LESSON 03

THE LABOUR RELATIONS ENVIRONMENT

CONTENTS
Page
1 INTRODUCTION ............................................................................................................................. 2
2 AIM OF THE LESSON .................................................................................................................... 2
3 LEARNING OUTCOME FOR THE LESSON ................................................................................... 2
4 KEY CONCEPTS ............................................................................................................................ 4
5 RECAP OF PRIOR LEARNING ...................................................................................................... 4
6 RESOURCES .................................................................................................................................. 5
7 ENVIRONMENTAL ANALYSIS....................................................................................................... 6
7.1 What is meant by the concept "environmental analysis"? ....................................................... 6
7.2 Why must the labour relations manager always analyse the environment within which the
organisation operates? ........................................................................................................... 7
8 INTERNAL ENVIRONMENTAL FACTORS THAT INFLUENCE LABOUR RELATIONS
MANAGEMENT .............................................................................................................................. 7
8.1 What are the internal environmental trends and variables that affect labour relations
management? ........................................................................................................................ 7
8.2 How does the organisational culture affect labour relations? ................................................ 10
8.3 How does an organisation's leadership affect labour relations? ............................................ 13
8.4 Is corporate governance a labour relations issue? ................................................................ 14
9 EXTERNAL ENVIRONMENTAL FACTORS THAT INFLUENCE LABOUR RELATIONS
MANAGEMENT ............................................................................................................................ 15
9.1 What does the external environment include? ...................................................................... 15
9.2 How do demographic variables affect labour relations management? .................................. 16
9.3 How do economic variables affect labour relations management? ........................................ 17
9.4 How do political variables affect labour relations management? ........................................... 18
9.5 How do social variables affect labour relations management? .............................................. 19
9.6 How do technological variables affect labour relations management? .................................. 23
9.7 What is the international context within which South African labour relations needs to
operate? ............................................................................................................................... 24
10 SUMMARY .................................................................................................................................... 26
11 SELF-ASSESSMENT .................................................................................................................... 27
12 LIST OF REFERENCES AND ADDITIONAL READING ............................................................... 29
Lesson 03 LRM4801

1 INTRODUCTION

In lesson 1 we introduced you to the open-system view of labour relations management. If you cannot recall
this, refer back to lesson 1 and study section 12 again. Also refer to figure 1.6 in Swanepoel and Slabbert
(2012:42) and reread section 1.5.3 in this book (the chapter is provided as an e-reserve). As Swanepoel and
Slabbert (2012:41) indicate, labour relations, as a function within an organisation, is in dynamic interaction
with numerous aspects, both inside and outside the organisation. From outside, there are influences and
variables related to economics, politics and general social factors. On the inside, there will be interactions
with aspects such as the finances of the organisation, its operations, its business strategies and its structures
and culture. How we manage labour relations is thus influenced by, and in turn influences, a wide variety of
other aspects that we have to manage and be aware of. The focus of this lesson is this environment (both
inside and outside the organisation) in which labour relations needs to be managed. We will attempt to answer
the following questions:

Why must the labour

What is meant by the relations manager always
concept "environmental analyse the environment
analysis"? within which the
organisation operates?

How do internal How do external

environmental factors environmental factors
affect labour relations affect labour relations
management? management?

2 AIM OF THE LESSON

The aim of this lesson is to enable you to analyse the interaction in the external and internal environments of
an organisation and to determine the impact of environmental factors on labour relations management.

3 LEARNING OUTCOME FOR THE LESSON

On completion of this lesson you will be required to demonstrate the specific learning
outcome:

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Learning outcomes infer from complex and real world scenarios to contribute to the overall formulation, implementation
and control of the organisational strategy and the management of conflict, group dynamics and diversity
from a labour relations management perspective

analyse and deal with complex and real world evidence of both external and internal
environmental influences on the strategic management of labour relations in an
organisation

provide an epistemological formulation of a labour relations policy based on the labour relations strategy
and the overall strategy of an organisation

engage with current research and oversee the implementation of a labour relations policy in line with the
organisational and labour relations strategies

You should demonstrate your ability to do this by

Explain what environmental analysis entails.

Apply the process of environmental analysis to the

management of labour relations in an organisation

analyse and deal with complex and

real world evidence of both external Identify and analyse the most important internal
and internal environmental environmental variables that may affect labour relations
influences on the strategic management in an organisation and critically evaluate
management of labour relations in an their impact.
organisation

Identify and analyse the most important external

environmental variables that may affect labour relations
management in an organisation and critically evaluate
their impact.

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4 KEY CONCEPTS

5 RECAP OF PRIOR LEARNING

Let’s start with an activity to determine if you remember what you learnt about the labour
relations environment at undergraduate level.

Activity 3.1: Self-assessment

Do this activity without referring to any sources, such as books or study guides previously
used.

Briefly write down the ways in which you think the following factors may affect labour relations in South Africa:
(1) changes in technology (e.g. information technology such as computers)
(2) population growth
(3) inflation rates
(4) expectation levels of the population
(5) political developments (such as elections)

Feedback

This activity focused on some of the external environmental factors that affect labour
relations management. Were you able to write down some ideas? You should have been
able to identify at least some ways in which the factors listed may affect labour relations
and the management thereof. For instance, changes in technology can lead to retrenchment of employees,
because fewer workers may be able to do more work. More often, such changes create a need for retraining
staff, who must be equipped with new skills to use the new technology. If the population grows and the
economy does not, a high unemployment rate may result. This can lead to higher wage demands, because
an employed person may be supporting an extended family. Political changes create expectations from the
population. Recent demands for housing and job creation are examples of some of these expectations. Trade
unions not only intervene in the workplace, but also in social issues. Inflation rates affect organisations'
profitability – when inflation rates rise (or the rand strengthens against the dollar), some organisations may
lose money and jobs may be threatened. All of this may affect the relationship between employers and
employees, not only because of the economic impact of the factors, but also because of the social impact
(Holtzhausen 2011:25).

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6 RESOURCES

You are now ready to begin with this lesson. The first step is to ensure that you have sufficient resources that
deal with the topic. Start by downloading the e-reserves for this lesson.

E-reserves

Organisational culture:
Quick, JC & Nelson, DL. 2013. Principles of organizational behavior. 8th International
edition. Mason, OH: Cengage Learning. Chapter 16 (Organizational culture).

Remember that all the e-reserves for this module are listed on the LRM4801 myUnisa module site (see the
Prescribed books link). You should download them from the OASIS Library catalogue. See the Study @
Unisa brochure or the frequently asked questions (FAQs) on the LRM4801 myUnisa module site for more
details.

In this lesson we have not provided you with many e-reserves, as information on the environmental factors
affecting labour relations can be found in any labour relations textbook, such as those listed below.

Additional reading

The following books may be consulted to obtain a more holistic view of the topics addressed
in this lesson:

• Bendix, S. 2015. Labour relation, a southern African perspective. 6th edition. Cape Town: Juta. Chapter
11 (Traditional negotiations).

• Finnemore, M, Koekemoer, GM & Joubert, YT. 2013. Introduction to labour relations in South Africa.
11th edition. Durban: LexisNexis. Chapter 3 (Environmental influences on labour relations).

• Nel, PS, Kirsten, M, Swanepoel, BJ, Erasmus, BJ & Jordaan, B. 2016. South African employment
relations, theory and practice. 8th edition. Pretoria: Van Schaik. Chapter 1 (Introducing some
fundamentals of employment relations) and chapter 10 (Managing human resources: the broader ER
management agenda).

• Swanepoel, BJ & Slabbert, JA. 2012. Introducing labour relations management in South Africa. Durban:
LexisNexis. Chapter 3 (The business challenge in a competitive and changing world: an introduction).

• Venter, R, Levy, A, Bendeman, H. & Dworzanowski-Venter. 2014. Labour relations in South Africa. 5th
edition. Cape Town: Oxford. Chapter 4 (Comparative labour relations: lessons from the BRICS debate),
chapter 6 (Contemporary issues in the South African labour market), chapter 14 (Ethics in labour
relations) and chapter 15 (Some future patterns and predictions for labour relations in South Africa).

In this lesson you may find it especially useful to read the opinions of experts on the variables that influence
the environments in which South African organisations operate. For this purpose, you may access
publications such as the Financial Mail (www.financialmail.co.za), Finweek (www.finweek.com) the
Economist (www.economist.com), Business Day (www.bdlive.co.za) and Fin24 (www.fin24.com). Also refer
to newspaper articles dealing with the business environment. Consider accessing websites such as News24
(www.news24.com), IOL (www.iol.co.za) and South African Labour News (www.salabournews.co.za) and
the Department of Labour (www.labour.gov.za) regularly to stay abreast of recent developments.

Also refer to the list of references at the end of the lesson for additional sources of information relevant to
this lesson. In this lesson you will have to read widely. Although textbooks may be used as a point of
departure, you will be required to obtain current information and data from news reports and the internet.
Conducting an environmental analysis essentially means that you have to look at the current environment in
which an organisation operates, as well as the future prospects for that particular organisation. This
information is not available in textbooks; it is information that you have to gather yourself. We will provide you
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with general guidelines, but then it will be up to you to obtain relevant information from whichever sources
you have access to.

7 ENVIRONMENTAL ANALYSIS

7.1 What is meant by the concept "environmental analysis"?

We indicated earlier that any organisation affects, and is affected by, the environment in which it operates.
From a labour relations management perspective, the process of environmental analysis could be
described as a process whereby the labour relations manager or officer constantly assesses both the external
and the internal environments in order to detect trends in the business environment. According to Ehlers and
Lazenby (2010:138), a continuous process of environmental analysis is important and includes four
interrelated activities, namely scanning, monitoring, forecasting and assessing. These authors define
environmental analysis as "evaluating and analysing the external environment for possible opportunities and
threats, and the internal environment for possible strengths and weaknesses (SWOT analysis)" (Ehlers &
Lazenby 2010:8). Environmental analysis is therefore a process whereby relevant data is systematically
gathered and interpreted to identify external opportunities and threats and internal strengths and
weaknesses. An organisation gathers information about the external world, its competitors and itself. The
company should then respond to the information gathered by changing its strategies and plans when the
need arises. From a labour relations management perspective, the labour relations manager should take
cognisance of aspects, both internal and external, that may potentially affect labour relations in the particular
organisation and advise top management accordingly – and, possibly, recommend an appropriate course of
action.

Although the approach followed may differ from organisation to organisation, in essence the process of
environmental analysis involves the following (Brevis & Vrba 2014:83-86):

• Identifying key environmental variables. Managers should take account the unique nature and
characteristics of their organisations. They need to identify key variables that will apply to the context
in which they operate. Top management are usually tasked with identifying key variables as they tend
to have extensive experience in a particular organisation or industry. They are also ultimately
responsible for the long-term survival of the organisation.

• Evaluate and select a technique for analysing the environment. Once the key environmental
variables have been identified, management should determine the appropriate technique (or
techniques) that will assist them in conducting the analysis. Two simple, yet powerful, techniques are
the classic linear trend estimation and a SWOT analysis. Linear trend estimation is a technique that
uses regression analysis to project future trends. It is based on the analysis of numerical values (e.g.
interest rate figures, unemployment figures, strike trends) collected at multiple points in time (current
and historical) and presented chronologically.

A SWOT analysis (S = strengths, W = weaknesses, O = opportunities, T = threats) involves identifying

the most important opportunities and threats in the organisation’s external environment and the key
strengths and weaknesses in its internal environment.

• Develop an environmental profile. An environmental profile entails summarising the results of the
analysis in a useful and user-friendly way.

• Monitor the variables, trends and environment continuously. Once the environmental profile has been
completed, the key variables identified have to be continuously monitored to ensure they are still valid,
providing timeous warning as to changes in trends, and identifying potential new opportunities, threats,
strengths and weaknesses so that strategies and plans can be proactively amended and implemented
if required.

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7.2 Why must the labour relations manager always analyse the environment within which the
organisation operates?

As indicated, the main reason for constantly analysing the business environment from a labour relations
management perspective is to identify trends, be they positive or negative, and to advise top management
so that an appropriate course of action can be taken promptly. For instance, before annual substantive
negotiations take place, the labour relations manager will scan the business environment in order to establish
wage-settlement trends in the external business environment. They will then bring these trends to the
attention of management in order to be used as a mandate for negotiations.

If environmental analysis is done on a continuous basis, the labour relations manager will keep abreast of
external developments in the labour relations arena and be able to advise top management accordingly. They
should be able to identify positive and negative trends in the business environment, assess their impact, and
recommend an appropriate course of action to top management. Failure to scan and assess the impact of
trends in the business environment, especially negative trends, will result in the organisation being
unprepared for the negative impact of these trends when they do occur.

Study

Study any of the suggested resources listed at the beginning of this lesson (or any other relevant
sources), together with the information contained in sections 7.1 and 7.2 above, and make sure
that you understand why it is necessary to analyse the business environment from a labour
relations management perspective, and what the process entails. Ensure that you are able to analyse the
business environment and can use the information acquired during this exercise for the benefit of your
organisation.

8 INTERNAL ENVIRONMENTAL FACTORS THAT INFLUENCE LABOUR RELATIONS

MANAGEMENT

The internal environmental trends and variables are factors in the organisation itself that could influence
strategic labour relations management either positively or negatively. These variables may include the
organisation’s business and labour relations strategies, the vision and mission of the organisation, and the
organisation's labour relations mission. We will discuss these aspects in detail in lesson 5, but it is important
for you to make this link here. Some of the additional internal environmental variables identified by authors
such as Finnemore et al (2018) and Venter et al (2014) include occupational health and safety, workforce
diversity, organisational culture, leadership, communication, policies and procedures. Also included in this
category would be the way in which management interacts with, and relates to, organised labour on a daily
basis, and the type(s) of trade union(s) organising employees in that particular workplace (refer back to the
frames of reference in lesson 1). If, for instance, the interaction is between inflexible management, on the
one hand, and a militant and uncompromising trade union, on the other, this will ultimately be reflected in the
labour relations strategy adopted by the organisation.

It does not fall within the scope of this module to discuss all these variables in detail. Some of them are
addressed in other lessons, for example the strategic management issues and the labour relations
management policy in lesson 5, workforce diversity in lesson 2, grievance and disciplinary procedures in
lesson 8, and communication in lesson 6. In this lesson, we will briefly comment on organisational culture
and leadership as variables affecting labour relations decisions and management within an organisation, as
these issues are not addressed elsewhere in the study material. It is, however, important that you also regard
the aspects mentioned above and covered in the other lessons as relevant here. You should not view lessons
in isolation, as all the aspects are interrelated.

8.1 What are the internal environmental trends and variables that affect labour relations
management?

Nel et al (2016:37-40) suggest that internal environmental factors affecting labour relations can be grouped
into three categories, namely general management-related factors, structural factors, and the nature and
organisational context of the organisation as such. These categories will be discussed briefly below.
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8.1.1 General management-related factors

Certain management decisions are traditionally regarded as being “managerial prerogative”. These include
decisions on matters such as planning how to grow the organisation in the short, medium and long term. This
may include entering new markets or expanding the organisation by locating new operations in different
regions, either locally or in other countries. It may also, however, happen that owing to new competitors
entering the market, an organisation may have to plan how to regain market share. This may include taking
a serious look at business processes and improving aspects such as productivity through better resource
utilisation. One of the primary resources that is often central to such improvement processes is the human
one. Thus, it may be necessary for the organisation to reduce labour costs and cut back on its activities,
eliminating some of the products or product lines. Such decisions clearly influence employment relations
dynamics. The same holds true for the interplay between decisions and dynamics related to other subsystems
of organisations and their employment-related subsystems. If aspects such as product lines are at stake, as
mentioned above, the marketing subsystem of the organisation is relevant. Poor marketing practices can
lead to lower sales and turnover, which can lead to pressures to bring down costs – including the costs related
to workers (labour costs, in other words). The finances of the organisation are obviously also central to all
aspects of the organisation’s employment relations. If an organisation experiences financial difficulties, it will
be much harder, for instance, for trade unions to negotiate good wage increases for the workers. It is therefore
also in the interests of the workers that management ensures that the finances of the organisation are as
sound as possible at all times. Similar linkages exist with other subsystems, such as inbound logistics and
operations. Operations and inbound logistics both play a crucial role in the efficiencies and effectiveness of
organisations – and, often, these issues may require strategic and tactical interventions that may influence
employment relations. Strategic interventions obviously cut across various subsystems and would typically
be aimed at enhancing prospects of organisational success. This may include the goal of growing the
business, but it may also include the need to cut back or "downsize" the operations of an organisation.

On the one hand, if part of the business growth, recovery or turnaround plans or strategies is to amalgamate
with another organisation, for example, important labour-related factors come into play as well. Organisations
cannot just blindly amalgamate without considering, for instance, the employment relations factor. After
amalgamation, two or more organisations will function "together" and therefore "their" climate becomes
"ours". An important factor here is the quality and nature of management and leadership styles in these
organisations. Also, the law lays down rules relating to the transfer of employees from one employer to
another, for example in a takeover of one organisation by another as a “going concern” or otherwise.

On the other hand, if part of the strategic and business planning is a decision to scale down the organisation's
activities, this could lead to the dismissal of workers. In such cases, fair staff retrenchment practices must be
followed, such as consulting with the representative bodies of the workers beforehand and using fair criteria
when choosing which workers to dismiss (more on this in lesson 8).

As mentioned above, decisions about changes to operational issues may also influence employment
relations. For example, new operational processes and technologies used in the process of production or
service delivery may also hold serious implications for work processes, and hence the way in which work is
organised and jobs are designed. Such "structural" decisions may influence employees and their
relationships with their work and colleagues, and are therefore issues directly interacting with employment
relations dynamics, such as consultation or negotiation with the workers and/or their representatives.

Activity 3.2: Setting up your blog and sharing your experiences

In this activity we will guide you to set up a personal blog on the LRM4801 myUnisa module
site. We will then post a blog question that you can reflect on in your own blog. You can also
read the blog entries of other students and comment on their entries if you wish to do so.

First you need to set up your blog by following these steps:

(1) Click on the BLOG link on the LRM4801 myUnisa module site.

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(2) Click on the Add blog entry link at the top to start your blog.
(3) Give your blog entry a title. You could use something like "Peter’s views on labour relations matters".
This is just an example; you can choose anything you like. Remember, however, that these blogs will
be viewed by your fellow students.
(4) Your name will automatically show once you have created the blog entry.
(5) Now type your reflection on the particular topic inside the text box provided.
(6) After the text box, you are asked to "Choose who can see this entry". It is suggested that you choose
the "All members of this site can see this entry" option.
(7) If you are not quite finished, you can click on the "Save draft" button. No one else will be able to read
your blog until you click on "Publish entry". [Note: if you save a draft, you will have to click on the "This
entry is publicly viewable" when you are finished and want to publish it.]
(8) Once you are ready to publish your blog entry, click on "Edit entry", select "All members of this site can
see this entry" and then choose "Publish entry".
(9) You can add links, bullets, lists and colour, etc by using the editing buttons. You can also go back,
delete and edit your blogs. You can also leave comments on other students’ blogs.
(10) The next time that we ask you to use the blog, you just click on "Add blog entry" again and create a
new blog, which will appear under your name again.

Now you need to reflect on the following blog question by posting your views on the blog that you created:

Blog question: Have you ever experienced a takeover or merger of an organisation? How
did this affect labour relations in the particular workplace? How was this handled by
management? Would you have done anything differently?

Feedback

When we ask you to reflect on certain matters by means of a blog, the intention is for you to
share your personal experiences and views. The intention is also for you to read what other
students think and have experienced and then to comment on their views, should you wish
to do so. This will all take place online and no formal feedback will be provided, as this is an interactive
sharing of views.

8.1.2 Structural factors

As we said before, the way in which work is designed or organised has a direct impact on employment
relations. A further structural factor relates to how an organisation is structured, which also affects
employment relations. For instance, the wider the span of control (i.e. number of subordinates per authorised
supervisor), the more difficult the task of the supervisor becomes. Too much emphasis on formal structures
for communication and control (i.e. too many forms, rules, regulations, and so on) can also interfere with the
quality of employment relations. When employees are not well informed or when decisions do not filter
through to them quickly enough, uncertainties, rumours and dissatisfaction may arise. This can lead to
unproductiveness and frustration on the part of both parties, and, ultimately, to poorer employment relations.
An organisation with a highly centralised structure will have different employment relations dynamics from
one that operates along the lines of decentralisation. Collective bargaining can, for instance, also be
centralised or decentralised (see lesson 7), and these processes should obviously be aligned with the general
management processes of centralisation/decentralisation. It would be very difficult to implement
decentralised collective bargaining successfully if the organisation were to follow a policy of strict, centralised
financial control and management.

8.1.3 The nature and organisational context

There is also some interplay between contextual factors, such as ownership, size, geographic distribution
and location of the organisation, and employment relations. The more workers an organisation has and the
more widely diffused its operations and sites are, the more challenging it may be to establish, for example,
sound communication between management and workers. A South African organisation that also has
business interests and operations in neighbouring countries such as Namibia and Botswana will have to
manage its employees and interactions with other roleplayers, such as worker representatives and trade

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unions in those countries, in accordance with the laws and value systems applicable there. The actual
industry or sector in which an organisation exists and operates also naturally plays an important role. Services
organisations face different dynamics from, say, mining organisations or factories. Not only will the kinds of
labour needs vary according to the relevant sector/industry, but different trade unions will also often operate
in different sectors. It is quite understandable, therefore, that organisations in the same industry are often
said to share many common aspects in relation to "organisational culture". The latter refers to the basic,
shared understanding and values of most people in the same organisation about "how things work around
here". Clearly, these cultural aspects of organisations are also strongly associated with employment relations
dynamics. If, for instance, it is part of the established organisational culture that deadlines are flexible, it will
be harder to take disciplinary action against an employee who, on occasion, does not meet a deadline for a
particular piece of work. There are thus numerous factors relating to the nature and context of organisations
that interact with employment relations.

Study

Before you continue with the next section, ensure that you have a coherent and critical
understanding of what internal environmental trends and variables are, and of how they may
affect labour relations management in organisations.

8.2 How does the organisational culture affect labour relations?

In this part of the lesson, we look closely at the role played by organisational culture in shaping labour
relations decision-making from inside the organisation. Robbins and Judge (2016:269) define as "a system
of shared meaning held by members that distinguishes the organisation from other organisations". Quick and
Nelson (2013:520) define organisational culture as "a pattern of basic assumptions that are considered valid
and that are taught to new members as the way to perceive, think, and feel in the organisation". When
comparing the way things are done in organisations, you will notice that organisations differ in the way they
perceive themselves and in the way in which they function and conduct business. These differences stem
from the fact that these choices are made from within the organisation by individuals, or groups of individuals,
whose frames of reference provide justification for the adopted choices. These frames of reference embrace
the organisation’s culture. A positive culture will be aimed at eliminating dysfunctional conflict among
members of an organisation and promoting functional conflict (see lesson 2). Venter et al (2014:523) state
that the culture should strive to promote harmonious employment relations by embracing sharing,
participation, communication and cooperation (more on this in lesson 6). Robbins and Judge (2016:280-282)
stress the importance of building a positive organisational culture, which they define as "a culture that
emphasises building on employee strengths, rewards more than punishes, and emphasises individual vitality
and growth". The organisational culture should support high ethical standards, thereby having a positive
impact on employee behaviour (Robbins & Judge, 2016:279). This has a direct impact on labour relations
management decisions. Robbins and Judge (2011:555) provide two examples of contrasting organisational
cultures, which are depicted in table 3.1.

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Table 3.1: Contrasting organisational cultures

Organisation A
This organisation is a manufacturing company.
Managers are expected to document all decisions
fully, and "good managers" are those who can
provide detailed data to support their
recommendations. Creative decisions that give rise
to significant change or risk are not encouraged.
Because managers of failed projects are openly
criticised and penalised, managers try not to
implement ideas that deviate too much from the
status quo. One lower-level manager quoted an
often-used phrase in the company: "If it ain’t broke,
don’t fix it".
There are extensive rules and regulations in this
company, which employees are required to follow.
Managers supervise employees closely to ensure
that there are no deviations, and disciplinary action
is a regular occurrence. Management is concerned
with high productivity, regardless of the impact on
employee morale or turnover.
Work activities are designed around individuals.
There are distinct departments and lines of
authority, and employees are expected to minimise
formal contact with other employees outside their
functional area or line of command. There are no
formal employee groupings and employee
representation by trade unions is unheard of.
Performance evaluations and rewards emphasise
individual effort, although seniority tends to be the
primary factor in the determination of pay raises
and promotions.
Source: Derived and adapted from Robbins and Judge (2011:555).
Organisation B
This organisation is also a manufacturing
company. Here, however, management
encourages and rewards risk-taking and change.
Decisions based on intuition are valued as much
as those that are well rationalised. Management
prides itself on its history of experimenting with
new technologies and its success in regularly
introducing innovative products. Managers or
employees who have a good idea are encouraged
to "run with it", and suggestion schemes are the
order of the day. Failures are treated as "learning
experiences" and employees are seldom
disciplined. The company prides itself on being
market-driven and able to respond rapidly to the
changing needs of its customers.
There are few rules and regulations for employees
to follow, and supervision is loose because
management believes that its employees are
hardworking and trustworthy. Management is
concerned with high productivity, but believes that
this comes through treating its people right. The
company is proud of its reputation as being a good
place to work.
Job activities are designed around work teams,
and team members are encouraged to interact
with people across functions and authority levels.
Employees talk positively about the competition
between teams. Individuals and teams have goals,
and bonuses are based on achievement of these
outcomes. Employees are given considerable
autonomy in choosing the means by which the
goals are attained.

Activity 3.3: Organisational culture

Critically compare the organisational culture of the organisation where you work, or one that
you are familiar with, with that of another organisation operating in the same industry, and
analyse the similarities and differences. To what do you ascribe these similarities and
differences? How do the different organisational cultures affect labour relations and the management thereof
in these organisations?

Feedback

Remember that there is no "right" or "wrong" culture. The organisational culture is merely
reflective of "how things are done" within a specific organisation. Just as the cultures in the
two examples above differ, your organisation’s culture may be vastly different from that of
another organisation, even if you operate in the same industry or geographical area. What is essential,
however, is for you to understand that an organisation's culture will affect the way labour relations are
managed within that organisation. For instance, how would the levels of formalisation and specialisation differ
in the two examples provided above?
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Robbins and Judge (2016:270) state that we should keep in mind that organisational culture creates the
climate prevalent in that organisation. They define organisational climate as "the shared perceptions
organisational members have about their organisation and work environment" (Robbins & Judge 2016:271).
This is important in the labour relations environment, in that a person who encounters a positive climate
regarding, for instance, diversity will feel more comfortable collaborating with co-workers, regardless of their
demographic background. Climate also influences the habits people adopt. If the climate regarding safety is
positive, everyone will wear safety gear and will follow safety procedures, even if, individually, they would not
normally think very often about being safe.

A further aspect that should be considered is the effect of the organisational culture on the ethical behaviour
of organisation members. Quick and Nelson (2013:539) explain that when an organisation’s culture promotes
ethical norms, individuals behave accordingly. Managers can encourage ethical behaviour by being good
role models for employees. According to Dessler (2015), in Nel et al (2016:458), there are various approaches
to address ethics in organisations within the context of culture. As such, a code of ethics is a means to create
an ethical culture in an organisation. Ethical principles in a code also guide action in an organisation, which
would provide guidance regarding the behaviour of personnel related to, for instance, harassment, conflict of
interests, discrimination, and the appropriateness of giving and receiving gifts. A formal code of ethics would
therefore guide employees in their attempts to exercise ethical behaviour in an organisation. It must, however,
be remembered that regardless of the existence or lack of a code of conduct, the possibility for unethical
conduct remains. This applies to the practice and execution of both human resource management and labour
relations activities in an organisation.

In order to ensure that ethical processes are followed in an organisation, the employer should apply
disciplinary processes that are not only effective in terms of discouraging unwanted behaviour, but also fair.
Dessler (2015:465-468) makes it clear that such processes are based on three pillars, namely

• rules and regulations addressing issues such as theft, destroying the property of the business and
drinking on the job.
• a system of progressive penalties ranging from verbal warnings to written warnings up to dismissal,
depending on the nature of the unethical behaviour.
• disciplinary appeals, which are also regarded as critical, since an appeals procedure is essential to
guarantee the fairness of the process. However, most union agreements will contain a disciplinary
appeals procedure, which usually guarantees fair treatment in an often complex occurrence, such as
alleged unethical behaviour of employees. Non-unionised businesses usually have such processes in
place as well.

For contemporary examples, you may refer to the Standard Bank Group’s Code of Ethics,
which is available on their website at:

https://www.standardbank.com/pages/StandardBankGroup/web/Code%20of%20ethics%20english.pdf

Also see First Rand Group's Code of Ethics at:

https://www.firstrandethicsoffice.com/Documents/Latest/FirstRandGroupCodeofEthics_en.pdf

Study

Ensure that you have a sound understanding of what “organisational culture” entails, and that
you are able to evaluate the importance of organisational culture and its impact on shaping
labour relations decision-making in organisations. You should also understand the effect of the
organisational culture on the ethical behaviour of organisation members, as well as its impact on the
management of labour relations.

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8.3 How does an organisation's leadership affect labour relations?

Activity 3.4: Leaders vs managers

Search the internet, magazines or newspapers for examples of good leaders (as opposed to
managers). Give reasons why you regard these people as good leaders.

Access Forum 4: Lesson 3 Activities and complete activity 3.4 by sharing your views here. Also read what
the other students have to say. Do you agree with their views? If not, argue your case in the discussion forum
and see whether you can come to an agreement.

Feedback

There are countless examples of good leaders, both nationally and internationally. Some
examples include former president and Nobel Peace Prize winner, Nelson Mandela; the
first South African sports captain to lead his rugby team to a world championship title,
Francois Pienaar; casino and hotel supremo, Sol Kerzner; tobacco magnate, Anton Rupert; and Danny
Jordaan, chief executive officer (CEO) of the South African 2010 FIFA World Cup Organising Committee
(Smit et al 2011:310). According to Forbes magazine (www.forbes.com), the most powerful people in African
business in 2018 included South Africans such as Nicky Oppenheimer (De Beers Group), Johann Rupert
(Richemont, Reinet Investments SCA and Remgro), Koos Bekker (Naspers), Patrice Motsepe (African
Rainbow Minerals), Michiel le Roux (Capitec Bank), Stephen Saad (Aspen Pharmacare), Desmond Sacco
(Assore Group), and Christo Wiese (Steinhoff International. International examples include the now deceased
former Apple CEO, Steve Jobs; British entrepreneur, best known for his Virgin Group, Richard Branson; and
media mogul, Oprah Winfrey. Google the names of some of these people and see what information you can
find on them. By looking at their personality traits, you should get some idea of what is required of a good
leader, and, more specifically, a good business leader.

Venter et al (2014:36) state that strong leadership is becoming an increasingly important component of the
success of an organisation. Leadership can be viewed as a person’s ability to exert influence over others
and to inspire, motivate and direct their behaviour to achieve particular goals (Brevis & Vrba 2014:447). The
terms "leadership" and "management" should, however, not be confused. Smit et al (2011:315) stress that
they are two distinct and complementary sets of management activities. A person can be a manager, a leader,
both or neither. For success in an increasingly complex business environment, it is necessary to be both.
The aforementioned authors explain that "management is about coping with the complexity of practices and
procedures to make organisations, especially large ones, work. Leadership, on the other hand, is about
setting the direction of the organisation and coping with change". Kotter (1990), in Robbins and Judge
(2011:410), argues that management is about coping with complexity. Good management brings about order
and consistency by drawing up formal plans, designing rigid organisation structures and monitoring results
against the plans. Leadership, in contrast, is about coping with change. Leaders establish direction by
developing a vision for the future; then they align people by communicating this vision and inspiring them to
overcome hurdles.

Robbins and Judge (2016:192) stress that we need strong leadership and strong management for optimal
effectiveness: "We need leaders to challenge the status quo, create visions of the future, and inspire
organisational members to want to achieve these visions. We need managers to formulate detailed plans,
create efficient organisational structures, and oversee day-to-day operations."

Thompson and Martin (2010:438) make a further distinction by referring to strategic leadership. Given the
strategic focus of this module, this view is especially relevant. These authors explain that the strategic leader
of an organisation affects both strategy creation and strategy implementation. He or she is responsible for
establishing the basic direction of the organisation, or, in the present case, the labour relations function in an
organisation. The strategic leader influences the nature and style of decision-making in an organisation. In
addition, decision-making and change are affected by the personal ambitions and qualities of the strategic
leader, the style of management adopted, and the management systems used. The task of leadership should
therefore not only be to provide the framework, values and motivation of people, and the allocation of financial
and other resources, but also to set the overall direction, which enables choices to be made so that the efforts

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of the organisation can be focused. In the labour relations environment, a strategic leader should set the
framework, mobilise the people, and make available the necessary human and other resources to assist the
organisation in achieving its strategic objectives.

According to Venter et al (2014:36), a positive labour relations environment is dependent on the ability of an
organisation’s leadership. Those leaders who gain the willing support and cooperation of employees will be
more successful in creating a work environment that is harmonious, productive and conducive to sound work
relationships.

Study

Ensure that you are able to differentiate between the concepts "leadership" and "management".
Also make sure that you fully comprehend the role of organisational leadership in giving the
labour relations function strategic direction.

8.4 Is corporate governance a labour relations issue?

A further aspect that is closely associated with leadership in a business environment is corporate
governance. This can be defined as "the system of reference according to which organisations are managed
and controlled, and from which the organisation's values and ethics emerge" (Daft 2010:30), or, in simpler
terms, the way in which an organisation is run. Many studies on good corporate governance have been
conducted worldwide. In South Africa, the King Committee on Corporate Governance published the King
Report on Corporate Governance for South Africa in November 2002 (King II), replacing the previous Code
of Corporate Practice and Conduct, which was published in the first King Report in 1994. This was followed
by the King Report on Governance for South Africa and the King Code of Governance Principles (together
referred to as King III) in September 2009. In November 2016 King IV Report on Corporate Governance for
South Africa was published in order to bring it up to date with international governance codes and best
practice.

The corporate governance principles underpinning King II and III are the principles of discipline, transparency,
accountability, independence, responsibility, fairness and social responsibility. In particular, King III highlights
the principles of fairness, accountability, responsibility and transparency (King III 2009). There can be no
doubt that the majority of the King III governance principles relate to corporate and human conduct and,
therefore, ultimately affect the domain of employment relations management (SABPP 2009:3). Ethical
leadership, the organisation in society, corporate citizenship, sustainable development, stakeholder
inclusivity, integrated thinking and integrated reporting are the concepts that form the foundation stones of
the King IV (King IV 2016).

Read

It is recommended that you read the King Report IV on Corporate Governance for South
Africa (2016) (referred to as King IV), which came into effect on 1 November 2016 (see

http://c.ymcdn.com/sites/www.iodsa.co.za/resource/resmgr/king_iv/King_IV_Report/IoDSA_King_IV_Repor
t_-_WebVe.pdf ).

As a labour or employment relations manager, you should be well aware of the implications of the King IV
Report for labour or employment relations decision-making and practices in an organisation. You should be
able to identify possible shortcomings and areas for improvement in your current practices, with particular
reference to the role of employment relations directors, managers and practitioners in ensuring sound
governance in South African organisations by utilising proactive strategies, not only to ensure compliance
with the code, but also to leverage and optimise the human resource contribution to the triple bottom line.

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Study

You should be able to identify and discuss corporate governance as one of the internal
environmental variables that influence the management of labour relations at a strategic level
in organisations, and critically evaluate its impact on the management of employment relations
specifically.

Activity 3.5: Internal environmental trends and variables

Choose any organisation that operates in South Africa. It may be the organisation for which
you are working, or any other organisation you are interested in. Obtain as much information
as possible on this organisation. Start by consulting their website. Most organisations also
publish their annual reports on their websites. Download the most recent annual report. Also access news
sites such as the ones mentioned earlier in this lesson and see whether you can find any news reports relating
to this organisation. You can even search under the organisation’s name on an internet search engine such
as Google.

Keep this information where you will be able to access it again, as we will return to it in other activities
throughout the module.

Identify the impact of the internal environmental trends and variables on your chosen organisation. Determine
how these trends and variables affect the way labour relations is managed in this organisation.

Feedback

There are a variety of internal trends and variables affecting labour relations at
organisational level. You may have identified management- or strategy-related decisions,
such as the organisational and labour relations strategies, the organisation’s vision and
mission and the labour relations mission (this will be elaborated on in lesson 5). You may also have discussed
aspects such as workforce diversity (lesson 2), the labour relations policy (lesson 5), communication (lesson
6), structures and procedures (lesson 8) or organisational culture, ethical behaviour, leadership and corporate
governance, as discussed in this lesson. Essentially, however, you should have identified the impact of these
variables on the management of labour relations and labour relations decision-making in this particular
organisation.

At this stage, you should appreciate the significant role played by internal environmental influences in shaping
labour relations in an organisation. The next section deals with the external environmental influences and
their impact on labour relations management in an organisation.

9 EXTERNAL ENVIRONMENTAL FACTORS THAT INFLUENCE LABOUR RELATIONS

MANAGEMENT

9.1 What does the external environment include?

The external environment includes influences or inputs from systems in the broader community, such as the
political, economic, social, demographic, educational and technological systems. Under normal
circumstances, an organisation does not have much control over external environmental influences.
According to Pearce and Robinson (2011:81), "a host of external factors influence a firm's choice of direction
and, ultimately, its organisational structure and internal processes". These factors, which constitute the
external environment, can be divided into three interrelated sub-categories: factors in the remote
environment, factors in the industry environment and factors in the operating environment. Pearce and
Robinson (2011) further state that the remote external environment presents organisations with opportunities,
threats and constraints, but rarely does a single organisation exert any meaningful reciprocal influence. For
instance, if parliament promulgates a piece of legislation such as the Employment Equity Act (EEA), the only
way in which a business enterprise can exercise a degree of control over this legislation is by making
representations and lobbying the politicians. Whether or not its representations will be taken into

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consideration when the legislation is passed is another question. Once the legislation has been promulgated
into law, the business enterprise has little choice but to comply.

Activity 3.6: External environmental variables

In activity 3.5 you were required to obtain information about the organisation for which you
work, or any other organisation with which you are familiar. Scrutinise this information and
identify the variables mentioned in it over which the organisation has no control. Categorise
these variables into clusters that have some logic to you (e.g. economic issues or political issues). Indicate
which of the variables can be considered "threats" and which can be considered "opportunities".

Feedback

Let's use Telkom as an example. If you read through their annual report (available at

http://www.telkom.co.za/ir/apps_static/ir/pdf/financial/pdf/Telkom_Integrated_Report_2018.pdf), you will be

able to identify variables such as the weakening economy, fluctuating currency movements, political
uncertainty, increased competition, volatile stock markets, sustainable development, and black economic
empowerment requirements that influenced their organisational strategy and, consequently, also their labour
relations strategy and the way in which they manage labour relations. Were you able to identify similar
variables? Were you able to determine whether the variables you identified would be considered threats or
opportunities in the environment in which this particular organisation operates? Don't despair if you were not
yet able to complete this activity. We will now look at various external environmental factors in more detail.
Once you have completed the lesson, we recommend that you return to this activity and attempt to answer it
again. You should then feel more able to identify possible threats and opportunities.

As previously indicated, for an organisation to remain prosperous, it must continually adapt to its external
environment, which is constantly changing. The external environment includes influences or inputs from
systems in the broader community, such as the political, economic, social, demographic, educational and
technological systems.

South Africa’s socioeconomic and socio-political situation is currently undergoing drastic changes. Many of
these changes spill over into the workplace and can eventually influence the quality of employment relations
to such an extent that the success of the total enterprise may be at stake. It is important to be mindful of the
consequences that factors in the macro-external environment could have for the quality of employment
relations in the enterprise so that the necessary steps can be taken in time to prevent these factors from
threatening the success of the enterprise. There are countless examples of these factors, but we will deal
with only some of them below. Many of these factors are interdependent, and it is sometimes difficult to define
and describe them individually. They should therefore not be studied in isolation, but the ways in which they
fit together should be identified and understood. Note that as a postgraduate student, you are required to
conduct research and obtain information from various resources. The aim of this lesson, therefore, is not to
provide you with all the necessary information on the external environment, but merely to provide you with a
few examples to lead you in the right direction.

9.2 How do demographic variables affect labour relations management?

To manage employment relations in the South African environment effectively,

organisations should understand the composition of the South African population. The
easiest way to obtain the most recent information on the South African population is by
accessing the mid-year population estimates available under “Publications” on the
Statistics South Africa website (www.statssa.gov.za). You may also refer to the latest
census data, which is also published by Statistics South Africa. A variety of census-related publications are
available at http://www.statssa.gov.za/?page_id=3955. The annual report published by the Commission for
Employment Equity is also a valuable source of information. It is published on the Department of Labour's
website. Click on the following link to see the 2018-2019 report:

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http://www.labour.gov.za/DocumentCenter/Reports/Annual%20Reports/Employment%20Equity/2018-
2019/19th%20Commission%20for%20Employment%20Equity%20Report%202018-%202019.pdf

In South Africa, as in other sub-Saharan countries, the relatively high annual rate of population growth has
implications for the number of young people entering the labour force each year. Countries such as South
Africa, with a rapidly expanding labour force, are under pressure to embark on effective job-creation
programmes to avoid the problems of crime, poverty and drug abuse, which tends to be associated with high
unemployment rates among the youth.

The composition of the South African population is further influenced by urbanisation, emigration and
immigration. Immigrants are residents of other countries who have been accepted as permanent residents
in South Africa, while self-declared emigrants are South African residents who, at the time of departing from
South Africa, stated their intention to leave the country and reside permanently elsewhere. There have been
wide fluctuations in the trends of documented immigration in South Africa. According to Statistics South
Africa, it is often difficult to make plausible migration assumptions owing to inadequate data. It is estimated,
however, that the large documented emigration of whites will decline substantially over time, and that the
positive documented immigration of Africans will continue. Migration is also an important demographic
process in shaping the age structure and distribution of the provincial population. Refer to the mid-year
population estimates mentioned above and obtain the most recent information on migration patterns in South
Africa.

Other demographic variables that should be considered include labour force statistics, such as the
unemployment rate, as well as the distribution of the population in general and the workforce in particular, in
terms of population groups, gender, occupational levels, languages spoken, age, levels of education, living
conditions and disability. Not only is it essential to have the necessary data available to meet legal
requirements (e.g. employment equity plans and reports), but aspects such as conflict, diversity and
communication can be managed effectively only if the workforce is well understood. For instance, given the
increasing number of women in the workplace – and especially at higher levels in organisations – employers
are compelled to consider the unique needs of female employees relating to work–life balance. This may
include aspects such as compressed hours, flexi-time, home-working and job-sharing. This, in turn, has a
direct impact on conditions of employment and employment contracts and will most probably be included in
collective bargaining in unionised organisations. Employers also have to consider the needs and expectations
of the different generations of employees to ensure the maximum levels of participation, productivity and
commitment from the various age groups.

Click on the following link to view a video clip relating to the characteristics of the four
generations in the workplace:
http://www.youtube.com/watch?v=QBVEMQsNbBY.

Can you think of any other demographic variables that affect labour and the management of employee
relations in the workplace?

9.3 How do economic variables affect labour relations management?

Factors such as a country’s economic growth rate, inflation, taxation and interest rates may have an effect
on employment relations. If the economy is sluggish, for instance, this may lead to increased unemployment
because relatively too few job opportunities are being created in relation to the number of new job seekers
entering the job market from school, college or university. People who are unemployed and have no money
are often jealous of those who do have jobs, earn money and make a decent living. This may lead to envy,
conflict and, ultimately, violence in the community. Workers’ lives (or those of their family members) may
consequently be threatened. Such a situation may lead to uncertainty, anxiety, health problems and
absenteeism. All of these may influence labour productivity and the manner in which employees are managed
at work. For example, workers may be warned about excessive absenteeism or poor work performance.
Moreover, poor economic growth may make managers reluctant to allow wage increases. This may lead to
strikes. Intimidation and violence, which frequently go hand in hand with strikes, often force workers to stay
at home, for instance during organised mass "stay-away" or "protest" actions. This, in turn, may cause conflict

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between management and workers when appropriate disciplinary measures are considered in cases where
protest actions are not protected by the Labour Relations Act 66 of 1995 (Nel, Erasmus & Swanepoel
1998:10-11).

High wages and low levels of productivity remain a structural problem for the economy (Slabbert et al
2006:3-34–3-35). South Africa’s productivity record is not encouraging. Adcorp (see
http://www.adcorp.co.za/Industry/Pages/AEIFebruary2013.aspx) reported a 50-year low in South African
labour productivity in February 2013. Despite the decline in employment and the increase in surplus labour,
labour market rigidity has caused remuneration to increase more than sixfold since 1980, with no
corresponding increase in output per employee. Furthermore, the remuneration of unskilled and semiskilled
workers increased twice as fast as that of skilled workers, despite the sharp rise in the unemployment rate of
unskilled and semiskilled workers. This sharp increase in remuneration, coupled with low productivity growth,
creates negative international perceptions. In contrast to the relatively sophisticated financial markets and
overall quality of the infrastructure, the quality of the labour force, compared with that of South Africa’s trading
partners, lags far behind when measured in terms of skills levels. In addition, the high levels of crime and the
loss in skilled labour (the "brain drain") contribute negatively to labour productivity and thus economic growth.

There is a mismatch between the supply of and demand for labour. In a perfectly competitive or perfectly
balanced labour market, the number of persons available to work and willing to accept the rate offered would
match the number of persons required. However, in South Africa, the working-age population increased from
37 678 000 in the first quarter of 2018 to 37 832 000 in the second quarter of 2018. The labour force
participation rate (the proportion of the working-age population that is either employed or unemployed) for
this group decreased from 59.3 per cent to 59.1 per cent over the same period. The labour force absorption
rate (the percentage of new entrants to the labour market who find a job in the formal sector of the economy)
decreased slightly from 43.3 per cent in 2017 to 43.1 per cent in 2018 (Statistics South Africa 2018).

9.4 How do political variables affect labour relations management?

Stability in the work environment, as well as the development and maintenance of a stable employment
relations environment and system, depends on the political stability in and around the country concerned.
Change is still taking place in South Africa with regard to political and labour issues. The major
transformation that culminated in the first democratic elections ever to be held in this country in 1994 was
no more than the beginning of a whole process of transforming South Africa into a better society for all who
live here. The change had a huge impact on the work environment and the management of labour relations.
Various new laws were passed, which emphasised the government’s intention to recreate the workplace.
New laws regulating attitudes in the workplace, spelling out basic rights, eliminating discrimination and
promoting health and safety have also been promulgated (see lesson 4). After the second round of elections
in 1999, government focus shifted from planning and reconciliation to delivery, while the major focus now is
on job creation. This is evident in the New Growth Path framework published in November 2010. The New
Growth Path starts by identifying where employment creation is possible. It then analyses the policies and
institutional developments required to take advantage of these opportunities (South Africa 2010). Aligning
employment strategies with the national strategy of job creation will be a major focus requiring serious
attention from employment relations managers in organisations. Such managers will also have to take
cognisance of the National Development Plan, which was published by the National Planning Commission in
November 2011 (see http://www.gov.za/issues/national-development-plan-2030) and its potential impact on
the relationships between government, business and organised labour. Clearly, the African National
Congress’s (ANC’s) philosophy and goals largely guide the transition from apartheid to democracy and will
also influence the business environment. It is therefore vital to monitor political happenings, and management
should familiarise itself with the following variables, among others, in the political environment:

• government’s ideological viewpoint, policy and vision concerning matters such as education, the free-
market system, economic development, privatisation, nationalisation, the right to vote, and international
relations
• international political trends and their influence on local politics and international markets
• pressure groups (or power groups), such as trade unionism in politics
• the stability of government

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In South Africa, we can expect the trade unions to play a key role in the political arena for a long time to
come. One reason for this lies in the alliance between organised labour, most notably the Congress of South
African Trade Unions (COSATU), and the ANC. Another reason relates to the rights of trade unions, which
have been enshrined in the Constitution of the Republic of South Africa, 1996. Trade unions play a major
role in national-level policy decisions about economic development and general labour-related matters. The
national body, NEDLAC (National Economic Development and Labour Council), facilitates these decisions.
However, the precise role that trade unions play in the workplace will depend largely on other developments
in the broader socio-political environment of the country. The following trends may be relevant in this regard:

As political democracy has become more of a reality, workers tend to strive to be more involved in
management decisions. There is a tendency towards greater “industrial democracy” (see lesson 6), and
workers want to be better informed about organisational issues and developments that may affect their lives.
Coupled with this is a growing level of expectation among workers and even among the unemployed.

Increasing pressure is being exerted on the private sector to make considerable contributions towards
combating poverty and raising living standards by, say, financing social services. This could encourage
greater community involvement, especially by larger South African organisations, as well as greater
cooperation between the social partners, with "social contracts" being more frequently concluded between
organised labour and employers at various levels.

Crime, frequently exacerbated by acts of violence, and intimidation in the community naturally spill over into
the workplace. Think, for example, of the recent surge in cash-in-transit heists in Gauteng. These heists were
aimed mostly at cash-in-transit vehicles. Because employees working for these security companies have
been exposed to frequent heists or attempted heists, or the continued threat of heists, their safety and security
have now become an area of prime concern. Increasingly, special measures are being instituted to eliminate
this problem. Appropriate agreements and codes of conduct have therefore become essential to maintain
order, peace and stability. The volatile security situation remains an obstacle to doing business in South
Africa. In addition, the business costs of crime and violence and the general lack of public trust in politicians
do not contribute to an environment that fosters global competiveness (WEF 2018:34).

If the government of the day changes, either in composition or with regard to policy direction, this may also
affect labour legislation. The legislation of a more pro-labour government will naturally be more sympathetic
to labour than it would be to capitalist organisations, and vice versa. In many African countries, authoritarian
governments’ policies are opposed to trade unions. COSATU has fought hard to prevent such a situation
from occurring in South Africa, and has indeed demonstrated that it is willing to take on the ANC (irrespective
of its alliance) on key policy issues that are of general concern to society as a whole, rather than only to the
labour constituency and its allies. Examples are the government’s privatisation plans and its stance (or lack
thereof) on the Zimbabwe crisis and the HIV/AIDS pandemic.

Note that South African labour legislation also forms part of the external environmental factors that affect
the way we manage labour relations. However, in order to deal with this topic comprehensively, it will be
discussed in a separate lesson (see lesson 4).

9.5 How do social variables affect labour relations management?

Inputs from the social environment, which have a direct effect on the labour environment, include poverty,
unemployment, poor health, low levels of literacy, and poor education and technical training. The impact of
these factors is alleviated by government’s policy of providing housing and basic services, offering primary
health care and increasing the effectiveness of the education system, as well as by its ability to ensure the
safety of the community.

Poverty, one of the worst social problems in Africa, influences the labour and production environment
adversely. However, because this problem is understood, programmes for its eradication are being
implemented. The role played by employers in this regard affects worker morale directly.

Unemployment, which precedes poverty, puts pressure on the capacity of the economy to create job
opportunities. The unemployment rate is the percentage of the economically active population that is

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unemployed. The official South African unemployment rate, in terms of the official definition of unemployment,
was 29.0 per cent in June 2019 (Statistics South Africa 2019). Unemployment is far higher among Africans
than among other race groups, and greater among women than among men. Those most at risk from
unemployment are African women with no education and who live in rural areas. However, unemployment
among educated people is also on the rise.

Training and educating the workforce not only increase the ability of a country to share in technological
developments, but also contribute to the productivity and general welfare of the labour force. In developing
countries such as South Africa, unemployment rates tend to be higher for those with no education or with low
levels of education, which provides one explanation for the high unemployment rate in South Africa.

According to the World Economic Forum (WEF 2014:39), a major concern relating to doing business in South
Africa is the poor health of the workforce, which is the result of high rates of communicable diseases and
poor health indicators generally. A major threat to South Africa’s competitiveness is the HIV/AIDS pandemic.
Horwitz (2007:230) states that HIV/AIDS, especially in sub-Saharan Africa, has had a devastating impact on
employment and employment health care costs. It has also led to a decline in union membership. HIV/AIDS
also has a detrimental effect on absenteeism, training, career and succession planning, with associated
adverse effects on state and union-negotiated medical schemes. Managers increasingly have to hire two or
even three workers for the same position. Productivity will decline as experienced workers are replaced by
younger, less experienced employees, while the shortage of skills will lead to higher production costs.
Governments will be forced to cut spending in non-health areas, especially physical infrastructure, opening
the way for greater private-sector participation in infrastructural projects. Business costs will rise as
organisations are forced to pick up an increased proportion of employee health care costs and deal with the
impact of absenteeism and lower productivity. This may deter foreign direct investment, especially in
Southern Africa.

Access the following websites to obtain data and statistics relating to HIV/AIDS, as well as
general information and publications relating to the disease:
• World Health Organization: http://www.who.int/topics/hiv_aids/en/
• The World Bank: http://data.worldbank.org/topic/health
• International Labour Organization: http://www.ilo.org/aids
• UNAIDS: http://www.unaids.org/en/regionscountries/countries/southafrica/

These statistics have dire consequences for South Africa’s labour market at present, as well as in the future.
Forecasting will become more difficult as the economically active population declines. Also affected will be
productivity, not least because of the associated stigma and demotivated employees who suffer the loss of
their colleagues (Venter et al 2014:45).

The pandemic has tremendous social and economic consequences, which need to be addressed by human
resource (HR) practitioners in their organisations. By affecting the population’s most productive age group,
the labour supply and skills levels will be hampered. The disease also imposes direct costs on businesses
through greater absenteeism, lower productivity at work by affected workers, and higher labour turnover rates
and thus greater recruitment and training costs. In addition, pension, death benefit and health insurance costs
also increase. Recognition of these facts has led to efforts in the private sector to initiate workplace
programmes to combat the epidemic.

South Africa has incorporated HIV/AIDS provisions into its labour legislation and has adopted special rules
applicable to the workplace. A Code of Good Practice on Key Aspects of HIV/AIDS and Employment was
published in 2000 to assist employees in dealing with the impact of HIV/AIDS in the workplace. This Code
was updated in 2012 (see list of references for details), following the publication of the ILO Recommendation
concerning HIV and AIDS and the World of Work in 2010 (ILO 2010).

In terms of South African law, the following guidelines apply (Nel et al 2016:456-457):

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• Procedures to deal with employee incapacity should be devised. Should an employee be dismissed
because of their HIV status or be forced to resign because of being HIV-positive, such a dismissal will
be an automatically unfair dismissal in terms of the Labour Relations Act 66 of 1995.
• In terms of the Employment Equity Act 55 of 1998, no employee, or applicant for employment, may be
required to undergo an HIV test in order to ascertain their HIV status. HIV testing by or on behalf of an
employer may only take place under certain conditions. The tests must, for instance, be voluntary and
anonymous. It is also important that pre- and post-test counselling be provided and that strict
procedures relating to confidentiality exist. Employers may approach the Labour Court to obtain
authorisation for testing.
• Employers are required, in terms of both the Occupational Health and Safety Act 85 of 1993 and the
Mine Health and Safety Act 29 of 1996, to provide, as far as is reasonably practicable, a safe workplace.
This may include ensuring that the risk of occupational exposure to HIV is minimised.
• An employee who is infected with HIV as a result of an occupational exposure to infected blood or
bodily fluids may apply for benefits in terms of section 22(1) of the Compensation for Occupational
Injuries and Diseases Act 130 of 1993.
• In accordance with the Basic Conditions of Employment Act 75 of 1997, every employer is obliged to
ensure that all employees receive certain basic standards of employment, including a minimum number
of days' sick leave.
• In accordance with both common law and section 14 of the Constitution of the Republic of South Africa,
1996, all people with HIV or AIDS have the right to privacy, including privacy concerning their HIV or
AIDS status. Accordingly, there is no general legal duty on an employee to disclose their HIV status to
their employer or to other employees. Where an employee chooses voluntarily to disclose their HIV
status to the employer or to other employees, this information may not be disclosed to others without
the employee's written consent. Mechanisms should be created to encourage openness, acceptance
and support for those individuals who voluntarily disclose their HIV status within the workplace.
• Employees with HIV/AIDS may not be unfairly discriminated against in the allocation of employee
benefits. Employees who become ill with AIDS should be treated like any other employee with a
comparable life-threatening illness with regard to access to employee benefits.
• Employers should ensure that employees, or applicants for employment, are not unfairly discriminated
against on the basis of their HIV status. Discrimination against employees who are HIV/AIDS-infected
can take various forms, for example
— compulsory medical screening at pre-employment level and of employees at any stage of
employment
— denial of employment to potential employees who admit to being HIV-positive
— disciplining of employees who inform their employers that they have AIDS
— demotion or transfer of employees who test HIV-positive or who admit to having AIDS
— workers forcing the employer to have an employee tested because the latter is suspected of
suffering from AIDS
— testing of foreigners who enter the country to seek employment
— suspension with salary of HIV-infected employees
— variation of the conditions of employment (e.g. changing the area of work)

Except in a few situations in which discrimination may be justified (e.g. an HIV-positive health care
worker), there can thus be no justification for discrimination in the workplace.
• In terms of the Code of Good Practice on Key Aspects of HIV/AIDS and Employment, every workplace
should develop an HIV/AIDS policy in order to ensure that employees affected by HIV and/or AIDS are
not unfairly discriminated against in employment policies and practices.

It is essential, however, to understand not only the impact of HIV/AIDS in South Africa, but also its impact on
organisations and the management of labour relations. A mining company such as Anglo American or Gold
Fields, for instance, would have to consider the implications of HIV/AIDS on its business, as the mining sector
is one of the sectors most severely affected by the HIV/AIDS pandemic. The ILO (2008:54) states that
workers in mining are at greater risk, not so much because of the nature of their work but because of the
circumstances in which it may be carried out. This is particularly the case for miners in many parts of Southern
Africa, who live far from their families and home communities for long periods of time, rendering them
vulnerable to contracting HIV/AIDS.

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HIV/AIDS and its impact on business is, therefore, a very real threat to organisations. Finnemore et al
(2018:83-85) indicate that HIV/AIDS has a considerable social and economic impact on workplaces. It leads
to increased absenteeism, as HIV leads to vulnerability to opportunistic diseases such as tuberculosis (TB)
and pneumonia, and, consequently, productivity declines. A further consequence is that training costs to
replace ill staff will increase considerably. Bolton (2008:280-281) warns that HIV/AIDS poses a serious threat
to economic growth and development on all continents, and most immediately in sub-Saharan Africa. She
continues to discuss the effects of HIV/AIDS on the viability and competitiveness of African businesses
through mechanisms such as the following:

• Labour supply: AIDS deaths, which occur mainly among workers in their most productive years,
directly reduce the labour supply. The ILO has calculated that the size of the labour force in high-
prevalence countries will be between 10 and 30 per cent smaller by 2020 than it would have been
without the effect of HIV/AIDS. Skills shortages appear in hard-hit sectors.
• Profitability: Businesses must spend more on health care, training and recruitment, while facing
revenue decreases owing to absenteeism (for illness, time taken to care for ill family members or to
attend funerals), labour turnover, time devoted to training, and reduced worker productivity, particularly
during episodes of HIV-linked illness.
• Less readily quantifiable impacts: Labour relations and employee morale can be adversely affected
when businesses are contending with HIV/AIDS. Investors may be reluctant to locate businesses in
countries facing higher HIV/AIDS burdens.

Organisations should therefore not have any doubts in terms of the urgency of managing HIV/AIDS and its
impact on their businesses. The question, now, is how they should go about approaching the problem of
HIV/AIDS. Organisations increasingly focus on workplace prevention programmes and explicit non-
discrimination policies (Bolton 2008:283-284). Many organisations now articulate the belief that taking a
proactive role to combat HIV/AIDS is not simply a question of compassion and good citizenship, but that
assertive action against HIV is critical to their long-term profitability – some have even concluded that this is
cost-effective in the short term.

Organisations are expected to implement various policies and procedures in order to deal with the impact of
HIV/AIDS in their workplaces. As previously indicated, the South African government published the updated
Code of Good Practice on Key Aspects of HIV/AIDS and Employment in 2010. This code, together with the
subsequent HIV/AIDS technical assistance guidelines (DoL 2012), may serve as a guideline for what
organisations should do.

Nel et al (2016:456-457) outline some guidelines for dealing with HIV/AIDS in the workplace:

• HIV/AIDS in the workplace should be managed by means of an integrated strategy that includes an
understanding and assessment of the impact of the disease in the workplace, and long- and short-term
measures to deal with, and reduce, this impact.
• HIV/AIDS policies and programmes incorporating ongoing, sustained prevention of the spread of HIV
among employees and their communities should be developed and implemented. Bolton (2008:286)
reiterates that organisations must formalise their position and practices as these relate to HIV/AIDS. A
written policy should outline what employees are entitled to, and how benefits operate. It also provides
a framework on which to base workplace HIV/AIDS programmes.
• Employees with HIV should be managed so that they are able to work productively for as long as
possible.
• Strategies should be formulated to deal with the direct and indirect costs of HIV/AIDS in the workplace.
• Employers should ensure that the rights of employees with regard to HIV/AIDS, and the remedies
available to them in the event of a breach of such rights, become integrated into existing grievance
procedures.

Venter et al (2014:45) confirm the above by stating that special AIDS policies and programmes will need to
be formulated and instituted to inform workers and employers alike of the consequences of contracting AIDS.
Moreover, the rights of employees (both those with AIDS and those without) will need to be clearly spelt out.
Education and training will also have to be provided for all employees.
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According to Finnemore et al (2018:84), it is good practice for organisations to have HIV/AIDS policies that
provide for education, voluntary counselling and testing for employees and their families, support
programmes, treatment for other sexually transmitted diseases, the right to privacy, protection from
victimisation, and protection of health care workers. Procedures relating to the ability of employees to fulfil
their contracts, as well as access to sick leave and medical treatment, should be included. Antiretroviral
treatment (ART) for employees has been made available by some employers in a move to improve the health
and life span of employees and lessen the negative impact on productivity. The underlying economic
imperative is that provision of ART can enable infected employees to remain productive and thus, indirectly,
contain recruitment, training and absenteeism costs (George & Quinlan 2008:20). The ILO (2008:74) reports
that multinational enterprises (MNEs) have taken the lead in providing treatment at workplaces, and their
programmes are well documented. Many diamond and gold mines as well as car companies in Southern
Africa provide treatment at the workplace through occupational health services or other arrangements made
with private or public health service providers. Companies such as Anglo American, DaimlerChrysler, BMW,
Volkswagen and Coca-Cola provide antiretroviral drugs (ARVs) for HIV-positive staff. There appears to be
an increasing trend towards companies providing ARVs to their staff in the worst-affected regions. In African
regions with a high rate of HIV infection, more than 70 per cent of the companies surveyed are fully
subsidising staff access to HIV treatment. Organisations may also consider bringing treatment close to the
workforce by introducing occupational health services, as this provides the opportunity for tailoring the
treatment to suit the needs of workers within their work environment. Additionally, support for treatment
adherence can be enhanced.

From the above, it should be clear that the HIV/AIDS pandemic has tremendous social and economic
consequences. Because it is affecting the population’s most productive age group, it hampers labour supply
and skills levels. It also imposes direct costs on businesses through greater absenteeism, lower productivity
at work by affected workers, higher labour turnover rates, and thus greater recruitment and training costs. In
addition, pension, death benefit and health insurance costs also increase. Staff morale is particularly likely to
be undermined, and severe problems relating to stigmatisation and discrimination may arise. Recognition of
these facts has led to efforts in the private sector to initiate workplace programmes to combat the epidemic.

Activity 3.7: Dealing with the poor health of the workforce

In activity 3.5 you were required to obtain information about the organisation for which you
work, or any other organisation with which you are familiar. Scrutinise this information again.
What does this company do to deal with the impact of HIV/AIDS?

Feedback

We will again refer to Telkom as an example. They are reported to have offered their
employees free medical screening and subsequent counselling, support and treatment, if
needed (Telkom 2018). They do not focus on HIV/AIDS only, but also on other life-
threatening diseases such as malaria, sexually transmitted infections, hepatitis B and C and tuberculosis.
They also provide a series of preventative/proactive interventions that promote a healthy lifestyle which is
aimed at improving the overall health and general well-being of their employees.

9.6 How do technological variables affect labour relations management?

The development of technology, and its effects on job content, the work environment and the relationship
between employer and employee, is one of the primary contributory factors to labour unrest, dismissals and
poverty. Technological developments not only improve the quality of products and speed up production
processes, but also change job content to such an extent that it may threaten job security, which is the basis
of industrial peace. Retraining workers reduces the profit margins of organisations, which, in turn, reduces
the availability of funds for eliminating disparities and contributing to social development.

Finnemore and Van Rensburg (2002:55) argue that while the benefits of new technology are frequently more
clearly defined in terms of safer workplaces, new and better-quality products, increased productivity and more
efficient use of natural resources, the impact of technological change on employees and unions at workplaces

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is widely contested. New technology has resulted in redundancy of old skills; fewer full-time, permanent
employees to achieve the same output; insecurity among employees; pressures on shop stewards to resist
technological changes at work; the need for a more highly educated but smaller workforce; and declining
trade union membership owing to large-scale retrenchments of blue-collar workers and greater numbers of
employees working in part-time jobs or according to fixed-term contracts, who are unlikely to be members of
any union.

Study

Make sure that you can identify the most important external environmental variables that may
affect the management of labour relations in an organisation, and critically evaluate their impact.

9.7 What is the international context within which South African labour relations needs to operate?

Keep in mind that South African organisations cannot exist in isolation, but are part of an international
environment and are influenced by factors such as globalisation and the labour relations systems of other
countries. You have already seen this throughout the study material, since we referred you to, for instance,
the recommendations in terms of HIV/AIDS made by the International Labour Organization, which were
accepted by South Africa in its Code of Good Practice on HIV/AIDS in the Workplace.

A number of international and regional bodies influence South African labour relations. This section serves
as an introduction to the international context within which South African labour relations needs to operate.

South Africa's reintegration into the world community has largely involved relationship-building with a number
of international and regional bodies. These bodies play a highly influential role in the development of South
African policy (Venter et al 2011:58-60) and are identified below.

9.7.1 The International Labour Organization (ILO)

The International Labour Organization (ILO) is a specialised agency of the United Nations (UN) that seeks
the promotion of social justice and of internationally recognised human and labour rights. The main aims of
the ILO are to promote rights at work, encourage decent employment opportunities, enhance social protection
and strengthen dialogue on work-related issues. The ILO formulates international labour standards in the
form of conventions and recommendations, setting minimum standards regarding basic labour rights, namely
freedom of association; the right to organise; collective bargaining; abolition of forced labour; equality of
opportunity and treatment; and other standards regulating conditions across the entire spectrum of work-
related issues. It promotes the development of independent employers' and workers' organisations and
provides training and advisory services for these organisations. Within the UN system, the ILO has a unique
tripartite structure in which workers and employers participate as equal partners with governments in the
work of its governing bodies. South Africa has ratified a number of ILO conventions, which are reflected in
the country’s legislation and policies.

See the ILO website (www.ilo.org) for more information.

9.7.2 Southern African Development Community (SADC)

South Africa also features as a key player among the SADC countries. Currently, SADC has a membership
of 15 states, namely Angola, Botswana, Democratic Republic of Congo (DRC), Lesotho, Madagascar,
Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, United Republic of Tanzania,
Zambia and Zimbabwe. SADC's vision is that of a common future, a future within a regional community that
will ensure economic wellbeing, improvement of the standards of living and quality of life, freedom and social
justice, and peace and security for the people of Southern Africa. This shared vision is anchored on the

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common values and principles and the historical and cultural affinities that exist among the people of
Southern Africa. The SADC mission is to promote sustainable and equitable economic growth and
socioeconomic development through efficient productive systems, deeper cooperation and integration, good
governance and durable peace and security, so that the region emerges as a competitive and effective player
in international relations and the world economy.

The role of SADC is essentially to provide a unified front for the regulation of affairs among countries in the
Southern African region. However, a far more important, yet perhaps less auspicious, role is its regulation of
economic affairs in the region to promote and bring about economic stability. Regulation of labour relations
and the establishment and promotion of fair and equitable practices among member countries are inherent
in this role. For instance, tripartite teams from Botswana, Namibia, South Africa, Zimbabwe and Zambia
drafted a Southern African Code on HIV/AIDS and Employment for the SADC employment and labour sector.

See the SADC website (www.sadc.int) for more information.

9.7.3 The African Union (AU)

The main aims of the African Union (AU) are to accelerate the process of integration on the African continent
to enable it to play its rightful role in the global economy, while resolving multifaceted social, economic and
political problems, compounded as they are by certain negative aspects of globalisation.

The vision of the AU is that of "an integrated, prosperous and peaceful Africa, driven by its own citizens and
representing a dynamic force in a global arena". It intends to realise this vision of a new, forward-looking,
dynamic and integrated Africa through relentless struggle on several fronts and as a long-term endeavour.
The AU has shifted its focus from supporting liberation movements in the erstwhile African territories under
colonialism and apartheid, as envisaged by the Organisation of African Unity (OAU) since 1963 and the
Constitutive Act 1, to an organisation spearheading Africa's development and integration.

The objectives of the AU include the following:

• to achieve greater unity and solidarity among African countries and the peoples of Africa
• to defend the sovereignty, territorial integrity and independence of its member states
• to accelerate the political and socioeconomic integration of the continent
• to promote and defend African common positions on issues of interest to the continent and its peoples
• to encourage international cooperation, taking due account of the Charter of the United Nations and
the Universal Declaration of Human Rights
• to promote peace, security and stability on the continent
• to promote democratic principles and institutions, popular participation and good governance
• to promote and protect human and peoples’ rights in accordance with the African Charter on Human
and Peoples’ Rights and other relevant human rights instruments
• to establish the necessary conditions that enable the continent to play its rightful role in the global
economy and in international negotiations
• to promote sustainable development at economic, social and cultural levels, as well as the integration
of African economies
• to promote cooperation in all fields of human activity in order to raise the living standards of African
peoples
• to coordinate and harmonise the policies between the existing and future Regional Economic
Communities for the gradual attainment of the objectives of the Union
• to advance the development of the continent by promoting research in all fields, in particular in science
and technology
• to work with relevant international partners in the eradication of preventable diseases and the promotion
of good health on the continent

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See the AU website (www.au.int) for more information.

9.7.4 The New Partnership for Africa's Development (NEPAD)

The New Partnership for Africa's Development (NEPAD) is a programme of the AU adopted in Lusaka,
Zambia, in 2001. NEPAD is a radically new intervention, spearheaded by African leaders to pursue new
priorities and approaches to the political and socioeconomic transformation of Africa. NEPAD’s objective is
to enhance Africa’s growth, development and participation in the global economy. NEPAD is a vision and
programme of action for the redevelopment of the African continent, which the leaders of Africa conceived
and developed. It seeks to redress the social, economic and political imbalances prevalent on the continent,
and to speed up Africa’s integration into the international arena. The very essence of NEPAD is the
partnership it envisages between Africa and the rest of the world.

NEPAD has the following three primary goals:

(1) to promote accelerated growth and sustainable development
(2) to eradicate widespread and severe poverty
(3) to halt the marginalisation of Africa in the globalisation process

NEPAD identifies the upliftment of the continent's human resources as being critical to achieve these goals,
and has identified job creation, education and skills development as driving forces in this process of
upliftment.

See the NEPAD website (www.nepad.org) for more information.

Study

Make sure that you can identify and critically discuss the roles of the various international
and regional bodies, and how these bodies affect the way labour relations is managed in
South Africa.

10 SUMMARY

In this lesson we focused specifically on the environment in which South African organisations operate. We
stressed the importance of thoroughly analysing both the internal and the external environments to determine
strengths, weaknesses, opportunities and threats, and identifying their impact on labour relations
management. In line with the strategic focus of this module, environmental analysis is viewed as the first step
in the strategic management process (more on this in lesson 5). We will continue our analysis of the
environment in which labour relations is managed in the next lesson by focusing specifically on the legal
framework that applies. Thereafter, we will continue with this process by focusing on the formulation,
alignment and implementation of labour relations strategy and policies, focusing on specific aspects at
organisational level. We will conclude with the last step in the strategic management process, namely control
and feedback, in lesson 10.

After working through this lesson, you should have compiled notes on the following topics for revision
purposes:
(1) reasons for analysing the internal and external business environments
(2) the environmental analysis process
(3) the concept "internal environmental trends and variables"
(4) examples of internal environmental trends and variables

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(5) the impact of internal environmental trends and variables on labour relations management in
organisations
(6) the concept "organisational culture"
(7) the importance of organisational culture and its impact on shaping labour relations decision-making
in organisations
(8) the effect of the organisational culture on the ethical behaviour of organisation members, and its
impact on the management of labour relations
(9) the concepts "leadership" and "management"
(10) the role of organisational leadership in giving the labour relations function strategic direction
(11) the impact of corporate governance on the management of employment relations specifically
(12) the concept "external environmental trends and variables"
(13) examples of external environmental trends and variables
(14) the impact of external environmental trends and variables on labour relations management in
organisations
(15) the roles and impact of the following international and regional bodies on the way labour relations
are managed in South Africa:
(a) International Labour Organization (ILO)
(b) Southern African Development Community (SADC)
(c) African Union (AU)
(d) New Partnership for Africa’s Development (NEPAD)

11 SELF-ASSESSMENT

After you have completed each lesson, it is necessary for you to determine whether you have
achieved the relevant learning outcomes stated at the beginning of the lesson. Therefore, read
through the relevant learning outcomes again before attempting to answer the self-
assessment questions.

To ensure that you have achieved the learning outcomes, answer the questions that follow and then study
the feedback on the questions. Remember, the feedback is provided only to ensure that you are on the right
track – it does not provide model answers. You are still required to consult sources of your choice to answer
the questions and achieve the learning outcomes.

Question 1

Explain what environmental analysis entails and why it is essential for a labour relations manager to
continuously scan both the internal and external environments in which an organisation operates. Briefly
outline how they should go about doing this.

Question 2

Suggest ways in which labour relations practices can enhance ethical behaviour in organisations.

Question 3

David Moloto, Training and Development Manager at Nestlé (South Africa) Pty Ltd, has the following to say
about their organisational culture:

Nestlé’s culture is characterised by trust, diversity, quality and honesty. It is an informal environment based
on our values of openness, trust and transparency. All generations of employees fit in easily. We have a
mixed culture of the older, traditional values and the young; it’s very diverse and truly representative of the
Rainbow Nation. While the work environment is relaxed, it is also performance driven. We are building a
culture of winning.

Nestlé wants to be a winning organisation.

Source: www.bestemployers.co.za.
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How would the above culture affect the way labour relations is managed at Nestlé?

Question 4

The HIV/AIDS pandemic is acknowledged as being the single most important issue currently facing South
African businesses.
Critically evaluate the above statement. Substantiate your answer by outlining the impact of the HIV/AIDS
pandemic on South Africa in general and South African organisations specifically. Propose ways in which
South African organisations should deal with HIV/AIDS.

Question 5

South African organisations cannot exist in isolation, but are part of an international environment. Labour
relations management in South African organisations is therefore influenced by a number of international and
regional bodies. Identify these bodies and explain their role and influence on South African labour relations
management.

FEEDBACK

Question 1

You should have covered the following aspects in your answer:

• an acceptable definition of "environmental analysis", including both the internal and external
environments
• reasons why it is necessary to analyse the environment from a labour relations point of view
• a brief explanation of how an environmental analysis should be conducted

Question 2

Various suggestions have been made in the literature (Erasmus & Wordsworth 2004; Nel, Nel & Du Plessis
2009; Rossouw & Van Vuuren 2006; Trevino & Nelson 2010) to enhance the practice of ethical behaviour in
organisations. Examples include the following:
• Induction and socialisation training of personnel to include ethics training, including explanations
referring to a code of ethics, should it exist. It is appropriate that both management and union
representatives cooperate to devise a process with regard to ethics training directed at promoting
ethical employment practices in organisations. This will minimise unethical behaviour of personnel.
• Provide rewards for employees who exhibit ethical practices, in the form of long-term rewards, which
could include recognition and praise, for example employee-of-the-month awards, followed by an
employee-of-the-year award at the end of the year.
• Encourage employees to act in accordance with shared values that are positive in an organisation.
• In some cases it is appropriate to discipline employees for unethical practices by applying a compliance-
based approach. This may be useful in integrating ethics into an organisation’s culture.
• A code of ethics needs to be continuously communicated to employees to influence behaviour on an
ongoing basis.
• It is critical that the example set by management enhances ethical behaviour in organisations.
• The employment relationship usually determines the ethical standards practised within an organisation
and, therefore, the way in which disciplinary processes operate. This will, in turn, reflect the culture and
ethics being practised in an organisation.

Question 3

From the statement it is evident that the company strives to achieve good interpersonal relations built on
openness, trust and transparency. It welcomes the diversity of its workforce and wants to use the strengths
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of all individuals to contribute to the success of the organisation. It regards the representativeness of its
workforce as essential and places great emphasis on performance. This means that aspects such as
employee involvement and participation, effective communication, diversity management and performance
management will most probably be high on its list of labour relations priorities.

Question 4

You should use section 9.5 as a point of departure to answer this question. Start by providing some
background information on the extent of the pandemic in sub-Saharan Africa and in South Africa specifically.
Then explain the impact of the pandemic on South African organisations and their workforce. Finally, make
suggestions as to how South African organisations should deal with HIV/AIDS matters in the workplace.
When making suggestions, also consider the various legal requirements.

Question 5

Refer to section 9.7 to answer this question. You should identify the following international and regional
bodies: (1) the International Labour Organization; (2) the Southern African Development Community; (3) the
African Union; and (4) the New Partnership for Africa’s Development. It will be beneficial to access these
bodies’ websites in order to gain insight into the role, purpose and objectives of each. Make comprehensive
notes on how they influence the development and management of labour relations in South Africa.

12 LIST OF REFERENCES AND ADDITIONAL READING

If you want to cite this Lesson in your assignments, you may cite it as follows:

In the text:
According to Deas (2019)… OR ….(Deas 2019)

In the list of references:

Deas, A. 2019. Advanced Labour Relations Management, Lesson 03 (2019).
Pretoria: University of South Africa.

Adcorp. [Sa]. Adcorp's Employment Index (AEI). Available at:

http://www.adcorp.co.za/Industry/Pages/Adcorp'sEmploymentIndex.aspx (accessed on 9 September 2015).

Barker, F. 2007. The South African labour market: theory and practice. 4th edition. Pretoria: Van Schaik.

Bendix, S. 2015. Labour relations, a southern African perspective. 6th edition. Cape Town: Juta.

Bolton, P. 2008. Corporate responses to HIV/AIDS: experience and leadership from South Africa. Business
and Society Review 113(2):277.

Brevis, T & Vrba M (eds.). 2014. Contemporary management principles. Cape Town: Juta.

Commission for Employment Equity (CEE). 2018. 18th Commission for Employment Equity annual report
(2017-2018). Department of Labour: Pretoria. Available at:
http://www.labour.gov.za/DOL/documents/annual-
reports/Commission%20for%20Employment%20Equity%20Report/2017-
2018/downloads/documents/annual-reports/employment-equity/2017-2018/18ceereport_amended.pdf
(accessed on 12 September 2018).

Daft, RL. 2010. New era of management. 9th edition. Canada: South-Western Cengage Learning.

Department of Labour (DoL). 2012. South African Code of Good Practice on HIV and AIDS and the World of
Work. Government Gazette, 451(35435), 15 June 2012. Available at:

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http://www.labour.gov.za/DOL/downloads/legislation/acts/employment-
equity/hivaidstechnicalguide.pdf/view (accessed on 9 September 2015).

Department of Labour (DoL). 2012. HIV/AIDS technical assistance guidelines. Cape Town: Government
Printer. Available at:
http://www.labour.gov.za/downloads/documents/useful-documents/employment-
equity/eehivaidstag2012.pdf (accessed 9 September 2015).

Dessler, G. 2015. Human resources management. 14th edition. Boston: Pearson Education.

Ehlers, T & Lazenby, K. 2010. Strategic management: South African concepts and cases. 3rd edition. Pretoria:
Van Schaik.

Erasmus, BJ & Wordsworth, R. 2004. Aspects of business ethics in South Africa. South African Journal of
Labour Relations Winter, 28(2):77-112.

Finnemore, M, Koekemoer, GM & Joubert, YT. 2018. Introduction to labour relations in South Africa. 11th
edition. Durban: LexisNexis.

Finnemore, M & Van Rensburg, R. 2002. Contemporary labour relations. 2nd edition. Durban: LexisNexis.

George, G & Quinlan, T. 2008. “Health management” in the private sector in the context of HIV/AIDS:
progress and challenges faced by company programmes in South Africa. Sustainable Development 17(1):19.

Holtzhausen, MME. 2011. Only study guide for Labour relations management: macro. Pretoria: University of
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