Leyte Colleges
Tacloban City
COLLEGE OF BUSINESS AND OFFICE ADMINISTRATION
INSTRUCTIONAL MODULE IN BA4 (SOCIAL RESPONSIBILITY)
Chapter 6: EMPLOYEE AND INDUSTRY RELATIONS
Introduction
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.
OBJECTIVES:
1. Define Collective Bargaining agreement
2. Explain the importance of keeping good employee relations.
3. Differentiate;
A. Industrial relations from employee relations.
B. Unitarism and Pluralism
4. Discuss the implications of psychological contract.
COLLECTIVE BARGAINING AGREEMENT (CBA)
A collective bargaining agreement (CBA) is a legally binding contract negotiated
between an employer (or group of employers) and a labor union (or group of unions)
representing the employees. It outlines the terms and conditions of employment, such
as wages, benefits, working hours, grievance procedures, and other workplace policies.
CBAs are the result of collective bargaining negotiations between labor and
management, aiming to establish mutual agreements that govern the employment
relationship within a specific workplace or industry.
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EMPLOYEE RELATIONS
Definition and Concepts
Employee relations consist of all those areas of human resource management that
involve relationships with employees directly or through collective agreements where
trade unions are recognized.
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 focused of factory work, manufacturing jobs, but now also includes the
service sector/non-union entities, part-time, and contractual workers.
To simply understand the definition employee relation:
Employee Relations, managing the relationship between the employer and its
employees.
GOAL OF EMPLOYEE RELATION
Its main goal to ossify the interest of its subject towards the company's goals and
aspirations.
PSYCHOLOGICAL CONTRACT
An intangible agreement between both parties binds the relationship between their
employer and employees.
Psychological Contract: INTEREST AND EXPECTATIONS
Schein (1998) is largely responsible for this notion of a psychological contract and his
suggestion was that between employer and employee there exist an implicit contractual
relationship which is derived from a series of assumptions on the part of employer and
employee about the nature of their relationship.
The Main Assumption are:
1. That the employees will be treated fairly and honestly.
2. That the relationship would be characterized by a concern for equity and justice and
that this would require the communication of sufficient information about changes and
developments.
3. That employee loyalty to the employer would be reciprocated with a degree of
employment and job security.
4. That employees input would be recognized and valued by the employer.
Psychological Contract: Interest and Expectations
➤Security of employment
➤Social relations and a sociable atmosphere
➤Potential for advancement
➤Access to training and development.
➤To be treated as a human being rather than as commodity
➤ Job Satisfaction and empowerment regarding their job.
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➤Family-friends/work-life balance conditions of work.
➤Fair and consistent treatment.
➤Some influence over their day-to-day operations but also at a policy level (often the
term "voice" is used in this context).
Psychological Contract: Interest and Expectations
•Function, task, flexibility
•Minimum standards of competence
•A willingness to change
•Ability to work as a member of a team
•Commitment to achieving organizational objectives.
•Capability to take initiative
•The talent to give discretionary effort
Forms Attachment: Compliance and Commitment
COMPLIANCE
It is the act of conforming and yielding, as with orders or laws. Etzioni used the terms
compliance rather than attachment and divided compliance into two elements:
1. The form of power wielded by the employer to achieve control.
2. The nature of the employee’s involvement.
Sources of Power:
•Coercive-Punishment
•Remunerative-Financial Reward
•Normative-Symbolic awards tied to values held by the company
Forms of involvement:
•Alienate-Negative or antagonistic (the most negative)
•Calculative-Careful and thoughtful of choices
•Moral-Positive and in accordance with norms set by the company. (the most
positive)
For example, if the nature of the employee's involvement with work was essentially
calculative, instrumental, or extrinsic, then the ideal or matching form of power the
employer should use would be remunerative.
Where the nature of the employee's involvement is alienative or highly negative,
the appropriate form of power may well be coercive.
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If the nature of the employee's involvement was highly positive or moral, meaning
that they identify with or share the values and purposes of the organization, then
the ideal form of power the employer should use would be normative, implying the
allocation or with holding of symbolic rewards such as prestige and recognition.
COMMITMENT
It is about involvement or moral bond between employer and employee and sharing
an optimistic view that leads to mutually beneficial relationship.
Define as a belief leading to employees creating positive value and even beyond
the expected output.
TWO DISTINCT FORMS OF COMMITMENT
1. ATTITUDINAL COMMITMENT
A commitment that can be distinguished from the psychological bond between
employer and employee that is held by common norms and values.
2. BEHAVIORAL COMMITMENT
A commitment that described as “going beyond expectations” or loyalty to the
company.
Two Side of the Coin: COOPERATION and CONFLICT
Relationship between the employee and the employer is the achieved in an
environment of mutual support and transparency to reach their desired goals.
Fox(1966) identified that this “frame of reference” has three different frames,
and these are:
1. “Unitarist”
2. “Pluralist”
3. “Radical/Marxist”
UNITARIANISM
It came from the Latin word “Unitas” unity, “oneness” and from Unus “one”.
It is a view that assumes that assumes that companies and their employees are
like-minded and thus share various commonalities.
It Is characterized as the “TEAM” or “ONE BIG HAPPY FAMILY” approach.
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PLURALISM
The difference between Unitarianism and pluralism is that looks into the diversity
of individuals and acknowledge it.
For Example:
It is common that there are conflicts within organizations between different
groups of employees and between different management functions as well as
between labor and capital.
We must not assume that all employees have the same interest and
expectations.
COLLECTIVE BARGAINING AGREEMENT (CBA)
It is a written legal contract between an employer and a union representing the
employees.
The CBA is the result of an extensive negotiation process between the parties
regarding topics such as wages, hours, and terms and conditions of employment.
UNITARISM VS. PLURALISM
UNITARISM PLURALISM
Definition A perspective that A perspective of an
emphasizes the shared organization as made up of
interests of all members of divergent sub-groups
an organization. having their own legitimate
interests
Goals and Interest Share common interests May have conflicting goals
and goals. and interests
Conflicts Conflicts are viewed as Conflicts are
dysfunctional. acknowledged and are
even desirable.
Paternalistic Approach Has a paternalistic Does not have a
approach and expects the paternalistic approach and
loyalty of the employees. does not expect the loyalty
of the employees.
RADICAL/MARXIST
Class and exploitation of workers are the central notions behind the
Radical/Marxist perspective.
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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.
Labor+ technology + Capital = Goods and Services with (Surplus Value)
In conclusion, this employee relationship is merely one-sided and exploitative,
which is impossible to resolve, unlike the Unitarist and pluralist.
INDUSTRIAL RELATIONS AS A SYSTEM
Industry relations is a major subsystem of the overall management system.
It constitutes an integral part of the human resource development activity of any
organization.
In 1958, a man named IT Dunlop created the idea of industrial relations as a
system.
He saw the system rooted in the idea of “Inputs, Processes, and Outputs”.
Inputs Processes Outputs
Actors
Collective
Bargaining
Context agreement
Arbitration
Ideology Rules
Inputs Feedback
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There are three pillars that are the independent variables under “Inputs”; these
are
•Actors
•Contexts
•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
CONTEXT
1) 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.
2) 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 requirements, and
labor to achieve targets
IDEOLOGY
It is simply the totality of values, beliefs, ideas, and more that are reinforced and shared
by all actors across the different hierarchies.
PROCESS SYNTHESIS: INPUTS AND OUTPUT
The processes include:
1. Collective bargaining agreements in resolving the conflict by arriving at a
consensus that both parties agree upon.
2. Arbitration through a third party, or in the same severe government intervention
to resolve the case.
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OUTPUT
For Dunlop, the outputs or outcomes of the system are a body of both procedural and
substantive rules, which together govern the actors at the workplace, and the purpose
of the system framework is to facilitate the analysis and explanation of these rules, their
formulation, and administration.
1. Substantive Rules -Result of rules such as hourly wages.
2. Procedural Rules-Result of compromises about the system.
Question for discussion:
1. Explain the two distinct forms of commitment?
2. Discuss the three pillars that are independent variables under Input?
3. Why psychological contract matters?
4. Cite the important of employee and industry relation?
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ANSERS KEY:
1. ATTITUDINAL COMMITMENT
A commitment that can be distinguished from the psychological bond between
employer and employee that is held by common norms and values.
BEHAVIORAL COMMITMENT- A commitment that described as “going beyond
expectations” or loyalty to the company.
2. 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
CONTEXT
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 requirements, and
labor to achieve targets
IDEOLOGY- It is simply the totality of values, beliefs, ideas, and more that are
reinforced and shared by all actors across the different hierarchies.
3. An intangible agreement between both parties binds the relationship between
their employer and employees. Schein (1998) is largely responsible for this
notion of a psychological contract and his suggestion was that between employer
and employee there exist an implicit contractual relationship which is derived
from a series of assumptions on the part of employer and employee about the
nature of their relationship.
4. Good employee and industry relations are vital for the success and sustainability
of businesses. They lead to increased productivity as motivated and engaged
employees contribute positively to company success. Positive relations also
result in improved job satisfaction and morale, helping employees enjoy their
work and stay longer with the organization. Effective relations lower turnover
rates as employees feel valued and appreciated for their work, reducing their
desire to leave. This also enhances the company's reputation within the industry,
attracting top talent and fostering strong relationships with customers, suppliers,
and other stakeholders. Open communication channels create a collaborative
work environment, allowing for quick resolution of concerns and challenges..
Maintaining good employee relations ensures legal and ethical compliance,
avoiding disputes and protecting the company's public image.
