6.5 - Improving employer-employee relations

• Employers and Employees


  Need to Cooperate with each other
• Employers and employees


  • Employers need hard-working staff to contribute to the production of goods or a service that can be sold for a profit
  • Employees need a secure income to support themselves and their families
• Employers would prefer to pay lower wages to keep costs down


  Employees want higher wages to improve their standard of living
• The two sides must negotiate


  1. To reach an acceptable compromise on wage rates, working conditions and terms of employment

  2. Failure to reach agreement could lead to a production stoppage, and both parties would suffer
• Successful employer-employee relationship


  • Maximises the cooperation and minimises the potential for conflict between these two groups
  • It is built on a culture of trust between the two groups
• Communication between Managers and Employees

  Is Essential
• Purpose of communication


  To pass on information and ideas
• Communication within the business is necessary for


  1. Making plans

  2. Giving instructions

  3. Motivating staff
• Effective communication


  The message that's received should be the same as the message that was sent
• Good communication


  • Is clear and unambiguous
• Effective communication


  Is a two-way thing
• Good communication and relations


  • Make it easier for employees to accept difficult decisions
  • Can help the feedback and complaints processes to run more smoothly
• Barriers that can prevent communication from being effective


  • Attitudes
  • Intermediaries
  • Language barriers
  • Sense of purpose
  • Communication overload
  • Remoteness
  • Group behaviour
• Overcoming communication barriers


  1. Creating a trusting relationship between employers and employees

  2. Creating a more democratic management style

  3. Making sure both parties recognise each others' objectives and needs

  4. Changing organisational structure to reduce the number of intermediaries

  5. Delegation and decentralisation to empower employees
• Individual Relationship


  Each Employee has with their Employer
• Employees treated as individuals


  • For employee appraisals
  • When negotiating working conditions
• Individual bargaining


  Employee negotiates with employer about own working conditions
• Individual bargaining for pay


  Employers can decide to pay an employee what they think he or she is worth to the firm, which might be more or less than other employees in the same role
• Individual bargaining for pay


  Provides a financial incentive to the employee to work productively
• Individual bargaining


  1. Used for flexible working arrangements

  2. Based on employee's personal circumstances (e.g. caring responsibilities)
• Good Employer-Employee Relations


  Businesses with good employer-employee relations will get more from their employees than businesses with poor relations
• Benefits to the employer of good employer-employee relations


  • The business will develop a great reputation among prospective employees, so it will attract the very best candidates during recruitment
  • If relations are good then productivity and efficiency are increased as new ideas and ways of working are picked up quickly by the employees. This allows the business to be more competitive
  • Getting the point of view of the employee is beneficial in making decisions. More diverse opinions will mean the business makes more informed decisions
  • Good communication will mean that the objectives of the employees are more aligned with the objectives of the business
• Benefits to the employee of good employer-employee relations


  • Employees will feel involved in the business which will give them a sense of job security
  • If workers are more productive and efficient then the business will make more money. This increase in profit can be fed back into the workforce through bonuses or pay increases
  • The views of the employee are considered during decisions so they will feel valued and motivated. This will increase their job satisfaction
  • Employees are able to communicate their personal objectives to the employer, which will help the employee develop skills and further their career
• Employers have to be careful not to have too close a relationship with their employees. Managers need to be able to keep some control over what's going on
• Employers need to make sure that they aren't employing workers just because they have a good relationship with them. They should expect the same high standards from every employee regardless of their relationship
• Employees represented in the decision making process


  Businesses need ways of communicating with their workforce and representing the workforce in the decision-making process
• Factors affecting employee representation


  • Organisational size
  • Organisational structure
  • Leadership and management
  • External factors
• Works councils


  Committees made up of employer and employee representatives (usually elected) that meet regularly to discuss general work issues
• Works councils


  • Discuss general work issues e.g. training, new technology and methods of work
  • Sharing of ideas and information in a relatively relaxed atmosphere improves relations
• Quality circles


  Like works councils, but they only discuss quality issues and include employees from all levels of the business
• In 1994, the EU brought in European Works Councils for businesses based in multiple European countries
• Trade unions


  Act on behalf of groups of employees in the workforce when negotiating rates of pay and working conditions etc. with the employer
• Benefits of trade unions


  • Strengthen bargaining power
  • Allow employers and workers to communicate
  • Provide advice and assistance to individual employees
• Trade union action in the workplace


  1. Negotiate with employers

  2. Encourage workers to go on strike if negotiations don't work
• What trade unions negotiate for


  • Fair rates of pay and/or productivity bonuses
  • Reasonable hours of work, and paid holiday entitlement
  • Safe and civilized working conditions
  • Greater job security with protection against mistreatment, discrimination and unfair dismissal
• Trade union action at a national level


  1. Put pressure on the Government to bring in legislation

  2. Minimum wage introduced in 1998

  3. Made redundancy payments compulsory

  4. Pension Protection Fund set up in 2005
• Trade unions take action in party politics:

  1. Many unions donate money to the Labour Party because they think its policies represent their interests.
  2. In the 1970s and 80s, unions had a lot of power in the Labour Party. Since the 90s they've had less power.
• Trade Unions


  Can influence the Decisions of the Business
• When employers want to make changes to the working practices of the business


  1. Trade unions can help staff if they want to resist the change, e.g. by organising strikes

  2. Trade unions can also facilitate change by liaising between employers and union members, and communicating the benefits of the change in working practices to their members
• Employees are more likely to be open to change


  If union representatives are involved in decisions, because they trust trade unions to protect their interests, but may not trust their employers to do the same