Employment relation in the in United states of America

University Degree Business and Administrative studies

London South Bank IHRM International Employees Relations

Compare and contrast the employment relation in the small and large firm sectors In United states

2528915

International Employment Relations

London South Bank University

Faculty of Business, Computing and information System

Introduction

This report gives an overview of employment relation in United States and also to It also makes comparisons between the employment practices of Small firms and those of larger firms.

The use of the term employee relations makes it easier to encompass change in the employment relationship, its environment and in the make up of the labour force and also encompass union and non-union relations. Leat (2001:6).Farnham (1993: 4) cited in Leat (2001:7), suggests that employee relations are concerned with the interactions between the primary parties who pay for work and those who provide it in the labour market (employers and employees), those acting as secondary parties on their behalf ( management or management organizations and trade unions) and those providing a third party role on employment matters (state agencies and EC institutions).The employment relationship is a legal notion widely used in different countries to refer to the relationship between a person called an employee and an employer for whom the employee performs work under certain conditions in return for remuneration. ILO (2005). It is the key point of reference for determining the nature and extent of employers rights and obligations towards their workers. ILO (2005).

United States has long been noted for high degree of diversity in conditions of under which employees work. Bamber et al (2004). Diversity was also apparent in collective bargaining outcomes, although some workers and unions lost devastating strikes or were forced into severe concessions. With the rise of industrialization, US workers organize national labour unions as a response to managerial control over employment. Unions are more attractive means of conducting labour market transactions and they play central role in setting terms of employment. As large corporations expanded in the 20th century in the USA, structured and bureaucratic internal labor markets appeared within those primary sector enterprise- the firms and corporations of the productive sector of a country's economy. This included well job defined job progressions also formal pay. American economy is the largest, because of the size of he economy and its important role in global political affair, the USA has played an important role in the development of other national system.

History of Employee Relations in USA

According Hogler (2003 : 1), the US system has its origin in the arrival of european settlers to the new continent . The early colonist brought with them english traditions of labour, upon which they imposed variations suited to different conditions. One of the variations involved a form of contractual relationship by which emigrant agrees to labour for a period of years in exchange for passage to the new world. This can also be perceived as a psychological contract, where there is a legally enforceable contract between employees and employer Leat (2001:7). The practice of the contractual relationship fell into disfavor as population growth furnished a source of labour. In US society today, there are laws prohibiting race discrimination in employment that make up an important part of contemporary labour market regulations.

According to Bamber et al (2004 : 68), America skilled craftsman started to form unions before industrialization, which began in the 1790s. The widespread establishment of the factory system in the 1850’s and 1860’s brought into the industrial system large numbers of rural women and children and many immigrants from Ireland, Britain, Germany and other countries. These factory workers did not unionize. This may have been partly because their pay was generally comparable to American farm earnings and higher than those of factory worker in Europe. In US history, vigorous representation of unionization by employers, both directly and indirectly through government action, inhibited unionisation (Sexton :1991, Bamber et al 2004 : 68).

Dunlop’s proposed three major grouping of actors: managers and their representatives: workers (non-managerial) and any spokesman; and specialized private agencies dealing with mangers workers organizations or even individual workers Adams (1991 : 11). In the USA, all of the participants in the employment relations system retain some influence. However, it is the employers that have generally been the most powerful of the actors and are becoming increasingly dominant. (Bamber et al 2004 : 68). The USA retained more unstructured employment practices often in smaller or rural firms, where pay was lower and administered in a less formal manner. Employer’s organizations are relatively unimportant in the USA. ( Adams 1980 : 4 cited in Bamber et al 2004 : 68). There have never been national employers’ confederations there engaging in the full rage industrial relations activities. There are employers’ confederations that have the mission avoiding the unionization of their members employee.

Union

The employment relations system in USA consist of two distinctive sectors: a non union sector and unionizes sector. These two sectors interconnect in many ways, and share some common legal and social underpinnings, but nevertheless differ quite significantly. The non- union sector is characterized by management discretion and control over the terms and conditions of employment. This is limited on by labour market constraints, protective labour legislation, the desire of mangers to avoid unionisation and the strong influence of a positive managerial outlook. The non-union sector includes most private white collar employment small firms and manufacturing employees in ...

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Union

American unions have relied on collective bargaining, accompanied by strike threat as their main weapon. It has required union to be solvent financially in order to have a credible strike threat. Unions have emphasized on collective bargaining and also engaged in politics. Collective bargaining determines the outcome of unionised sector has reached an advanced stage of development in the USA. Since the 1940’s collective bargaining has produced a high standard of living for most unionised worker, protection for the worker interest in fair treatment and a complex and detailed set of rules governing the employment relationship, while generally preserving the managerial ability to ensure efficiency. The collective bargaining structure is highly fragmented and this fragmentation is increasing.

From 1881 the Federation of Trades and Labor Unions was founded. Five years later the organization changed its name to the American Federation Of Labour. Based on the Trade Union Congress in Britain, the AFL's first president was Samuel Gompers. He held fairly conservative political views and believed that trade unionists should accept the capitalist economic system. Some companies reduced the wages of its workers. When they refused arbitration, the American Railway Union then called a strike. The case came before the Supreme Court in 1895. The American Railway Union's appeal was refused. This decision was a great set-back for the trade union movement. This decision made some workers question the AFL's moderate approach.

In 1933 Robert Wagner chairman of the National Recovery Administration, introduced a bill to Congress to help protect trade unionists from their employers. The act established the rights of workers to join trade unions and to bargain collectively with their employers through representatives of their own choosing. Workers were now protected from their employers and as a result union membership grew rapidly. In June, 1938 The Fair Labour Standards Act was passed to eliminate labor conditions detrimental to the maintenance of the minimum standards of living necessary for health, efficiency and well-being of workers". Another important act initiate was the Fair Employment Act. This act required that all federal agencies include in their contracts with private employers a provision obligating such employers not to discriminate against persons of any race, color, creed, or nationality in matters of employment.

Trade Unions in the United States remained weak throughout the 19th century. Only 2 per cent of the total labor force and less than 10 per cent of all industrial workers, were members of unions. Most part of Americans view unions and management as serving rather that discrete and fundamentally opposed interest. The conflict between union and management has a limit. The unions are still mainly concerned with pure and simple goals of the founders of the American labour movement better wages, hours conditions of work and do not wish to be broadly involved in management. They have been willing to enter into collective bargaining agreement covering the matters that concerned them giving up the right to strike for the duration of the collective bargaining. In the non-union sector, employers have the devised a set of management parties to systematically determine pay and conditions of work. Compensation and individual performance evaluation systems is common.

Employment relations in US Small and Large Firms

Introduction

There is no single, uniformly acceptable, definition of a small and large firms. A small firm in other states or industry in USA is likely to have much higher levels of capitalization sales and possible employment that any other. According to Storey (1994 : 8) Definitions, therefore relate to objective measures of size such as number of employees, sales turnover, when examined at the sectoral level, mean that in some sectors all firms may be regard as small, while in other sectors there are possibly no firms which are small. Large firms are classified as having more employees compare to small firms. The Small Business Administration defines large establishments as those employing more than 100 workers, and large firms are those employing more than 500 workers.

Small business represents an important part of the United States economy. Many firms in the United States are small businesses Brown, Hamilton, and Medoff (1990) Firms wishing to be designated small businesses for government programs such as contracting must meet size standards specified by the U.S. Small Business Administration (SBA). Data available suggest more than half of all Americans work for these firms. Small firms generate 60 to 80 percent of net new jobs annually over the last decade.

European Foundation (2006) describe small firms have wide array of different situations regarding working environment and employment relations from one firm to the other. A different set of factors such as sector, age of enterprise, business culture of the enterprise, geographical location, explain these differences.

It also characterized employment relations in the US small firms by a number of traits

Small firms are known for their informal communication and flexibility as well as for their need to become more structured in their approach to human resources as they grow.
Managers of small business managers/owners express the desire to implement more formal human
resource management procedures without losing the benefits of the more flexible, informal cultures that characterize smaller firms.
Because of the close involvement of the owner/manager, smaller firms do more likely struggle with a trade-off between an individualized, personal approach allowing maximum flexibility in people management and a more bureaucratic, formal approach.

Employment relations amongst small firms in US would have issues such as informal communication, direct supervision, more broadly-defined jobs, the ability to capitalize on strengths of individual employees to meet customer needs, and the critical importance of individual employees to the organization's success

The foundation also characterized employment relations in US small firms by a number of negative points:

Large firm offer much higher wages than small employers, even when differences in employees education and experience and the nature of industry are taken into account.
Large employers also offer better benefits.
The reasons large employers offer higher compensation is not because they offer inferior working conditions. In fact, when working conditions are taken into account, large employers still pay more than their smaller counterparts.
The jobs generated by large employers provide greater, not less, security than those generated by small employers.

Trade Union

Unions are secondary organizations, associations of workers who are already organized by those to whom they sell their labour power and whose actions are designed to influence. (Hollinshead et al.1999: 133). Workers join trade unions as a response to market weakness of the individual and in the belief that market strength can be achieved thorough collective organization an collective action.

In USA , employees working for large firms employers are more likely to be unionised than those working for small ones but among nonunion workers those working for small firms are more likely to want to be unionised. Desire for unionization is stronger among employees of small firms. This is directly attributed to higher levels of dissatisfaction with wages, working conditions, and benefits among employees of non unionized small firms (Brown, Hamilton, and Medoff 1990). More union organization activity in large firms during the 1970s and early 1980s than in small firms.

Collective Bargaining

Collective Bargaining is an important institution in all democratic societies where freedom of association is common. (Rose :2008). Collective bargaining is the main method where by unionised workforces and their management jointly determine matters such as pay and conditions of work. (Rose :2008).

Webbs regarded collective bargaining as one of three main methods use by trade unions to achieve their basic aim of improving the conditions of their members working lives. (Rose :2008). The methods are mutual insurance and legal enactment. The first involves the use of trade funds to provide out of work benefit and traveling allowances to individual workers o enable them to refuse jobs offered at below the rate agreed amongst union members. The latter is a method of creating employment rules and it involves state regulation of wages, conditions and other aspects of the employment relationship, and trade unions would lobby for legislative changes in favor of their members. According to (Foundation :2006), The National Labor Relations Act, the Labor-Management Relations Act and subsequent labour law establish the right of employees to elect representation and to bargain collectively.

In the US, the most usual scope for collective bargaining is the enterprise itself , where the valid negotiators are the employer and the employers’ representative. Collective bargaining agreements cover about 15% of the US labour force, but are more prevalent in larger firms. In 1988, 19.4% of employees were covered by a collective bargaining agreement, compared with a 5.2% of employees in small establishments. Within 95% of the US smallest firms, working and employment conditions are negotiated on an individual basis between the employer and the employee. Most of the collective bargaining agreements have a time length longer than one year long, where most of them have also self-extension clauses provided that these agreements are not denounced by any of the working parties.

Trade unions play an active role in the collective bargaining agreements, since they are the responsible of its application and the exclusive official negotiators with the employer. Any difference in the interpretation or application of the collective bargaining agreement are generally solved through arbitration procedures The mission assigned to the US trade unions by the American Employment Relation System is limited to negotiating and ensuring that the agreements are fulfilled.

One factor influencing differences in wage and compensation levels by enterprise size is the presence of a collective bargaining agreement. Workers are covered by a collective bargaining agreement, on average, receive higher wages and are more likely to receive certain benefits than workers not covered by such an agreement.

Union density

Union density refers to the percentage of members out of potential trade union membership, either of the labour force in total, which includes unemployed, or those in employment. (Hollinshead et al: 1999). Union density varies by industry. It can vary in the public or private sector and regionally . Variations in density are also shown in terms of characteristics of individuals such a gender, ethnic origin , marital status, and qualifications and status. Jobs related characteristics such as weather full time or part time, and size of the work place will show differences in the union density of employees.

According to available source The percentage of workers represented by unions (i.e., union density) in the United States has decreased from a high of 35 percent in 1945 to 12.5 percent by 2005. Union density is substantially greater in the public sector than in the private sector. In the public sector, approximately 36 percent of government workers are represented by unions, with the highest density being in local government.

In the private sector, only 8 percent of workers are represented by unions, with the transportation industry and utilities maintaining the highest level of union density. Union density in the private sector is approximately half of what it was in 1983. Union membership rates vary considerably by state. New York, Hawaii, Michigan, and Alaska have the highest membership rates with 25 percent, 24 percent, 22 percent, and 20 percent, respectively while North Carolina and South Carolina have the lowest rates. As of 2005, full-time wage and salary workers who are represented by a union make more than those workers not represented by a union .

Union density declined due to reason like change in management attitudes toward unions. Employment has moved from manufacturing jobs and other jobs that have traditionally been represented by unions to more service and high technology jobs. There are more white collar and part-time jobs now than ever before, which has also contributed to the decline in union density because it is harder for unions to organize people in these jobs. Furthermore, employers have learned that using positive human resource management practices like installing formal grievance systems, comprehensive benefit plans, and worker involvement programs suppresses union organizing activity

Pay and Employment Condition

Pay is the wages, salaries or fees paid by employers in return for the provision of labour.(Hollinshead et al: 1999). Pay is generally determined in one-on-one negotiations between employers and employees. Employers organizations representing small firm fiercely defend the right to and the need for “flexibility” in these matters.

Not usually for small firms (Curran et al, 1993), pay determination is largely an individualistic affair that was rarely pursued in a systematic manner.(Ram and Edwards, 2003). In small firms there are no formal pay structures or review, individuals have to bargain. Wages in small firms are consistently lower than in larger firms. Jobs in small firms may be less desirable than those in large firms. Workers in small firms generally receive less training than do workers in large firms. large firms pay higher wages in order to attract productive workers as well as to compensate them for the mechanical and impersonal work atmosphere that is brought about by the division of labor in large firms.

According to (Foundation :2006) , working and employment conditions amongst US small business can be characterized as extensive and complete. The existing working and employment conditions within the US small firms can be labeled as worse than within large ones.

There are important differences by firm size in terms of hours worked and full-time/part-time status, which by turn reflects the seasonal nature of some small businesses. Thus, there is a greater proportion of employees in large establishments working full-year/full-time than in small firm, and a greater proportion of employees in small firm working other combinations of time.

Smaller firms are criticized for their lack of use of best practices, lack of sophistication, and lack of attention to the documented relationships that have been demonstrated between HRM practices and organizational outcomes in larger firms. At the same time, there is evidence that US small firms vary widely in their practice of human resources management and that size of firm is not necessarily the best predictor of human resource management.

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