It is our intention to examine the interplay between industrial relations (IR) and human resource management (HRM).

Detailed Summary Anna, Simone & Rob

Group Assignment MGF 2661

“Industrial Relations” 22/03/01 Week 4

Introduction

It is our intention to examine the interplay between industrial relations (IR) and human resource management (HRM).

There are many contradictions both in theory and in practice between HRM and IR at workplace level and beyond. The central contradiction concerns the very essence of the nature of HRM and IR. IR has traditionally been concerned with collective representation of employees. This means that through the process of collective bargaining, employee representatives negotiate with employer representatives over a large range of substantive issues such as pay, working conditions etc., as well as procedural arrangements such as disciplinary, disputes and redundancy procedures. Trade Unions by their very nature are concerned with protecting the interests of the employees, firstly by securing the highest price for their labour. Employers, on the other hand, wish to buy labour at the lowest cost to themselves. Therefore, there is a conflict of interest between employees and employers. The conflict is ever present and needs to be continually regulated through the process of collective bargaining.

One of the issues that HRM places emphasis on is the commitment of the individual employee to the employer’s organization. The main contradiction referred to above is between the individualism of the HRM approach to the employment relationship to the collectivism of the IR approach to that relationship.

Another issue that should be looked at is recent attempts to incorporate certain aspects of IR within HRM, and this has given rise to speculation about the emergence of a contemporary form of IR. (Mabey & Salaman, 1995)

Industrial Relations - Definition

“The study of the relationship between the organization and its employees. This covers the full range of collective and individual interactions and communications between employers and employees. And also the processes by which they adjust to the needs and wants of each other”(Clark, 1993, p. 97))

Approaches to industrial relations

Unitary approach

This approach refers to mutual cooperation, individual treatment and sharing of common objectives. Work place conflict is seen as a temporary hurdle. Trade unions are seen as competition (Stone, 1998 p. 530)

Pluralist Approach

The pluralist approach sees organisations as competitors, where the management needs to mediate between different groups of interest. Trade unions are representatives of the employees, and the state of industrial relations depends on the compromises made between management and the unions. (Stone, 1998, p. 531)

Marxist Approach

This approach focuses on the type of society that an organisation exists in rather than on the relations between management and the rest of the workforce. (Stone, 1998, p.532)

History of Industrial Relations

The history of IR in Australia dates back to the early 1800s and has undergone a significant amount of changes since then. The following provides a highlight of the most significant event that occurred throughout time:

In 1828 Australia adapted to Master & Servants Act, which gave employer the right to pursue employees who do not turn up to work or who damages the employers possessions.
In 1901 the Industrial Arbitration Act was passed. This statute founded the first arbitration court, which has binding arbitration powers. The later evolved into what is now known as the Industrial Relations Court of Australia (IRCA).
In 1916 the Eight Hours Act created a standard 48 hour working week and the basic female wage was also set. Females in the early 20th century were set ...

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In 1828 Australia adapted to Master & Servants Act, which gave employer the right to pursue employees who do not turn up to work or who damages the employers possessions.
In 1901 the Industrial Arbitration Act was passed. This statute founded the first arbitration court, which has binding arbitration powers. The later evolved into what is now known as the Industrial Relations Court of Australia (IRCA).
In 1916 the Eight Hours Act created a standard 48 hour working week and the basic female wage was also set. Females in the early 20th century were set to earn 54% of the basic male wage.
1926 saw the induction of the Workmen’s Compensation Act, which was the first piece of legislation that provided compensation for employee’s who are injured at work. This is now best known as WorkCover.

Throughout the 20th century many amendments were made to the employee and industrial relations field in Australia, which included the induction of 40 hour week, the anti discrimination act, minimum redundancy payments and leave entitlements. In 1983 the Occupational Health & Safety Act was introduced, which placed a greater responsibility on employers to reduce work related injuries and involve employees in creating a safer workplace. The new Industrial Relations Act in 1988 endorsed the development of workplace dispute settling mechanisms in order to create a more flexible workforce. The need for a more flexible workforce eventually lead to the establishment of the Enterprise Bargaining Principle (EBO) in 1991. This allowed employees and their unions to

negotiate workplace practices, award payments and also encouraged discussion between employees and management. Furthermore, 1996 provided another milestone for IR, with the introduction of the Workplace Relations Act (Cascio, 1998, p.482).

Parties in Industrial Relations

Government and Industrial Tribunals

Government involvement in industrial relations in Australia is important for a number of reasons:

Governments establish procedural rules for employers and unions as to how negotiations should be conducted and disputes resolved.
They establish substantive rules on matters related to the workplace (such as safety and health) and conditions of work (such as leave, working hours and the manner of payment of wages).
Government policy influences the economic and social environment in which employment takes place.
Governments are large employers in their own right, and the conditions established for their own employees set standards for employees in the private sector.

Furthermore, governments have a role in administering those rules through federal and state departments of industrial relations. These provide advice to ministers, develop and implement government policy on employment and industrial relations matters, update the relevant pieces of legislation, and encourage employment, human resources utilization and training schemes. Also, the role of sector HRM acts through public services sectors by determining pay and conditions in different sections of the service, administer human resources policies, and are involved in recruitment activities, promotions and transfers.

The Industrial Relations Commission settles industrial disputes within its jurisdiction and determines wage fixing principles and working conditions. The IRC’s role has been greatly diminished in the recent years, as it is seen to be a major obstacle in to the success of an enterprise –based system of industrial relations. However, the IRC still possesses a great lobby, including unions, employer associations, industrial advocates and academic specialists (Clark, 1993, p. 111).

Employer Associations

Employer associations represent employer interests providing a range of services and play a number of roles. These are to:

promote the trade interests of members;
lobby governments about policies and regulations;
help determine conditions under which members employ labour;
process logs of claims served by unions on members;
help formulate employers’ policies and strategies;
represent employers in negotiations with unions;
appear before industrial tribunals on behalf of members.

There are two main types of employers associations:

Single-industry associations, which limit membership to employers from specific industries, and deal solely with the problems of those industries, such as the Master Builders Association.

Employers associations may be dependent on other organizations for specialized services or may be only semi dependent, employing some staff but not enough to meet all the needs of members.

Umbrella organizations, which have multi-industry membership that may include single-industry associations; umbrella organizations therefore deal with a wide range of problems and interests.

One of the problems that employers bear, is that they are not as well coordinated or disciplined as trade unions in their approach to industrial matters. In part, this is a result of competition between members. Also, employers perceive their associations as being advisory and as a source of specialist services. They do not accept direction from their associations, and make their decisions about the union demands often on a company rather than an industry basis. There is little an association can do about members who do not follow association policy. It should also be noted that with the variety of membership, an association policy that suits one company may not suit the other due to differences in size, location, etc (Clark, 1993, p. 110).

Trade Unions

Union concerns have traditionally been concerned with pay rates, conditions of work and work security. In the recent times, however, unions have moved towards a wider approach, which includes industrial democracy, social welfare, training, industrial policy and taxation. Some also focus on award concessions, possibly limiting their efforts to just enterprise bargaining. In general, unions fulfill many functions exerting powerful influence on the government (McTaggart, Findlay & Parkin, 1996, p. 352).

However, union membership has been declining, due to many micro and macro economic factors, forcing the unions to undergo a serious, critical evaluation (Stone, 1998, p. 537).

Industrial Relations Processes

Grievances

One of the key elements of effective industrial relations management is the existence of an adequate and accommodative grievance procedure, and a willingness by all parties to use that procedure. Grievances cover all types of industrial conflict and may be formal.

The object of a grievance procedure is to provide a method for the joint speedy, effective and peaceable resolution in the workplace. A successful dissolution of a grievance procedure should provide both parties with better communications, consultation and the quality of relationships between managers, unions and employees. Yet the success of the process depends, to a large extent. On the aptitude and among other things training of the personnel with its operation (Clark, 1993, p. 118).

Award Restructuring

Award restructuring was a response to the increasing productivity of Australia’s overseas competitors.

The fundamentals of award restructuring are:

restructuring job classifications according to skill requirements;
restructuring wages to reflect skill movements;
restructuring education and training qualifications to reflect new job classifications.

Award restructuring measures include:

the establishment of skill related career paths to provide an incentive for workers to continue to participate in skill formation
the elimination of impediments to multiskilling and broadening the range of tasks that a worker may be required to perform
the creation of appropriate relativities between different categories of workers within the award and at enterprise level

ensuring that working patterns and arrangements enhanced flexibility and the efficiency of an industry
the creation of properly fixed minimum rates for classifications in awards related appropriately to one another, with any amounts in excess of these properly fixed minimum rates being expressed as supplementary payments
updating and rationalizing of the list of respondents to awards
addressing any cases where award provisions discriminated against sections of the workforce.

However, it may seem that award restructuring did not prove to be one of the more successful ventures of the government and the IRC. Even when this initiative did proved to be lucrative, it did not necessarily lead to higher productivity and greater competitiveness. The unions believed that specific campaigns could prove to be more successful at targeting pay equity and greater power (Clark, 1993, p. 120).

Enterprise bargaining

In 1991 the Industrial Relations Commission endorsed enterprise bargaining. This meant that instead of negotiations between unions, representing particular skill or employer groups, negotiations for wages and conditions for a variety of workers, took place within a particular enterprise. The unions representing those workers may be involved in the negotiations. The results are reported to the IRC but would not lead to changes in the awards for the occupation of the people affected. The IRC could conciliate in enterprise negotiations but would not generally arbitrate.

After the endorsement of enterprise bargaining, the award system became a safety net – minimum set of wages and conditions, below which workers covered by that award, could not fall. (McTaggart, Findlay and Parkin, 1996, p. 350)

The EBP focused on a number of features such as:

Increasing productivity through enhancement of workplace culture;
Stimulating communication between employers and employees to reduce conflict;
A greater focus on customer satisfaction through an increase on product and service quality.
Increasing international competitiveness through the implementation of workplace change.
Continuous review of productivity through the introduction of improvement programs as well as the introduction of efficient

measurement of productivity indicators such as output, cost as well as human resource and labour indicators to name a few.

The pace of enterprise bargaining has now increased, but it is uncertain whether this pace will remain steady. Furthermore, the effectiveness of enterprise bargaining has been questioned by many critics. (Stone, 1998, p. 547)

The Workplace Relations Act

Passed in 1996 this action was induced to encourage a more direct relationship between employers and employees reducing the need for third party intervention and greater flexibility in the labour market.

The objectives of the Workplace Relations Act are to:

give primary responsibility for IR and agreement making to employers and employees at the enterprise and workplace levels;
Focus the role of the award system on providing a safety net of fair and enforceable minimum wages and conditions
Ensure freedom of association
Avoid discrimination

Assist employees to balance their work and family responsibilities;
Assist in giving effect to Australia’s international obligations in respect to labour standards. (Stone, 1998, p. 553)

As stated above, this Act provided a safety net with the introduction of twenty allowable matters, which were aimed at providing the employee with reassurance in regards to their position within the company. These allowances included leeway for public holidays, overtime payments, superannuation and annual leave to list a few. Overall, this act was designed to increase efficiency and productivity within the Australian workforce in order to compete with the rest of the world (Clark, 1993, p. 121).

Trends

The future may hold the following future industrial relations trends:

Focus on horizontal authority and reduced hierarchy;

Responsibility for people-management being devoted to line managers; the role of personnel professionals is to support and facilitate line management, and not to control it;
Employees are viewed as subjects with the potential for growth and development; the purpose of HRM being to identify this potential and develop it in line with the adaptive needs of the organisation;
Management and non-management having common a common interest in the success of the organisation. Its purpose is to ensure that all employees are aware of this and committed to common goals;
An attempt to lessen the earnings gap between the most highly paid and the most lowly paid, which has been widening over the last few years
Although levels and duration of industrial conflict have fallen during the 1990s, the current trend is for shorter strikes still;
A movement away from larger bargaining units will result in a higher proportion of directly negotiated settlements.
New workplace and HRM practices will replace unions and collective bargaining;
The new paradigm will differ from the ‘pluralist’ approach traditionally dominant in IR. Organisations will place more emphasis on “mutual gains”(Cuming, 1995, p.32)