Learning Unit 1 - HR.pptx

INTRODUCING SOME FUNDAMENTALS OF EMPLOYMENT RELATIONS (ER) The Department of Industrial Psychology and People Management HRM2BB2 2024-08-22 Dr R Utete 1 OBJECTIVES At the end of this Learning unit, s...

INTRODUCING SOME FUNDAMENTALS OF EMPLOYMENT RELATIONS (ER) The Department of Industrial Psychology and People Management HRM2BB2 2024-08-22 Dr R Utete 1 OBJECTIVES At the end of this Learning unit, students should be able to: Explain the concept and nature of “employment relations” and the way it has evolved from traditionally known “industrial relations”; Describe and illustrate the implications of different ideological, theoretical perspectives on the conflict/common-ground dynamics in employment relations; Explain the multidimensional nature and societal embeddedness of the contemporary employment relationship, and show its relevance for everyday practice in employment relations Differentiate between a tripartite and multipartite perspective of employment relations systems and very briefly explain who the role-players and stakeholders are, and why they are important Explain at least four “key ingredients” that make employment relations dynamic Demonstrate the implications of the nature and importance of perceptions of justice for the theory and practice of employment relations Explain how the dynamics of employment relations at organisational level may interact/interplay with other environmental variables or factors. 2024-08-22 Dr R Utete 2 Introduction South Africa is the biggest largest economy in Africa. South Africa's GDP amounted to just over 373 billion U.S. dollars in 2024, the highest in Africa. Egypt followed, with a GDP worth around 347.6 billion U.S. dollars and ranked as the second-highest on the continent. Algeria ranked third, with about 266.8 billion U.S. dollars. These African economies are among some of the fastest-growing economies worldwide (Statista, 2024). Real gross domestic product (GDP) in the fourth quarter was R1 158 billion in the last quarter of 2023, but still below the peak of R1 161 billion recorded in the third quarter of 2022 (Stas SA, 2023) It is known as a manufacturing hub, it is the most industrialized, technologically advanced, and diversified economy on the African continent. South Africa is an upper-middle-income economy – one of only eight such countries in Africa. The transport, storage & communication industry made the biggest positive impact, expanding by 2,9% and contributing 0,2 of a percentage point to the GDP growth. 2024-08-22 Dr R Utete 3 Introduction cont’ South Africa is weakened by various challenges such as: High crime rate (refer to the stats by SAPS -2024). In 2024, South Africa had a crime index of 75.4, which is to be considered high. South Africa has the highest crime index in Africa and ranks as the fifth most dangerous country globally according to the same index (Statista, 2024). Poor security Inequality -Female workers earn approximately 30% less, on average, than male workers. The report reveals that males are more likely to be employed and have relatively better-paying jobs compared to females. High unemployment rate - High unemployment is at 32.9% (2024). The largest industry employment gains were recorded in Trade(109 000), Manufacturing (99 000), and Private households (44 000) (Stats SA, 2024). Although the country has progressive regulations, inefficient implementation hinder the effectiveness of these regulations. 2024-08-22 Dr R Utete 4 Introduction Constraints faced by the country put a major threat to the stability of the employment relations in South Africa The major challenges relates to ill-treatment, injustices and unfairness and which affect the workplace and general humankind. If these challenges are not addressed, they pose a major threat to the societies Thus, the field of study of Employment Relations (ER) has its core on the income-earning work and related dilemmas of fairness and justice in the world of work. This is an important field since the most of people depend on income- earning work. 2024-08-22 Dr R Utete 5  Origin of Employment Relations The field of Employment Relations evolves from what was called ‘Industrial Relations’ Industrial Relations emerged from the perceived unfairness brought by developments following Industrial Revolution Industrial Revolution began in the United Kingdom in the 18 th Century which emanates from the distinction between owners (employer) and the workers (employees) The workers (income earners) gradually perceive the relations between parties as being unfair The issue of labour is key to the basic problem related to fairness of wealth distribution because it is the core of the wealth generation period. Those with capital strive for a better return of their investment which means that the labour is productive as possible The organisations (employers) want those who are working (employees) to produce as much as possible through their work (expertise) Nevertheless, labour has price tag (salaries or wages), it is generally better for those owners who want to accumulate wealth to pay the working people less than more (unequal distribution of wealth) Thus, perceive power imbalances will arise and conflict will be the order of the day due to these injustices of unequal distribution of wealth 2024-08-22 Dr R Utete 6 Definition of employment relations Industrial Relations comprised of certain actors [managers, workers and specialised governmental agencies], certain contexts [technological characteristics, the market and the distribution of power in the society], an ideology which binds the industrial relations system together, and a body of rules created to govern the actors at the workplace and work community. From this it is clear that the focus was traditionally on the conflict regulatory dimensions and the institutions involved in the rule- making and work-control processes in an employment context. Employment relations brings together two study areas that have long developed their “separate ways”, namely human resource management and industrial relations. 2024-08-22 Dr R Utete 7 Theoretical perspectives & ideologies There are different world views on how we think the world works We have different lenses we look how world work We develop different theories about how things work Employment relations is not immune to this phenomena Employment relationship needs to be understood in the broader theories about the society in context We should look at this field with open mind to gain understanding Therefore, we will look closely at different theories to better understand the employment relationship. 2024-08-22 Dr R Utete 8 Theoretical perspectives & ideologies Pluralist perspective There will always be conflict between employers and employees. Conflict can be contained by ‘orderly’ collective bargaining. Individuals in an organisation combine into a variety of distinct section groups, each with its own objectives, interests and leadership. The different groups are competitive in terms of leadership, loyalty and authority. This conflict puts the organisation in a permanent state of tension. It recognises the mutual dependence of groups. The key lies in the regulation of the employment relationship and how to institutionalise conflict in order to contain and control its impact. 2024-08-22 Dr R Utete 9 Unitarist perspective Employers and employees share the same values. All parties should strive towards a common objective. Unions are unnecessary and cause friction as they compete with the employer for the loyalty of employees. Management has the legitimate authority and right to manage, and is therefore expected to provide appropriate leadership. Conflict is regarded as unnecessary as employees are expected to be loyal to management and “their” organisation. The underlying assumption is that people working in an organisation are in basic harmony, and conflict is undesirable and a result of miscommunication. Collective bargaining should not be encouraged. 2024-08-22 Dr R Utete 10 Radical perspective The capitalist economic system establishes political and legal structures which favour the employer. Workers are oppressed for the sake of capitalist interests and hence there is an emphasis on the class struggle between the “haves” and the “have nots”. Radicals see the imbalance of power both within society and at the workplace as central. Those who own the means of production have a power superiority over those who sell their labour. Conflict is always rooted at a macro level and is socio-political and economic. Trade unions, through collective bargaining, can provide continual challenges to employers while working on the political front towards the overthrow of the capitalist system. 2024-08-22 Dr R Utete 11 Corporatism In corporatism, specific unelected groups play a crucial role in the decision-making process. Corporatism is a political system in which judicial authority is given to corporations that act for economical, industrial, and professional groups. This initial meaning was not linked with the definite conception of an industry corporation, being a rather more extensive reference to any included body. Apparently, the whole society is run by these groups’ decisions. Corporatism in South Africa can be regarded as a system of interest representation whereby influential socioeconomic organizations are given access to, and the possibility of helping to shape policies decided in, state institutions, in exchange for restricting their demands and operating within agreed parameters, as well as supporting the ideology of national unity 2024-08-22 Dr R Utete 12 Societal Corporatism and concertation Societal corporatism Extension of pluralism and sometimes referred to as tripartite coordination or cooperation. The two primary parties (management & labour) are no longer viewed as interacting on a purely competitive basis. Interdependence between all three parties (including the State) is acknowledged, each of whom values consensus building interaction rather than adversarial relations. Conflict and common ground are blended, and a mutually gainful, long-term view is favoured above short-term, win/lose modes of interaction. 2024-08-22 Dr R Utete 13 State corporatism and concertation There is an emphasis shift from a tripartite coordination or cooperation to a situation where the State moves into a paternalistic or authoritarian mode to demobilise and coopt organised labour (trade unions) into government structures. This perspective is closer to unitarism because conflict between business and labour is viewed as undesirable, and in a certain sense the legitimacy of the role of trade unions is abandoned. Concertation - 2024-08-22 Dr R Utete 14 Key characteristics of employment relations systems Core elements Unitarism Pluralism Societal corporatism State corporatism Worker control Economic system Regulated market Market-driven with state aspiring to Social market, with state State intervention in economy. State intervention ensures economy with state balance power between unions and involvement and large welfare worker ownership and control of favouring employer employers. provision. production. interest. Goals and values of Employers and employees Employers and employees have Employers and employees State is employer, or employer is All employees are owners, employers and are committed to common conflicting goals and values but share a common interest in dependent on patronage of therefore goals and values employees goals of the organisation acknowledge their inter- maintaining a more egalitarian state, thus employees are are theoretically shared. and share similar values. dependence. society. expected to make their interests subordinate to the common good. Perspective on Conflict is unnatural or the Conflict is natural and functional but Conflict is expected but should Conflict is unnatural and not Conflict is unnatural and conflict result of agitators or poor must be managed by structures and be pre- empted because it is tolerated in what are usually one- unexpected because communication. procedures. too disruptive party state systems. employees are their own to the economy. employers. Trade unions Trade unions are un- Trade unions are necessary to Trade unions are important Trade unions’ power must be Trade unions in theory should necessary, promote channel conflict and represent stakeholders in society. limited to serving the national not exist since no employer- distrust and conflict, and employees’ interests. interest first. employee relationship is thus should be avoided. present. Collective Decision- making is an Collective bargaining is a voluntary, Collective bargaining is a Collective bargaining is not No need for collective bargaining and employer prerogative, usually decentralised process. The formalised, centralised process promoted and strikes are not bargaining or strikes because strikes collective bargaining right to strike should be exercised between strong employer and tolerated. wages and conditions of interferes with market within a framework of rules. trade union organisations and service are determined by forces and strikers should the state. Strikes should seldom employees. be dismissed. be resorted to. 2024-08-22 Dr R Utete 15 South African perspective of Employment Relations (ER) Social embeddedness of the multidimensional employment relationship Roots of employment relations are embedded in the relationships between employers and employees, and these parties are integral to modern society. Organisations exist to deliver need-satisfying products and services to the members of that society, who are also the very same people who set up and work in those organisations – individual dimension. The theory and practice of employment relations revolve around how the parties arrange their relationship, organise and execute the work, and distribute the fruits that accrue from these productive processes. ER is concerned with the fairness and justice of these arrangements, with the ways in which the parties integrate, regulate, balance and institutionalise their partly divergent and partly convergent interests and objectives, and with the formal and informal dynamics that go along with this. Key ingredients to the employment relationship are the simultaneous conflict and common–ground elements that are built into any employment relationship. The heart of conflict is built on the economic dimension of any employment relationship – the exchange of labour for pay. 2024-08-22 Dr R Utete 16 South African perspective of Employment Relations (ER) This explains the importance of power in the relationship between employers and employees. The party with the most power is in the best position to get the other party to agree on its definition of a fair exchange of wages and conditions of service for the work done in the context of the employment relationship. The power imbalance led to employees joining forces and forming representative bodies to negotiate with employers on their behalf – labour or trade unions. This is where the collective dimension of employment relations comes into play and impacts on the individual dimension of the employment relationship. 2024-08-22 Dr R Utete 17 Key dimensions of Employment Relations Employment relationships are shown to be multidimensional: there are individual, collective, formal and informal dimensions. In practice, these dimensions often occur simultaneously and may also be referred to as formal/informal individual dimensions, or formal/informal collective dimensions. The individual dimension: Every individual has an employment relationship with the organisation as an employing entity. Each worker interacts every day with the organisation. The worker has a specific relationship with the organisation and with various individual managers at different levels, as well as with other workers as individuals. These are individual, interpersonal or human relations. The collective dimension: Workers can organise themselves in groups that can enter into discussions as a group with management or with groups of employers. This is generally referred to as the labour-management relationship or the union-employer relationship. Labour usually organises workers in groups known as trade unions, which act as the representatives of their individual worker members. As a group, a union has a specific relationship with management, and in this regard we talk about intergroup relations. 2024-08-22 Dr R Utete 18 Key dimensions of Employment Relations In practice, these two dimensions come together, with a formal dimension and/or an informal dimension. The formal dimension: The parties have specific rights and duties which are based on official agreements between them, which may be individual or collective. Whether the (individual, formal) employment contract is written or verbal, it is an agreement the parties have with each other. The formal dimension is characterised by certain agreements, rules, laws, regulations and formalities, which focus on the official control of the individual and/or the collective dimensions. The informal dimension: This is the fourth dimension of the employment relationship. It has to do with the dynamic aspects of human behaviour. This could include human behaviour in a group context (informal collective dimension), or in the context of the individual dimension. It includes those aspects and consequences which arise from the feelings and ideas that the various parties have about each other, their values, needs and outlook on life, as well as their preferences and perceptions of each other, and so on. It can also be thought of as the social dimension. 2024-08-22 Dr R Utete 19 South African perspective of Employment Relations (ER) The centrifugal forces of the conflict between the employer and employee parties are balanced by the existence of shared interests (e.g. survival of organisation). Both collectively and as individuals, the parties interact and make use of informal dynamics, such as communication and power, as well as formal dynamics, such as courts, legal processes and quasi-legal processes, in order to regulate and maintain their relationship. Formal dimension of ER: legal and formal rule-making and application aspects. Informal dimension of ER: behavioural dynamics involved in ER. 2024-08-22 Dr R Utete 20 Key role players Role-players and stakeholders in Employment Relations 2024-08-22 Dr R Utete 21  Management Representative of employers. Must see to it that the right things are done in the right way in order to realise the ultimate objectives of the enterprise. Represented by employers’ organisations such as National Employees Association of South Africa (NEASA) 2024-08-22 Dr R Utete 22 Employees Workers “hire out” or “sell” their labour potential to the employing party to perform a specific task. They are represented by employee organisations (trade unions) which may be members of umbrella trade union federations such as South African Federation of Trade Unions (SAFTU). 2024-08-22 Dr R Utete 23 The State The government plays role of both master and servant of the two primary participants i.e management and employees. In terms of Master role: it makes the laws that ensure that Employee Relations is practised in such a way that the general order in society is not disrupted. The government institutions that play a role through law enforcement include the Department of Labour, the CCMA, and the Labour Court. In terms of Servant role: because it helps both primary parties to conduct their relationship in orderly fashion. 2024-08-22 Dr R Utete 24 Dr R Utete KEY INGREDIENTS THAT MAKE EMPLOYMENT RELATIONS DYNAMIC Fairness and justice played a key role in the development of labour relations: had all things been perceived as fair, we would not have had industrial relations. Nel et al (2016) acknowledge the significance of the formal aspects of employment relations, but also emphasise the importance of focusing on certain key behavioural dynamics that underlie labour relations. In all of this they show that fairness and justice perceptions are crucial to relationships in the world of work and society at large. You may recall that right at the outset of their book, the importance of fairness and justice is emphasised. Related are the issues of conflict and power, which manifest alongside the common ground we have. Trade unions came into existence to address the power and conflict aspects that had resulted from employment relationships. These ingredients together make for the dynamics of this field. This means that the field is not static; in other words, there is never a dull moment in the field of labour relations. 2024-08-22 25 IMPORTANT INGREDIENTS THAT MAKE EMPLOYMENT RELATIONS DYNAMIC Justice and the perceptions that the parties to the employment relationship have of this concept are also crucial when it comes to labour relations when studied from a management perspective. Distinction between social justice and organisational justice should be given. Employment relations as a field is concerned with both levels of justice; and trade unions generally try to bring about greater social justice as well as organisational justice. This is relevant to South Africans and also to others in Africa who are engaged in the field of labour or employment relations. In the context of changes in Africa, Beugré (2002:1091) explains that the last part of the previous millennium saw ‘‘dramatic social and political changes on the African continent. Social justice is both an end in itself and a means. As an end, social justice is considered as a virtue that should characterize any civilized society. As a means, social justice fosters the right of the disenfranchised and helps reduce social inequalities. 2024-08-22 Dr R Utete 26 CORE INGREDIENTS THAT MAKE ER DYNAMIC Centrality of justice perceptions in Employment Relations Distributive justice This refers to “the distribution of the conditions and goods which affect individual (psychological, social and economic) well-being” (Deutsch 1975: 137). Distributive justice in the employment relations context therefore concerns itself with employees perceived fairness of organizational outcomes that they receive (Kim, Lin & Leung 2015:163). This refers to economic exchange in the context of efforts / pay (input & output) Based on three criteria: i) Equality: everyone gets exactly the same distribution; ii) Need: based on who needs it the most; and iii) Equity: rewards or outcomes based on how much person contributes or invests 2024-08-22 Dr R Utete 27  KEY INGREDIENTS THAT MAKE ER DYNAMIC Procedural justice This refers to the perceived fairness of the processes and procedures followed in reaching certain decisions or outcomes. From the employment relations context, it refers to the employees perceived fairness of the processes by which outcomes are allocated (Kim et al. 2015:163) Six criteria are central to procedural justice: i) Consistency: equal application of rules and procedures to all concerned over time ii) Bias suppression: prevention of self-interest in the decision-making process iii) Accuracy: making of decisions on the basis of accurate information iv) Correctability: modification or correction of a decision, if appropriate v) Representativeness: representation of all stakeholders or parties concerned in the process vi) Ethicality: reflection of current ethical and moral principles in the process 2024-08-22 Dr R Utete 28  Key ingredients that make ER dynamic Interactional justice This refers to the manner in which outcomes are communicated to employees at an interpersonal level. Within the employment relations context, it relates to the extent to which employees are treated with politeness, dignity and respect by authorities or third parties involved in executing procedures or determining outcomes Greenberg (1990) describes two aspects of interpersonal justice: i) Interpersonal treatment: treatment received from decision makers ii) Adequate causal accounts: the use of adequate explanations for the outcomes or decision reached Three elements that are central to interpersonal justice: i) Neutrality: implies openness and honesty, function of the decision maker ii) Trust: the degree to which people believe the decision maker will be fair iii) Standing: refers to the individuals’ concern with their status in a group 2024-08-22 Dr R Utete 29  Conflict Conflict in employment relations may be regarded as an inherent part of the interaction between the parties. Conflict interplays with other dynamics and it often leads to some changes in employment relations. Conflict dynamics usually include some negative emotional elements and aspects such as antagonism, aggression, threats, hostility and lack of cooperation are often present Causes of conflict: i) Different values, attitudes or perceptions ii) Different objectives or methods of achieving them iii) Differences in information or communication blockages iv) Lack of resources (scarcity) v) Skew distribution of resources (structural imbalances) vi) Personality differences 2024-08-22 Dr R Utete 30 Power It can be seen as a medium through which divergent aims and interests are mediated and resolved. Interpersonal power may be understood as “one person’s ability to influence another person’s behaviour or thinking, so that they do something that they otherwise would not have done” (Robbins 1998: 407). Social unit power is “the realistic capacity of a system-unit to actualise its interests within the context of system-interaction and in this sense exert influence on processes in the system” (Parsons 1960: 23). 2024-08-22 Dr R Utete 31 Bases of power i) Legitimate power: emerges from the right to issue directives ii) Reward power: emerges from the capacity of the group or individual to confer or withhold rewards iii) Coercive power: capacity of an individual or group to use force or coercion through the use of sanctions or by withholding desired commodities iv) Knowledge power: based on the possession of specialised knowledge or skills v) Referent power: arises out of the force of an individual’s personality 2024-08-22 Dr R Utete 32  Diverging and converging interests Aspects such as interdependence, shared interests and common ground are equally crucial. Employment Relations is not solely concerned with the divergent interests and conflict in employment relations. The fundamental common ground is that human needs have to be satisfied. People need products and services, and these have to be delivered. This is a basic shared interest and explains why parties come together. Trade unions exist because there are employees If there were no employing organisations, there would be no employees and hence no trade union members. Employees in organisations often belong to trade unions and trust their union leadership, it is in the interest of employers not to ignore or wish away trade unions. Therefore, trade unions also have interest in the continued existence of the employing organisation 2024-08-22 Dr R Utete 33 The relationship between Employment Relations and its broader environment – Macro-External factors and socio- economic factors Macro-external environment that contextualize employment relationship has to take its point of departure that South Africa is not isolated island Changes across the globe are not immune to South Africa. The country forms part of the global village into which world has largely developed The country is also experiencing transformation, and this cannot disconnect from international developments. These changes spills over to the employment relations and particular into organisations and workplaces all over the country We should be mindful of how factors in the macro-external environment could have consequences for the quality of employment relations within organisations Factors such as the country’s economic growth rate, inflation, taxation and interest rates may have an effect on Employment Relations. these factors will be discussed in the next slides 2024-08-22 Dr R Utete 34 Sociopolitical factors There is relationship between ER and socio-political variables and factors. The political environment as such is crucial, as government promulgates and enforces all the relevant legislation that impacts directly on ER. Organised business and organised labour are engaged directly to take part in the processes of drafting and/or amending labour-related legislation. The increasing value attributed to aspects like transparency and democratic processes holds potential implications for the ways ER is managed. A society’s value system regarding the physical environment is also important. 2024-08-22 Dr R Utete 35 Technological factors Technology is a key driving force behind the re-organisation of the world of work. We live in an era of rapid change, revolution and technological developments. Ecological factors and sustainability issues are high on agendas of governments and other stakeholders. Aspects such as global warming and climate-change are receiving more attention from governments, business organisations and trade unions across the globe. Responsible corporate citizens = Organisations who demonstrate to the communities where they operate that they care about the environment and the impact of their operations on it 2024-08-22 Dr R Utete 36 The relationship between Employment Relations and the broad environment General management-related factors Decisions regarding planning, marketing, finance, business growth, operations, etc. all interplay with ER dynamics. Certain management decisions interplay with Employment Relations dynamics. Due to new competitors entering the market, an organization may have to plan how to regain market share The organization will have to relook at business processes and improving aspects such as productivity through improved resource utilization It is also necessary for organization to reduce labour costs, such decisions clearly interplay employment relations Management is also responsible for business growth or turnaround plans, in this regard, these plans can have impact on labour relations aspects. Finances of the organization are also central to all aspects of organization employment relations (trade unions to negotiate good wage increases for the workers) 2024-08-22 Dr R Utete 37 The interplay between Employment Relations and the broad environment – Organization-related factors Structural factors This relates to how an organization is structured, which also interplays with employment relations The way in which work is designed or organised is an area of direct interface with Employment Relations. Structural factors include: span of control, formal structures for communication, centralised/decentralised structure. The emphasis on formal structures for communication and control (too many forms, rules, regulations), these can also interfere with the quality of employment relations When employees are not well informed or decisions do not filter through them quickly enough, uncertainties and dissatisfaction may arise Frustration and productivity in both parties may lead to poorer employment relations Organisations with highly centralized structure will have different employment relations dynamics to one which operates along the lines of decentralization. 2024-08-22 Dr R Utete 38 Nature and context of organisation This incorporates contextual factors such as location, geographical distribution, size and ownership, of the organisation. In addition, organisations that are spread over the globe have to manage its employees and interactions with other role-players such as worker representatives and trade unions in accordance with relevant labour legislations of those countries. The more employees an organization has and the more widely diffused its operations and sites are, the more challenging it may be. Hence, the organization have to establish an effective communication system Organisations with different dynamics require different skills set and they can also have different trade unions since these companies might be operating in different sectors (manufacturing, hospitality, transport) It is clear that the dynamics of employment relations are largely intertwined with numerous other factors and variables both within and outside organisations stretching from politics and economic issues The actual sector in which an organisation exists interplays with Employment Relations as well as cultural aspects of organisations. 2024-08-22 Dr R Utete 39 QUESTIONS 1. “There is no ‘field of study’ such as Employment Relations. The field of study is actually Human Resource Management (HRM), and labour relations forms a small and almost insignificant part of HRM as field of study, theory and practice.” Critically discuss this statement. 2. What is meant by the individual and collective dimensions of employment relations? Provide a concise explanation, with examples of how these dimensions manifest themselves in practice. 3. What does the “tripartite” nature of industrial relations systems refer to? 4. What is social justice, and how does it relate to employment relations? What is distributive justice, and how is it relevant to employment relations? Substantiate fully and give examples to support your viewpoints. 5. Identify and explain at least five “sources” or “bases” of power, and explain how these may have relevance to employment relations. 6. Which “macro-external” variables or factors interplay with employment relations? Can these play a role in employment relations at the level of the organisation (micro-level)? Explain and give examples. 2024-08-22 Dr R Utete 40 Q&A session 2024-08-22 Dr R Utete 41