Chapter Eight

EMPLOYEE/ LABOUR RELATIONS

What is Employee Relations?

Management of all organizations is mainly concerned with what should be done to enhance the
contributions of its employees to achieve objectives. This means maintaining good employee
relations through creating good working atmosphere, providing attractive rewards, having good
leadership, and assigning employees to interesting and challenging jobs. Employee relations
is the interactions between the employer (represented by management) and the work-force
(represented by trade unions) (Beech & McKenna, 1995). Here, interactions imply that
management must support and address issues of employee job satisfaction and employees must
show commitment towards the success of the organization. Moreover, according to Armstrong
(1996) employee relations is concerned with:
- Managing and maintaining formal and informal relationships with trade unions and their
members.
- Sharing information with employees and involving them in decision making on matters of
mutual interest
- Creating and transmitting information of interest to employees.

Employee Relations Objectives

Milkovich and Boudreau (1991) noted that employee relations activities are those, whose
objective is to create an atmosphere of trust, respect, and Cooperation. Further more, employee
relations:
- Provide a conducive work environment in which employees can do their jobs better
- Help management to mutually solve employees problems which otherwise might affect
performance
- Helps employee to control over important aspects of work life.

Labor Unions and Collective Bargaining

Labor Unions
Labor union is an organization of workers whose purpose is to protect and maintain the interests
of union members. As workers representative, trade unions "provide workers with a 'collective
voice' to make their wishes known to management and thus bring actual and desired conditions
closer together (Armstrong, 1996). This worker organization is established to bargain with
management about pay, working hours, conditions of employment and to make joint decisions
with management on matters affecting their members' well being. Furthermore, the following
broad objectives characterize the trade unions as a whole.
- To secure and, if possible, improve the living standards and economic status of its
members.
- To enhance and, if possible, guarantee individual security against threats and
contingencies that might result from market fluctuations, technological change, or
management decisions.
- To create mechanisms to guard against the use of arbitrary and capricious policies and
practices in the workplace (Mondy & Noe, 1990).

Collective Bargaining
Collective bargaining is basic to labor- management relations. It is a joint process of job
regulation undertaken by management and trade unions that negotiate to establish pay and
conditions of employment (Beardwell & Holden, 1996). This contractual agreement is hoped to
give workers and management an identity of purpose and provide an atmosphere in which both
focus their attentions towards the achievement of organizational objectives. Such union-
management agreement enables to negotiate better position to urge workers to do their jobs as
per the contract.
In an organization where a trade union is established and recognized by the management,
collective bargaining will take place. For the bargaining to take place, according to Beardwell
and Holden (1996) the following conditions must exist:
- Employees must be prepared to act collectively and recognize their common interests.
- Management must recognize trade unions and their representatives as legitimate
bargaining agents for labour, trade unions must be free to organize employee without
pressure from state or employer control.

Collective bargaining is a means to reach negotiable agreements on matters pertaining to

employment. This joint labour-management agreement has two outcomes. These are:
 Substantive agreements- they set out agreed terms and conditions of employment
covering pay and working hours and other aspects such as holidays, overtime regulations,
flexibility arrangements and allowance (Armstrong, 1996).
Procedural agreements - which set out an agreed course of action for various
eventualities such as equal opportunities, recruitment, redundancy, discipline etc. (Howe,
1995).

The process of bargaining is carried out by negotiation where workers' representative (union) and
management discuss issues with a view to relating a common agreement. As noted by Beardwell
and Holden (1996) negotiation can be conducted using distributive and integrative approaches.
Distributive bargaining. One party will seek to achieve gains at the expense of the other.
The aim is the division of a limited resource between groups both of whom wish to maximize
their share. The important factor in this approach is the power each side has to damage their
opponent if they do not comply with their demands. Thus the threatened use of sanctions, for
example, is strike and lock-out.
Integrative bargaining. This approach seeks mutual gains in areas of common interest with
a problem solving approach from the parties involved.

Having outlined approaches to negotiation, what are the stages to be followed in negotiation? is a
question, we are now required to provide an answer. According to Howe (1995), formal
negotiations often follow the following stages.

Preparation:
Set objectives. These are normally prioritized into three levels. These are:
- The basic minimum requirement that must be achieved,
- The desirable requirements that the negotiator would like to achieve,
- The optimum requirement or best level of achievement;
Research the background to the negotiation including the bargaining power of the other
party. Prepare the case to be argued.
Select the negotiators who should be good communicators, persuasive, acceptable to the
other party, and authoritative.
 Negotiation
- Exchange information;
- Listen to the other party's position;
- Signal likely compromise points
- Propose ways forward.
Closing
- Summarize positions;
- Propose a final offer, which meets the needs of both parties;
- Reach agreement.
Although the aim of collective bargaining is to reach a common agreement, sometimes there may
be disputes that need resolution. How can such disputes of two parties be resolved? Various
methods can be used to resolve disputes. These are conciliation, mediation or arbitration.
Conciliation - a means where by a neutral third party acts as a go-between to settle the
disputes.
Mediation - a means where by a third party propose recommendations which enable the
two parties to resolve the disagreement.
Arbitration - the submission of a dispute to a neutral third party. Both sides of the issue
are heard by an arbitrator who acts as judge and jury. After weighing the facts, the
arbitrator renders a decision (Werther & Davis, 1996).

Employee Relations Practices

In many organizations, the immediate bosses are responsible for assigning tasks, counseling and
providing information to employees. This being the case, concerning issues related to the entire
organization " managers and human resources departments directly affect employee relations
through communication, counseling discipline practice" (Werther & Davis, 1996). In-addition,
employee participation can also affect employee relations.

Communication
If management is getting things done with and through employees, management must
communicate all the necessary information that affect employee's interests. As a result, a feeling
of belongings on the part of the workforce may be created. This in turn enables the organization
to generate commitment of employees to the achievement of objectives. As stated by Howe
(1995) communication involves the sharing of ideas, plans and targets throughout the
workforce and involves both vertical dimension (up and down the organization hierarchy) and a
horizontal dimension (between peers).

In addition to promoting good relationships between employees and the management, effective
communication enables administrators/managers to achieve the functions of planning,
organizing, directing and controlling. Furthermore, from an organizational viewpoints,
communication also plays an important role in manager's job as described below.
- In managers' interpersonal roles, they act as a figurehead and leader of their
organizational unit, interacting with subordinates, customers, suppliers, and peers in the
organization.
- In managers' informational roles, they seek information from peers, subordinates, and
other personal contacts about anything that may affect their job and responsibilities.
- In managers' decisional roles, they implement new projects, handle disturbances, and
allocate resources to their unit's members and departments (Stoner & Freeman, 1992).

In order to have a clear picture of communication; it is necessary to understand the

communication process and channels of communication. These vital issues in communication
will briefly be presented below.

The Communication Process

The communication process consists of encoding a message by a sender, transmitting it through
a medium, decoding the message by a receiver, and then authenticating receipt and
understanding of the message by receiver through feedback, as illustrated in the figure in the next
page.
 Sender Encoding Channel Decoding Receiver
Initiates Symbolic Medium of Symbols Receives
Message message transmission interpreted message
Created into message

Feedback
Receiver reverses process to respond to sender
The Basic Communication Process (Holt, 1993)

Sender: The sender is the source of the message who initiates the communication. In an
organization, the sender will be a person with information, needs, or desires and a
purpose for communicating them to one or more other people (Stoner & Freeman,
1992).
Encoding: The transmission of information using symbols such as words, pictures, signals,
and the like. For example, a green light in a traffic signal is a symbols for the
word pass. Encoding takes place when the sender translates the information to be
transmitted into a series of symbols (Stoner & Freeman, 1992).
Channel: The medium of communication from the sender to the receiver. For example, air
is a channel of communication for or spoken words and paper for written letter.
Feedback: The process is not over until communication completes a full cycle back to
sender. Feedback occurs when a receiver responds to a sender's message with
understandable return message. This may be in the form of acknowledgement, or
it may be an answer or elaboration (Holt, 1993).

Channels of Communication
Communication channels are intended to facilitate understanding and coordination among
sections, departments and levels in the organization. The channels through which information
travel is categorized into two types, namely formal and informal channel of communication.
Formal Communication Channels
Formal channels of communication are reporting relationships determined by the structure of
management through which prescribed messages are sent (Holt, 1993). In every
organization, the structure prescribes who should report to whom. For example, in the
Ethiopian context, Ministries performance reports may be required by the Prime Minister
Office, who must pass them to the House of People's Representative. This network can be
divided into vertical and horizontal/lateral communications.
Vertical Communication Channels
Vertical channels of communication are a flow of information up or down the chain of
command. Such approaches can be categorized into downward and upward communications.
Downward Communication is the passing of information by manager/administrator to junior
employee. The major purposes of downward communication are to advise, inform, direct,
instruct, and evaluate subordinate and to provide organization member with information
about organizational goals and policies (Stoner & Freeman, 1992). Upward Communication,
on the other hand, is the passing of message or information from the employee to the upper
level management. The main purposes of this communication system is to give an
opportunity to employee to present his/her activities report, work progress and problems
related to his/her jobs.

Horizontal Communication
A horizontal or lateral communication is a process that occurs between co-workers, heads of
different departments, divisions, sections, and peer managers. According to Stoner and
Freeman, (1992) lateral communication:
- Provides a direct channel for organizational coordination and problem solving.
- Enables organization members to form relationships with their peers.

Informal Channels of Communication

Depending on friendship, social interaction, common interest, .., an informal communication
network can be established within an organization. As defined by Holt (1993), informal
channel of communication is the unsanctioned personal network of information among
employees. The most common informal channel of communication is grapevine, which are
unofficial and voluntary interpersonal relationships between members of an organization.
The grapevine is used by employees to make sense of unclear or confusing management
actions or to file information missing from formal communication channels (Baird et.al,
1990).
Organizational communication to be effective, management must allow information to flow
from management to other employee and from employee to management in order to ensure
efficient functioning through feedback. In this way, management not only avoids
 misunderstanding but also creates good and open relationship between employee and
supervisor.

Counseling
Many organizations provide a number of services to their employees. Thus, counseling is one of
the many services organizations offer to employees. Counseling is a discussion of a problem
with an employee that is intended to help the worker resolve or cope with the problem (Werther
& Davis, 1996). Family troubles, stress, financial and other personal problems are likely to
affect employee's performance. In such situations, it is the responsibility of the management to
arrange counseling services to help them do their jobs in a better way.
Counseling services usually are provided by human resource department because the department
is in constant contact with employees. All matters discussed during counseling session are
confidential. The counselor is responsible to follow whether the employee avail the counseling
programmes to solve the problem encountered. When counseling an employee does not resolve
performance-related issues, discipline may be the next step (Werther & Davis, 1996).

Discipline
The organizational rules and regulations are intended to direct and control the effective
functions of employees. Thus, to ensure compliance with organizational standards rules and
regulations must be communicated to all employees. This will enable employees to maintain
desired discipline in the workplace. Discipline, according to Mondy and Noe (1990), is the state
of employee self-control and orderly conduct and indicates the extent of genuine teamwork
within an organization. Werther and Davis (1996) suggest two ways to handle disciplinary cases
in an organization. These are:

Preventive discipline is an action taken to encourage employees to follow standards and rules
so that infractions are prevented. Its basic objective is to encourage self-discipline.

Corrective discipline is an action that follows a rule infraction. It seeks discourage further
infractions and ensure future compliance with standards and rules. The corrective or
disciplinary action is a penalty, such as warning or suspension without pay. These action are
initiated by the employee immediate supervisor but may require approval by a higher-level
manager. In principle, disciplinary action should aim at correcting unaccepted behavior.
 Most organizations take progressive disciplinary action in order to give employees
opportunities to learn from their mistakes. In this regard, Chandler and Plano (1988) have
suggested that there are five steps, which can be used to discipline employees in an
organization. These are:

1. Informal talk or counseling is used for minor first-time infractions. A friendly

discussion will often clear up the problem. The supervisor explains what is expected
from the employee and allows employee to express his/her views. The discussion is
documented.

2. Oral reprimand or warning is used for second offenses or more severe first-time rule
violations. The employee is told the interview is an oral reprimand. Previous
violations are mentioned. The employee is also told that his/her behavior could lead
to serious disciplinary action if not corrected. The employee is left with the feeling
that he/she must improve in the future. The interview is documented.

3. Written reprimand or warning is a letter or memorandum written to the employee

listing prior accidents, specifies on what behavior is expected, how the employee is
not meeting the expectations, what will happen if the behavior is not corrected, and
period of time for correcting the behavior. A copy of the letter is placed in the
concerned employee's file.

4. Suspension or disciplinary layoff occurs if the behavior is not corrected. The

employee is suspended or laid off for one to thirty day(s). This is the final step that
attempts to correct behavior before discharge.

5. Discharge is the most drastic form of disciplinary action as it separates the employee
from the job. It is reserved for the most severe offenses and is taken after other
corrective efforts have failed.

Employee Participation
As discussed earlier, management is getting things done with and through other people. If this is
the case, people to help organization attain its objective, it is desirable that management
approach should be participative. As Chandler and Plano (1988) defined, Participative
management is a process by which workers are brought into organizational decision-making
processes to varying degrees, primarily on matters that directly affect them. In addition to
meeting the personal satisfaction of individual employees, participation enables organizations to
increase efficiency. The involvement of employees tapes their knowledge and skill for the
betterment of organizational activities.

According to Armstrong (1996) employee participation should aim to:

- Generate commitment of all employees to the success of the organization
- Enable the organization better to meet the needs of its customers
- Help the organization to improve performance and productivity
- Improve the satisfaction employees get from their work
- Provide all employees with the opportunity to influence and be decisions, which are likely
to affect their interests.