EMPLOYEE AND INDUSTRY RELATIONS

The idea of employee relations is a loaded one. Many may think that the idea behind it is too abstract that cannot be
subjected to a systemic and grounded explanation. Some may agree that to capture the essence of what it is about
would be a tall order given the complexity of variables involved in discussing its dynamics. However, in this chapter, we
will seek to rationalize the core of employee and industrial relations by first learning the basics of employee relations, its
variables, and the dynamics and models that best capture it. Various perspectives will be peered from the microcosm of
employee dynamics to the greater whole, as seen in the lens of the company.
Diagnostic questions:
What is the basic premise of "employee relations" in your understanding?
1. What do you think is the difference between industrial relations and employee
2. relations?
3. Why do you think that keeping good employee and industrial relations is important for a business, and what could
happen if handled incorrectly?
4. How can a manager keep good relations with their employees and industry?
5. What traits are you expecting that a company should have for you to say that they are keeping good employee
relations practices in the workplace.
Employee Relations vs Industry Relations
Over the past few decades, there has been confusion between the two terms. A debate regarding the nuances between
the concept of "Employee Relations" and "Industry Relations has continuously been contested. Many see the need to
differentiate the two, others see that there are overlaps, and many see that these are linked together to the point that
they can be used interchangeably (Blyton & Turnball, 1994).
What is "Industrial Relations" for many:
 The term is synonymous and associated with collectives, such as mass movements of workers, trade unions, and
others.
 It was also linked to "Industrial" work, such as the manufacturing sector, labor- intensive tasks, and factory work
that are full-time.
 The tone of "Industrial Relations" were thought of to be more focused on "collective action," such as bargaining
agreements.
What is "Employee Relations" for many:
 The term revolves around a smaller subset of industries and goes beyond the collectives, such as trade unions.
 Are no longer just focused on factory work, manufacturing jobs, but now also includes the service sector/non-
union entities, part-time, and contractual workers
The emergence of the distinction is also brought upon by the changing industry environment over the past decades.
Before the industrial revolution, work was more inclined toward factory work. Now, we see the factory's idea has
diminished also because of the onset of technology and evolution of labor demand from workers. Moreover, the
dynamics within these labor spaces have drastically altered the relations from the employer to labor unions against a
more individualistic approach now between the employer directly to the employee. The difference in the industry jargon,
type of work, and management focus changed the locus from industrial toward the employees.
In more recent practices, the term "Employee Relations" generally focuses on the restrictions and agreements between
the industry to its workers in various levels of collectivization, as a union or as an individual. Its main goal is to ossify the
interest of its subjects toward the company's goals and aspirations. Under this premise, the idea of industry and
employee has moved once more, wherein the relationship between the company and its workers is seen as a unitary
entity, working toward a common goal compared to two separate entities in a constant state of bargaining between
conflict and resolution.
In this part of the book, we will open up our discussion regarding employee relationships.
Psychological Contract and Why It Matters
An intangible agreement between both parties binds the relationship between the employer and their employees. This
means that the relationship within the corporate structure is guided and predicated on a set of practices and
expectations between them. There exist various sets of assumptions that may not be bound by a solid contract but are,
nonetheless, practices that are accepted and expected in the relationship between the employee and their employers.
Examples of these norms are as follows:
 Both parties observe fairness and transparency.
 Employee impact and value are recognized and rewarded by their employer in various forms, such as benefits,
tenure, or career growth.
 Both employer and employee will work toward the shared goal of growth that will be beneficial for both parties
based on shared values, mores, and vision.
The set norms between employer and employee relationship provide the necessary environment for co-creating value
for the workplace environment. Reciprocity exists in this interaction where the employer extracts value from the labor
generated by its subjects while at the same time, employees earn monetary compensation, security, and self-fulfillment.
Once attained, this psychological contract drives employee satisfaction and motivation, which in turn, creates more value
to the organization through better work quality and output. Adding to the broad prescriptions above, the employees
themselves seek specific conditions that will further elevate their sense of belongingness and self-actualization, which
could be, but are not limited to, the set of examples below:
 Community building among peers
 Tenure and security
 Corporate mobility and promotions
 Expansion of skillsets and training
 Humane treatment
 Work/life balance or integration
 Having their voices and suggestions heard by the management
 Impact and performance are duly rewarded
 Flexibility on tasks and processes
For these to work flawlessly, the industry also sets its standards on its employees in a cycle where both mutually
benefit from their work engagement.
 Proactive and willing to learn
 Has the necessary skills and competence to work on designated tasks
 A team player willing to work with others
 Focused on achieving the goals set by the organization
 Has the initiative to work on tasks with minimal supervision
However, it has to be understood that these are not the only expectations that both the employee and employer
may demand from each other since it may vary from different scenarios, organizational dynamics, intensity,
extensity, and other forms. What is common is that the harmony between the employer and the employee must
exert the best effort to derive the best from their work and tasks, therefore elevating overall productivity and value
across the organizational hierarchy.
The challenge for both is to find the right compromise in reconciling many of their differences and instill a system
that can operationalize and standardize practices. Failure to meet at a compromise from both parties may mean
additional opportunity and transactional cost. This is the worst-case scenario, and therefore, it is in the best interest
of employers and employees to arrive at the best compromise that will be fair and just for all.
This dimension of knowing the psychological contract is essential in understanding the dynamics within
organizations. Values such as justice, fairness, transparency, trust, dignity, and cooperation come into play in
employee/employer dynamic. Therefore, it should not, on the contrary, be assumed that employees and employers
share these values by default toward common goals. The diversity embedded in human relationships and collectives
complicates the idea of the interactions.
Job satisfaction is an instance where the dynamic is being studied. Employee satisfaction is measured through
surveys regarding various aspects of their jobs and each employee's views regarding it. Questions may be asked to
raise discussions on reward systems, compensation, conflict resolution, community relations, work processes, and
others in both external and intrinsic levels.
Example of factors:
 Power, influence, control, and freedom regarding the tasks given
 Self-actualization and fulfillment when doing their jobs
 Respect among peers and working relationship in the workplace
 Compensation
 Recognition of the personal value
Today's generation of workers is more selective regarding their job choices, resulting in more resignations that contribute
to a rising trend of high attrition rates among businesses. The decline in overall satisfaction may be linked to the
changing workplace market that is now more accessible and transparent than before. Other than technology, the idea of
changing jobs in short periods is also linked to the lack of growth within companies because of the flatter organizational
structures, which were widely popular in the 2000s onward due to the rise of smaller and more agile start-up companies.
Another contributing factor to this is the emergence of the "Gig Economy," where more and young workers are pushed
to pursue part-time jobs because of the lack of wages relative to the demands of the current-day economy. By
overstretching their time and energy, most workers lead to burnout that pushes them to leave their post and look for
other posts.
Relationship Attachment: Compliance and Commitment

Compliance
The word itself conjures ideas of submission and power. In the relationship between employee and employer,
compliance has different forms and root sources of power present in this interaction (Etzioni, 1975).
Sources of power:
 Coercive - Punishment
 Remunerative - Financial reward
  Normative - Symbolic awards tied to values held by the company
Forms of involvement:
 Alienative - Negative or antagonistic
 Calculative - Careful and thoughtful of choices
 Moral - Positive and in accordance with norms set by the company
Furthermore, he explained that the sources of power and forms of involvement could be combined, making it nine
different combinations. An example of this is if a worker's involvement or reaction toward a task is alienating or negative,
resulting in him or her being negligent, then it could be best for the company to be coercive toward the employee to
correct the action or subdue the damage to be incurred. Another example is if the act is calculative to the point that it
resulted in positive growth and development, then the company may be remunerative in their approach. Lastly, suppose
an employee acted positively, and is in line with the moral standards and examples by the organization. In that case, the
individual may be given awards of recognition that may bring prestige to the one to be rewarded.
Commitment
Again, following Etzioni, "Commitment" is about involvement or moral bond between employer and employee and
sharing an optimistic view that leads to a mutually beneficial relationship. In the nineties, commitment is defined as a
belief leading to employees creating positive value and even beyond the expected output. On both definitions,
commitment is assumed as a bond between employees and employers and a behavior that can be described and
differentiated from others. Experts see that commitment has slight variations between them that can be split into two
distinct forms.
 Attitudinal commitment - Commitment that can be distinguished with the psychological bond of the employer
and employee that is held by common norms and values.
 Behavioral commitment-Commitment that can be described as "going beyond expectations" or loyalty to the
company
It should be noted that differences in work environments depend on the culture, industry need, contractual obligations,
and traditions of the environment. Thus, bonds can be interpreted in various magnitudes with slight variations on a
common theme. An example of this would be the level of commitment by contractual employees. Comparing it to full-
time employees would be faulty. The contractual employees may not exhibit the same level of commitment because of
the limited time he/she is expected to engage with the company.
The relationship of the employer to their employees should not be seen as a one-way street where one party sends a
message to another; end of the story. In reality, the norms, attitudes, and culture are created by the reciprocation of
actors, as one sends a message to the other, he/she then interprets it and gives their feedback; vice versa. Through this
ongoing discourse between both, compromises are made, and a new course of action is agreed upon moving forward. In
a sense, the company is looking for different ways of acquiring commitment from its workers while the workers are
asking for their organizations to meet certain obligations and adjustments to create more value for the company.
Companies go to various lengths to show their employees that their work is highly valued, fair treatment is given, and
their welfare is looked upon by the organization. This can manifest in performance rewards, added vacation leaves,
parties, or awards, just to name a few. Communication between the employer and the employee is key to building the
base of this relationship to ensure employee involvement is present in all aspects of this bond. Within an organization
that is well managed, workers are expected to yield more value in a workplace that best supports their interests. While
some argue that employee focus is nothing but a fad, security employee commitment is one of the most challenging
puzzles to answer today's modern workforce. The goals of building this relationship aim to foster values that are
important for high performing groups, such as espousing teamwork, proactivity, and continuous
improvement or what the Japanese call "Kaizen."
Two Sides of the Coin: Cooperation and Conflict
Relationship between the employee and the employer is best achieved in an environment of mutual support and
transparency to reach their desired goals. However, this relationship is never linear nor is ensured. Volatility exists in this
interaction just like any human relationship outside the context of the organization. Cooperation and conflict exist and
are a part of this ongoing and never-ending interaction. As with other types of human communication and relations, it is
never a sure case. The interaction is further developed and improved through the constant construction and
reconstruction of norms and beliefs to suit the interests of both parties where the synthesis ends in a compromise.
Conflict and cooperation are more akin to the push and pulls of the system and like your laws of physics, minute
variations of action contribute to the reaction of other variables in a system.
Central to this relationship is the idea of "perspective" that different actors have. One view on a topic cannot be assumed
to be universal unless it is agreed by both parties or written as a doctrine or universal law. Therefore, it should be
clarified that perspective is not the view per se but is the way or approach to view a certain idea, context, or worldview.
Each actor has these certain variations in views or perspectives that, as students of commerce and industry, should
remember and recognize this diversity of thought. Each person has a certain view or basis of their perspectives. Fox
(1966) identified that this "frame of reference" has three different frames, and these are "unitarist," "pluralist," and
"radical/ Marxist" references, which were then expanded in the nineties with the inclusion of the feminist perspective.
Unitarism
As the term suggests, it is a view that assumes that companies and their employees are like-minded and thus, share
various commonalities, such as norms and aspirations. Also, central to this perspective is the role of the management
and its role as the primary authority over its subordinates, while at the same time, the reason for employee loyalty. This
is best described as both paternalistic and at the same breath; controlling. Examples of this are the idea of a family or
pushing for communal spirit across the organization. In this view, conflict should be avoided at all costs, and is seen as a
distraction in the workplace. Therefore, for a unitarist, conflict is a direct result of "poor communication" and not a faulty
capitalist system. This perspective is akin to looking at rose-colored glasses where the employment relationship is leaning
more on cooperation than conflict.
Pluralism
The difference between unitarism and pluralism is that pluralism looks into the diversity of individuals and acknowledges
it. Therefore, it accepts the notion that there are differences in objectives, norms, and perspectives which then creates
groups or unions.
These groups then create their networks and power structures that may or may not overlap in their goals and
preferences leading to conflicts. An example of this is the varying functions of departments that may be conflicting to the
motives of the other. A simple representation of this may be in the direction in which the finance and purchasing
departments may conflict with the budget and strategy. Another example of conflicts that may arise may be on the
bounds of job roles and processes that may differ from group to group. For a pluralist, these kinds of conflicts are
welcomed and anticipated, and the commitment of the workers is not centered on the management but to their
interests. Managers, in this perspective are not the be-all and end-all of leadership, but a shared structure of power with
their subjects or employees. Managers here seek compromise through more engagement and conflict resolution.
Differences in this manner are seen as part of the managerial process necessary for the facilitation of leadership and
bargaining with employees.
Employees can make their voices heard through collective bargaining which is a mechanism largely associated with
unions. By unionizing, the powerless workers now have a solid bargaining base against their employers, and have
changed the way employee relations work from the industrial revolution to what it is today.
Radical/Marxist
Class and exploitation of workers are the central notions behind the Radical/Marxist perspective. In a much simpler
sense, the employer is seen as the evil that merely exploits workers for labor to derive surplus value, which is only
accessible to the capitalists and not the laborers themselves. To make a profit, it is acknowledged by believers of this
perspective that it can only be extracted by employing cheap labor that costs way less than the final product. This
alienation from work is the driving force for Marxist thought that fuels class division and exploitation.
It is understood in this perspective that:
Labor + Technology + Capital Goods and Services with (Surplus Value)
Tying this belief down to society at large, the same class conflict exists within organizations all because Marxists see that
the system is unjust and only reinforces the machine of the rich to accumulate more. In conclusion, this employee
relation is merely one-sided and exploitative, which is impossible to resolve unlike the unitarist and pluralists. Conflict in
this sense is unavoidable, and resolution through mediation is impossible all because Marxists see compromise and
collective bargaining agreements as a surrender to the capitalist machine; therefore, only reinforces the cycle than break
it. The Radicals/ Marxists only see revolution as an escape and final solution to break the cycle of exploitation and end
the practice once and for all in a class war against the capitalists.
Industrial Relations as a System
In 1958, a man named J.T. Dunlop created the idea of industrial relations as a system. For Dunlop, he sees the system
rooted in the ideas of "Inputs, Processes, and Outputs"
Outputs
Dunlop sees outputs defined by substantive and procedural rules that manage the main characters or actors within an
industrial environment. The difference in substantive and procedural rules for some is rather unclear and hard to grasp.
 Substantive rules - Result of rules such as hourly wages
 Procedural rules - Result of compromises about the system
Procedural rules commonly define substantive rules. In the simplest sense, substantive rules emanate from procedural
rules such as an example of how both parties negotiate wages. Just as was said previously, the by-product of the
interaction between two parties is then translated as substantive rules. Outputs are the outcome of this that then, in
turn, governs the system moving forward. These procedural rules vary from culture, customs, and ethics not only from
the perspective of organizations, but also from country to country.
Inputs
Again, for Dunlop, there are three pillars that are the independent variables under "Inputs"; these are actors, contexts,
and ideology.
Actors
 A group comprised of laborers who are not part of the managerial level
 A group comprised of managers that may also include employee collectives
  Exogenous agencies that exist beyond the employee/employer relations, such as government agencies, national
labor associations, and others.

Contexts
 Market influence - Economics and the market play a huge part in industrial relations such as that of emerging
market trends, a global competition that pressures firms to be more accommodating, and flexible to employee
terms.
 Technological influence - The impact of disruptive innovation plays an important role in the system, such as that
of drastic changes to production practices, which will force the industry to adapt to the skills sets, manpower
requirement, and labor to achieve targets.
Power in this interaction is shared beyond the employee and employer. Recognizing other variables that play a part in
the relationship is important for us to see the big picture rationale behind industry relations. Third-party actors, market,
and technology variables contribute to the variances of power and distribution of it across the labor chain. This power
distribution must be agreed upon by parties involved to create the base for hierarchies and agencies.
Ideology
It is simply the totality of values, beliefs, ideas, and more that are reinforced and shared by all actors across the different
hierarchies. Ideologies that are shared stronger by the actors correspond to a better working relationship and
harmonious environment, making the system more stable.
Process Synthesis: Inputs and Outputs
For the system to find a consensus, the inputs are turned to outputs with the help of a process in which actors are
subjected. These processes include collective bargaining agreements in resolving the conflict by arriving at a consensus
where both parties agree upon. Another way is through arbitration through a third party, or in some severe cases,
government intervention to resolve the case. In some other cases, there is no longer a need to tap other parties because
it is already resolved at the earlier phase when one party gives way to the other.