Professional Documents
Culture Documents
WHAT IS EMPLOYEE
RELATIONS?
Introduction
This Change Agenda summarises the changing nature The work HR professionals carry out today in connection
of employee relations work in UK organisations. It is with employee engagement and the employment
based on a series of interviews and discussions with HR relationship includes:
executives and leading UK organisations, and on recent
research by leading academics in the field. • managing the employment contract eg its legal
basis, pay and conditions, discipline, absence, health
The aim of the report is to: and safety
• ensuring compliance with employment law eg
• profile the decline in formal industrial relations work redundancies, unfair dismissal, minimum wage,
in organisations working time, discrimination
• describe some of the current work that HR • direct communication through eg team briefings
professionals carry out under the heading of and employee surveys
employee relations • promoting retention, involvement and engagement
• stimulate debate about some key issues for HR through eg ‘partnership’, teamworking and work–
professionals. life balance policies
• the collective processes of negotiation and
Union membership and traditional union-related consultation, with and without trade unions.
personnel management work has declined enormously
in the last 30 years, with no prospect of a sustained The underlying theme of this report is that managing
re-emergence, though the reregulation of employment the employment relationship remains central to good
and the new Employee Information and Consultation HR practice. The emphasis of employee relations
Regulations are pushing employee relations back up the continues to shift from institutions to relationships,
management agenda. but employee relations skills and competencies are still
critical to achieving performance benefits. The focus
However, interest in the employment relationship and now needs to be on gaining and retaining employee
work for HR professionals has been reinvigorated by: commitment and engagement.
CIPD research has underlined the business significance of no claim can be made that the findings are necessarily
good employee relations: representative of UK workplaces generally, some common
themes emerge. The questions were straightforwardly
• Employee attitudes and commitment are strongly designed to explore the following issues:
associated with business performance, and managers
see employee voice as contributing to performance via • How is employee relations organised?
better employee contributions and productivity gains. • Why do employers need employee relations?
• The informal climate of involvement and consultation • What do employee relations people need to know?
appears to be more strongly associated with employee • How is employee relations changing?
satisfaction and commitment than the collective • How does employee relations impact on performance?
machinery for negotiation and consultation. • Is employee relations in practice more reactive or
• Mechanisms in use for employee voice include two-way proactive?
communications, project teams and joint consultation, • Should an employee relations practitioner be an
but there is growing interest in electronic media, ‘employee champion’?
attitude surveys and partnership schemes.
• The major constraints on employee voice are lack of How is employee relations organised?
skills and enthusiasm by managers and employees. None of the senior HR managers interviewed had any
• The psychological contract model, validated by problem agreeing that they were interested in and
successive employee attitude surveys, suggests that concerned about ‘employee relations’. Interestingly,
HR practices strongly affect the way people feel about however, few said that they used the term with
their work. Employees’ trust in the organisation, their colleagues. And even large commercial organisations had
sense of being fairly treated and the extent to which no employee relations function as such, but identified
they believe their employer has delivered on the implicit a number of specialist posts such as ‘partnership co-
deal between them, affects their attitudes towards job ordinator’ or ‘employee communications’ as having
satisfaction, commitment, work–life balance and the important employee relations responsibilities. Several
state of employee relations. respondents pointed out that line managers had key
responsibilities in this area.
However, relatively little has been written about the
everyday management processes involved in managing Many people had difficulty explaining clearly how
the contemporary relationship. Therefore, over the employee relations differed in practice from the whole
last couple of years, the CIPD has undertaken a series field of HR: the two can hardly be entirely synonymous
of interviews with senior HR professionals that were but the boundaries are fluid and, particularly in smaller
designed to establish what significance the term organisations, employee relations is essentially seen as a
‘employee relations’ has for them and facet of/perspective within the total HR function. Some
their organisations. claimed that employee relations has a more strategic role
than other parts of the HR function and that ‘achieving
What does employee relations mean for employers? strategy through people’ distinguishes it from routine
Face-to-face interviews were conducted with a small personnel work. So, in organisational terms, employee
sample of HR/employee relations managers in finance, relations often suffers from a degree of ‘invisibility’ in
manufacturing, and local government. The result is a that its boundaries are unclear and no single function or
snapshot of current attitudes and practice. Although individual has specific responsibility for managing it.
The world of industrial relations in the decades The main factors underlying the decline are to be
immediately following the end of the Second World found in product markets and employee attitudes.
War was one of widespread union membership, Global competitive pressures mean that industrial
industry-level agreements on pay and conditions, action can destroy jobs. This fact has not been lost on
the ‘closed shop’, industrial action, and inflationary UK employees. About one in every two have never
pay settlements. Employers struggled to assert their belonged to a trade union (down from about one in
authority and in many sectors collective bargaining four 20 years ago). Younger people are particularly
was accepted as a form of ‘joint regulation’ that gave unlikely to belong to trade unions, many saying that
trade unions a say in many key management decisions. they don’t see the point. Employers themselves have
That picture of the employment relationship is almost generally adopted a pragmatic attitude to trade unions,
completely unrecognisable today. with no large-scale derecognition and little or none of
the aggressive anti-union activities adopted by some
The change can be measured on a number of different employers in the United States.
dimensions. Critical among these is union membership.
From a peak of some 12 million plus, union membership What has happened to collective bargaining?
has fallen to around 7 million today. The number of By 1950, when trade unions had significantly enhanced
independent unions has also contracted dramatically, their status by playing a constructive war-time role,
with about three-quarters of union members currently three-quarters of the workforce were covered either
concentrated in 11 trade unions, each of which by national agreements or by statutory wages councils
has a quarter of a million or more employees. With which determined pay rates, working hours and
the projected merger of three of the largest unions other conditions. But this apparently stable system
– AMICUS, TGWU and GMB – the consolidation of was steadily undermined by workplace bargaining
a majority of union members into a small number of in the 1960s, followed in the 1970s by an upsurge
‘super unions’ is coming increasingly closer. of strike action. This was the heyday for local union
activists who engaged in bargaining over the ‘micro-
What accounts for the decline in union management’ of work. Management efforts to reassert
membership? control through so-called ‘productivity agreements’
One frequently quoted explanation for the continued had at this stage only limited success. A significant
fall in union membership is the decline in the size proportion of the work of many personnel departments
of heavy industries such as coalmining, shipbuilding was engagement in union and industrial relations work.
Dell is a US company that has grown rapidly since its formation 20 years ago and currently ranks
number three on Fortune’s Global Most Admired Companies list. It seeks to deliver value to customers
through its direct business model, by focusing on the customer experience and taking out cost from the
production process.
The company is data-driven. Managers report on the achievement of targets on a daily basis. Its employee
relations climate is strongly influenced by its aspiration to be a ‘great company and a great place to work’
through the adoption of a ‘winning culture’.
The focus is on the team and on individual contributions to the team. People/line managers are expected
to interact with individuals, and their performance in this area is closely monitored. Both people managers
and individual contributors are measured on the way in which they deal with people as well as on their
technical proficiency. There’s a consistent emphasis on how people do their job, not just what they do,
including, for example, support for colleagues and behaving ethically.
The company makes a conscious effort to recruit people who will have a good ‘fit’ with its values
– people who are open, direct and who focus on getting the job done rather than engaging in office
politics. The company runs a leadership programme each year, which in 2005 is focusing on personal
development planning.
Employee engagement is driven by the relationship between individuals and their manager. The
expectations of people managers are clearly defined:
• Set a performance plan.
• Work in each team on individual development plans.
• Undertake mid-year review.
• Undertake end-year review.
• Undertake monthly review with each individual (30 minutes to 1 hour)
• Give feedback to improve performance.
Dell measures people managers’ compliance with their performance management targets, tracking what
has been done at each stage. In addition, senior managers are expected to take regular opportunities to
engage with more junior staff, for example, at ‘brown bag’ lunches with different groups, or while visiting
operations in other countries, to help embed a common culture.
Other methods of encouraging dialogue include quarterly results meetings across the business at which
senior managers take questions. ‘Tell Dell’ surveys every six months cover core areas suggested by
statements such as ‘Management is doing a good job positioning the company to win in the marketplace,’
‘My manager is effective at managing people,’ ’I receive ongoing feedback that helps me to improve my
performance,’ ‘My manager sets a good example of ethical business behaviour,’ ‘I would recommend Dell
as a great place to work’ etc. The surveys provide a broad measure of employee engagement.
The data is analysed to identify trends. Managers are then tasked with sharing their results with their
teams and developing team action plans to address issues and drive improvements.
The company’s approach to employee relations is based on engaging with its employees. It does this by
a combination of methods: collective bargaining, consultation with elected employee representatives and
direct engagement with individuals (see figure 1). Engagement is regarded as being critical to the success
of the company, which is developing a balanced scorecard containing different measures of engagement.
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ITV uses a wide range of direct communication methods to engage with individuals. ITV’s intranet, known
as the Watercooler, provides a daily online update on news affecting ITV and there’s a weekly Watercooler
for employees who are not online. Other methods of communication include the 60-Second Update –
produced monthly by central communications and setting out what’s going on in the business – individual
development reviews, briefing meetings, workshops and using individual relationships with line managers.
The effectiveness of the process is monitored through employee opinion surveys.
The company also engages in collective consultations through elected representatives because unions
represent only 15 per cent of employees and the employer wants feedback from the whole workforce. ITV
needs to consult employees frequently because of the scale of change within the organisation. It has 15
communication/consultation groups centred on different businesses/locations.
ITV uses collective bargaining as a means of securing employee agreement on new working practices. It
believes that collective relationships deliver significant change management benefits to the company and
help to reassure employees that their interests are being respected. However, they rarely deliver engagement,
which is built on the role of line managers, HR policies and effective employee communications.
The distinction between negotiation and consultation can be quite subtle. In practice, the company
uses a similar approach in dealing with recognised unions (collective bargaining) and elected employee
representatives (consultation): management sets out its proposals, it takes account of the response and it
decides what action to take.
Language is important. It’s simply impolite to say, ‘We’re not here to negotiate.’ Management’s line is,
‘We’ll listen to everybody.’ Negotiations can lead to industrial action if they break down, but this is less
likely with the process of consultation. However, the critical issue is the same: are employees willing to
support what you’re proposing?
The company has a well-established collective bargaining agreement with ASLEF, the RMT, TSSA and
AMICUS, which operates through the South-West Trains Company Council. This agreement gives the
unions negotiating rights on a range of issues, including pay and terms and conditions of employment.
They are also consulted on issues relating to performance and attendance, changes in working practices,
and redundancy. The Company Council is supported by a number of smaller groups.
South-West Trains needs to ensure that it can involve and engage all staff, not just its union members. A
number of employees are not represented by a union and have a limited formal voice in the company. In
addition, the firm’s ‘Tell Us’ employee survey shows that a percentage of staff don’t feel they’re consulted
about major decisions. These factors, combined with the approach of the new Employee Information
and Consultation Regulations requiring that all staff are included in consultation arrangements, led the
company to review its existing arrangements.
The company would prefer the current collective-bargaining machinery to be adapted to allow non-union
representatives to be informed and consulted alongside union representatives. However, other options may
be possible, including establishing employee forums that would be open to all staff and would operate in
parallel to the Company Council.
Although it has a very good working relationship with all the unions, the company has moved away
from relying solely on collective machinery to inform and consult employees. It takes responsibility for
communicating with all employees and has improved its direct methods of communication. It holds ad hoc
forums on specific issues to generate feedback from employees. Staff surveys have shown that employees
want face-to-face communication, where possible through their line manager. ‘Time with your manager’
sessions have been introduced for operational staff to ensure that individuals have regular conversations
with their line manager.
HR seeks to get across the message to line managers that negotiating skills are basically communication
skills, and that authentic conversations are needed to establish trust-based relationships with employees.
‘Partnership’ in the company is seen as being essentially between employer and employees, while the
relationship with the trade unions is a professional one. In addition to regular team briefings by line
managers, the company is increasingly using email and the company intranet to communicate with
employees.
organisational values and seeing that they are reflected the philosophy of HR management. The Government
in organisational processes and behaviour. has encouraged the adoption of alternative dispute
resolution through the courts system, and the expanding
Managing workplace conflict volume of tribunal cases has helped to raise its profile in
Although workplace conflict is no longer reflected in the employment field.
high levels of industrial action, the ability to manage
conflict remains a key issue for many organisations. There is some evidence of increased interest by
Mediation as a method or technique of resolving employers, both in training managers in dispute
workplace issues represents an important shift from avoidance and resolution and in using external
the traditional industrial relations framework, with its mediation services where necessary, though it is larger
emphasis on formal discipline and grievance procedures, organisations, particularly in the public sector, that have
towards more of a ‘win–win’ approach consistent with been most interested in developing in-house mediation
‘And yet, the academic field of industrial relations is at a cross roads forty years removed from its golden
age ... This is partly an issue of nomenclature. Up to the golden age, the label “industrial relations” clearly
included questions of labour (markets, law and unions), and today’s human resource management ... Some
still use this broad definition, but many more use a much narrower definition that equates industrial relations
with labour unions, collective bargaining, and perhaps labour markets. For some, industrial relations is a part
of human resource management; for others, they are distinct entities ... The field of industrial relations has
moved from the stability of the golden age to the current uncertainty, conflict, and turbulence of what can
be labelled the “late middle ages of industrial relations”.’
Some initial conclusions from this analysis are worth usage as much as institutional preference and most
spelling out: managers will continue to refer to the ‘workplace’
or ‘employment relationship’. ‘Commitment’ and
• To a considerable extent, it is only in the public ‘engagement’ are becoming vital requirements,
sector that trade unions retain a measure of their underpinning high performance as they do, and
former strength and influence in the workplace. emerging from a positive employment relationship.
This is partly through the existence of institutions • The traditional academic models of industrial
of collective consultation, reinforced by continued relations have only limited relevance to what
reliance in many cases on industry-level bargaining managers do today. Employers are in charge and
and the public policy emphasis on ‘partnership’. But the role of ‘joint control’ and ‘rule-making’ by
it’s also due to the absence of commercial pressures employers and trade unions has been substantially
and to the level of influence Government continues replaced by employment regulation and
to exercise, both directly and indirectly, across the organisational values.
public sector. The Government’s ability to secure HR management has largely displaced industrial
the passage of its legislative programme requires it relations as an organising framework both
to be sensitive to trade union aspirations. This can for managers and academics. HR people have
be seen in the extent to which the Government played an important role in implementing direct
continues to consult the unions on a range of communication mechanisms. The concept of the
industrial and social issues. Arguably, trade unions ‘collective’ relationship, with its own distinctive
now exert more influence by political than industrial means of communication, is increasingly
means. unrepresentative of most workplaces, where
• Union influence in the private sector, on the other managers use a wide range of methods of
hand, continues to decline. The main areas of the communicating with individual employees, with
private sector where industrial disputes are still specific groups and with the workforce as a whole.
experienced from time to time – for example, public • Employee relations can nevertheless point to an
transport – are those where there’s a clear public underlying philosophy and attitudes and skills
or political interest and/or the Government is seen that are still needed by HR practitioners. It’s worth
as the ultimate ‘banker’. Trade unions may also examining what industrial relations practitioners
enjoy a somewhat stronger position in organisations have contributed to managing organisations that
that depend on public sector contracts, particularly is still relevant today. The current ‘business partner’
where the Transfer of Undertakings (TUPE) model is helpful in identifying an ‘added value’
Regulations apply (or are applied by agreement). framework within which HR practitioners need to
• ‘Employee relations’ as a term remains ambiguous, operate, but an unreflecting business focus may
with no clear boundaries. Few organisations outside lead to a neglect of the softer skills, which are
the public sector now have employee relations essential to managing the employment relationship,
departments, and most HR people don’t use the and of employee interests and influence. Employers
term on an everyday basis. It’s not calculated to help also need HR managers with a positive, ‘can do’
managers focus on what they need to know and do attitude who will resist the temptation to adopt
to increase performance – the language has echoes a defensive or compliance-led HR culture. If
of a historical era that offers few insights into ‘employee champion’ is not attractive as describing
contemporary practice. Language is determined by an essential HR role, there’s still a job to be done
Engagement is an idea whose time has come. In one being familiar with a wide range of techniques and
sense, it offers managers a framework for monitoring skills, including mediation and communications. But,
a range of indicators – including employee attitudes ultimately, it may also mean asserting more strongly the
and behaviours – of the state of the employment employee interest and agenda. This may not fit well
relationship. But, beyond that, it represents an with a management culture still based on ‘command
aspiration that employees should understand, identify and control’: it’s a genuinely transformational message.
with and commit themselves to the objectives of the But without some significant progress in this direction,
organisation they work for. What does this mean for both high-performance working and strategic business
employee relations specialists? It means being more partnering are unlikely to succeed.
strategic and seeing the ‘bigger picture’. It means
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We produce many resources on employee relations issues including guides, books, practical tools,
surveys and research reports. We also organise a number of conferences, events and training
courses. To find out more please visit www.cipd.co.uk
January 2005
Issued: November Reference:
2005 3591
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