STRATEGIC

HUMAN CAPITAL
MANAGEMENT
▪ Human Resource Management, Dressler,
G., Pearson Education.
▪ Fundamentals of Human Resource
Management, Noe, R.A., Hollenbeck, J.R.,
Gerhart, B., & Wright, P.M., McGraw Hill
Education.
▪ Strategic Human Resource Management,
Armstrong, M., Kogan Page.
 10
EMPLOYMENT
RELATIONSHIPS
STRATEGY
 Learning Objectives (LO)
▪ Understand the concept of employment relationships strategy.
▪ Describe the dimensions of the employment relationship.
▪ A strategy for creating a constructive and positive employment relations
climate.
▪ A strategy for achieving mutual gains and building trust.
▪ Approaches to employment relations strategy and the concerns of
employment relations strategy.
▪ Describe the partnership agreement strategy and employee voice strategy.
▪ Explain the trade union recognition strategy.
▪ Explain the employee wellbeing strategy.
 INTRODUCTION

▪ Employment relationships strategy defines the intentions of the

organization about what needs to be done and what needs to be changed
in the ways in which the organization handles relationships with
employees and their trade unions, if any.
▪ This is an area of people management where a strategic approach is
particularly appropriate. Organizations need to have a clear idea of the
route they want to follow in developing a cooperative and productive
employment relations climate.
▪ The foundation for the strategy is provided by the employment
relationship, which describes how employers and employees work
together and relate to one another.
 Dimensions of the Employment Relationship
▪ The dynamic nature of the employment
relationship increases the difficulty of developing a
strategy to manage it.
▪ The problem is compounded by the influence of a
multiplicity of factors – the culture of the
organization, the prevailing management style, the
values (espoused and practised) of top
management, the existence or non-existence of a
climate of trust, day-to-day interactions between
employees and line managers, and the HR policies
and practices of the business.
▪ Strategies for managing the employment
relationship will therefore focus on establishing
overall intentions about how a constructive and
cooperative employment relations climate can be
developed and what approaches are adopted to
achieving mutuality and trust.
 A strategy for creating a constructive and positive
employment relations climate
▪ The employment relations climate of an organization consists of the perceptions
of management, employees and their representatives about the ways in which
employment relations are conducted and how the various parties.
▪ An employment relations climate may be created by the management style
adopted by management or by the behaviour of the trade unions or employee
representatives or by the two interacting with one another.
▪ It can be good, bad or indifferent according to perceptions about the extent to
which:
o management and employees trust one another;
o management treats employees fairly and with consideration;
o management is open about its actions and intentions – employment relations
policies and procedures are transparent;
o harmonious relationships are generally maintained on a day-to-day basis;
 A strategy for creating a constructive and positive
employment relations climate
▪ A strategy for improving the climate may involve developing fair
employment relations policies and procedures and making plans to
implement them consistently.
▪ Line managers and team leaders, who are largely responsible for the day-
to-day conduct of employment relations, need to be educated and trained
on the approaches they should adopt.
▪ Transparency can be achieved by communicating policies to employees,
and commitment increased by involvement and participation processes.
▪ Importantly, the organization can address its obligations to the
employees as stakeholders and formulate strategies for mutual gains and
building trust.
 A strategy for achieving mutual gains
Boxall (2013: 5) set out three conditions under
which the quality of employment relationships
may facilitate the achievement of mutual gains:
a) capability match – fit between employer’s
need for a competent workforce and
employees’ need for a conducive work
environment;
b) commitment match – fit between employer’s
need for employees’ commitment and
employees’ need for job security and fair
treatment from the employer; and
c) contribution match – the extent to which the
employer and employees perceive that their
respective needs are being met.
 A strategy for building trust
▪ Trust is a firm belief that a person may be relied on. A
climate of trust is an essential ingredient in a positive
employment relationship.
▪ It has been suggested by Herriot et al (1988) that trust
should be regarded as social capital – the fund of goodwill
in any social group that enables people within it to
collaborate with one another.
▪ A strategy for building trust must focus on how it can be
created and maintained by managerial behaviour and by
the development of better mutual understanding of
expectations – employers of employees, and employees of
employers.
▪ The sort of behaviour by managers that should be fostered
by the strategy is being honest with people, keeping their
word (delivering the deal) and practising what they preach.
 Approaches to employment relations strategy
There are four approaches to employment relations strategy:
▪ Adversarial: the organization decides what it wants to do and employees
are expected to fit in. Employees only exercise power by refusing to
cooperate.
▪ Traditional: a good day-to-day working relationship, but management
proposes and the workforce reacts through its elected representatives.
▪ Partnership: the organization involves employees in the drawing up and
execution of the organization’s policies, but retains the right to manage.
▪ Power sharing: employees are involved in both day-to-day and strategic
decision making.
Adversarial approaches are much less common today in most organizations. The
traditional approach is still the most typical, but more interest is being
expressed in partnership as discussed later in this chapter. Power sharing is rare.
 The concerns of employment relations strategy
Overall, employment relations strategy is concerned with building stable and
cooperative relationships with employees that minimize conflict. More
specifically the strategy covers matters such as:
▪ the achievement of increased levels of commitment through involvement
or participation – giving employees a voice;
▪ developing a ‘partnership’ with trade unions, recognizing that employees
are stakeholders and that it is to the advantage of both parties to work
together – this could be described as a unitary strategy, the aim of which is
to increase mutual commitment;
▪ changing forms of recognition, including single union recognition, or
derecognition;
▪ changes in the form and content of procedural agreements which define
the rules that regulate relationships between management;
▪ new bargaining structures, including decentralization or single-table
bargaining.
 Partnership agreement strategy
▪ A partnership agreement strategy aims to get management and a trade
union to collaborate to their mutual advantage and to achieve a climate of
more cooperative and therefore less adversarial industrial relations.
▪ Management may offer job security linked to productivity and the union
may agree to more flexible working.
▪ The perceived benefits of partnership agreements are that management
and unions will work together in a spirit of cooperation and mutuality,
which is clearly preferable to an adversarial relationship.
▪ Provision is made for change to be introduced through discussion and
agreement rather than by coercion or power.
 Employee voice strategy
▪ The term ‘employee voice’ refers to the say employees have in matters of
concern to them in their organization.
▪ It describes a forum of two-way dialogue that allows employees to
influence events at work and includes the processes of involvement,
participation, upward problem solving and upward communication.
▪ An employee voice strategy will indicate what voice arrangements are to
be made, if any.
▪ The voice strategy appropriate for an organization depends upon the
values and attitudes of management and, if they exist, trade unions, and
the current climate of employee relations.
▪ Strategic planning should be based on a review of the existing forms of
voice, which would include discussions with stakeholders (line managers,
employees and trade union representatives) on the effectiveness of existing
arrangements and any improvements required.
 Trade union recognition strategy
An organization deciding whether or not to recognize or derecognize a union
should take some or all of the following factors into account:
▪ the perceived value or lack of value of having a process for regulating
collective bargaining;
▪ if there is an existing union, the extent to which management has freedom to
manage; for example to change working arrangements and introduce flexible
working or multiskilling;
▪ the history of relationships with the existing union;
▪ the proportion of employees who are union members and the degree to which
they believe they need the protection their union provides;
▪ any preferences as to a particular union, because of its reputation or the extent
to which it is believed a satisfactory relationship can be maintained;
▪ if derecognition is contemplated, the extent to which the perceived advantages
of not having a union outweigh the disadvantages of upsetting the status quo.
 Employee Wellbeing Strategy
▪ Employee wellbeing has been defined by Warr (1987) as ‘the overall
quality of an individual’s subjective experience and functioning at work’.
▪ The wellbeing of employees depends on the quality of working life
provided by their employers – the work environment and the feelings of
satisfaction and happiness arising from the work itself.
▪ The moral case for caring about wellbeing is strong but there is also a
strong business case.
▪ The purpose of an employee wellbeing strategy is to provide a framework
for the introduction of policies and practices designed to increase the level
of wellbeing among the employees of an organization. The strategy should
be evidence based.
▪ Factors affecting wellbeing: the work environment; job design and
demands; relationships with line managers; relationships with colleagues;
financial wellbeing; stress.