HRM AND THE

INDIVIDUAL
EMPLOYMENT
RELATIONSHIP
Employment relationship is the economic
exchange of an individual’s labor for
reward of some description, otherwise
referred to as the wage–effort bargain or
‘a (fair) day’s work for a (fair) day’s
pay’.
ELEMENTS OF EMPLOYMENT RELATIONSHIP

SOCIO-
ECONOMIC
POLITICAL

LEGAL/ PSYCHOLOGICAL
CONTRACTUAL CONTRACT
The previous slide indicates the complexity of the
relationship between employer and employee and
stresses that the nature of the employment
relationship in any instance reflects more than the
explicit terms and conditions laid out in a contract
of employment. It is important, therefore, to
recognize that all employment relationships can be
considered unique.
 CONTRACT OF
EMPLOYMENT

The contract of employment therefore

represents an accumulation of rights and
responsibilities for both parties and
constitutes the explicit and implied
‘rules’ under which labor is employed.
These rights and responsibilities are the
result of a range of processes, including:
The means by which the individual terms and
conditions of employment are determined and altered

The means by which the collective (i.e. workforce)

terms and conditions of employment are determined
and altered

The law-making process, including case law and legal

precedents

The evolution of organizational custom and practice.

These rules, and the procedures designed to both
determine and enforce these rules, play a vital role in
regulating the employment relationship on behalf of
both parties. They define roles and accountabilities,
set the boundaries for behaviour and establish
standards of expected performance in relation to the
contract.

In this sense, rules help to address the power

imbalance in the employment relationship and avoid
or restrain conflict.
However, there are numerous problems associated with
the regulation of the employment relationship. Whilst it
is generally desirable for both employees and managers
to establish the exact terms under which an employer is
engaging labour (for example, the hours of work),
extensive systems of formal rules can be inflexible,
overly bureaucratic and time-consuming, and can act as a
significant impediment to the achievement of
organizational objectives, in particular by restricting the
capacity of organizations to cope with rapid change
Alternatively, informal rules such as organisation custom
are open to misinterpretation and hold the potential for
confusion or abuse of workplace arrangements.
Moreover, where rules are perceived by employees to be
unreasonable, or where they are imposed contrary to the
views of those who must comply with or enforce them,
they are unlikely to be effective and, at worst, can
undermine performance.
 UNITARIST AND
PLURALIST
PERSPECTIVES ON THE
EMPLOYMENT
RELATIONSHIP
 UNITARISM
Unitarism represents the viewpoint that
organisations are ‘families’ or ‘teams’ where
managers and workers share common
objectives and in which conflict or dissent
among employees is deviant behaviour.
 PLURALISM
Pluralism reflects the viewpoint that
organisations are made up of various interest
groups, most notably managers and workers,
who have conflicting but equally legitimate
interests and therefore conflict is both
inevitable and natural.
THE PSYCHOLOGICAL
CONTRACT

A set of unwritten reciprocal expectations between an

individual employee and the organisation

The perceptions of the two parties, employee and

employer, of what their mutual obligations are towards
each other’
THE PSYCHOLOGICAL
CONTRACT

Understanding the psychological contract allows us

to appreciate why the management of people
presents a problem for organisations. Unlike the
explicit contract of employment, the psychological
contract is subject to constant change.
EMPOLOYEE ENGAGEMENT AND THE
PSYCHOLOGICAL CONTRACT

Employee engagement is the combination of

commitment to the organization and its values plus a
willingness to help out colleagues. It goes beyond job
satisfaction and is not simply motivation.
Engagement is something the employee has to offer:
it cannot be ‘required’ as part of the employment
contract.
EMPOLOYEE ENGAGEMENT AND THE
PSYCHOLOGICAL CONTRACT
Both represent a means of understanding the
connection between the way people are managed and
both individual and business performance. A positive
psychological contract and high levels of engagement
contribute to the creation of beneficial behavioral and
attitudinal employee outcomes such as job
satisfaction, organizational commitment, increased
motivation and lowered intention to quit
 HISTORY OF PEOPLE
MANAGEMENT
SCIENTIFIC MANAGEMENT

• A clear division of tasks and responsibilities between management and workers.

• Use of scientific methods to determine the best way of doing a job.
• Scientific selection of the person to do the newly designed job.
• The training of the selected worker to perform the job in the way specified.
• Enthusiastic cooperation with the workers to ensure that the work is performed in
accordance with scientific management principles, and this being secured by the use
of economic incentives.
 HISTORY OF PEOPLE
MANAGEMENT
THE HUMAN RELATIONS
MOVEMENT

• Grey (2007) suggests that the story of organizational behavior often follows a
simple narrative in which scientific management is most often cast as the bad
guy and the human relations movement as the good guy
• However, Grey suggests that this story rather over-simplifies the evolutionary
relationship between the two and in particular wrongly promotes the human
relations movement as the search for a corrective remedy to scientific
management.
 HISTORY OF PEOPLE
MANAGEMENT
NEO-HUMAN RELATIONS

• The neo-human relations movement (Grint, 2005) that emerged in the 1940s and
1950s introduced an alternative perspective and the idea of the self-actualizing
person. This approach rejected some of the ideas associated with the early
human relations movement, in particular, that humans are easy-to-control social
beings. The theories associated with neo-human relations emphasise ‘self-
actualisation’ and the achievement of one’s full potential through work as the
most effective motivator.
 HISTORY OF PEOPLE
MANAGEMENT
NEO-HUMAN RELATIONS

Two sets of work characteristics that might serve as sources of worker

satisfaction or motivation:

• Hygiene factors
• Motivation factors
 HISTORY OF PEOPLE
MANAGEMENT
NEO-HUMAN RELATIONS

Taylor’s conception of the worker and that presented by the neo-human

relations movement is best outlined by the two opposing assumptions made
about people at work suggested by McGregor:

• Theory X
• Theory Y
MANAGERIAL
CONTROL
 MANAGERIAL CONTROL

Friedman (1977) suggested that organizations may choose between two ‘logics of control’ for
the management of people at work, depending upon the nature of product and labor markets:

• Direct control that emphasizes a low-trust relationship between management and employees,
strict supervision and task specification

• Responsible autonomy that is associated with a high-trust, high-commitment relationship

where workers have a degree of discretion and responsibility for their work
 MANAGERIAL CONTROL

In relation to these control strategies, Handy (1976), referring to

organizations in their broadest possible sense ), identifies three types of
psychological contract:

• Coercive
• Calculative
• Cooperative
 COMPONENTS OF
INDIVIDUAL WORK
PERFORMANCE
 COMPONENTS OF INDIVIDUAL
WORK PERFORMANCE

A contemporary understanding of individual performance is

provided by Boxall and Purcell (2003) who suggest that
individual performance is a function of ability, motivation
and opportunity or, alternatively, P = f (AMO)
 ABILITY

A range of factors can influence an individual’s ability to perform a

particular role, such as their personality, prior education and
previous life and work experience, and a number of HRM activities
are relevant to ensuring an organisation has a ready supply of
adequately able labor
 MOTIVATION

Motivation can be understood both as the individual’s choice to

perform a particular task, as well as the level and persistence of
effort given to that task (Boxall and Purcell, 2003). The role of HRM
in maximizing employee motivation is to design jobs, practices,
processes and an environment to stimulate workers to perform to
their potential in a direction desired by the organisation.
 OPPORTUNITY

Individual performance is partly a function of ‘opportunity to

succeed’. This suggests that performance does not take place in a
vacuum: it is embedded in a wider organisational context. The
‘opportunity’ to perform effectively is provided by a working
environment that provides the necessary support for employees to
achieve their potential.
KEY TAKEAWAYS