Employee relations
5.1 Introduction
This chapter is concerned with the area of employee relations. Here, unlike some other commentators, we do not make a hard distinction between the terms industrial relations (IR) and employee relations, which we take to include all aspects of work and the work environment. The area of IR and then employee relations were key areas feeding into the development of personnel management, and then into HRM. The field has critical impacts on HRM, through the political process as well as employer and employee organisations (such as trade unions), and includes labour market changes and legislation. In parts of Asia politics and employee relations are often strongly linked. This discussion forms the first half of this chapter, dealing with its early development, definitions, a system, strategy, perspectives, partnership and the future.
In the West (especially in the European Union), a key aspect of the employee relations area – not least because it is seen to be both a ‘cause’ and a ‘cure’ for ‘poor’ employee relations – is employee involvement. A spectrum of practices is often lumped under the rubric of this elastic concept, ranging from industrial democracy through to financial participation. A more contemporary guise is the idea of workplace partnerships. However, the use of employee involvement as a solution to help in business and management problems often comes too late in the HRM strategy and processes, with it being ad hoc, used merely as a ‘bolt on’ and some sort of organisational ‘life belt’. This area forms the second major part of this chapter, where employee involvement is examined in terms of forms and practices with the related issues that these raise.
5.2 Overview
Employee relations as a subject frequently arouses very mixed reactions. Why is this? For some commentators attitudes are influenced by a range of factors, which include ‘frames of reference’ and ‘perspectives’ in employee relations. Trying to interpret employee relations issues and events, especially disputes, in terms of the ‘facts’ of the situation to arrive at an explanation of the causes is not easy. Yet, surely ‘the facts speak for themselves’? With sufficiently close attention given to collecting detailed information can we not come across some objective explanations? We will look at these issues in the first part of this overview.
The origin of employee relations is in IR, with its antecedents arising in the late nineteenth century ‘labour problem’, with its ‘Two Faces’. On the one hand, there was labour militancy, conflict and economic disruption; on the other hand, there were issues of poor pay and poor working conditions. The best ‘solution’ to this problem was seen by many as collective bargaining, to which IR became closely linked. The IR area remained marked by pragmatism and its scope largely reflected the practical concerns of management, public policy and governments. From the 1950s to the 1980s the area became almost synonymous with trade unions and strife. Managing this strife was a major and time-consuming concern of personnel specialists and line managers, as well as governments as, for example, in South Korea and Japan.
Drawing on a wide variety of theories and data from economics, history, sociology, law, politics and organisational behaviour, employee relations is concerned with all aspects of the employment relationship. It was argued that in every country there was an employee relations ‘system’ involving three groups or parties: workers and their organisations; employers, managers and their organisations; government and agencies concerned with work (see Dunlop, 1959 and Figure 5.1). Every system creates a complex set of rules to govern the workplace; these rules, and the context in which they operate, will be considered in more detail later in this chapter (see 5.4.1 and 5.4.2).
Figure 5.1 The ER system Source: Dunlop (1958)
The idea of ‘good’ and ‘harmonious’ employee relations is often proposed as ‘normal’ and the key to success. This can be seen in some of the ‘Asian Tiger’ economies. Why does this harmony seem so elusive and the subject of debate? If we look at employee relations in Asia there is great diversity in structures and practices. The role of employee organisations as one group in the employee relations system has been hotly debated, especially in the US. Nevertheless, even in American HRM models (see Chapter 1), trade unions are considered by many to be both ‘stakeholders’ and ‘situational factors’. In the same framework, employee influence is given as a ‘HRM policy choice’ while ‘laws’ are another situational factor. Indeed, the idea of employee involvement, and more recently ideas of ‘partnership’ with labour/trade unions, is not new. The ideas of HRM processes and procedures to reduce or resolve conflict are also of long standing.
We can see some of the issues regarding employee relations and disputes in the Asian example in Text Box 5.1.
Among other issues, there may be disagreements in employee relations. If there are disagreements, how can we attempt to prevent and resolve them?
Some of the issues and processes in this area are illustrated by the examples in Text Box 5.2.
Text Box 5.2
In the post-2006 global ‘credit crunch’ and economic downturn situation with its commensurate impacts on business and employment, it may seem to many that managers can more easily blithely assert their prerogative and take hard line ‘take it or leave it’ positions in negotiations and dealing with staff. Hence, there is no need for ways to resolve disagreements and disputes as they will not occur. In any case, it may be argued by some people that, with enough time and goodwill, all disagreements and disputes can be settled and resolved.
However, the above situation and scenario may not always be the case. If neither side can walk away, as is obviously often the case with the high costs to both sides that would be incurred, the disagreement or dispute needs to be resolved. Therefore, dispute settlement and its processes can be seen as assisted continuation of negotiation and related to conflict – they are an intervention process and adjunct to collective bargaining (Rowley, 2002a; 2002b). From a unitary perspective, dispute settlement may be viewed as irrelevant (Rowley, 2001a; 2001b). However, one inherent outcome of managing people from a pluralist (or radical) perspective is conflict (Rowley, 2002c). Of course, there can be a range of conflict types, but here we are more concerned with the more formal and visible forms. Once this type of conflict, leading to a dispute, occurs, then some sort of settlement and resolution will be needed.
If informal and internal ways to settle disputes fail, there is stalemate or an impasse is reached, then resort to varied forms of more formal processes may be usefully considered. Again, such processes can be internal, or externally facilitated, and also range from ad hoc to more permanent systems and from voluntary to prescribed and compulsory, even as parts of procedural agreements. However, while some disputes can be handled by law or labour courts, others require assistance from intervention by a neutral, third party in processes such as conciliation, mediation and arbitration.
Indeed, there can be publicly supported and funded systems of dispute settlement. These supports vary between, and have a long history across, countries, sectors/industries and times, with varied preference for certain types and levels of voluntary vis-à-vis compulsory elements over time and juncture (i.e. wartime) of each type.
In the UK, for example, there was an early 19th century system of compulsory and binding arbitration. The 1896 Conciliation Act then allowed government appointed arbitration (voluntary, except during wartime) to settle disputes. From 1919 the Industrial Relations Court was used by government to refer disputes to if both sides agreed. Renamed the Industrial Advisory Board in 1971, this body was replaced by the Central Arbitration Committee (CAC) in 1976. The independent, albeit government funded, Advisory, Conciliation and Arbitration Service (ACAS) can appoint arbitrators or refer matters to the CAC. ACAS remains the UK’s main provider of dispute settlement assistance of the types in its name. Similar ideas of state-encouraged dispute resolution systems can be found in other parts of the world, for example, from the US, to Australia and Switzerland and Ireland.
The main types of dispute settlement process can be seen on a spectrum, ranging from at one end conciliation, with mediation in the middle and arbitration at the other end. These can be seen diagrammatically in Figure TB5.2.1. While each of these types of intervention involves neutral, mutually accepted third parties, but who these are, what they do and the type and ‘strength’ of intervention, discretion, and so on, all vary, as it shown in Figure TB5.2.1.
Conciliation is a process that involves independent, neutral third parties acting as messengers and interpreters in identifying causes of differences and the relative significance and importance (from ‘easily traded’ to ‘deal breakers’) of issues and positions of both parties in order to help develop ideas and mutually acceptable solutions. Agreement to any possible solutions remains the parties’ own; joint decision as conciliators do not, per se, impose or recommend solutions. Provision of conciliation may be from private or public facilities. In the UK the best-known supplier is ACAS. Conciliation is undertaken by its full-time staff, almost all civil servants. This UK system is voluntary and arises via the parties’ requests, procedural agreements or ACAS volunteering its services, in disputes.
Mediation is a process that involves an independent, neutral third party assisting parties to resolve differences and come to some agreement and end the dispute. Mediation is more proactive than conciliation as mediators may now suggest their own ideas and proposals for a resolution. However, such solutions are non-binding on the parties. The parties may accept, reject or alter the ideas and proposals in solutions. In the UK, such mediators are drawn from an ACAS list, whose members are often academics.
Arbitration is the method and process of resolving disputes by referring them to an independent, neutral third party but now with both parties having agreed beforehand to abide by the arbitrator’s decision for settlement. Basically, the arbitrator(s) hears the arguments of both sides and decides on them.
Arbitration is often criticized because of tendencies it may engender and encourage. One of these is the ‘flip-flop’ effect, with decisions being awarded alternately to one side and then the other side each time a dispute is referred to arbitration. This switching is irrespective of the merits of the particular case on a particular occasion and is an attempt to maintain the image of arbitrator neutrality and impartiality by being not seen as favouring only one side with decisions.
Another detrimental tendency is to ‘split the difference’ in decisions, which encourages more intransigence and extreme positions in offers and demands from both sides and a seemingly even wider gap between the parties’ positions. Therefore, only the lowest offers and highest demands from each side are given and tabled as both parties know that while these ‘extremes’ will not be agreed, it may maximize the median and ‘real’ result if the demands and offers are split in arbitration. Thus, the parties ‘real’ positions are not clearly set out by either side.
Some possible solutions to these issues of ‘splitting’ decisions have been developed, such as the idea of so-called ‘pendulum arbitration’. This process only allows arbitrators to choose between each side’s final offers and demands in their entirety with the ‘splitting’. An additional benefit of such pendulum arbitration is that this method encourages less extreme positions in the parties’ final offers and demands before they go to arbitration as neither side can afford to risk being seen as ‘unreasonable’ as this will not attract the arbitrator’s decision (i.e. the ‘pendulum’) their way. A further by-product of this moderating influence is that, in turn, this psychology can encourage voluntary dispute settlement as parties will be closer together in offers and demands before actually going to arbitration.
Yet, there are issues and problems with pendulum arbitration, not least that the decision implies that one side is totally ‘right’ and the other side is totally ‘wrong’ in a dispute in all the offers and demands. Critically, the system does not allow for classic negotiating, with its trade-offs and compromises over issues between parties. Indeed, often there is rarely a simple choice between offers and demands, but rather complex packages and also with conflicting views and evaluations of any data used and presented (Kennerly, 1994), as ‘the facts’ often ‘do not speak for themselves’. In sum, ‘The ‘winner takes all’ concept underlying pendulum arbitration is incompatible with the principles of compromise and flexibility underlying the negotiation process …’ (Salamon, 2000: 485).
We have distinguished and outlined the three main types of dispute resolution process. However, in practice, the dividing line between dispute resolution processes is less robust; rather it is thin and easily blurs. For instance, the process of mediation may be similar to conciliation, or it may be more formal and similar to arbitration, except with no final binding award.
There are several key, often conflicting, issues and considerations around dispute settlement and its processes for management and business. These include the following Table.
Table TB5.2.1
Key issues for management in dispute resolution
| Some processes (conciliation and mediation) avoid giving third parties power to resolve disputes on what might be uncongenial terms. | versus | Third parties do not have to live with the consequences of their actions or decisions. |
| Processes force both sides to re-examine cases which can make some movement, and hence settlement, possible. | versus | Can become addictive, ‘chilling’ important processes such as negotiation, making earlier settlement less likely as parties imply wait to go to dispute resolution. |
| Third parties approach issues with fresh minds and can bring their own suggestions and proposals for resolutions. | versus | Third parties may not have expert enough knowledge of the area and issues. |
| ‘Permanent’ third parties can be appointed to boost knowledge of the area and issues. | versus | Independence can decline as third parties can go ‘native’ with long exposure to the area and issues. |
| Processes have powerful ‘public relations’ dimensions, being used to shift blame and responsibility for settlements onto others and outsiders, rather than as a ‘failure’ by the parties themselves. | versus | Actual calling for dispute resolution can be seen as a sign of weakness and undermining the authority of the parties themselves. |
Nevertheless, despite these issues, the benefits of such processes in dispute settlement are obvious. After all, disagreements and disputes will need to be settled and resolved as amicably and agreeably as possible in some fashion. Also, some amicable and ‘see as fair’ settlement is needed to avoid festering resentments and future disputes erupting. Given this, dispute resolution will remain important for management.
Source: Rowley (2009)
There are examples of dispute resolution processes around the world. These include the US, Australia and Switzerland (see Salamon, 2000) as well as Asia. Some interesting examples are provided in Text Boxes 5.3 and 5.4 covering the resolution of disputes in China and Vietnam.
5.3 Employee relations
We can trace the antecedence and development of employee relations, which could be said to have existed ever since people interacted in the labour process.
5.3.1 Definitions
Some definitions of IR are narrow – as, for example, those of the influential early pioneers of the topic, such as Flanders (1970) and others. For these writers, IR was about the institutions of job regulation and the rules governing employment. Thus, IR was seen as being about job regulation and collective bargaining, and often narrow sectors and workers – industrial, male, manual workers and their organisations, trade unions. Yet, this reduced IR to the study of formal bargaining structures and procedures, which is somewhat limiting.
In contrast, for other commentators, the starting point for IR was the ‘exchange relationship’ – the buying and selling of ‘labour’. In particular, the basic disparity of bargaining strength between the ‘buyer’ and ‘seller’ of labour actually makes conflict inevitable. These commentators, for example, considered that IR was the process of control over work relations (Hyman, 1975). Yet, while this is interesting and it broadens out the field, employee relations covers more than just this: it involves the study of both structures and actions.
However, there are broader views of employee relations, which view it as being concerned with all aspects of the employment relationship. It includes the study of individuals, groups and their unions and associations, employers and their organisations, and the environment in which these parties interact. It is this idea of organisations and environments which we turn to next.
5.4 Concept of a ‘system’
In every country an employee relations system, a subsystem of the economic and political system, exists. This involves the following three groups or parties (see Figure 5.1 in section 5.2).
Workers and their organisations
Employers, managers and their organisations
Government and agencies concerned with the workplace and work community
Furthermore, the concept of an employee relations system can be applied at different levels, as follows.
National (different countries)
Industry (different sectors of production or services)
Group, firm and plant (particularly given the importance of international corporations)
5.4.1 Rules
Every employee relations system creates a complex system of rules to govern the workplace and work community. These rules may take a variety of forms – for example, agreements, statutes, custom and practice – but their essential character is to define the status of the parties and to govern their conduct. These rules are fundamentally of two kinds:
1. Procedural – the methods and procedures to be used, such as those involved in settling disputes.
2. Substantive – dealing with, for example, rates of wages, hours of work, and so on.
The system’s rules may be created in a variety of ways – through laws, collective bargaining, or imposed unilaterally by one of the parties.
5.4.2 Context
The parties and the system do not operate in a vacuum but within an environmental context comprising the following aspects.
Political and legal factors – i.e. the power relationships and status of the parties
Economic factors – in particular, labour markets and product markets
Social factors – including culture and values
Technological factors – i.e. methods and resources applied to production
If rules are the output of the system, the input to the system is the value and objectives of the three parties. The subject matter of employee relations, therefore, involves the three parties of the system and their organisation, objectives, relationships and interactions within the environment in which they operate.
While a classic piece of work, Dunlop’s (1959) writing attracted much criticism, some of which stems from his own time and place of 1950s American pluralism. Dunlop argued, for example, that in each employee relations system there was an underlying, shared ideology (of consensus) which was expected to lead to stability in the system. However, the emphasis on stability and consensus makes it difficult for the model to explain dynamic change. Thus, Dunlop’s work was criticised for being too static, overly conservative, ignorant of behavioural factors, and more concerned with solving, rather than seeking, the sources of conflict.
5.5 Strategic choice
Criticisms of Dunlop led some writers to build on his approach. They introduced into the area the important concept of ‘strategic choice’ and the idea of applying it at three levels (see Figure 5.2).
Figure 5.2 Strategic choice in industrial relations Source: Kochan et al. (1984)
Strategic
This level comprises the strategies, values, structures, and so on of the parties. Here we may ask questions such as how business strategy affects employee relations. For example, we might compare a business strategy that emphasises product differentiation and innovation against one seeking to minimise labour costs (see the earlier points in Chapter 1). In much of Asia, especially in South Asia, politics and employee relations are closely linked. Political groups use employee relations as a means of putting pressure on governments or opposition. In Asia we can compare the focus on labour reducing costs in countries such as Vietnam with the deliberate policy of driving up the cost of labour to encourage higher added-value jobs, such as in Singapore.
Functional
This level represents the actual process and results of contract negotiation. The discussion of strikes, bargaining power and wage determination feature prominently here. An Asian example of the functional level is the Japanese ‘shunto’ annual pay negotiations which take the form of ritual posturing between employers’ and employees’ representatives.
Workplace
This level illustrates the activities in which employees, their supervisors and their union representatives engage in administering the labour contract and adjust to changing circumstances and new problems on a daily basis. Here there are issues such as managing conflict, motivation, participation and supervision of individual workers, as well as the structuring of work into jobs, groups or teams. The use of ex-military HR managers in countries such as China and Pakistan, with their supposed experience of managing people, shows the importance of managing the day-to-day workplace issues.
5.5.1 Goals and expectations
Importantly, this model is driven by the goals and expectations that people have of work. How people go about achieving their goals is through the organisational structures and processes. It is through these structures and processes that parties interact and make choices that, together with forces in their environment, determine the extent to which their goals are met.
Without a safety net of wealth or government support, some Asians work to gain the means of survival, including basic goods and services, for themselves and the family. For example, the provision of organisation-supplied accommodation by employers – such as the Indian railways, Chinese SOEs, Malaysian utility companies, South Korean manufacturers in Malaysia and contractors in the GCC – gives a needed source of shelter but comes at the risk that the of loss of a job (or involvement in an industrial dispute) will lead to loss of that shelter as well as loss of income.
5.5.2 Options and choice
This model emphasises the range of options that management, labour and government have in responding to environmental changes (such as increased competition or changes in technology). Although the environment is vitally important there is also, it is suggested, a degree of choice at all three levels.
Another useful addition is the idea of strategic choice and employee relations decisions being of a ‘third order’ (Purcell, 1987). This presents employee relations as ‘downstream’ of other strategies for organisations. This can be seen in Figure 5.3.
Figure 5.3 Three levels of strategic decision making Source: Purcell (1987)
5.6 Frames of reference
An important development for employee relations concerned the work and ideas on the fundamental perspectives taken by people on the basic structures and roles of organisations.
Within an organisation, are we ‘all in it together’, part of a team harmoniously pulling in the same direction with similar ambitions, desires, and so on? If so, how do we explain some of the conflicts and disagreements in relation to work? The seminal work of Fox (1966) explained that two views may be taken of the enterprise and managerial conceptions of its authority structure, i.e. on the nature, function and legitimacy of trade unions. These are as follows.
5.6.1 Unitarist perspective
In the unitarist perspective the organisation has a unified authority structure with common objectives and values – that is, there is one source of authority and focus of loyalty: ‘a team’. Thus, it can be argued here that people:
strive jointly towards a common objective, each pulling his weight to the best of his ability. Each accepts his place and his function gladly, following the leadership of the one so appointed. There are no oppositionary groups or factions, and therefore no rival leaders within the team? Nor are there any outside it; the team stands alone, its members owing allegiance to their own leaders but to no others.
(Fox, 1966: 3)
This unitarist perspective is a common view of some Asian managers and government authorities. However, the role of trade unions and employee conflict in parts of Asia suggests this is less the perspective of all actors in the system.
5.6.2 Pluralist perspective
In the pluralist perspective the organisation is seen to consist of a coalition of individuals with diverse objectives and values. Here it can be argued that:
In place of a corporate unity reflected in a single focus of authority and loyalty, we have to accept the existence of rival sources of leadership and authority.
(Fox, 1966: 4)
So, organisations are made up of sectional groups with divergent interests, and this limits the degree of common purpose. For example, management has to balance various interests, which include shareholders, directors, customers and employees.
This pluralist perspective is less common in some parts of Asia among managers and government where rival thought is considered by some to be much more threatening than it is in the West (Harry and Nakajima, 2007). However, the existence and role of trade unions and conflict in parts of Asia, such as South Korea and Malaysia, suggests that pluralism is a perspective held by others.
In addition to these views, it is worth noting here another perspective – a radical view, which is a modification of Marxist analysis. This perspective denies that there can be any common interest in the employment relationship. Maoists in parts of India and Nepal and the Communist Party of North Korea maintain this perspective while the Communist Party in China has tended to ignore the issue during its pragmatic dealings with the factors impacting on economic growth. This radical view maintains that only the leadership of the Communist Party can determine the ‘correct’ path in employee relations and there is no need for intervention by other participants.
With the pluralistic view, it follows that some conflict is inherent in the very nature of employee relations. It is, therefore, as important for management to accept that some conflict of interest is inevitable as it is for unions and employees to accept that there are some common interests – in particular, contribution to the survival and success of the organisation. With the growing acceptance in the West, after the 1950s, of this sort of proposition, collective bargaining became increasingly considered by many as the best method to resolve these differences of interest.
The core thread running through employee relations is that labour is more than a commodity to be exchanged in the open competitive market and more than a set of ‘human resources’ to be allocated to serve the goals of the firm (Blyton and Turnbull, 1998). Rather, because workers bring their own goals, expectations and aspirations to the workplace, employee relations must also be concerned with how the policies governing employee relations, and the work itself, affects workers and their interests, as well as the interests of the firm and the larger society (Blyton and Turnbull, 1998). Nevertheless, conflicts should be limited in scope and frequency since the parties’ goals are interdependent and common and at least some are shared. The essence of effective employee relations is, therefore, one in which the parties successfully resolve issues arising from their conflicting interests and successfully pursue joint gains in cases where they share common interests.
5.7 Individualism versus collectivism
There are other useful perspectives to consider in employee relations. One such approach is to view employee relations in terms of individualism versus collectivism and its variants. By individualism we mean the degree to which management asserts the individual nature of the relationship with employees within employee relations. By collectivism we mean the amount of collective focus in the relationships within employee relations. This view also allows the production of a set of employee relations regimes at societal level.
Furthermore, not only are there these different perspectives in employee relations, but their prevalence over time, and across different countries, has varied. This can be usefully seen if we make a broad brush coverage of history over the last two hundred years of industrialisation in order to locate developments and ground the more contemporary situation. We present such views next.
5.7.1 Liberal individualism/laissez faire
Along with industrialisation in the West during the nineteenth century was the idea of liberal individualism or laissez faire. With this it was believed that everything should be determined by the free play of markets. Thus, employment contracts were freely entered into by relatively equal people capable of pursuing their own best interests. Any combination of workers or employers would adversely affect this free market mechanism, which, if left to itself, would ensure the greatest possible good for all. The anti-combination feelings were strongest in the US where the government acted to prevent or reduce combinations of workers or employers aimed at protecting ‘customers’ from monopolies of labour or production. While this is an historical model, it has contemporary relevance, particularly in terms of World Trade Organisation values concerning free markets.
5.7.2 Liberal collectivism
From the late nineteenth century liberal collectivism developed. This was ‘liberal’ in the sense that the role of the state was limited. Simultaneously, this was ‘collective’ in the sense that parties were free to organise and engage in collective bargaining.
5.7.3 Corporatism
After the Second World War, and particularly following the1960s, there developed a greater degree of government involvement and co-operation between the employee relations parties. This was seen in various examples – which included incomes policies and the establishment of tripartite mechanisms involving government, employer and employee representatives – in a number of countries. From the late 1970s such approaches declined. On the one side opposition grew to the view that unrepresentative trade union ‘barons’, not elected politicians, were now running countries in ‘shady deals’ with politicians. On the other side some wanted a return to ‘free’ collective bargaining and the end of trade union use in macro-economic policy, as in keeping inflation under control via incomes policies. Some countries have maintained elements of corporatism – for instance, the Scandinavian system, versions in South Korea from the 1990s and the succession of social partnership agreements in Ireland and Australia since the 1980s (see Salamon, 2000).
5.7.4 Individualism/neo-laissez faire
From the 1980s such corporatism was weakened with a revival, not so much of liberal collectivism, but essentially of individualism or neo-laissez faire. This was seen in the UK, but less so in some other countries, especially in Europe. Pro-trade union support and legislation was repealed and replaced by anti-trade union laws in a ‘step-by-step’ approach which whittled away union strengths in the UK. By 1997 the UK employee relations legal terrain was dramatically different from that of the earlier period.
5.7.5 Social democratic individualism
In the UK, after 1997 and the return of the Labour Party to government, there was a re-evaluation in terms of employee relations. On the one hand there has been much criticism that Labour was all ‘style over substance’ and that little has changed. This is seemingly supported by Labour’s pronouncements that the previous Labour legislation would not be fundamentally overturned and that the UK benefited from a flexible labour market, which it needed to maintain. Yet, on the other hand, there is increasing vocal criticism by business interests of the so-called over-regulation of the economy, part of which concerns the regulation of employment matters. The post-2010 election situation in the UK is still in its early stages.
5.7.6 Government approaches
There are several models that use dimensions of varying trade union power and political ideology. The models, historically developed in the West, have relevance in contemporary situations – for example, liberal individualism in the past and in the 1980s in the UK, corporatism from 1945 to the 1980s in the UK, in Scandinavia since the 1930s, in post-war Japan, and now developing some aspects in South Korea and other Asian countries. We give an example of one such model in Figure 5.4.
Figure 5.4 Governmental approaches to employee relations Source: Salamon (2000)
5.8 Partnership
Following Labour’s 1997 election victory, as mentioned above, there was renewed interest in ideas of so-called workplace ‘partnership’ and deals. These were trumpeted as the way forward for employee relations, especially in the context of ‘New Labour’ in the UK. A range of employers and trade unions signed such agreements, and they received endorsement and encouragement from senior politicians. There had been some developments during the previous 18 years whereby some businesses and management had tried to change and recast ‘traditional’ employee relations. This was labelled by some commentators as ‘The New IR’.
The ‘New IR’ changes involved reconfiguring trade union recognition and bargaining arrangements in order to try to obtain ‘simplification’. For instance, in companies where multiple unions had been recognised, there were attempts to move to either ‘single table bargaining’ (with all the different unions bargaining together) or ‘single union recognition’ (with commensurate de-recognition of the other unions). If the organisation or particular operation was new, a single union-only recognition was offered from the start. This recognised union would then represent everyone in the company, in a similar way to some Asian enterprise unions, such as those in Japan.
We present some Asian examples (Japan, South Korea and Malaysia) of trade unions, types and structures in Text Boxes 5.5, 5.6 and 5.7.
Japan has built much of the success of its manufacturing sector on the partnership between management and unions. In Japan one union represents all in the company as an enterprise union. This recognition of a specific trade union could well be preceded by what was called a ‘beauty contest’ for management to pick its favoured union. One of the most well known examples of the latter, in the UK, was Nissan’s recognition of the then AEEU at its new Sunderland factory on a ‘greenfield’ (newly industrial) site.
A key aspect of such single union deals was often the idea of what came to be labelled ‘no strike agreements’, along with compulsory and maybe ‘pendulum’ arbitration (see the points on dispute resolution earlier in this chapter). However, not only are such agreements impossible to enforce, they are better seen as ‘strike last agreements’. For instance, how would an employer actually prevent employees from walking away from the workplace or all claiming to be ‘sick’ at the same time? Ideas of pendulum arbitration have come from the US. Pendulum arbitration was taken as a possible method to prevent the ‘chilling’ of negotiations that occurred as sides simply waited to go to arbitration, which would then force parties to make realistic demands and offers and reduce extreme cases. These tactics were often used to try to maximise or minimise awards in the all-too- common eventuality that the result was to split competing demands down the middle. In contrast, with pendulum arbitration the most reasonable cases (to attract the pendulum) would be presented by both sides because ‘split’ awards were not allowed. It was either the whole of one offer or the whole of the other that had to be decided on by arbitration. So, employer and employee positions would now aim to be the most reasonable in order to attract the arbitrator’s decision (the pendulum).
However, there are classic problems with these processes. As with other forms of third party intervention, both sides could use this process to opt out of any responsibility for the outcomes. Both sides can lose control over the situation. It means the sides are presented as ‘right’ or ‘wrong’. Yet, negotiations are rarely about a single issue, but are a mixed and tradable set of issues. These issues create tensions and problems for arbitration and single trade unions.
Thus, there are difficult issues. The diversity in this area can also be seen in countries such as Japan, China and India. Japan stresses long-term stability and shared prosperity with low (by Western standards) differences in pay between the top and the bottom of organisations. Theoretical partnerships in Chinese SOEs should mean that all are ‘working for the common good’ with apparently low differentials in pay (but certainly high differentials in terms of benefits and status) in the expectation of long-term prosperity. Indian politics and economics were, for many years, dominated by socialist ideology so that employers found it difficult to encourage change or greater productivity and tended to hide profits, along with the real level of executive pay and benefits, mainly in the ‘black’ economy. Trade union officials were often encouraged, discreetly, to take the employer’s side, while some officials would pursue their own political ends without seeking to protect their own union members.
We present some Asian examples of employee relations systems in Text Boxes 5.8 to 5.11. These cover China, Vietnam, India and the Philippines.
Text Box 5.10
This section examines the relevance of the Indian industrial relations system, specifically the existing political/legal framework to the IT/ITES/BPO industries. Unsurprisingly, we come to the conclusion that the national regulatory regime and the global BPO industry mainly exist in different ‘worlds’. IT/ITES/BPO is largely regulated by the interaction of global capital flows and local labour market dynamics while existing forms of regulation have been marginalised. We begin by describing what those forms of regulation are. Next, we describe the current HR- employment relations scene in the ITES/BPO sector. These dynamics have important implications for both workers and other organisations in the IR system, such as trade unions. The implications of this are also analysed.
Employment relations in India are regulated by a number of legal instruments, commencing with the Trade Union Act of 1926. This Act, initially provided for the registration of trade unions and, in the process, provided specific immunities from conspiracies in restraint of trade and civil actions for breach of contract (Krishnamurthi, 2002). The legislation still specifies a minimum membership of only seven workers for registration. This, in turn, has given rise to a huge number of registered unions (64,817 in 1999), with a very small average base (786 members) (India Labour Bureau, 2004).
The Trade Union legislation was silent on the question of union recognition by employers and this remained the case until 1958, when the Standing Labour Committee of the Federal Government devised protocols for representation and collective bargaining rights that were agreed to by representatives of industry and labour. These were appended to the Voluntary Code of Discipline, wherein management agreed to recognise the union which had the largest membership constituency for any given establishment or industry. This could be determined by either an examination conducted by the Ministry of Labour of the financial records/membership of the contending unions or, where all parties, including the employer agree, by way of a secret ballot conducted by the Ministry. To trigger recognition, the actual union membership threshold is quite low – minimally 2 per cent of the workforce in question. In exchange for this, unions agreed to subscribe to a code of discipline of their own. This includes such provisions as no strikes without notification, a renunciation of coercion, work to rule tactics and sit-down strikes and a willingness to discipline officials and members who act in disregard of the code (Krishnamurthi, 2002: Ch.6).
With respect to all of these undertakings it is important to keep two essential points in the foreground. First, these protocols represented a voluntary undertaking on the part of business and labour leaders. They may or may not be respected in any specific case. Union recognition is not a statutory requirement of Indian employment relations law. As one commentator reminds us, such ‘codes are virtually buried for all practical purposes and have become part of industrial relations history’ (Ratnam, 2001: 42). In part, inter-union rivalry (see below) has militated against finding agreement on principles for union recognition. Secondly, under the 1926 Act, union membership also remains voluntary. There are no legal provisions for closed or union shop rules, or for the automatic check-off of membership dues. Union recognition is also referred to in the 1947 Industrial Disputes Act. This omnibus bill was designed to foster orderly industrial relations on the sub-continent (Sodhi and Plowman, 2001). Appended to the bill (Schedule Five) is a lengthy list of unfair labour practices, which includes proscriptions against interference in union organising, including discrimination against union members, the use of threats or coercion, including threats to shut down operations, the creation of company or company dominated unions, or the refusal to bargain in good faith with the recognised union. Employers are also forbidden from recruiting replacement workers during legal strikes or employing casual or temporary workers on a long-term basis, although penalties for transgressions of such rules seem to be minimal.
The 1947 Act also establishes rules for the settlement of disputes involving wages, working hours, occupational classifications, layoffs, retrenchments and technological change. Depending upon the issue, a Labour Court may be established to deal with cases of dismissals, the legality of strikes/lockouts, or the withdrawal of existing conditions while an Industrial Tribunal may be created to process disputes over compensation, hours of work, job classification, technological change or reductions in employment. Awards are made by the Labour Courts, Industrial Tribunals or National Tribunals that have been established for that purpose and are binding upon the parties unless vetoed or modified by the relevant state or Federal government. From the available, if dated evidence, it appears as though settlements through adjudication rather than collective bargaining have been the most pervasive form of interest based settlement (Sodhi and Plowman, 2001: 59). Recognised unions are given statutory rights to represent workers in any disputes which come before a conciliation officer, board, labour court or tribunal that is established under the Act.
In addition to specifying a host of unfair labour practices, the Industrial Disputes Act is immediately relevant to two other areas of employment relations. First, it provides detailed rules with respect to employer initiated changes (such as layoffs and retrenchments), which first must receive approval from the appropriate court or tribunal and, second, it criminalises certain categories of industrial action. With respect to the former, in establishments of 100 or more employees who have at least one year of service, workers are entitled to half their normal pay for a period of 45 days in the event of a layoff being approved. One month’s notice must be provided for any retrenchments and workers are again entitled to 15 days of their normal pay for each year of service. The same provision also applies to permanent closures, except here the employer is required to provide 60 days’ advance notification. Any other changes in the terms or conditions of employment must be preceded by a 21-day notification.
On the union’s side, notice of strike action must be provided to employers two weeks before such action is taken, while strikes and lockouts are outlawed during, and seven days after, any conciliation hearings or for the two months following any Labour Court or Tribunal hearings. Additionally, strikes are not permitted during the term of any conciliation award, which may be for a period of up to three years. Existing strikes can also be prohibited once reference has been made to the Act, with fines and jail terms imposed upon transgressors. All provisions in the Act cover establishments and industries that have been declared a public service, but the definition of such, contained in Schedule One of the Act, is very elastic. Governments can rule that just about any activity is temporarily a public service, including manufacturing and financial pursuits in the private sector. Thus, governments may choose to include or to exclude various activities from the provisions of the Disputes Act as they see fit.
The laws regulating strike and lockout activity seem to be ‘honoured in the breach’. By no stretch of the imagination has such activity ceased to occur in Indian employment relations. The numbers of recorded strikes has declined dramatically since the early 1980s, falling by more than 80 per cent, although strikes and lockouts have become larger in the sense of involving many more workers. Overall, the number of person days lost on account of disputes has declined somewhat since 1981, but nowhere near as dramatically as the actual number of disputes (India Labour Bureau, 2004). It would be incorrect to attribute any of these trends to statutes that have been on the books for over 50 years. Rather, the foreign exchange crisis of 1990–91, the turn towards the IMF and the subsequent adoption of neo-liberal remedies, as elsewhere, had a chilling effect on employment security, which made its effects known in the number of recorded industrial disputes.
Overall, and given the ambit of the Industrial Disputes Act, it can be seen that it is weighted in terms of the status quo (Chibber, 2003). Proposed changes for shutdowns, labour force reductions, or other significant alterations can quickly be removed from the realm of managerial prerogative and become the subject of an award. The whole tenor of the Indian system is control through protection, a logic that is largely at odds with the market rationality of globalisation. And although this is frequently an object of complaint, in truth requirements such as those contained in the Industrial Disputes Act have had little impact on the IT/ITES/BPO sector. There are several reasons for this.
First, existing legislation was mainly intended to apply to and protect low-wage manual workers. Those earning more than 1,600R per month ($US 35) and/or exercising supervisory, administrative or managerial tasks are exempt from the Industrial Disputes legislation. This would include most of the IT/ITES/BPO sector where, for example, average starting salaries in call centres are many times that amount. In other words, salaries in ITES are at a level which exempts workers in the sector from essential features of the system, but still renders them hugely inexpensive by western standards. Second, to date, the main issue for Indian IT/ITES/BPO providers has been recruiting and retaining labour, not shedding it (see next section).
Given this mix of conditions, or what might be best described as a highly unstable ‘equilibrium’, it is still the case that, despite reports of spontaneous job actions at individual call centres, the IT/ITES/BPO sector remains completely union free. To understand why this is the case, and to appreciate the challenges that union organising in the IT/ITES/BPO sector face, it is necessary to revert back to the IR context once again.
As part of this legacy, trade unions have been described as a ‘frail but enduring part of India’s labour relations’ (Ratnam, 2001). As we have seen, statutes governing unions have been permissive of the creation of very small entities. As a result, only 2 per cent of registered unions have a membership exceeding 5000, while 40 per cent have less than 100 members (Sodhi and Plowman, 2001: 140-156). Historically, this has gone along with excessive fragmentation. Thus, there are no less than a dozen central labour organizations operating in India, each with its own political affiliations, to which only 20 per cent of registered unions are affiliated (Ratnam, 2001). As a result, specific enterprise unions also proliferate. Multiple plant/office unionism has added immensely to the complexity and divisiveness of the situation. It has resulted in a situation described by one analyst where ‘the arduous task of organizing a trade union from scratch has suddenly lost is relevance: the easier path to ascendance as a leader is to take over existing organizations.’ (Ramaswamy, 1988). This has gone along with an intense politicization that has left unions beholden to specific political parties, as well as dependent upon state patronage and reliant upon professional outside leaders (Chibber, 2005). None of these traits are favourable to an organising model (Bronfenbrenner, Friedman, Hurd, Oswald and Seeber, 1998) of union growth into information and knowledge based industries. As a result, overall union densities in India are estimated to be about one-third of the organized sector of the economy or about 1 per cent of the total societal labour force (Ratnam, 2001: 32).
On top of the historical legacy and peculiarities of trade unionism in India, more recently, various state governments have announced several special promotional schemes that encompass a comprehensive package of incentives and policies for the IT/ITES/BPO industries and further add to the uniqueness that is encountered in this sector. Most of the states in India have Software Technology Parks (STPs) and Export Processing Zones (EPZs) that offer first world infrastructure within the STP gates. With respect to changes in existing labour codes, a majority of the states have either promulgated a government order or notification permitting all establishments in the respective jurisdictions engaged in IT-enabled services (including call centres) to: work on national holidays; allow women to work through night shifts; and permit offices to function 24 hours a day, all through the year (Nasscom-g, 2005), although such practices have traditionally been banned through urban Shops and Establishment Acts (Confederation of Indian Industry, 2004).
For example, the 2003 IT and ITES Policy (Nasscom-h, 2005) of the state of Maharashtra (of which Mumbai, the commercial hub of the country, is the capital) and which accounts for 20 per cent of the country’s exports, aims to ‘create hassle-free and industry friendly, 24×7×365 working environment’ for the sector by amongst other things:
Relaxing working hours, work shifts and employment of women under Shops and Establishments Act,
Applying all relaxations under the Industrial Disputes Act and Contract Labour Act to all IT and ITES units in the state on par with Special Economic Zones,
Notifying IT & ITES units as continuous process units,
Issuing special passes to vehicles transporting women workers of IT & ITES units during night times,
Declaring IT & ITES units as public utility services and essential services (Nasscom-h, 2005).
Similarly, the state of Andhra Pradesh’s ‘AP Policy on Information Technology Enabled Services’ dated 29 January 2002 also commits to providing a supportive environment by amending the AP Shops and Establishments Act to allow ITES companies to:
Employ women and young persons (between the age group 18–21) during night shifts, subject to provision of adequate security and transport,
Have ‘flex-timing’ by asking an employee to work for more than eight hours a day, without exerting an additional financial burden on the companies, in terms of overtime payments, as long as the statutory requirement on the maximum weekly working hours of 48 hours is respected,
Operate 24 hours a day and 365 days in the year, and
Reduce the procedure involved in retrenching employees, if certain conditions are satisfied (Nasscom-i, 2005).
Currently, the IT/ITeS sector is devoid of the presence of trade unions. Existing unions appear to be unprepared to enter the new economy, but there is also a growing sense, as one manager put it ‘it’s not a question of if, but of when’ a trade union presence will develop. Considering the massive increase in employment in the ITeS industry and work environments characterised by round the clock work shifts, monotony, burnout and performance based employment, the question of whether trade unions will enter this new age industry raises heated discussion amongst politicians, trade unionists, industry analysts and employers. The employers’ view is that there is no need for an external entity to represent employee voice because the IT/ITeS sector needs more people than it can get due to its phenomenal growth rate. This fact is said to promote best practices in people management and according to Bhargava, the former CEO of Progeon, ‘there is more that is good here than it has ever been in any single economic sector of India’. Attrition rates in the industry, however, testify to alternative realities. More than likely, should the manager’s prognosis cited above come to pass it will be at individual worksites, generated by specific grievances, and will assume the form of enterprise unionism. In the meantime, internal employment relations are largely regulated through HR practices, which are described in the next section.
Source: Thite and Russell (2007: 75–82)
5.9 The future of employee relations
The area of employee relations has evolved, as it has always done, partly driven by business and management, as well as government, concerns. As long as there is a labour process, there will be employee relations and the need to understand its history and traditions and what drives those involved. Long-term predictions of the radical change of employee relations, with the demise of conflict and trade unions, have been unfounded. For example, trade unions and political parties, as in India, have formed close relationships that work well when the particular parties are in power. Political parties, when in government, support their trade union partners but when they are in opposition the favoured trade unions are used against the government – irrespective of the harm this might do to the interests of the trade union members, their employers and the country. As Asia creates more knowledge, and as employees are seen more as human capital rather than just factory ‘hands’, employee relations will evolve, but with an Asian character.
One of the persistent interests of employee relations, both in terms of a ‘cause’ and ‘cure’, is employee involvement – a flexible and heterogeneous term and concept that can cover a wide range of practices, each with radically different implications. This has become an even more ‘hot topic’, not least driven by practices, ideas and regulations from the US and Europe in Asian suppliers, as was well demonstrated by Litvin (2003) in describing consumer group pressure on Asian work practices.
5.10 Employee involvement
The importance of employee involvement to employee relations, and to HRM more generally, is often made. It is seen as trying to create a sense of belonging and commitment through information about the organisation and its environment. A key management task is to decide if, and how, to share information because important information may be used by employees, such as in negotiations to share with competitors, customers or regulators, among others. Yet, a lack of action by management itself actually amounts to a decision not to share information, demonstrating a lack of trust in their employees. It is primarily a management responsibility to create the conditions and establish the policies and practices to promote effective employee involvement and trust.
In parts of Asia there is a reluctance to share information as this is seen as reducing the power of the source of the information – the owners and managers. Subordinates are expected to provide information, usually positive information, to supervisors, but this is not a mutual exchange, so little reliable information will be passed back. Supervisors are unwilling to share power and authority and expect obedience and loyalty from staff. Staff on their part expect to be told what to do and do not wish to take responsibility for their bosses’ tasks, fearing that they would be forced to take the blame when things go wrong. Some Asians often refer to this as upward delegation of decisions.
There has been a whole range of reasons offered for the interest in employee involvement, some of which are shown in Table 5.1.
Table 5.1
Reasons for interest in employee involvement
| Factor | Aspects |
| Efficiency | Improve organisationally |
| Change | Make more acceptable |
| Commitment | Enhance |
| Learning | From employee knowledge and skills |
| Social | Increased aspirations, reduce alienation |
| Control | Redefine managerial authority |
It is this great diversity of reasons for the interest in employee involvement that partly gives rise to a heterogeneous concept, exacerbated by terms such as ‘involvement’ and ‘participation’ used interchangeably, despite the gaps in their implications, including differing levels, power sharing, and so on. Therefore, we need to make some broad distinctions from the start. With this in mind, we can usefully consider the concept of employee involvement within a framework, as demonstrated in Figures 5.5 and 5.6.
Figure 5.5 Employee involvement framework Source: Salamon (2000)
Figure 5.6 Dimensions of employee involvement Source: Bratton and Gold (1999)
These types of framework usefully and clearly indicate that there are variations in the area of employee involvement. This is in terms of several dimensions, which include the following.
These frameworks also usefully display the differences in form and type. As Salaman (2000: 374) put it:
It is the nature and quality of the process of interaction which determines the extent or depth to which employees (individually, in groups or through their representatives) are allowed and able to contribute to and influence organisational decisions (whether operational or strategic).
This may range from only informing by management through consultation to negotiation and finally co-determination (equal influence in both setting the agenda as well as deciding the outcome or organisational decision making).
Participation is primarily a philosophy, not a particular institutional form … Therefore, it can take place at any time and in any organisational framework so long as management is genuinely and unreservedly prepared to share responsibility for the decision- making process with employees and/or their representatives.
Nevertheless, to help understanding, some further details will be illustrative.
5.11 Forms of employee involvement
There is vast range of examples of employee involvement, which have some specific and common advantages and disadvantages.
5.11.1 Communication
Communication is at the basic level of employee involvement. It can be both one-way and two-way.
5.11.1.1 One-way communication
With one-way communication, information is given by one party to another. The HRM objective of one-way communication is to try to ensure that all HR know and understand what they and others in the organisation are doing and why. This is the most common means of communication throughout much of Asia. There is a huge variety of practices here; they are widespread and include notice boards, letters, staff newspapers and magazines, employee reports, in-company videos, performance appraisals and oral presentations. One of the more recently reported systems is ‘team briefing’.
Team briefing
This is a system of communication that is often operated by line management. It is based on leaders and their teams getting together in groups on a regular basis. Information is ‘cascaded’ down through organisational levels and management tiers through supervisors to the lowest levels of the organisation. Part of the team briefing normally contains ‘core’ information relating to corporate issues. This is supplemented by local news at each stage. Some Asian organisations – for example, in the Kuwait oil sector – use team briefings as a means of communication so that messages can be reported quickly, in a standard format and, hopefully, accurately.
Team briefing has its share of both benefits and problems. They include those shown in Table 5.2.
5.11.1.2 Two-way communication
Unlike simple information giving, two-way communication in HRM attempts to give subordinates some ‘voice’ and provide feedback to both parties. Again, there is a very wide variety of methods and practices here, which include the following.
‘Speak-Out/Up’ or feedback programmes
Here people can telephone or write (by email or letter), in confidence, to a company representative to raise concerns. The initiators are usually guaranteed a response within a specified period.
Open-door programmes
This type of programme enables employees to see management who are not their immediate supervisors. Examples are rare in Asia, except for those with influence or connections (‘guanxi in China, ‘wasta’ in the Arab lands, ‘giri’ or ‘con’ in Japan, ‘inmaek’ in South Korea, ‘orang delam’ in Malaysia, ‘quan he’ in Vietnam) which can be used to short-cut organisational hierarchies. In theory, bosses in Asia may operate an opendoor policy, but those who enter the open door know that they risk drawing attention to themselves and that they probably will upset their immediate supervisor. Mis-steps through the open door can be seriously career limiting, unless the employee has good connections.
‘Walking the floor’
Senior executives physically and visibly walk though the shopfloor and offices. This behaviour is to be seen and also to listen. In parts of Asia, the being seen is far more important than the listening, although this method is regularly used by Asian managers who wish to be seen as part of the organisation’s community and who value the opportunity to demonstrate a ‘common touch’. It is also used as a means of keeping middle management under pressure in case senior management discover that there are problems that have not been disclosed to them.
Sensing groups
In this system management meet periodically with small random samples of staff. This allows management not only to communicate company policies and goals to the groups, but also to hear employee concerns and suggestions. Trade unions and political or social networks are the more usual form of sensing groups in parts of Asia, but these groups often have agendas other than organisational success and may not necessarily represent the interests of employees.
Task forces
These groups, often of junior managers and employees, can be commissioned on various areas and concerns – for example, to review specific policies or processes or be asked to suggest improvements. Such practices are used with success in Japan, in particular.
Employee attitude surveys
These represent a more systematic means of feedback. This type of survey has spread in use and can be undertaken by specialists or in-house staff. At first sight this method seems more concerned with measuring commitment than involvement. In-house surveys especially are viewed with suspicion in some of Asia as it is doubted whether confidentiality and anonymity will be respected. However, the benefits of surveys are numerous so some Asian organisations favour this method of obtaining information from the workforce – especially as the expectation is that employees will not give negative opinions. The benefits of surveys include the following
Suggestion schemes
Suggestion schemes are often seen as being applicable only to large manufacturing firms and manual workers, but they are also to be found in the service sector and among white collar staff – for example, in banks, airlines and retailing. HR are invited to submit ideas to improve aspects of organisational performance for which they are often rewarded. The reward is usually an award (cash or benefit) of which there can be several types. These can include the following.
Encouragement – for effort in making suggestions even if they are not implemented
Valued – for leading to clearly quantified savings (fixed amount or percentage of savings)
Special – for savings not easily identified (for example, health and safety matters)
Suggestion schemes have their own benefits and problems, which can be seen in Table 5.3.
5.11.2 Task and work groups
Employee involvement can also occur at a different level and in a different form in the task and work group. These employee involvement occurrences have a long history, deriving from the well known ‘Human Relations’ experiments in the US in the 1920s. Ideas of job enlargement and enrichment developed from the 1960s, introducing elements of responsibility into tasks. The development in such matters was led by some Scandinavian organisations. Examples of such forms include the following.
Autonomous work groups
In 1972 Saab Scania’s factory abolished the classic, Fordist mass production, single assembly line moving at fixed rates past workers. In its place were six separate assembly areas and workers divided work amongst themselves without management direction. Similar experiments occurred at Volvo in its Kalmar and Uddevalla factories.
In Asia, subcontractors are used as autonomous work groups so that firms such as Toyota send specialist work to small firms with whom they have a long-term and close relationship, treating the firms as closely linked to the larger enterprise. Japanese firms are also keen on project-based teams working together with few formal distinctions between the team members, of different seniority levels, or their roles outside the team. However, the levels of employee autonomy, and hence involvement via this route, is debatable. Indeed, autonomous work groups are rare in parts of Asia.
Quality circles (QCs)
Typically these groups are small, with six to twelve members led by a supervisor or team leader in the area; they are ‘voluntary’, meeting regularly within paid work time (although meetings can be held during ‘leisure’ time). The QCs identify, select and analyse work-related problems, collect data, present findings and propose solutions intended for approval by management, which are then implemented. After 1945 came the development, in Japan, of this American idea - set out earlier by people such as Deming and Juran. By the late 1980s, Japan had over 10 million workers in QCs. The common requirements for such QCs include the following.
Management are convinced of the benefits, giving long-term commitment and resources
Involvement of middle managers
Facilitator for administration and development of ideas
There are several benefits and problems with QCs, as noted in Table 5.4. Total Quality Management (TQM) then emerged, partly as an alternative means of addressing quality issues. TQM is a more integrated approach to quality matters, with ‘harder’ objectives, which are work-related and performance-led, rather than concerned with employee involvement.
Table 5.4
Benefits of and problems with quality circles
| Benefits | Problems |
 Improve quality/reliability |
✕ Sustaining, have short life/high failure |
| Save costs |
✕ Time/expenses in running, training, disruption, etc. |
| Increase interest/ commitment in job |
✕ Challenge notions of authority, criticisms of management |
| Enhance supervisory authority/leadership skills |
✕ Disinterest - middle management allocated responsibility, but denied authority (own agenda; not obliged to follow priorities) |
Team working
Team working, in its present guise, has its origins in the UK in practices at organisations such as Japanese companies like Komatsu, Hitachi, Nissan, and especially Toyota. Since the 1990s this form of organising work has become more prevalent in other sectors.
Empowerment
Empowerment became fashionable from the 1980s, although it was linked to earlier movements such as the Quality of Working Life approach in the 1970s. In essence, empowerment is about providing the opportunities and structures (and, of course, the work culture) so that employees can contribute to the organisation. The onus is on management to ‘empower’ staff. This empowerment is individual and direct involvement in work. A range of benefits flow from this method of organising, including the need for less direct management and supervisory control, with greater employee autonomy, albeit within bounds set by management.
5.11.3 Financial
For some commentators, employees also obtain involvement through particular financial arrangements. This is not, in fact, a new idea (see Chapter 3 on employee rewards). Indeed, there are examples of such financial arrangements from the early nineteenth century in the West and in a few Asian companies, such as Tata in India. Nevertheless, the rise in popularity in the West has occurred since the early 1980s, encouraged by governments through favourable tax legislation, and has been followed by a modest application of the systems in Asian organisations undergoing privatisation, especially in South and South West Asia, and by ‘buying out’ the jobs of workers in SOEs in China. The types of financial participation include the following.
5.11.4 Success of employee involvement
Several important elements in the success of employee involvement have been identified, and can be seen in Table 5.5.
Table 5.5
Important elements in the success and failure of employee involvement
| Elements | Reasons/Characteristics |
| Management commitment – more than just initiate Support – throughout the management system Advance consideration and exposition of objectives Training of all involved Regular monitoring Problems and shortcomings typical |
Many schemes costly in time to be properly run Middle/lower-level managers pivotal to implementation Avoid confusion and conflict between schemes Commitment, ensure competence and regularly reviewed Measures set against specified objectives Should not be unexpected |
5.11.5 International variations in employee involvement
There are widespread variations globally in the meaning and practice of employee involvement (see earlier frameworks). This includes the ideas of industrial democracy, workers on the board, co-determination and works councils.
This is also the case across Asia. We provide an example of one form in South Korea in Text Box 5.12.
5.12 Conclusion
The area of employee relations remains as important, but as changeable, as ever. While the foci of the area have shifted – partly reflective of the practical concerns of business, management and governments – the ideas of a model of a system of actors who have different perspectives remains a useful aid and framework in the understanding of employee relations. The different participants may vary in their relative influence and power, but their interactions and perspectives remain crucial, not only to the functioning of an economy, but also to its competitiveness and the types of production which prosper.
The area of employee involvement is a diverse and elastic concept, seemingly allowing everyone to support it. Involvement also has a range of benefits for organisations and employees. Some of the key ideas and practices are not particularly new, although employee relations fashions do come and go, as witnessed by ideas of ‘industrial democracy’ in the 1970s versus ‘empowerment’ more recently. These ideas and practices vary throughout Asia, yet their various forms have radical differences in implications for management and businesses.
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