Human Resource Management (HRM) and Industrial Relations (IR) play a significant role in the management of employees-employers relationship. However, nowadays, industrial relationship has become very sensitive and complex to manage.
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Progress in industrial relations is difficult because of lack of cooperation and harmonious relationships between important parties. The term industrial relations define the association that exist between employees and management, which results from the prevailing union-employer relationship.
Initially, industrial relationship entailed all the existing relationships, as well as interactions between employees and employers. It represented all elements of employment relationships that entailed HRM, employees’ relationship, as well as union-management relations.
Currently, the great development of HRM and its proliferation has made industrial relations to specialize in studying and practicing trade unionism, collective bargaining, as well as labor-management relations.
Whereas industrial relations use unions in the management of people within organizations, human resource management is a nonunion employment approach that engages in the recruitment, management and development of policies in the workplace. Human resource management is an upcoming field that is highly effective in hiring, performance management, employees’ motivation and training of personnel.
It is a very effective approach in managing people, as well as workplace culture and environment. An effective human resource management involves use of comprehensive and strategic methods for managing employees to effectively contributing in efficient production process. Effective and efficient productivity is important in enhancing a company’s overall production, as well as enhancing achievement of its goals and objectives.
Industrial relations were more instrumental in the past and especially in ensuring collective bargaining and in disputes and grievances settlements.
However, with the current great development and propagation of human resource management that encompass hiring, training, performance management and employees’ motivation, many organizations prefer to embrace HRM, rather than industrial relations for managing employees-employer relationships (Ackers, 2002).
Whereas writers like Daver (2001), Carpenter & Raphael (2012), see this shift like a response to the rising international competition, others like Bech (2005) see it as an incidence of the privatization and deregulation in the management of workforce.
Different Theoretical Perspective Underpinning Employment Relationships
Employee relationship refers to all the elements such as industrial relations, management and resolution of employees’ grievances and conflicts, as well as management of employees’ cooperation and communication.
Formerly, the term industrial relations was employed in referring to the management of employees relations, but nowadays employee relations is the currently used term. Mitchell (2012) posits that employment relationship is dependent on individuals’ perception of the world of work.
Katz & Darbishire (2002) claim existence of significant political, academic and philosophical theoretical perspectives that highly influence peoples understanding of employees’ relations.
In line with Katz & Darbishire (2002) claim, Kaufman (2004) identifies some important theoretical perspectives that influence individuals’ perception, which entail economic explanation, philosophical perspective, and Employment relationship.
Tripathi (2003) argue the economic perspective as a labor market consisting of demand for labor from companies and supplies of labor by persons. He argues that Companies aim in maximizing profits to enhance shareholders wealth.
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Consequently, Mitchell (2012) considers neo-classical economics as an approach where economists perceive a company’s demand for labor as a function of the demand for its products/services. In this case, a firm will tend to hire more employees until the point where the revenue realized by hiring more employees approaches the costs of hiring those employees.
When this scenario occurs, the firm stops hiring more workers, as it does not deem it profitable. However, this situation does not always happen because of other underlying factors that influence the market. Whilst the economic theory is imperative in explaining how demand and supply of labor is determined, it fails to account for other important factors in the chain.
For instance, it fails to explain the organization structure and the party responsible for setting the wages. Similarly, it does not put into account the differential of wages between workers because of varied skills, as well as qualification requirements of jobs.
In addition, economic theory does not show the employment relationship in the workplace or illustrate how management handles the human relations. According to the economic theory, the foundation of the relationship is purely the exchange of labor in return for wages.
This means that if there is need for more labor, more wages is paid. The theory does not factor in the role of human resource management in work scenario.
As per the perspective on the employment relationship, a philosophical approach regarding unitary and pluralistic is considered. The unitary method considers firms as a harmonious, integrated team with employees and managers sharing common goals and objectives.
Mitchell (2012) claim that employees and management share common values that tie them together preventing any potential source of conflict. The approach perceives royalty and adoption of leadership characterize the workplace and managers oversee the employees in becoming involved as well as committed in pursuit of the firms’ goals and objectives.
Budd (2004) considers unitary approach as the best approach for a proper workplace. Unitary approach considers applicants values and ideas during selection and recruitment exercise for qualification purposes. Consensus of ideas and values is paramount in unitary approach and new recruits learn appropriate values and ideas involuntary from management, which they use for socialization purposes, as well as for consensus building.
Unitary approach advocates involuntary learning process, where employees involuntarily pursue corporate induction courses and other essential training programs. Mitchell (2012) argues that unitary is the best approach as it requires the management to manage the workers as a team to enhance effectiveness and efficiency in the workplace.
Occurrence of a discord in unitary approach is an aberration and persistence existence of conflict may result to dismissal for those acting against the management. The approach does not give room for differing views and regards different opinions as contravention of the organization values and culture.
Conversely, Jayne (2012) regards pluralistic approach as the best approach for workplace management as it enhance performance and innovation because of the presence of competing sub-groups in pursuit of their goals and objectives.
Pluralistic approach embrace different opinions from competing factions, which are important in enhancing efficiency through subsequent inventions of more efficient processes of accomplishing objective. The conflicts that accompany the competition against the existing sub-groups are essential in the development and evolution of the firm, personnel and policies.
Pluralist approach uses policies designed in managing these different groups, rather than unifying them. Thus, this approach advocates for the democracy where there is embracing of divergent views.
Jayne (2012) posits that in instances of persistence conflicts, the management engages in negotiations and bargaining mechanisms to address diverging views, rather than using dismissal tactics as the case in unitary approach as posited by Kaufman (2004).
The radical approach explains the employment relationship as one of exploitation where the employer exploits the workers. Mitchell (2012) argues that commercial and industrial harmony is not possible unless the management control the means of production to benefit in the relationship.
Radicalism is the basis of trade unions and socialists associations; it facilitated development of trade unions to strengthen individual workers. According to Mitchell (2012), radicalism takes and sells labor like any other commodity.
Whereas pluralists embrace competition and democracy, radicalism is founded on the superiority of the employer that results to the employer undermining the trade union and influencing the working conditions to suite them.
Marxism views the exploitation to result from the employer setting the wages lower than the selling value of the products to enhance profits. Workers have limited bargaining power and must accept the market rate offered by the seller (Mitchell, 2012).
The introduction of scientific management by F.W Taylor enabled the breaking of tasks in simpler parts to help the managers understand and control the work process better. This approach made the surveillance and monitoring of employees more achievable.
In addition, it helped redesigning and combination of tasks to maximize efficiency. However, the approach resulted to more conflicts, as well as opposition to management. The process improved by incorporating employees in decision making, which resulted in increased employees’ satisfactions.
Other subsequent important improvements entail job redesign, rotation, enrichment and enlargement. Despite, all the above improvements there is a concern of whether all the measures undertaken has adequately addressed the quality of working life to enhance employees-employers relationships (Kaufman, 2004).
Industrial Relations in Managing Employment Relationship
The aforementioned theoretical perspectives explained the various theoretical underpinning employees-employers relationship. Effective and efficient management of employees-employers relationship is imperative in enhancing productivity and profit maximization. Industrial relations involve the use of unions to manage employees-employers relations.
One important aspect of industrial relations is the formation of trade unions. Industrial relations started during the industrial era where employees used the trade unions for collective bargaining and resolution of grievances and disputes.
Industrial relations mainly entail the formation of trade unions, which is an association of wage earners for the aim of ensuring favorable working conditions in their workplace (Tripathi, 2003).
Human Resource Management in Managing Employment Relationship
Human resource management is a method for managing people in a thorough and structured manner. It includes recruitment, training, motivation and preparing policies to manage employees-employer relationship.
Human resource management involves a move from collective employee relations that emphasize on use of union in the bargaining and dispute managements towards personalized –based negotiations, where managers use contract and performance –pay systems for reinforcement (Bech, 2005).
Rise of HRM verse decline of Industrial relation
The industrial relations entail the use of collective bargaining for employment relations. It uses the concept of unions and socio-emotions rather than contractual arrangements and performance-based remuneration. Industrial relations use rules and regulations to govern relations concerning work, workplace and working community.
The main aim of industrial relations is to sustain harmonious working relationship between the employers and employees. They ensure harmonious working relationship by using collective bargaining and grievance solving techniques to solve arising disputes. For instance, industrial relations use labor unions to force for better working conditions or wages increases through strikes and demonstrations.
However, with the continuous evolvement and propagation of human resource management, firms are moving from industrial relations to embrace HRM in ensuring harmonious relationship between the management and other employees.
The reason why firms tend to embrace the use of human resource management in management of workforce relationship is the effectiveness of HRM in managing employees’ relationship. HRM is not a reactive system as the industrial relation that focuses on solving emerging grievances, but a proactive approach that attempt to address underlying causes of grievances.
Industrial relation uses the outdated philosophy of Marxism of radical approach where every party to exploit the resulting relationship in the workplace. The radical approach considers the workplace relationship as the one where the employers exploit the employees.
The radical approach posits that employers sell their products at high prices but they pay their employees very little money. This is the reason why they regard the association as one of exploitation. The continuous exploitation of the employees by their bosses has caused dissatisfactions to many employees, an issue that has called for a better strategy to solve the low performance that accompanies unsatisfied workforce.
This has given rise to the evolvement of human resource management to incorporate better strategies for introducing and sustaining favorable working relationship between the management and other employees. The human resource management has introduced payment packages, which are performance-based.
This has been a very effective strategy in solving the remuneration grievances, which often affects existence of good relationship between the management and employees. Thus, instead of the employees using the concept of collective bargaining to bargain for better pay, the human resource management institutes a system that links individual performance with the pay one receives.
The differential of the pay based on performance has greatly embraced by many employees, which has resulted to an enhanced customer satisfaction that was difficult to realize by using industrial relations (Legge, 2004).
Apart from introducing performance-based pay, human resource management has incorporated motivation in the workplace as a strategy of enhancing relations in the workplace. The use of motivation has greatly boosted working relations between the various stakeholders interacting in the day-to-day working process and particularly ensuring harmonious relationship between employees and the management.
Human resource management is now using various strategies to motivate the employees. For instance, employees who meet their targets get rewards to reinforce their spirit for sustaining their high performance. Similarly, highly competent human resource staffs give the employees the opportunity to set their targets and the freedom to appraise their performance.
This strategy has been instrumental in enhancing intrinsic motivation, where employees own the responsibility for setting high standards for themselves and pursuing them with vigor. This method has helped in enhancing performance because employees who have the freedom to set their goals and assess their performance pursue their goals with passion and are highly satisfied with undertakings.
In the past, the management used to set very high targets for their employees that were unrealistic to accomplish. This method resulted in building tension between the management and the employees, as the employees contemplated the setting of high targets as a means for the management to exploit them.
The lack of trust between employers and employees resulted to employees having low morale and lack of job satisfaction; the job turn up was very high. However, with adoption of human resource management that is proactive rather than reactive, the introduction of motivation strategies such as actively engaging the workers in decision making process has greatly boosted job satisfaction and enhanced performance.
Therefore, instead of firms relaying on industrial relations, which are reactive, many firms are nowadays embracing human resource management in establishing proactive measures to facilitate harmonious working relationship between management and workers (Jayne, 2012).
Industrial relation engage employer, employees, government and trade union in collectively resolving any dispute that erupt in the workplace. Industrial relation mainly use confrontation approaches such as boycotting duty, strike and demonstration in negotiating for proper working conditions or terms.
This method is an outdated approach in conflict resolution. It is not a good strategy for solving work related issues, as the engaging parties do not carry good memories of resulting confrontations that may hinder effective performance in future business endeavors.
In other times, industrial relations use the trade union to pursue for better working conditions for member employees through lawsuits, which sometimes stay for a long period without being determined.
In addition, the legal proceeding that the trade union use to seek for justice are very expensive, which require members to pay higher commissions to cater for the salaries of the trade union employees, as well as pay for the high legal fees.
In some cases, the trade union uses alternative dispute resolutions to solve arising disputes between the employers and workers. Some of the methods used such as mediation and negotiation are very effective in solving any arising disputes amicably. However, because they are mainly not enforceable, the employers are likely not to honor the promise made.
This leaves the conflict unresolved, which may crop up in future at a higher magnitude. Other alternative dispute resolution such as litigation and arbitration although are enforceable, they are not the best option for solving disputes because they are time consuming and expensive because of the costs associated with the process.
Thus, the poor conditions that accompany the use of industrial relations in solving conflicts arising from poor working conditions or poor terms of employment makes it less preferred approach than human resource management (Daver, 2001).
Human resource management being a proactive approach tries to suppress factors that underpin poor working relationship. For instance, human resource management has been very instrumental in the recruitment, placement training and promotion processes to ensure that competence in the recruitment and placement process to enhance job satisfaction.
Human resource management stresses the importance of ensuring job satisfaction in minimizing cropping conflicts in the workplace. The human resource management engages in a thorough exercise during the hiring process to make sure that it recruits only highly competent employees.
The recruited employees receive appropriate training before placement to equip them with appropriate skills to ensure they fit in to their new environment. Proper recruitment and training is important in making sure that management identifies the strengths and weaknesses for the recruited personnel and assisted accordingly.
In addition, knowing their strengths and passions is essential to make sure they take it in consideration during the placement exercise. During the training process they are get to know the culture of the firm they will be working to adjust accordingly.
Proper training is important in helping employees overcome subsequent conflicts that may arise because of poor training and orientation that may hinder proper relationship between the management and the employees (Carpenter & Raphael, 2012).
Scholars who focus on industrial relation have a perception that the labor market is not competitive, which opposes the claim of economic theory. industrial relations gives the employers an upper hand over the employees in the negotiation process of better terms and better working conditions.
Industrial relations is characterized by a conflict of interests between workers and the management where the workers demand higher pays, while the management crave for higher profits , which give rise to an inherent conflict of interest in employers-employees relations.
The perceived inherit conflict of interest makes it difficult for the laborers to contemplate that management can pursue laborers interest for better pay to bring to an end exploitation. In this respect, industrial relations aspire to improve the strained relationship between employers and the management by fighting for an improvement of workers right and employment relationships.
Industrial relations are biased and underline on employees’ conflict of interests by supporting employees mechanisms such as collective bargaining, labor union and labor management partnership. The policies endorsed by industrial relations through pluralists approach aim in ensuring a balance in the employment relationship to achieve economic efficiency and employment equity.
Industrial relations have failed to bring the desired employment relationships. The reason why it has failed to achieve its objective is the approach of its formation. Its foundation was in a form of a problem solving to bring using the radicalism method.
For example, instead of employers having proactive strategies to enhance customer satisfaction, they failed to employ appropriate strategies that are employed by HRM such as motivational methods to enhance employees’ job satisfaction.
Many scholars nowadays perceive industrial relations to be in crisis. This is because the industrial relations get pressure on one side by the dominant economic theory and prevailing institutional behaviors. On the other side, they receive an equally pressure by the postmodern views.
In the formulation of policies, the emerging neoliberal perspective that advocate fort a free and fair market overruns the industrial relations tradition view of industrial relations on institution intervention. Moreover, many firms are nowadays adopting labor unions for solving employment disputes.
In response to the demising in industrial relations, many firms are nowadays embracing human resource management. They prefer to adopt human resource management because of its ability to effectively ensure strong employment relationship that bring efficiency in economy and employee equity (Budd, 2004).
Human resource management uses various models to bring and sustain harmonious employment relationships. One of the models it uses is the normative model of HRM that is oriented towards unitary perspective that identifies goals that are common to employers and employees.
Normative model emphasize the importance of aligning business and individual needs through instruments of selection, development, assessment and rewards. This makes human resource management to appear a proactive business strategy, rather than a reactive approach like it is the case with industrial relations.
Business integration of HRM within the overall business decision making makes it more efficient in establishing health employment relationship than industrial relations. Thus, many firms are adopting HRM for management of employment relationships because of its integrated series in the creation of personnel policies to underpin organization strategy of harmonious employment relationship.
Similarly, the human resource management is becoming more preferred than industrial relations for its ability to use descriptive-functional perspective model that emphasize on the importance of partnership between employer and employee.
This approach is engraved in the pluralist approach where there is acknowledgement that consensus cannot be taken for granted and thus, the management has to take into consideration the competing priorities that prevail within the firm.
In response of the economic theory, human resource management view labor as soft or hard. Soft HRM consider employees as valuable assets that should be developed and reinvested in, on the other hand hard HRM consider labor as another factor of production such that a firm should recruit the right number of workers, with appropriate skills and into the right jobs to cut down on unwanted expenses (Befort & Budd, 2009).
McDonald’s is one of the Companies that have disowned industrial relations and embraced HRM. The firm uses strategic HRM tactics to establish a competitive edge over its rival brands.
For instance, McDonald’s selects, recruits competent personnel and then takes them through a thorough program to orientate them to the firm’s culture. In addition, the company adopts significant HRM skills such as employees’ motivation through increased wages. In McDonald’s, there is extensive job differential and the management considers the passion and interest of its employees during placement process.
Thus, McDonald’s uses pluralist approach where Employees have the freedom to air their views. In addition, McDonald’s employees get a chance to experiment new methods to foster innovations and inventions.
However, all departments in the firm are required to operate in harmony as depicted by unitary approach and work for a common objective. Nonetheless, McDonald’s does not inhibit any characteristics of radicalism, where the management exploits employees (Gutterman, 2005).
Proper management of the human capita is important in ensuring high performance in organization. Firms that use strategic approaches for effectively managing their workforce have employees who are highly satisfied with their jobs.
They tend to record low turnover rates and high productivity. Industrial relation is a common traditional approach for managing employers-employees relationship through collective bargaining, use of unions and collective dispute resolutions.
However, because of the emergence of modern methods, which are more efficient in managing employment relationship such as HRM, many companies are moving from the use of industrial relations to adoption of HRM in ensuring strong employment relationships.
Human resource management is more success in ensuring health employment relationship because it is a proactive business strategy rather than a reactive approach like industrial relations.
Human resource management uses tolls such as selection, development, appraisal and rewards to enhance employment relationship between the employer and the employee.
In addition, human resource management stresses the importance for management to recognize that an organization consists of groups with competing interest, which should be listened and assisted accordingly. This approach in solving the conflict of interests between the employer and employees has greatly helped in the success of HRM in ensuring strong employment relationships.
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