Human Resources

Week 2 Section 2
Law and government
Organisation and management
 ROLE OF LAW AND GOVERNMENT

Why do you think the LAW is important in Human Resources?

Employment law comes from Common Law and Statute Law.

Common law is made of the rules and principles and law we extract from the
decisions of judges and courts.
Statute law. Act of Parliament and the orders and regulations made under
those statutes.

Role of employment legislation

- Establish and support the employment relations and collective bargaining
systems;
- To regulate the payment of wage and other benefits;
- To prescribe or control conditions of work, including the safety, health and
welfare of employees.
Development of employment law

The common law notion of ‘master and servant’ was central

to the employment relationship, which meant it was shaped
and regulated by the law of contract and the law of torts*.

Law of torts. Deal with civil wrongs and wrongful acts,

whetyher intentional or accidental, from which injury occurs
to another.

Today, the Employment Relations Act 2000 governs all

employment contracts (now known as employment
agreements).
 State involvement

New Zealand laws are mostly copied from the laws of England.
Why do you think that happened?

Employment legislation
Employment relations, labour relations and industrial relations – these terms
are used interchangeably to refer to all aspects of the relations between
employers and employees or unions.

The objectives of the Employment Contracts Act:

-To facilitate the formation of effective and accountable unions and effective
and accountable employers organisations;
-To provide procedures for the orderly conduct of relations between workers
and employers;
-To provide a framework to enable agreements to be reached between workers
and employers.
Legislation has traditionally supported collective rather than individual action, while at the
same time providing protection for individual employees.

Regulation of wages

Minimum Wage Act 1983

Wages Protection Act 1983
-Wages should be paid in case, or cheque, money order ot postal order or direct credit to
a financial institution with the consent of the worker, or on the instruction of the worker.
-Payment cannot be withheld for any period or reason.
-Deductions may be made from wages for any lawful purpose, but only on the instruction
of the worker or with the worker’s consent.
 Conditions of work

There are many aspects of work and employment which the community has
decided should be subject to standards or requirements set by statue.

Occupational safety, health and welfare legislation

Health and Safety in Employment Act 1992

Holidays and leave legislation

The Holidays Act 1981

Accident compensation legislation

NZ’s accident compensation system was introduced in 1974.

Anti-discrimination legislation Equal Pay Act 1972

 LAW AND GOVERNMENT IN EMPLOYMENT RELATIONS

Legislation has been a central influence or determinant in the development and

practice of New Zealand’s employer – employee relations.

Industrial relations theory (3 different approaches)

-System theory; which consists of the political, economic, and industrial sub-
systems – within the total social system. In turn, the industrial relations sub-
system is made up of managers, workers and government agencies, a complex
of rules, the environment in which they operate, and the ideology or
understanding they share.
-Institutional approaches. Industrial relations deals with certain regulated or
institutionalised relationships in industry, but does not include personal or
unstructured relationships.
-Sociological views. All organisations, institutions and technology are the
product of human thought and action, and cannot exist or be studied separately
from the people involved.
 Conflict in industry
It is believed that conflicts are inevitable and inherent in industrial society. Therefore the
objectives of industrial relations systems, policies and practices cannot be to eliminate
conflict. Instead, it must be to channel and manage conflict in a constructive way, and to
set up the means for the parties in conflict to resolve the issues between them.

Causes of conflict in industry

Inherent causes Extraneous causes

The inherent causes and the solutions may be addressed by the industrial relations
system, but both the causes and the solutions for extraneous problems lie outside
industrial relations and thus outside the control of the industrial relations parties.
 Total social system

Political
system

Economic Industrial
system relations
system

The wider society or total social system influences the three sub-systems
of the individual relations system itself: in other words, it provides an
external context and influence for the political, economic and industrial
relations sub-systems which are themselves interrelated.
An the industrial relations system at any one time in its development is
regarded as comprised of certain actors, certain contexts, an ideology
which binds the industrial relations system together, and a body of
rules created to govern the actors at the workplace and work
community.

The actors in the system are:

The hierarchy of managers and supervisors;
The hierarchy of non-managerial employees and their representatives;
Specialised government agencies (and specialised private agencies
created by managers and employees) which are concerned with
employees, employers and their relationships.

However the actors are not free agents. They are subject to the
influencesand limitations of their environment.
The contexts are:
-The technological characteristics of the workplace and the work
community;
-The market or budget constraints which affect the actors;
-The location and distribution of power in the wider society.
Ideology:
-Defines the rights, responsibilities and relationships of the actors;
-Control the actors’ responses to conflict;
-Establishes the substantive and procedural rules by which the actors
manage their relationships and resolved their conflicts.

Pluralism in industrial relations

The pluralist says we live in a liberal democracy in which there are
many different groups, with competing as well as overlapping interests
and memberships.

Pluralism might offer a useful view of the nature of society, but it

assumes that power is relatively evenly distributed, that key decisions
are taken by parliament or other responsible and responsive bodies in
a reasonaly open way, and that these decisions are impartial – not
favouring any particular group or interest in society.
 Unitary view
The unitary view sees society and its systems as one entity in which
everyone has common interests and common goals, and will this
accept a single source of authority.
Within the organisations, the unitary view is used to reinforce such
notions as ‘management’s right to manage’ and suggestions that
decisions or actions taken in the best interests of the organisation are
necessary in the best interests of its employees as well.

Impact of HRM
Neither a pluralist not a unitary frame is a sufficient basis for examining
and understanding industrial relations and industrial relations systems.

Formal and informal systems

The study of all aspects of job regulation – the making and
administrating of the rules which regulate employment relationships –
regardless of whether these are seen as being formal and informal,
structured or unstructured.
 Institutions and actors in industrial relations
The three major players in the industrial relations system are the government and its
agencies, employers and their organisations, and workers and their unions.

The government should:

-Ensure there is adequate machinery for the peaceful settlement of industrial disputes
and that the machinery is up-to-date and flexible enough to cope with problems raised by
the changing needs of the industrial structure;
-Provide guidelines, in the form of minimum standards, for the safety, health and welfare
of people in employment;
-Promote and encourage good relationships between employers and unions at all levels,
including their organisation into effective bargaining units
-Protect the public interest.

It is clear that the role of any one party or organisation is conditioned by what each of the
others carriers through as its role. If the non-government parties handle industrial
relations well there may be little need for government to take a hand.
The most obvious role of the state in individual relations is its power to legislate.

Employer organisations
Business New Zealand
-The production of high value-added goods and services;
-Global excellence for all knowledge and learning benchmarks;
-Balanced employment, economic and environment legislation;
-Low compliance costs;
-Reduced taxation.

UNIONS
Workers’ unions became legal and legally recognised in New Zealand under the Trade
Union Act 1878. The Employment Act 1001 left unions without the special status in the
industrial relations system that they had previously enjoed from its earliest days. But the
special legal status of unions is restored by the Employment Relations Act, which also
gives them a monopoly over the negotiation of collective agreements.
Unions use the collective strength of their members in pursuit of four main objectives:
- To protect individual workers from victimisation, intimidation and exploitation;
- To continually improve workers’ terms and conditions of employment;
- To protect the conditions and standards already achieved;
- To ensure that workers share in the benefits of technological and social advance.
 Organisation and management
Job design and work organisation, along with the management of people are
keys to individuals’ job satisfaction and productivity.

Job
Organisaion
Management

HR specialists should have greater opportunities to be involved in organisation

design and development.

The nature of organisation

Organisations are of different types: work, family, sports clubs, hobby groups,
churches, political parties and so on.
A social organisation is a continuing system of differentiated and coordinated human
activities utilising, transforming, and welding together a specific set of human, material,
capital and natural resources into a unique problem-solving while engaged in satisfying
particular human needs in interaction with other systems of human activities and
resources in its environment.

Organisations could be formal and informal.

An organisation is the rational coordination of the activities of a number of people for the
achievement of some common explicit purpose or goal, through division of labout and
function, and through a hierarchy of authority and responsibility.

So, in order to achieve goals the organisation exercise such things as:
Division of labour and Hierarchy.
 Development of organisation theory

Mechanistic organisation Organic organisation

Classical organisation theory had its roots in the scientific management

movement. Not surprisingly, it emphasised the need for centralisation
of authority, clear reporting lines within a hierarchy, specialisation of
skills, division of labour, and explicit organisational rules.

The focus of organisation theory might have shifted as a response to

the human relations movement – which emphasised delegation of
authority, employee autonomy, communication and interpersonal
relationships and more recent views on how to deal with increasing
turbulence and complexity in the internal and external environments of
the organisation.

Befor ethe Industrial Revolution organisations were of flat types. After

the Revolution the organisations started to grow and turned into tell
types companies.
UNITY OF COMMAND

THE SCALAR CHAIN (or THE CHAIN OF COMMAND)

Fayol’s model of organisation

General Manager

Manager Manager Manager

Supervisor Supervisor Supervisor Supervisor Supervisor Supervisor

WOrkers Workers Workers Workers Workers Workers

Elton Mayo said that
People like to feel important and have their work recognised as important. They like to
work in an atmosphere of approval. They like to be praised rather then blamed, They like
to feel independent in their relations to their supervisors. They like to be consulted about
and participate in actions that will personally affect them. In shirt, employees, like most
people, want to be treated as belonging to and being an integral part of some group.

Differentiation and integration

Likert’s linking pin model

Chief Executive
Manager Manager
Supervisors Supervisors
workers workers workers workers
The McKinsey 7-S model

Structure

Strategy Systems

Shared
values

Skills Style

Staff
 The Modern Organisation
Today’s organisations are not structured in accordance with rigid theories, but to meet the
needs of their particular strategies and environments. Situational* and contingency*
approaches to organisation become more relevant. Henry Mintzberg describes six basic
elements of organisation, and they provide us with a useful analytical tool:

-Operate core – the base of the organisation, made up of the people who produce
products and provide services.
-Strategic apex – which oversees the whole system (even the simplest organisation has
to be managed).
-Middle line – the hierarchy of authority, in traditional terms, which links the p[erating
core to the strategic apex.
-Technostructure – which is involved in the formal planning and control of the work of
other people, and is made up of analysis – often called ‘staff’ (to distinguish them from ‘
the line’) who are outside the hierarchy of line authority.
-Support staff – of a different kind to the analysis, who provide various internal services,
like cafeteria, mailroom, legal advice and public relations.
-Ideology – which encompasses those traditions and beliefs which distinguish one
organisation from others and infuse life into the skeleton of its structure.
Entrepreneurial organisation. Simple, informal and flexible, with little
staff or middle-line hierarchy. Revolves around chief executive who
controls personally and supervises directly, and provides vision and
leadership.

Machine organisation. Centralised bureaucracy with formal

procedures, specialised work, sharp divisions of labour, functional
groupings and extensive hierarchy. Operations are mainly routine,
simple, repetitive and standardised.

Diversified organisation. Market-based ‘divisions’ loosely coupled

together under central administrative headquarters. Divisions run
businesses autonomously while headquarters manages ‘corporate’
strategy. Typical of large and mature organisations.

Professional organisation. Bureaucratic yet decentralised, dependent

on training to standardise the skills of its many operating professional.
Individuals work autonomously, subject to controls of profession.
Minimal technostructure and middle-line hierarchy, but large support
staff for professionals.
Innovative organisation. Fluid, organic, selectively
decentralised ‘adhocracy’ with functional experts
deployed in multidisciplinary teams of staff, operators
and managers to carry out innovative projects. Co- IDEOLOGY
ordination by mutual adjustments, assisted by
integrating managers and matrix structures. Strategic
apex
Missionary organisation. Clear, focused, inspiring,
distinctive mission around which whole structure is built.
Co-ordination through standardisation of norms,
reinforced by selection, socialisation and indoctrination
of members. Small units, loosely organised and highly
Techno- Support staff
decentralised but with powerful normative controls.
structure
Political organisation. Usually overlaid on conventional
organisation, but sometimes strong enough to create Middle line
own configuration so that power conflicts and political
games pull individuals or units apart and become
substitute for legitimate systems of power.
Operating core
 The Matrix Organisation

Employees are gathered in groups to carried out specific tasks, so the

work in teams. This type of organisations have dual chain of command.
This type of organisation is good when an organisation has to deal with
diverse tasks where the employees’ dedication to a project is needed.
Unfortunately, lack of care and clarity in establishing the matrix of
reporting and responsibility often leads to confusion and to power
struggles which then cause the whole organisation form to collapse.

Project – based organisation

Some organisations choose to carry out their core activities on a
project basis, forming project teams or task forces to undertake specific
assignments. (e.g. movie industry). The project –based organisation
may have functional departments – finance, marketing, HR. Projects
may involve a single product or client, and may take a short time, or
months, and sometimes years. The team members are drawn from
different parts of the organisation, and perhaps from outside the
organisation as well.
Network organisations
Long-term, purposeful arrangements among distinct but related organisations
that allow them to gain or sustain competitive advantages.

The network organisation takes a ‘sub-contracting’ approach to its human

resources needs. It might retain a team of people on a short-term basis to carry
out a particular project, or contract a range of external suppliers – market
researchers, designers, manufacturers, sales agents, etc. The organisation
itself will usually have a small core staff, who set the strategic direction and
provide co-ordination and support for the outside contractors. In this case the
network is responsible for the operational implementation of the business ideas
and strategies of the central organisation.

‘Cluster’ groups – where a number of specialist firms in an industry come

together for a specific business purpose – and franchise businesses are
variations of the network approach. The network organisation is really a system
of individual entities: it’s an open-ended system of ideas and activities, rather
than an organisation with a clear structure and boundaries.
 Teams and teamwork
Organisaing work and people in teams has become popular as a way for organisations to
gain competitive advantage. Some organisations introduce teams to encourage
employee commitments and co-operation, to get employees more involved in decision
making, to help them be innovative and creative with ideas and work practices, to improve
productivity and quality, and to bring together a range of skills and experiences to focus on
increasingly complex work challenges.

Warnings:
-strong team norms can stifle individual creativity and initiative, putting team members in
an ‘iron cage’ of team working;
-not everyone responds positively to the ‘empowerment’ agenda, contrary to team
working’s assumptions about people’s self-actualising impulses;
-the introduction of team working can upset established norms and interests, and it may
be difficult to deal with the resulting difficulties;
-team design is crucial to success, but is not always dealt with carefully;
-implementation can be compromised by poorly defined objectives, poor boundary
management, and a lack of attention to other organisational systems (e.g. rewards and
control).
A New Zealand survey (KPMG, 1995) shows that most organisations are positive about
teamwork. As a result of introducing teams,
84% had increased quality;
75% had improved productivity;
61% had improved financial performance;
35% had decreased costs.

Employees of those teams said that:

In 73% of cases that the employee relations had improved;
79% said that staff morale was better and
20% reported lower staff turnover.
 Restructuring

Restructuring, downsizing, rightsizing, delayering, flatter hierarchies,

re-engineering seek to reduce costs, improve productivity, and become
more responsive to their customers and other stakeholders.

From an HR management pointview, most restructuring exercises have

these outcomes staff numbers are reduced; job responsibilities and job
relationships are changed fundamentally; staff who remain often feel
more work pressure and suffer symptoms of stress, and the level of
trust between the organisation and its employees is lowered.

Criticisms of restructuring – when it is used as a quick way to cut costs

of doing business – fall into several categories:

Objectives not met

There is mounting evidence that large reductions in staff numbers over
a relatively short period of time lead to only small long-term cost
reductions, and may even increase costs.
Engineering, not human solution
These days organisations are more like frogs than bikes!

Downsizing
Effects of downsizing:
Decreased job satisfaction;
Decreased staff motivation;
Decreased promotion opportunities;
Decreased staff commitment to organisation
Decreased morale among staff
Increased concern about job security.

Rightsizing
When ‘downsizing’ is used as a strategic tool, it can be called
‘rightsizing’, and has the objective of building an organisational system
that is flexible and responsive to its market place.
These organisations need two kind of workers: a core of permanent
staff who have reasonable job security, and a periphery or outer ring of
temporary workers that expands or contractors as needs change.