Industrial relations theoretical perspectives

October 12, 2011

Introduction
The employment relationship is a key aspect of managing human resources because it brings
together the rights, power, legitimacy and obligations that both employers and employees seek
from each other. The traditional view of industrial relations was to associate it with the rules and
procedures relating to employment. Under this period, trade unions were seen as protecting the
interests of their members, whom they negotiated through collective bargaining to gain improved
pay and conditions from employers.
This rather narrow and somewhat outdated view of the employment relationship fails to take
account of the informal social relations that are now acknowledged as influencing the effectiveness
of how people work within the organizations.
Moreover, it fails to account for the role of the individual in employment relation. For this reason,
the term employee relations is now more commonly used, and it takes account of the motives,
ideologies and perspectives of both the organization and its employees. Therefore, the effective
management of employee relations is the prerequisite of positive psychological contracts and
ensuring that employees feel involved in decision-making processes.
Unitarism perspective
The Unitarian perspective sees the business organization as a team integrated by shared values and
interest, with senior management as the main basis of authority and center of loyalty. According
to Nick (2010), unitarism represents the viewpoint that organizations are families or teams where
management and workers share common objectives and in which conflict or dissent is deviant
behavior. While Farnham and Pimlott (1995), view unitarism as that of workplace harmony arising
from the fact that employees and employers are united in the achievement of common goals.
Organizations are seen as the natural unit of consideration within which objectives are aligned.
Hence, organizations can be related to a family where, regardless of the different branches and
functions that might exist, the family is of central and paramount concern for all members.
According to Kelly (1998), conflict is something that signals a major breakdown in the normal and
desirable state of affairs. This perspective therefore, suggests that conflict should be avoided if
possible and eliminated if it arises.
This perspective according to John & Fellenz (2010), views conflict as emanating from members
classed as deviant which should be dealt with severely as they endanger the overall harmony of
the group. Because everyone supposedly has the same interests, managers with a unitary view
expect employees to trust them to make correct decision, therefore, conflict should not arise
between what is best for the company and what is best for employees.
Because of this integrative view of the workplace, management’s right to manage and make
decisions is seen as rational, legitimate and acceptable to all (Salamon, 1987). Management
decides the way work is organized and employees are expected to carry out the work as directed.

Weakness of unitarism
(1) This theory does not realize that there are power inequalities between employers and employees
which will create different kinds of conflicts (Kessler & Purcell, 2003).
(2) Conflict is not seen as a force that reflects inequalities and which can be used as opportunities
to regain work harmony rather conflict is negatively treated (Dzimbiri, 2008).
(3) Unitarism is normative and lacks description of how common interests can be identified and
shared across organizations (Ackers & payne, 1998).
(4) It emerges in the context of the pre-industrial society and fails to comprehend the impact of
technological, organizational and other changes characteristic of contemporary society (Teicher,
Holland & Gough, 2006).

Pluralism perspective.
Pluralism has its philosophical origins in the Hobbesian view of man as a selfish being who will
utilize any opportunity to dominate his fellows (Bendix, 2001).
It views the organization as being made up of powerful and divergent sub-groups - management
and trade unions. Thus, it accepts conflict as inevitable and uncontainable through various
institutional arrangements.
This theory believes that, since society comprises of a variety of individuals and social groups with
each having their own social values and pursuing their own self-interests and objective, it is
necessary that those controlling and managing workplace, similarly have to accommodate the
differing values and competing interests within them. It is only by doing this that organizations
can function effectively (Singh & Kumar, 2010).
It believed that none of these stakeholders (employers and employees) is dominant; as such there
will be a point in time where balance between competing interests will be reach. This legitimates
the right of any stakeholder to challenge management’s right to manage within a controlled
structure that regulates these divergent views and interests. Therefore, Management’s role is to
take account of these competing views and interests and attempt to settle them.
Weakness of pluralism
(1) Pluralism is inextricably linked to democracy but in reality, it is not democracy because there
are no elections, opposition, and the government holds office permanently.
(2) It relies on negotiations and bargaining processes to overcome fundamental differences
between management and labor, and when they cannot resolve it resort to the use of law.
(3) Its focus is upon a continuous description of the govern institutions of modern capitalist society,
and thereby ignores the inbuilt biases and inequalities of power and control in modern structures
(Teicher, Holland & Gough, 2006).
(4) It does not realize that the state also represents commercial interests and not just public interests
(Kitay & Marchington, 1996).
(5) It dwells on the rules and procedures and disregards the processes that also contribute to the
resolution of conflicts (Gennard & Judge, 2002).
Summarized differences between Unitary and Pluralist perspectives

Unitary perspective Pluralist perspective

General philosophy Argues that despite
Argues that organization is
differences and conflicts, composed of individuals with
interests of capital and labora variety of differing and
are supposed to besometimes competing interest.
harmonious and ordered. Therefore, unions based on
interests, objectives and
leadership are allowed
Power dispersion Concentration of power with No concentration of power in
management is seen as logical one group. Therefore,
and rational consensus is negotiated
View of conflict Conflicts are irrational and Conflict is rational and
should not happened inevitable due to differing
interests from various groups
Attitude towards unions Unions should be avoided or Unions are legitimate
marginalized representatives of employees

Neo-institutionalism perspective
The neo-institutionalists used the term institution in synonymous with firm or organization and
argued that the tools of the neoclassical economist could be used to interpret the behavior of
individuals in such institutions. They argue that institutional arrangements traditionally considered
as alternatives to market are really complementary to the market and serve to make it more efficient
(Hills,1995).
They believed that apparent non-market behavior may really be quite rational and complement the
efficiency objectives of a system of market prices. In the view of this perspective, for instance, it
may appear that the rationale behind employees unions is for the non-market function of raising
wages above the prevailing market rate. But in actual fact, unions may also serve the interests of
their members for certain types of services. The union may help to evaluate complex wage and
benefit packages for its membership. The union may also serve as a means of communicating to
management the complex needs and preferences of its members. In situations of this kind, the
union acts as an agent whose services both management and labor may value. They argued that,
the union is not so much a means for establishing reasonable value outside the marketplace as it is
a market agent to be valued by its members because of the services it provides to employees and
to management.
Furthermore, they argued that, unions can also serves the efficiency objectives of a market system
if a lack of information obscures the range of rational choices of individuals and if market
encourage opportunism. Protection against opportunism can be obtained through contracts, which
is defined as transaction costs.
According to this perspective, structure of governance comes about through individual and rational
market behavior. As such, individuals agree to a quite limited form of participation in the decisions
of the firm in exchange for protection of the skills that they acquire over the long term. Employees
feel that they are an important part of the production process, hence, act as good agents for the
employer by efficiently performing the firm’s profit-making activities. As a result, these
employees gain long-term job security.
In this case, employees have not gained their job security collectively, but rather, the employer has
granted these benefits because the production process/ service that are provided require it.
Therefore, the employer has voluntarily created a limited governance structure that helps
employees feel involved. The structure of governance could be seen as a subtle form of control
created by the employer to solve the agency problem.

Human Resource Management (HRM)

Human resource management (HRM) has two main forms of existence. One is the form of
academic discourse and activity. This finds expression in conferences, journals, books, courses in
business schools and so on. While the other is in the form of practice in organizations that employ
people and hence have employment relationships. These two modes of existence at times intersect
and trade-off on another. At other times they exist alternatively independently each fuelled by their
own interests, priorities, prejudices and logics.
However, Armstrong (2008) defined HRM as a strategic and coherent approach to the management
of an organization’s most valued assets, the people working there, who individually and
collectively contribute to the achievement of its objectives. In another way, Boxall (2007) view
HRM as the management of work and people towards desired ends. Meanwhile, Storey (2007)
 says that HRM can be regarded as a set of interrelated policies with an ideological and
philosophical underpinning.
Storey (2007) went further to identify four aspects that constitute the meaningful version of HRM;
1. A particular beliefs and assumptions
2. A strategic thrust informing decisions about people management
3. The central involvement of line managers
4. Reliance upon a set of levers’ to shape the employment relationship.
HRM consists of two basic frameworks or models; the Matching model and the Harvard
framework.
The Matching model school of thought believes that HR systems and the organizational structure
should be managed in a way that is congruent with organizational strategy. While the Harvard
framework school of thought believes that the problems of rhetorical personnel management can
only be solved: “when general managers develop a viewpoint of how they wish to see employees
involved in and developed by the enterprise and of what HRM policies and practices may achieve
those goals. Without either a central philosophy or a strategic vision which can be provided only
by general managers, HRM is likely to remain a set of independent activities, each guided by its
own practice tradition.
Generally and characteristically, HRM is divided into two major parts; the Hard and Soft HRM.
Hard version of HRM
The Hard version of HRM emphasizes that people are important resources through which
organizations achieve competitive advantage. Thus, these resources have to be acquired,
developed and deployed in ways that will benefit the organization. The main focus is on the
quantitative, calculative and business strategic aspects of managing human resources in as rational
a way as for any economic factors.
According to this approach, the drive to adopt HRM is based on the business case of a need to
respond to an external threat from increasing competition. It is a philosophy that appeals
managements who are striving to increase competitive advantage and appreciate that to do this;
they must invest in human resources as well as new technology.

Soft version of HRM

The soft version of HRM emphasizes communication, motivation and leadership, as such, it
involves treating employees as valued assets, a source of competitive advantage through their
commitment, adaptability and high quality (of skills, performance and so on). Hence, it sees
employees as means rather than objects (Guest, 1999). The soft approach stresses the need to gain
the commitment, the hearts and minds of employees through involvement, communications and
other methods of developing a high commitment, high trust organization.
Summarized differences between Hard and Soft HRM

Hard Soft
Model Utilitarian instrumentalism Developmental humanism
Fit External Internal
View of HR Factor of product and variable Valued asset that must be
cost that needs to be measured retained and developed to gain
and monitored to gain competitive advantage
competitive advantage
Management focus Enhancement of competitive Enhancement of competitive
advantage via integration of advantage via the treatment of
HR policies, systems and employees as valued asset and
activities with short term through employee
business strategy commitment, adaptability and
quality
ER context Increase efficiency and reduce Build employee commitment
labour costs, thus emphasis on to organizational goals thus
cost reductions, monitoring, emphasis on commitment,
ourtsourcing and downsizing development and trust

HRM view from either perspectives (unitarist and pluralist)

HRM has its foundation in two US based models as mentioned above. The Harvard model also
defined as hard HRM and the Michigan model also defined as soft HRM.
The hard HRM has a unitary perspective that incorporated the concept of mutuality including
mutual goals, influence, respect, rewards and responsibility which leads to employee commitment,
resulting in better outcomes for employees and the organization. Therefore, discourages the
formation of unions.
While the soft HRM has a pluralist perspective of employee relations that argues that organization
and employees interests are opposed and what advantages the organization will disadvantage
employees and vice versa. Hence, encourages the formation of unions.
However, HRM is often considered unitarist and associated with strong managerial prerogative.
In view of this, Keenoy (1990) describes HRM as a wolf in sheep’s clothing. While Fowler (1987)
further argues that employee involvement under HRM is actually involvement on the company’s
terms, and is actually a subtle form of employee manipulation disguised as mutuality. Meaning the
ineffectiveness of unions in organizations where HRM exist actively.

Conclusion
It is clear from the above work that HRM as a discipline does not just emerge as a discipline or a
term on its own. But has its roots from other earlier approaches to the workplace. Though, the
approaches of HRM and earlier approaches maybe slightly different but all has the same goals of
making the workplace (i.e. employer and employee) achieve its primary objectives, irrespective of
the employee relations perspective HRM is viewed from.
References
Ackers, P., Payne, J. (1998). British trade unions and social partnership: rhetoric, reality and
strategy. International Journal of Human Resource Management 9, (3) 529-550
Armstrong, M. (2008). Strategic human resource management: A guide to action (4th ed.). UK:
Kogan Page Publishers.
Boxall, P., Purcell, J., and Write, P. (2007). Human resource management: scope, analysis and
significance. Oxford: Oxford University Press.
Dzimbiri, L. B. (2008). Industrial relations in a developing society: the case of colonial,
independent one-party and multiparty Malawi. Germany: Cuvillier Verlag
Farnham, D., Pimlott, J. (1995). Understanding industrial relations (5th ed.). USA: Casell
Fowler, A. (1987). When chief executives discover HRM. Jounal of Personnel Management, Vol.
4, Iss: 2, pp. 3.
Gennard, J., Judge, G. (2002). Employee relations (3rd ed.) UK; Institute of Personnel and
Development
Guest, D. (1999). Human Resource Management: The Workers’ Verdict. Human Resource
Management Journal, 9/3: 5-25
Hills, S. M. (1995). Employment relations and the social sciences. USA: University of Carolina
Press
John, M., Fellenz, M. (2010). Organizational Behaviour & Management (4th ed.). USA: Cengage
Learning EMEA
Keenoy, T. (1990). HRM: A Case of the Wolf in Sheep’s Clothing?. Personnel Review, Vol. 19,
Iss: 2, pp.3 - 9
Kelly, E. J. (1998). Rethinking industrial relations: mobilization, collectivism, and long waves.
USA: Routledge
Kessler, I., Purcell, J. (2003). Individualism and collectivism in industrial relations: theory and
practice. Oxford: Blackwell Publishing
Kitay, J., Marchington, M. (1996). A review and critique of workplace industrial relations
typologies. Journal of Human Relations 49, (10) 1263-1290
Nick, W. (2010). An Introduction to Human Resource Management. USA: SAGE Publications
Ltd.
Salamon, M. (1987). Industrial relations: theory and practice. USA: Prentice Hall International
Storey, J. (2007). Human resource management: a critical text (3th ed.). UK: Cengage Learning
EMEA
Teicher, J., Holland, P., Gough, R. (2006). Employee relations management: Australia in a global
context (2th ed.). Australia: Pearson Education