour contracts.
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o Prompt communication removes suspicion rumours and doubts. HR managers
must convince union leaders of company’s integrity and sincerity.
• Top management support
o Employee relations is a staff function and derives its authority from line authority,
HR manager in charge must report to top lime authority e.g. CEO or chairman.
• Training in industrial relations
o Employee relations is largely a human relations problem, hence supervisors,
foremen etc should be trained in relevant areas e.g. leadership and communication
practices.
• Development of the right union leadership
o Management should create conditions which would stimulate growth of
competent union leaders
STATE
Secondary player
The state plays the secondary role in industrial relations while the employer – employee
is the primary relationship.
o The state can influence the nature, quality and direction of industrial relations
directly or indirectly.
o Government is both “master and servant or referee”. Master by virtue of its
legislative and control functions and servant as it has to look after the other
party’s needs by creating structures and systems to institutionalize conflict and
cooperation and to facilitate conduct of primary relationships.
The government plays a “balancing act” between the employees and the employers
NB: “The states role is to provide and maintain the institutional context in which the
primary parties can interact.
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TRADE UNIONS
Meaning
Trade unionism is the result of the growth of modern industrial system involving mass
employment of workers in conditions which make them helpless in bargaining for better
terms of contract individually. The exploitation of workers by employers forced workers
to unite thus trade unionism.
Definition
Trade unions are associations of workers that are specifically formed to maintain
industrial peace and protect the rights of workers.
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• Dissatisfaction with management
• Need for social outlet
• Need for avenues for leadership
• Forced unionization – in organizations where union membership is a prerequisite
for employment.
• Social pressure from co-workers. etc
Trade unions first developed in Europe following the industrial revolution in the
mid 19th century. To make good profits, employers adopted adverse practices such
as long working hours and low pay. In response to this exploitation, workers
joined together to fight for improved working conditions by means of collective
bargaining through the formation of trade unions. Today trade unions function as
workers representatives in grievance resolution efforts and provide mutual
benefits and support to their members. In addition they also act as pressure groups
in campaigning for human and workers rights, environmental and occupational
health hazards.
In Kenya, the first African trade unions were registered in the 1940’s. The Kenya
Federation of Registered Trade Unions was founded in 1952 as an umbrella body.
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This was later followed by The Kenya Federation of Labour with Tom Mboya as
secretary general. In 1956, the Federation of Kenya Employers was formed,
signaling the start of tripartism in labour relations in Kenya. After independence
in 1963, several legislations were put in place to regularize the operations of the
various players in trade union issues.
NB: All collective bargaining agreements must include a procedure for resolving disputes
about interpretation and application of the agreement.
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Negotiation is a process of persuasion. The purpose is to influence and alter the other
party’s point of view and opinion so that an agreement or settlement can be achieved. It is
the instrument which is used to persuade another party to change or accept an alternative.
The ability to persuade is the a function of the ability to exert influence on the other
party, which in turn depends on the use of power.
Power is the ability of a party to influence another to change its position or behaviour. It
is a sly and elusive phenomenon. A party has power only if perceived as such by the
other party and is acknowledged consciously or unconsciously.
Power is the capacity to influence others through the control of instruments of reward and
punishment – which can be tangible or intangible. Negotiation efforts entail showing that
one possess power and are able to exert it.
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In this stage, the preparations for actual bargaining by the union and the management
takes place.
NB: Bargaining and negotiation involves the use of tricky acts that are aimed at
misleading the other party.
Teamwork approach in negotiation is usually favoured by both the union and the
employers. Employer may have a committee made up of departmental and divisional
heads and the company lawyer, while the union may consist of business agents,
shopstewards and branch officials of trade unions.
NB: Union bargainers are usually experts in the art of bargaining and negotiation as they
are full time involved in the same exercise with other organizations e.g. dockworkers
union, Kenya Airline pilots, union, Kenya union of domestic workers, hotels, educational
institutions, hospitals and allied workers – KUDHEIHA, Banking, insurance and finance
union.
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Strategy for Bargaining
Union
Management
Claim 200%
Target 30%
Offer 10%
NB: The employer must know how far it can go without risking a strike.
• Avoid mutual agreement clauses that can prevent management right to control and
manage the firm regardless of union contracts.
• Develop agreements which make union appear like they have won and union lost.
• Determine the point at which the company is willing for the union to go on strike.
(Management must adopt an attitude of not being afraid of a strike)
• Have in reserve conditions which employer can ask unions to accept in return for any
concessions it may be prepared to make e.g. extended period before the next
settlement or increased work output etc
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The Collective Bargaining Agreement (Contract)
Successful negotiation lead to collective agreements which are sealed by the signing of a
contract which runs for 2-3 years. This consists:
STRIKES
The trade disputes act defines a strike as:
The cessation of work by a body of persons employed in any trade or industry
acting in combination or a concerted refusal or a refusal under common
understanding of any persons who are or have been so employed to continue to
work. It includes any interruption or slowing down of work by any number of
persons in any trade or industry action in consent or under a common
understanding.
• A strike is the ultimate economic force that a union can use to force employers to
concede to their demands.
• A strike offsets the employers right to manage the firm. (makes the firm
unmanageable)
• Without the possibility of a strike there can be no true collective bargaining.
Activity
Recall the strikes that have occurred in Kenya over the last few years. Why do you think
some succeeded and some failed?
Types of strikes
Ecomomic strike:
The most common form of strike based on demand for better wages and working
conditions.
Recognition strike:
Used to force the employer to recognize and deal with the trade union.
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Jurisdictional strikes:
Occurs when two unions argue over membership and the employer is caught in the
middle.
Wildcat strike:
• Quick, sudden strikes which are unauthorized and not approved by union
leadership.
• Carried out contrary to labour laws and agreements.
• Shows a sign of fragmentation in union.
• Instigated by a sub-group unsatisfied with regular grievance procedure.
In the event of a strike, employers must have a contingency plan for the efficient
functioning of the organization.
• Make sure the plant is left in good physical condition.
• Explain the employers side of the issue to the employees.
• Give a statement to the press
• Inform suppliers and customers
• Notify the appropriate mediation services e.g. minister for labour
• Determine to what extent non-union personnel will be maintained on the working
staff
• Paying off striking workers for the work completed in the past.
NB: Strikes are usually unfriendly and employers should do all they can to win the strike
without violating the law.
Costs of a strike
Strikes can be extremely costly and damaging to the entire economy. It is for this reason
governments intervene with laws, procedures and regulations to contain them to ensure
minimal labour unrests and industrial peace
Costs are:
• Pre strike costs such as tension between employer and employee
• Costs of reduced production
• Legal costs
• Costs of executive time spent in negotiation
• Loss of orders from customers
• Loss of profits for non-production
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• Executive time performing operative tasks
• Use of casual staff/overtime costs
• Hiring and training replacements
• Loss of customers
• Loss of income by strikers
• Loss of morale and motivation by strikers
Picketing
Picketing is the patrolling of plant entrances by striking employees to ensure that the
plant is not opened for business and remains closed.
Usually they can remain peaceful if the employer does not attempt to open the plant, but
can be violent if he attempts to open. Purpose of pickets is to ensure that the plant is
paralyzed to cause maximum loss to the employer as part of union power to force
demands.
Employers can sometimes obtain a court injunction to limit the pickets that can be placed
at the entrances.
INDUSTRIAL DISPUTES
Sometimes disagreements can arise between the union and the employer in the process of
collective bargaining and implementation of the agreement.
Definition
An industrial dispute means any conflict, unrest or disagreement between the workers
and the management on any ground. The trade Disputes Act cap 234 of the laws of
Kenya defines it as;
• A difference between employers and employees, or between employers and trade
unions or between trade unions and trade unions connected with employment or
non-employment issues.
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• Progress of labour unions as membership increases.
• Enactment of labour laws. These protect both unions and employers.
• Improvement of employers’ behaviour. With the fear of disputes employers
behave and treat employees better.
Negative effects
• Hardship for workers. Loss of wages, distress, layoffs, etc
• Loss of production – for employer in reduced profits, overtime, customers, image
etc.
• Loss of consumers / production on National Income – due to low production,
there is low revenue, hence decreased incomes and standards of living.
• Social /political disorders – lack of discipline among workers, labour problems
tend to spill over to social and political unrests.
• Decreased Investment – local and foreign. No one wants to risk their investment
in an economically unstable environment.
•
Causes of industrial disputes
Most disputes are a result of economic reasons and sometimes managerial or political.
Economic Causes:
• Low wages
• Big industrial profits – if employer is earning high profits, workers demand for a
share as they see themselves as partners in the company.
• Working conditions – poor safety and health conditions, abuse, threats of layoffs,
poor sanitation. Etc.
• Working hours – demand for day offs, shorter working hours.
• Demand for fringe benefits e.g. housing, transport, education and training etc.
Managerial Causes:
Includes bad management and policies.
Industrial unrest is undesirable for all parties involved i.e. employer, employee and the
government. Various measures are used to restore and maintain industrial peace.
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Methods for prevention of Industrial Disputes:
Preventive measures include all methods that improve industrial relations e.g.
Mediation
Mediation is the process of resolving a stalemate between two parties by
assisting them identify the problem but without making any decisions. The
mediator takes a neutral role, suggests alternatives, assists the parties to
identify causes of the stalemate, minimizes chances of work stoppages and tries
to keep the two parties talking to each other. The mediator does not make
decisions.
Arbitration
The process by which a dispute is resolved by an impartial third party after
hearing all the facts to the issue. The decision made by arbitrators is binding by
law.
The collective bargaining contract and most contracts usually provide for arbitration
as a final step.
The arbitration process takes the form of a court hearing thus the burden of proof is on
the party that initiated the complaint.
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STATE INVOLVEMENT IN DISPUTES
Procedures:
• A trade dispute must be reported to the minister for labour by or on behalf of any
party to the dispute.
• Minister shall consult a tripartite committee and he may reject or accept the report
or refer it back to the parties, mediators or the industrial court.
• Appoint a conciliator or a conciliation party made up of employers and Trade
Union representatives and a neutral person.
• Carry out investigations on the dispute through an investigator.
• Refer the dispute to the industrial court as a last resort.
Characteristics of a grievance:
• Expressed verbally or in writing.
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• Related to company operation or policy.
• Involve interpretation or application of labour contract.
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The grievance procedure:
- Is usually connected with an organization that deals with a trade union.
NB: All companies with unions or not should have known methods for dealing
with grievances. Employee must know where they stand in matters pertaining to
justice or injustice of their treatment. The knowledge that the procedure exists is
satisfying even though the employees never resort to it.
Grievance procedures differs from one industry or organization to another because of:
• Size of organization
• Trade union strength
• Management philosophy and values
• Company traditions/culture
• Cost
Varies from even 2 steps to 10 depending on the above. E.g.
Aggrieved employee
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The aim should be to resolve the grievance at the initial step which usually involves the
aggrieved employee, the supervisor and the shop steward. As the grievance goes higher
up the ladder, it gets more difficult and face saving becomes more important.
NB: Supervisors should be well trained in problem – solving to reduce the number of
grievances that go past this level. If a grievance is not solved at the top – arbitration,
strike or dropping of the case can happen.
*END*
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