293

16
Employee Relations

Key concepts and terms

zz Arbitration zz Mediation
zz Bargaining power zz New realism
zz Collective agreements zz New-style agreement
zz Collective bargaining zz Pluralism
zz Conciliation zz Psychological contract
zz Employee relations zz Social partnership
zz Employee voice zz Stakeholder
zz Employment relationship zz Unitarism

Learning outcomes

On completing this chapter you should be able to define these key concepts. You should
also know about:

zz The nature of the employment zz Collective agreements

relationship zz Disputes resolution
zz Employee relations policies
zz Employee voice
zz Managing employee relations
zz Communications
zz Collective bargaining
294  HRM Practice

Introduction
Employee relations are concerned with generally managing the employment relationship and
developing a positive psychological contract. In particular they deal with terms and conditions
of employment, issues arising from employment, providing employees with a voice and com-
municating with employees. Employees are dealt with either directly or through collective
agreements where trade unions are recognized.
Employee relations cover a wider spectrum of the employment relationship than industrial
relations, which are essentially about what goes on between management and trade union
representatives and officials. The wider definition of employee relations recognizes the move
away from collectivism towards individualism in the ways in which employees relate to their
employers. The concepts of joint control and rule-making belong to a historical era. To a large
extent, especially in the private sector, employers are in charge. Union membership has gone
down in the United Kingdom from a peak of some 12 million to around 7 million today, largely
for structural reasons – the decline of large manufacturing firms and the rise in the service
industries, and the growing numbers of part-time workers. Between 1980 and 2000 the
coverage of collective agreements contracted from over three-quarters to under a third of the
workforce. There has been a dramatic reduction in industrial action.
This chapter is organized as follows. It starts with an analysis of the fundamental concepts that
explain the nature of employee relations – the employment relationship and the psychological
contract. Against the background of these concepts, employee relations philosophies and the
employee relations policies that evolve from them are then considered. Employee relations
policies, although they may not be articulated, provide the basis for managing employee
relations with or without trade unions, and for informal employee relationships (examined in
the next section). If trade unions are recognized and have negotiating rights, industrial relations
(considered in the next two sections) will involve collective bargaining and reaching collective
agreements. Whatever policies and agreements exist, workplace conflict can still take place,
and the next section of the chapter therefore deals with methods of resolving disputes. Finally,
there are two sections on dealing with employees generally by giving them a voice (involvement
and participation) and through communications policies and practices.

The employment relationship

Organizations consist of employers and employees who work together. This is the employment
relationship, which may be expressed formally in what Rubery et al (2002) regarded as its
cornerstone, namely the contract of employment. In law an employee is someone working for
an employer who has the ultimate right to tell the worker what to do. In the United Kingdom,
the Employment Rights Act (1996) defines an ‘employee’ as a person who works under a
contract of employment, the tacit assumption being that ‘the employer’ is the other party to the
 Employee Relations  295

contract. The employment relationship can be defined formally by procedure agreements and
work rules.
But the employment relationship is also an informal process which happens whenever an
employer has dealings with an employee and vice versa. Underpinning the employment
relationship is the psychological contract, which expresses certain assumptions and expectations
about what managers and employees have to offer and are willing to deliver (see Chapter 8).

The dimensions of the employment relationship

The dimensions of the employment relationship as described by Kessler and Undy (1996) are
shown in Figure 16.1.

Parties
• managers
• employees
• employees’ representatives
Substance
Individual:
Operation • job
• reward
• level The employment • career
• process relationship • communications
• style • culture
Collective:
• joint agreements
• joint machinery
Structure
• formal rules/procedures
• informal understandings,
expectations, assumptions

Figure 16.1  The employment relationship

The basis of the employment relationship

The starting point of the employment relationship is an undertaking by an employee to provide
skill and effort to the employer, in return for which the employer provides the employee with
a salary or a wage (the pay–work bargain). Initially the relationship is founded on a legal
contract. This may be a written contract but the absence of such a contract does not mean that
there is no contractual relationship. Employers and employees still have certain implied legal
rights and obligations. The employer’s obligations include the duty to pay salary or wages,
provide a safe workplace, to act in good faith towards the employee and not to act in such a way
296  HRM Practice

as to undermine the trust and confidence of the employment relationship. The employee has
corresponding obligations, which include obedience, competence, honesty and loyalty.
As Marsden (2007) points out, ‘At the heart of the employment relationship lies a “zone of
acceptance” within which employees agree to let management direct their labour. This may
relate to the range of tasks that employees are willing to undertake at management’s direction,
but it may also include the priority to be accorded to different types of work, and the willingness
to vary working time according to management’s requirements.’
The employment relationship exists at different levels in the organization (management to
employees generally, and managers to individual employees and their representatives or
groups of people). The operation of the relationship will also be affected by processes such as
communications and consultation, and by the management style prevailing throughout the
organization or adopted by individual managers.
An important point to remember about the employment relationship is that generally it is the
employer who has the power to dictate the contractual terms unless they have been fixed by
collective bargaining. Except when they are in demand and can strike a bargain with their
employer, individuals have little scope to vary the terms of the contract imposed upon them by
employers. Inevitably there are conflicts of interest between employers, who want to control
compliant and high-performing employees, and employees, who want to maintain their rights
to self-determination and ‘a fair day’s pay for a fair day’s work’.
It was claimed by Edwards (1990), in line with labour process theory, that relationships
between employers representing capital and employees representing labour are usually ones of
‘structured antagonism’. However, as the revisionist labour process theorists Thompson and
Harley (2007) commented, ‘In the employment relationship there will always be (actual and
potential) conflict, but simultaneously there will be shared interests.’

The employment relationship and the psychological contract

The concept of the employment relationship is linked to that of the psychological contract. As
described by Guest et al (1996), the psychological contract may provide some indication of the
answers to the two fundamental employment relationship questions that individuals pose:
‘What can I reasonably expect from the organization?’ and ‘What should I reasonably be
expected to contribute in return?’ But it is unlikely that the psychological contract and therefore
the employment relationship will ever be fully understood by either party.
The aspects of the employment relationship covered by the psychological contact will include
from the employee’s point of view:
zz how they are treated in terms of fairness, equity and consistency;

zz security of employment;
 Employee Relations  297

zz scope to demonstrate competence;

zz career expectations and the opportunity to develop skills;

zz involvement and influence;

zz trust in the management of the organization to keep their promises.

From the employer’s point of view, the psychological contract covers such aspects of the
employment relationship as competence, effort, compliance, commitment and loyalty.

Underpinning employment relations philosophies

Relationships between employers and employees are founded on underpinning but seldom
articulated philosophies. These are the unitary and pluralist views, the concept of social
partnership and, on the part of employers, belief in a collective or individual approach.

The unitary view

The unitary view is one typically held by management, who sees its function as that of
directing and controlling the workforce to achieve economic and growth objectives. To this
end, management believes that it is the rule-making authority. Management tends to view the
enterprise as a unitary system with one source of authority – itself – and one focus of loyalty
– the organization. It extols the virtue of teamwork, where everyone strives jointly to a common
objective, everyone pulls their weight to the best of their ability, and everyone accepts their
place and function gladly, following the leadership of the appointed manager or supervisor.
These are admirable sentiments, but they sometimes lead to what McClelland (1963) referred
to as an orgy of ‘avuncular pontification’ on the part of the leaders of industry.
The unitary view, which is essentially autocratic and authoritarian, has sometimes been
expressed in agreements as ‘management’s right to manage’. The philosophy of HRM with its
emphasis on commitment and mutuality owes much to the unitary perspective.

The pluralist view

The pluralist view, as described by Fox (1966), is that an industrial organization is a plural
society, containing many related but separate interests and objectives which must be maintained
in some kind of equilibrium. In place of a corporate unity reflected in a single focus of authority
and loyalty, management has to accept the existence of rival sources of leadership and attach-
ment. It has to face the fact that, in Drucker’s (1951) phrase, a business enterprise has a triple
personality: it is at once an economic, a political and a social institution. In the first sense, it
produces and distributes incomes. In the second, it embodies a system of government in which
298  HRM Practice

managers collectively exercise authority over the managed, but are also themselves involved in
an intricate pattern of political relationships. Its third personality is revealed in the organization’s
community which evolves from below out of face-to-face relations based on shared interests,
sentiments, beliefs and values among various groups of employees.
Pluralism conventionally regards the workforce as being represented by ‘an opposition that
does not seek to govern’ (Clegg, 1976).

The concept of social partnership

Social partnership is the concept that the parties involved in employee relations should aim to
work together to the greater good of all. It is based on the mutual gains theory of Kochan and
Osterman (1994), which states that employers, employees and trade unions gain from cooperative
forms of employment relationships.
Social partnership has been defined by Ackers and Payne (1998) as ‘a stable, collaborative
relationship between capital and labour, as represented by an independent trade union,
providing for low social conflict and significant worker influence on business decision making
through strong collective bargaining’. It provides the rationale for partnership agreements,
described later in this chapter.
The concept of social partnership is rooted in stakeholder theory, originally formulated
by Freeman (1984). Donaldson and Preston (1995) defined the theory as representing the
corporation as a ‘constellation of cooperative and competitive interests’. They explained that
‘stakeholders are identified by their interest in the corporation, whether or not the corporation
has any interests in them. Each group of stakeholder merits consideration because of its own
sake and not merely because of its ability to further the interests of some other group, such as
the shareholders.’ As Hampden-Turner (1996) commented, ‘Stakeholders include at least five
parties: employees, shareholders, customers, community and government. Wealth is created
when all work together.’

Collectivism and individualism

Employers will have views about the extent to which they want to relate to their employees
collectively through trade unions or individually. This will determine the use of collective
agreements on the one hand, or a focus on individual contracts on the other.

Employee relations policies

Employee relations policies express the philosophy of the organization on what sort of
relationships between management and employees are wanted, and how the pay–work bargain
 Employee Relations  299

should be managed. The overall objectives of employee relations policies should be to create
and maintain a positive, productive, cooperative and trusting climate of employee relations.
The areas that can be covered are:
zz The employment relationship: the extent to which terms and conditions of employment
should be governed by collective agreements or based on individual contracts of employ-
ment (in other words, collectivism versus individualism).
zz Trade union recognition: whether trade unions should be recognized or derecognized,
which union or unions the organization would prefer to deal with, and whether or not
it is desirable to recognize only one union for collective bargaining and /or employee
representational purposes.
zz Collective bargaining: if unions are recognized with negotiating rights, the scope of areas
to be covered by collective bargaining.
zz Managing workplace conflict: how grievances should be settled and disputes resolved.

zz Participation and involvement: the extent to which the organization is prepared to give
employees a voice on matters that concern them.
zz Partnership: the extent to which a partnership approach is thought to be desirable.

zz Harmonization of terms and conditions of employment for staff and manual workers.

zz Working arrangements: the degree to which management has the prerogative to determine
working arrangements without reference to employees or, if they are recognized, trade
unions.
Employee relations policies provide the basis for managing employee relations with or without
trade unions, and can affect informal employee relationships.

Managing employee relations

The ways in which employee relations are managed will depend on whether or not trade
unions are recognized. To a large extent day-to-day management is carried out informally.

Managing with trade unions

Trade unions can be recognized with full negotiating and representational rights, or they
can only have representational rights, in other words the right to represent employees over
grievances, disciplinary matters and redundancy. Trade union members may also take part in
joint consultation, and act as health and safety or learning and development representatives.
Ideally, managements and trade unions learn to live together, often on a give and take basis, the
presumption being that neither would benefit from a climate of hostility or by generating
300  HRM Practice

constant confrontation. It would be assumed in this ideal situation that mutual advantage
comes from first, acting in accordance with the spirit as well as the letter of agreed joint regulatory
procedures reached in collective agreements, and second, believing that with goodwill on both
sides, disagreements can be settled without resource to industrial action. In practice, both
parties are likely to adopt a more realistic pluralist viewpoint, recognizing the inevitability of
differences of opinion, even disputes, arising because the interests and viewpoints of employers
and employees can never be identical.
In the 1960s and 1970s things were different. In certain businesses, for example the motor and
shipbuilding industries, hostility and confrontation were rife. And newspaper proprietors
tended to let their unions walk all over them in the interests of peace and profit.
Times have changed. Trade union power has diminished in the private sector, if not in the
public sector. Managements in the private sector have tended to seize the initiative. They may
be content to live with trade unions but they give industrial relations lower priority. They may feel
that it is easier to continue to operate with a union because it provides a useful, well-established
channel for communication and for the handling of grievance, discipline and safety issues.
In the absence of a union, management need to develop alternatives, which can be costly and
difficult to operate effectively.

Managing without trade unions

Managements can manage perfectly well without trade unions. It may make no obvious
difference to many employees, but some will not do so well. Millward et al (1992) established
the characteristics of union-free employee relations from the third Workshop Industrial
Relations Survey:
zz Employee relations were generally seen by managers as better in the non-union sector
than in the union sector.
zz Strikes were almost unheard of.

zz Labour turnover was high but absenteeism was no worse.

zz Pay levels were generally set unilaterally by management.

zz The dispersion of pay was higher, it was more market related and there was more
performance-related pay. There was also a greater incidence of low pay.
zz In general, no alternative methods of employee representation existed as a substitute for
trade union representation.
zz Employee relations were generally conducted with a much higher degree of informality
than in the union sector. In a quarter of non-union workplaces there were no grievance
procedures, and about a fifth had no formal disciplinary procedures.
zz Managers generally felt unconstrained in the way in which they organized work.
 Employee Relations  301

zz There was more flexibility in the use of labour than in the union sector, and this included
the greater use of freelance and temporary workers.
zz Employees in the non-union sector are two-and-a-half times more likely to be dismissed
than those in unionized firms, and the incidence of compulsory redundancies is higher.
The survey concluded that many of the differences between unionized and non-unionized
workplaces could be explained by the generally smaller size of the non-union firms, and the fact
that many such workplaces were independent, rather than being part of a larger enterprise.
Another characteristic not mentioned by the survey is the use by non-unionized firms of
personal contracts as an alternative to collective bargaining.

Informal employee relations processes

Where there are formal processes of collective bargaining and dispute resolution, as described
later in this chapter, a framework for industrial relations is provided in so far as this is
concerned with agreeing terms and conditions of employment and working arrangements
and handling workplace conflict. But within or outside that framework, informal employee
relations processes are taking place continuously.
These happen whenever a line manager or team leader is handling an issue in contact with an
individual employee, a group of employees, an employee representative or a shop steward. The
issue might concern methods of work, allocation of work and overtime, working conditions,
health and safety, achieving output and quality targets and standards, discipline or pay (especially
if a payment-by-results scheme is in operation).
Line managers and supervisors handle day-to-day grievances arising from any of these issues,
and are expected to resolve them to the satisfaction of all parties without invoking a formal
disputes or grievance procedure. The thrust for devolving responsibility for HR matters to line
managers has increased the onus on the latter to handle employee relations well. Effective
team leaders establish good working relationships with their staff, or where they exist staff
representatives, which enable issues to be settled amicably before they become a problem.
Creating and maintaining a good employee relations climate – one of cooperation, trust and
mutuality – in an organization may be the ultimate responsibility of top management, advised
by HR specialists. But the climate will be strongly influenced by the behaviour of line managers
and team leaders.

Collective bargaining
Managing with unions, as described earlier, involves collective bargaining – the establishment
by negotiation and discussion of agreements on matters of mutual concern to employers and
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unions, covering the employment relationship and terms and conditions of employment.
Collective bargaining is a joint regulating process, dealing with the regulation of management
in its relationships with work people as well as the regulation of conditions of employment. It
was described by Flanders (1970) as a social process which ‘continually turns disagreements
into agreements in an orderly fashion’.
Collective bargaining can also be seen as a political relationship in which trade unions, as
Chamberlain and Kuhn (1965) noted, share industrial sovereignty or power over those who are
governed, the employees. The sovereignty is held jointly by management and union in the
collective bargaining process.
Above all, collective bargaining is a power relationship which takes the form of a measure
of power sharing between management and trade unions (although recently the balance of
power has shifted markedly in the direction of management, at least in the private sector).
Bargaining power is the ability to induce the other side to make a decision or take a course
of action that it would otherwise be unwilling to make. Each side is involved in assessing
the bargaining preferences and bargaining power of the other side. As Fox and Flanders
(1969) commented, ‘Power is the crucial variable which determines the outcome of collective
bargaining.’ It has been suggested by Hawkins (1979) that the main test of bargaining power is
‘whether the cost to one side in accepting a proposal from the other is higher than the cost of
not accepting it’.

Forms of collective bargaining

Collective bargaining takes two basic forms, identified by Chamberlain and Kuhn (1965): first,
conjunctive bargaining, in which both parties are seeking to reach agreement, and second,
cooperative bargaining, in which it is recognized that each party is dependent on the other and
can achieve its objectives more effectively if it wins the support of the other.
Walton and McKersie (1965) made the distinction between distributive bargaining, defined as
the ‘complex system of activities instrumental to the attainment of one party’s goals when they
are in basic conflict with those of the other party’, and integrative bargaining, defined as the
‘system of activities which are not in fundamental conflict with those of the other party and
which therefore can be integrated to some degree’. These activities aim to define ‘an area of
common concern, a purpose’.

Collective agreements
The formal outcomes of collective bargaining are substantive agreements, procedural agreements,
new style agreements, partnership agreements and employee relations procedures.
 Employee Relations  303

Substantive agreements
Substantive agreements set out agreed terms and conditions of employment, covering pay,
allowances and overtime regulations, working hours, holidays and flexibility arrangements,
and the achievement of single status or harmonization. Single status means that there are no
differences in basic conditions of employment. Harmonization is the adoption of a common
approach to pay and conditions for all employees, for example, placing all employees in the
same grade and pay structure.

Procedural agreements
Procedural agreements set out the methods to be used and the procedures or rules to be
followed in the processes of collective bargaining and the settlement of industrial disputes.
Their purpose is to regulate the behaviour of the parties to the agreement, but they are not
legally enforceable, and the degree to which they are followed depends on the goodwill of
both parties or the balance of power between them. Like substantive agreements, procedural
agreements are seldom broken, and if so, never lightly – the basic presumption of collective
bargaining is that both parties will honour agreements that have been made freely between
them.
The scope and content of such agreements can vary widely. Some organizations have given
limited recognition to the provision of representational rights only, while others have taken an
entirely different line in concluding single-union deals which, when they first emerged in the
1980s, were sometimes referred to as the ‘new realism’.

Single-union deals
Single-union deals typically agree that there should be a single union representing all employees,
and cover flexible working practices, the harmonization of terms and conditions between
manual and non-manual employees, the commitment of the organization to involvement
and the disclosure of information, the resolution of disputes by such means as arbitration, a
commitment to continuity of production and a ‘no-strike’ provision.

New-style agreements
The so-called ‘new-style agreements’ emerged in the 1990s. These stipulate that negotiating
and disputes procedures should be based on the mutually accepted ‘rights’ of the parties
expressed in the recognition agreement. They typically included provision for single-union
recognition, single status, labour flexibility, a company council and a no-strike clause to the
effect that issues should be resolved without resource to industrial action.
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Partnership agreements
Partnership agreements are based on the concept of social partnership, discussed earlier. Both
parties (management and the trade union) agree to collaborate to their mutual advantage and
to achieve a climate of more cooperative and therefore less adversarial industrial relations.
Management may offer job security linked to productivity, and the union may agree to more
flexible working.
The perceived benefits of partnership agreements are that management and unions work
together, in a spirit of cooperation and mutuality which is clearly preferable to an adversarial
relationship. Provision is made for change to be introduced through discussion and agreement
rather than by coercion or power.
Guest and Peccei (2001) found that the balance of advantage in partnership arrangements
commonly appears to favour employees. Furthermore, an analysis by Guest et al (2008) of
evidence from the 2004 Workshop Employee Relations Survey (DTI, 2004) suggested that
partnership practice remains relatively undeveloped, and that it is only weakly related to trust
between management and employee representatives and to employees’ trust in management.
Direct forms of participation generally have a more positive association with trust than
representative forms.
However, data gathered by Roche (2009) from a large representative sample of employees in
Ireland showed that some mutual gains are associated with partnership. Employees gained
from enhancement to the intrinsic aspects of their work, for example autonomy, but did not
gain security or more pay, and did not seem to be more willing to accept change. Employers
gained more commitment, an improved climate of employee relations and better supervisor/
employee relationships. Unions gained influence and more members.

Dispute resolution
The aim of collective bargaining is of course to reach agreement, preferably to the satisfaction
of both parties. Grievance or negotiating procedures provide for various stages of ‘failure to
agree’, and often include a clause providing for some form of dispute resolution in the event of
the procedure being exhausted. The types of dispute resolution are conciliation, arbitration and
mediation.

Conciliation
Conciliation is the process of reconciling disagreeing parties. It is carried out by a third party,
in the United Kingdom often an ACAS conciliation officer, who acts in effect as a go-between,
attempting to get the employer and trade union representatives to agree on terms. Conciliators
 Employee Relations  305

can only help the parties to come to an agreement. They do not make recommendations on
what that agreement should be. That is the role of an arbitrator.
The incentives to seek conciliation are the hope that the conciliator can rebuild bridges and the
belief that a determined, if last-minute, search for agreement is better than confrontation, even
if both parties have to compromise.

Arbitration
Arbitration is the process of settling disputes by getting a third party, the arbitrator, to review
and discuss the negotiating stances of the disagreeing parties and make a recommendation on
the terms of settlement which is binding on both parties, who therefore lose control over the
settlement of their differences. The arbitrator is impartial, and the role is often undertaken in
the United Kingdom by ACAS officials, although industrial relations academics are sometimes
asked to act in this capacity. Arbitration is the means of last resort for reaching a settlement,
where disputes cannot be resolved in any other way. Procedure agreements may provide for
either side unilaterally to invoke arbitration, in which case the decision of the arbitrator is not
binding on both parties. The process of arbitration in its fullest sense, however, only takes place
at the request of both parties, who agree in advance to accept the arbitrator’s findings. ACAS
will not act as an arbitrator unless the consent of both parties is obtained, conciliation has been
considered, any agreed procedures have been used to the full and a failure to agree has been
recorded.
The notion of pendulum or final offer arbitration emerged in the 1980s and 1990s. It increases
the rigidity of the arbitration process by allowing an arbitrator no choice but to recommend
either the union’s or the employer’s final offer – there is no middle ground. The aim is to get the
parties to avoid adopting extreme positions. But the evidence from the Workshop Employee
Relations Survey (2004) was that the full version of pendulum arbitration, as defined above,
was rare.

Mediation
Mediation is a form of arbitration which is stronger than conciliation. It takes place when a third
party (often ACAS) helps the employer and the union by making recommendations which,
however, they are not bound to accept. It is a cheap and informal alternative to an employment
tribunal and offers a quick resolution to problems, with privacy and confidentiality.

Employee voice
Employee voice is the say employees have in matters of concern to them in their organization.
Boxall and Purcell (2003) defined it: ‘Employee voice is the term increasingly used to cover a
306  HRM Practice

whole variety of processes and structures which enable, and sometimes empower employees,
directly and indirectly, to contribute to decision making in the firm.’ Employee voice can be
seen as ‘the ability of employees to influence the actions of the employer’ (Millward et al, 1992).
The concept covers the provision of opportunities for employees to register discontent, express
complaints or grievances, and modify the power of management. It sometimes brings collective
and individual techniques into one framework. Direct employee voice involves contacts
between management and employees without the involvement of trade unions. Union voice is
expressed through representatives and can be power-based.

The forms of employee voice

Employee voice takes the following forms:
zz Participation, which is about employees playing a greater part in the decision-making
process by being given the opportunity to influence management decisions and to con-
tribute to the improvement of organizational performance. As Williams and Adam-Smith
(2006) explain, the term ‘participation’ refers to arrangements that give workers some
influence over organizational and workplace decisions.
zz Involvement, which is the process through which managers allow employees to discuss
with them issues that affect them. Williams and Adam-Smith (2006) suggest that this
term is most usefully applied to management initiatives that are designed to further the
flow of communication at work as a means of enhancing the organizational commitment
of employees.
Marchington et al (2001) categorized these elements of employee voice as representative
participation and upward problem solving.

Representative participation
Representative participation can take the following forms:
zz Joint consultation: a formal mechanism which provides the means for management to
consult employee representatives on matters of mutual interest.
zz Partnership schemes: these emphasize mutual gains and tackling issues in a spirit of
cooperation rather than through traditional, adversarial relationships.
zz European Works Councils: these may be set up across European sites as required by EU
legislation.
zz Collective representation: the role of trade unions or other forms of staff association in
collective bargaining and representing the interests of individual employees and groups
of employees. This includes the operation of grievance procedures.
 Employee Relations  307

Upward problem solving

Upward problem solving takes the following forms:
zz Upward communication – which is any means through which employees can make
representations to management about their concerns through their representatives,
through established channels (consultative committees, grievance procedures, ‘speak-up’
programmes and so on) or informally.
zz Attitude surveys – seeking the opinions of staff through questionnaires.

zz Suggestion schemes – the encouragement of employees to make suggestions, often

accompanied by rewards for accepted ideas.
zz Project teams – getting groups of employees together with line managers to develop
new ideas, processes, services or products, or to solve problems. (Quality circles and
improvement groups come into this category, although the former have often failed to
survive as a specific method of involvement.)

Communications
Employee communication processes and systems provide for ‘two-way communication’. In
one direction they enable organizations to inform employees about matters that will interest
them. In the other, they provide for upward communication by giving employees a voice, as
described above.
Communications should be distinguished from consultation. As the ACAS (2005) guide states,
communication is concerned with the exchange of information and ideas within an organiza-
tion, while consultation goes beyond this, and involves managers actively seeking and then
taking account of the views of employees before making a decision.

The importance of employee communications

Good communications are important for three reasons. First, they are a vital part of any change
management programme. If any change is proposed in terms and conditions of employment,
HR processes such as contingent pay, working methods, technologies, products and services,
or the organization structure (including mergers and acquisitions), employees need to know
what is proposed and how it will affect them. Resistance to change often arises simply because
people do not know what the change is or what it implies. Second, organizational engagement
or commitment will be enhanced if employees know what the organization has achieved, or is
trying to achieve, and how this benefits them. Third, effective communications generate trust,
as organizations take trouble to explain what they are doing and why. However, it should be
308  HRM Practice

emphasized that these three benefits of good communications will only be realized in full if
employees are given a voice – the opportunity to comment and respond to the information
they obtain from management.

What should be communicated

Managements and individual managers need to communicate to employees about terms
and conditions of employment, what they are expected to do, learning and development
opportunities, the objectives, strategies, policies and performance of the organization, and any
proposed changes to conditions of employment, working arrangements and requirements, or
the structure and policies of the organization.
Employees need the opportunity to communicate upwards their comments and reactions to
what is proposed will happen or what is actually happening in matters that affect them, for
example, pay and other terms of employment, working conditions, work–life balance, equal
opportunity, job security, health and safety, and learning and development programmes.

Approach to communication
To be effective, communication needs to be clear, easily understood and concise. Information
should be presented systematically on a regular basis, and be as relevant, local and timely as
possible. Empathy is required by management in the sense of appreciating the concerns of
employees, and what they want and need to hear. Possible reactions to proposed changes
should be assessed and anticipated in the communication. Attitude surveys can be used to find
out what information employees want, and where they feel there are any gaps that need to be
filled.
A variety of communication methods will be needed, both spoken and written, direct and
indirect. Face-to-face communication to individuals or groups is direct and swift, and provides
an opportunity to gauge the reactions of people who can respond on the spot and ask
questions. But it should be supplemented by written material or intranet communications
where the information is particularly important or complex.

Employee relations: key learning points

The nature of the employment relationship
The employment relationship describes how employees and employees work together. It
may be expressed in a formal contract, but it is also an informal process which happens
whenever an employer has dealings with an employee and vice versa.
 Employee Relations  309

The nature and significance of the psychological contract

The psychological contract is a set of unwritten expectations which exist between
individual employees and their employers. Its significance arises because it can strongly
affect the behaviour of both parties.
Employee relations philosophies
Relationships between employers and employees are founded on underpinning but
seldom articulated philosophies. These are the unitary and pluralist views, the concept
of social partnership, and on the part of employers, the extent to which a collective or
individual approach should be adopted.
Employee relations policies
Employee relations policies express the philosophy of the organization on what sorts of
relationships between management and employees are wanted, and how the pay–work
bargain should be managed.
Managing employee relations
Managements and trade unions need to learn to live together, often on a give and take
basis, the presumption being that neither would benefit from a climate of hostility or by
generating constant confrontation.
Managements tend to manage perfectly well without trade unions. It may make no
obvious difference to many employees but some will not do quite so well.
Informal employee relations processes take place whenever a line manager or team
leader is handling an issue in contact with an individual employee, a group of
employees, an employee representative or a shop steward.
Collective bargaining
Collective bargaining is a joint regulating process establishing by negotiation and
discussion agreements on matters of mutual concern to employers and unions,
covering the employment relationship and terms and conditions of employment.
Collective agreements
The formal outcomes of collective bargaining are substantive agreements, procedural
agreements, new-style agreements, partnership agreements and employee relations
procedures.
Disputes resolution
The processes of dispute resolution are conciliation, arbitration and mediation.
Employee voice
Employee voice is the say employees have in matters of concern to them in their
organization. The main forms of employee voice are participation and joint consultation.
310  HRM Practice

Communications
Employee communication processes and systems provide for ‘two-way communication’.
In one direction they enable organizations to inform employees on matters that will
interest them. In the other, they provide for upward communication by giving
employees a voice.

Questions

1. You have been asked by your managing director to provide a brief report on what
your company can do to develop a more positive psychological contract. Prepare
the report.
2. A tutor at the local further education college sends you a message, ‘I should be most
grateful if you would talk to my business management students on the subject
of “Obtaining added value from good employee relations”. ’ Prepare an outline of
your talk.
3. Your chief executive asks ‘What is the case for and against our entering into a
partnership agreement with the trade union? I would be interested in any evidence
you can get from research or experience elsewhere.’ Reply.

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