Management Strategies Faced In Industrial Relations Business

If one is to fully appreciate Salamon's statement it is necessary to understand the fundamental principles of industrial relations and be aware of relevant factors which have altered the context of the employment relationship, since the traditional 'master' and 'servant' relationship of the early and mid-nineteenth century. In examining and presenting the evidence which supports the above quoted conclusion, it is hoped that this paper will portray a logical and incisive representation of Salamon's beliefs in this area.

The situation surrounding the industrial relations process up until 1971 (and indeed for most of the 1970s, following the enactment of TULRA 1974) was very much a 'voluntarist' tradition, which enhanced the position surrounding the trade unions and workers, with respect to industrial action legalities. The government's restoration of trade union tort immunities in an attempt to contrast a corporatist relationship between parties, proved a futile method of precluding the "strike ridden winter of discontent" during 1978, and led to a transformation which could be considered a watershed. In 1979 Margaret Thatcher and the Conservative party came to power and introduced wide ranging measures to depoliticise industrial relations and weaken collective organisation and industrial action. One of the most notable features of industrial relations during the 1980s was the shift in power from the workforce to the employer, which has obviously influenced ensuing management strategies aimed at "maintaining management security within the organisation's decision making process."

Although the traditional 'master' and 'servant' employment relationship has long since gone (today's typical employer being a public or private corporate body and also an abstract, legal entity which uses 'managerial agents' to draw up employment contracts between the 'employer' and the 'employee'), the power distinction apparent in the traditional employment relationship is echoed in remaining 'common law duties', which offer only a "dependent and a subordinate" relationship on the part of the employee. Managers today are disparate from the 'owner', but popular management 'buy outs' often provide a sense of ownership for managers. Salamon believes that the shift from 'agency' principle to the "possession of enterprise principle" gives authority to management (since management believes and accepts that it has the "requisite knowledge and ability to direct the affairs of the organisation"), and has perhaps been influenced by the socio-economic background of more recent 'graduate' managers.

This change which Salamon refers to as 'managerialism' is illustrated by the growth of sophisticated organisations based upon the function specialisms such as marketing, research and development, and finance. Hierarchical structure within organisations also assist the development of manergerialism, and may result in what Fox describes as a 'low trust' relationship; managers at the lower end of the spectrum such as supervisors are excluded from management decision making, and as a consequence may seek "collective consciousness" to give them a sense of security. The ostracism of lower management members could prove detrimental to the long term effectiveness of the organisation, since industrial relations decisions frequently occur at operational levels and not just strategic levels.

In view of the common law duties for employees to 'obey' all reasonable and legitimate instructions of their employer, and therefore 'submit' to the reasonable 'authority' of the employer, it is understandable that an organisation's "sectional interest groups" (management on one hand and employees on the other) often possess divergent interests which may result in conflict. Harbison (1954) believes that industrial conflict is a natural outcome of work relations within capitalism and wrote about the industrial worker:

The industrial worker for the most part, works harder than he likes at tasks which are frequently arduous, usually monotonous, and sometimes dangerous. On the job he is nearly always the subject to direction of higher authority. His income is seldom sufficient to cover what he thinks his needs demand. The natural state of the industrial worker, therefore, is one of discontent."

Conflict can therefore be considered the "genesis of industrial relations" and as Barbash believes, "..the essence of industrial relations." However, for conflict to be justifiable and useful there needs to be a method of managing divisions between parties; as Barbash points out, there is a danger that conflict may become "abnormal, aberrant, dysfunctional or pathological" and result in violence, civil insubordination, or perhaps the abolition of management unions.

Traditionally, the most common method of resolving issues brought about by industrial conflict is collective bargaining, which enables employees to use collective power to counterbalance that of management. However, "the distinctive system of British Industrial Relations based on collective bargaining is no longer characteristic of the economy as a whole." Milward et al (1992) Collective bargaining has been described by Flanders as "the diplomatic use of coercive power; a pressure group activity; and collective agreements as compromise settlements of power conflicts." The process allows 'substantive' and 'procedural' employment agreements to be negotiated and agreed by workers and management. Kahn-Freund describes procedural agreements as those referring to the "institutions and methods designed to be used for the prevention or settlement of disputes" while the substantive agreements are concerned with conditions of employment such as wages, bonuses and hours.

The effectiveness of collective bargaining depends largely upon the ability of each party to accept compromise and not to expect the full achievement of their original aspirations. Although decision making is essentially a political process executed by top management, and being influenced by external environmental factors such as the government, new technology, the economy, and moral idealistic values, l strategic choices can be modified to accommodate trade unions. This helps to explain the first part of Salamon's definition of management strategies in industrial realtions; the strategies result from logical choice based upon alternatives available (possibly following negotiations with the union), and have been constrained by restrictive policies introduced by management to 'bargain' with the opposing party. The constraints may have derived from a number of areas.

Poole (1980) believes that management decisions in industrial relations depend upon the interaction between 'constraints and 'choices'. Economic and political pressures often set limitations and direct management choices towards a particular avenue. For example, management constraints within a free enterprise market would perhaps require the formulation of policies aimed at reducing costs yet maintaining output. It is likely that this would conflict with employee values, and may even hinder the creation of labour policies in favour of employees. Another example of an environmental constraint given by Poole is the "trend towards greater governmental concern for the management of the economy" which results in a more stringent control of wages and industrial power, and encourages co-operation between mangers and employees as in Fox's 'unitary' perspective (see later).

Anthony (1977) points to two kinds of constraints which limit the freedom of management:

Firstly, the self imposed policy constraint (or management philosophy, which can be likened to Poole's 'moral idealistic value' rationality ), an example of which is the company whose policy is to refuse to recognise or negotiate with any trade union. Idealistic values may also provide benefits for employees, as did the customary social responsibility executed by the Quaker companies in the 19th century. Wilson, a proponent of social responsibility believes that management in its decision making, should give consideration to the 'values', 'expectations' and 'interests' of society both within and outside the organisation.

Secondly, the policy which is imposed when circumstances surrounding the organisation cause severe limitations. For example, a concession to union pressure because of high costs incurred in resistance, perhaps contributed by the potential loss of business in a sellers' market and the threat of plant closure; this constraint has similarities with Poole's rationality derived from 'technocrat values' - an "algorithmic approach which satisfy the criterion of logical reasoning."

Also fundamental to industrial relations and therefore collective bargaining are the concepts of 'power' and 'authority'. It seems that where authority is present power will follow, and where there is power authority will follow. With respect to power, Hyman considers it "primary as a resource ... in the service of collective interests" and therefore the source of power must be within the industrial relationship. Five examples of sources of power have been provided by French and Raven (1959) and include: reward; coercion; legitimisation; referment; and expertise, which helps to explain why the balance of power is instrumental in creating what Magneau and Pruitt refer to as "reciprocal perception of power". The perception of the opposition's power, in the monds of each party strongly influences the level and outcome of negotiations; without a reciprocal perception of power, it is more difficult to exert actual power.

With respect to authority, Fox (1971) offers an interesting theory that, because authority rests on the 'legitimisation of power', it must srem from the process of socialisation which teaches us from an early age to: "obey parents, teachers, policemen" and the like, and also to accept subordination. Hence we have the creation of "managerial perrogative", and the employee "legitimises the employer in directing and controlling his actions" Torrington and Hall believe that "the individuals who become employees of the organisation surrender a segment of their personal anatomy to become relatively weaker, making the organisation inordinately stronger." Also, Salamon identified that management tends to perceive itself as having "privileged access to power through its control of information and resources within the organisation and its linkage to the 'establishment' within society." Another way to achieve the most effective organisational operation is the "management by agreement" approach. This is based on the principle that management can only effectively manage operations by sharing power, authority and decision making through a joint regulatory process.

In this era of "macho management" there are probably few instances where managers need to force their authority upon employees, since the subordinates see no point in challenging the values upon which power and authority rests. It is reasonable to believe therefore, that employers are in a far superior position with respect to power and authority than employees, but this has not always been the case. Indeed, during the 1960s there was a high incidence of disputes and strikes and unions were perceived to be very strong. Following managements' reactive and defensive response to trade unions and collective bargaining, the Donovan Commission recommended policies and procedures aimed at improving industrial relations. This was also intended to reform the highly fragmented, ill-organised, industry-wide system that had resulted from employers neglecting their own systems, and joining employers' organisations. Subsequently in 1972, the Department of Employment published a code of practice which encouraged senior managers to give higher priority to this area. The overriding need for management to gain control resulted in the formalisation of organisational level industrial relations, and the authority and status of both management and unions were legitimised. 'Leap-frogging' wage claims were controlled by wage reforms and salary structures, and there was a greater emphasis upon communication and joint consultation in order to restrict collective bargaining.

The commission for Industrial Relations argues that an industrial relations policy should be a formal written document, and as such..

"promotes consistency in management and enables all employees and their representatives to know where they stand in relation to the company's intentions and objectives" and "encourages the orderly and equitable conduct of industrial relations by enabling management to plan ahead, to anticipate events and to secure and retain an initiative in changing situations."

However, it has been suggested by Salamon that a written policy may reduce managements' flexibility in decision making, which is perhaps why Marsh found in his 1982 survey of manufacturing companies, very few documents amongst a variety of policies and philosophies. Moreover, of 69 policy statements quoted by Marsh, only 5 referred to trade unions; the emphasis of most organisational philosophies appeared to centre in the direct relationship between management and its employees. It is also argued by Anthony that the popularity of the written policy stems from the idea of management exercising a kind of "governmental, open and democratic function in society" and there are often more circumstances where written policies are more useful to unions than they are to management.

Despite the introduction of codes of practice and the apparent importance of industrial relations, Winkler (1974) reported that "directors literally do not want to know about industrial relations" and more recently, Farnham and Pimlott point to those managers who view power sharing with trade unions as "threatening their decision making authority and organisational legitimacy." Moreover, Anthony (9177) suggests that one of the reasons why companies have installed an industrial relations policy is merely to avoid an investigation by a government agency, since the CIR have been suspicious about companies without policies. In view of this evidence it is surprising that many managers did not exercise their right to end collective bargaining during the Conservative government's attempt to introduce the derecognition of unions in the 1980s! Perhaps this was due to the 'safe' nature of collective bargaining; it could be considered a management strategy which may control and restrict the areas for negotiation, and in consequence is unlikely to undermine the system.

Farnham and Pimlott (1995) believe that industrial relations has had a low priority in the overall corporate strategy of many organisations due to a number of reasons: often there is inadequate support and commitment from senior managers, as industrial relations is merely a small part of the overall management function and lacks specialist expertise; managers are sometimes so involved with preserving their traditional basic rights, that no consideration is given to the development of new areas of joint regulation with trade unions; the reluctance of some managers to become involved with industrial relations may derive from the practice of concluding industry-wide and national collective agreements. It seems that the old formal system of industrial relations has diminished, but Sisson (1984) feels that no suitable replacement model exists.

Beaumont has identified how political and economic factors particularly during the 1980s created the need for 'flexibility' within industrial relations. He also points to suggestions that changes in work practices and productivity are influenced by changes in management styles. With respect to management styles, Farnham and Pimlott have remarked upon the more structured and strategic approach taken by employers today, which they suggest may be a response to the; extension of employment legislation; influence from the Donovan Commission; public policy in the 1970s and also more democratic trade unions. Along with the transformation of industrial relations practices, there has emerged several new terms relating to this area of management; these include 'employee relations' and 'human resource management'. Human resource management is essentially based on the 'unitary' perspective (as expressed in Fox 1966) and therefore the shift from 'personnel management' to HRM could be considered an example of a management style aimed at maintaining managerial security within the organisations decision making process. Particularly useful considering the major problem with 'personnel management'; Farnham and Pimlott identified the problem of the split between line management and specialist staff which incorporates both a control and a welfare role.

However, Beaumont (1990) argues that the validity and value of different management styles has not yet been established, and remarks that findings by Gower and Legge (which suggest a relationship between the image of employees portrayed by company reports, and their industrial relations style of management), were based on limited data. It is also useful to note Monk's findings following the 1990 Workshop Industrial Relations Survey. Monk commented that relatively few employers were implementing HRM in a systematic way; although he went on to say that a 'pick and mix' approach could be an effective way of meeting the diverse needs of different organisations. Although HRM is more likely to be found in organisations with unions, Story (1993) observed that many employers in this category had not successfully integrated their HR and industrial relations strategies. Fox (1966) expressed two basic views with respect to the relationship between management and the unions: the 'unitary' perspective and the 'pluralist' perspective. The 'unitary' manager's role can be considered one of direction and control, where management is the sole source of authority and employees are expected to be loyal to the company, working jointly towards a common objective. Conversely, pluralism involves the management of various related but separate interests, with an acceptance of trade unions and rivalry. These perspectives were developed further by Purcell and Sisson to help accommodate the diversity of organisations. This introduced a new alternative distinction between 'individualism' and 'collectivism', and encompassed a number of 'types' including: traditionalists; sophisticated paternalists; sophisticated moderns; and standard moderns. The management style present in an organisation will depend upon the relative strength of management within the employment relationship. An example of this is the emergence of 'macho' management in the 1980s following the depoliticisation of trade unions.

Article name: Management Strategies Faced In Industrial Relations Business essay, research paper, dissertation