Chapter 7 Employee Relations Summary

Throughout history, peoples perceptions of work and employment have evolved from a
necessary evil to a source of fulfillment. The relationship between employer and
employee involves responsibilities, obligations, and expectations as well as challenges.
On an economic level, many believe there is an unwritten, informal psychological
contract that includes the beliefs, perceptions, expectations, and obligations that make up
the agreement between individuals and their employers. This contract has evolved from a
primarily master-servant relationship, in which employers held the power, to one in
which employees assume a more balanced relationship with employers. Workforce
reduction, the process of eliminating employment positions, breaches the psychological
contract that exists between an employer and employee and threatens the social contract
among employers, communities, and other groups. Although workforce reduction lowers
costs, it often results in lost intellectual capital, strained customer relationships, negative
media attention, and other issues that drain company resources.
Employment law is a complex and evolving area. In the past, employment was
primarily governed by employment at will, a common-law doctrine that allows either the
employer or employee to terminate the relationship at any time as long as it does not
violate an employment contract. Many laws have been enacted to regulate business
conduct with regard to wages and benefits, labor unions, health and safety, equal
employment opportunity, sexual harassment, and whistle-blowing. Title VII of the Civil
Rights Act, which prohibits employment discrimination on the basis of race, national
origin, color, religion, and gender, is fundamental to employees rights to join and
advance in an organization according to merit. Sexual harassment is defined as

unwelcome sexual advances, requests for sexual favors, and other verbal or physical
conduct of a sexual nature when submission to or rejection of this conduct explicitly or
implicitly affects an individuals employment, unreasonably interferes with an
individuals work performance, or creates an intimidating, hostile, or offensive work
environment. Sexual harassment may take the form of either quid pro quo harassment or
hostile work environment harassment. An employee who reports individual or corporate
wrongdoing to either internal or external sources is considered a whistle-blower.
Although legal compliance is imperative for social responsibility, the ethical
climate of the workplace is more subjective and dependent on top management support
and corporate culture. Companies with a strong ethical stance fund initiatives to develop
employees skills, knowledge, and other personal characteristics. With diversity
programs, companies assume an ethical obligation to employ and empower individuals
regardless of age, gender, physical and mental ability, and other characteristics. Work/life
programs assist employees in balancing work responsibilities with personal and family
responsibilities.
Employees may play an important role in a firms philanthropic efforts.
Employees benefit from such initiatives through participation in volunteerism and other
projects.
In light of the complexity of and emotions involved with responsibilities toward
employees, many companies have chosen to embrace these obligations to benefit both
employee and organizational goals. An employer of choice is an organization of any size
in any industry that is able to attract, optimize, and retain the best employee talent over
the long term. One traditional way to strengthen trust is through ESOPs, which provide

the opportunity both to contribute to and gain from organizational success. Finally, the
global dimensions of todays workplace shape an organizations ability to effectively
work with employee stakeholders and to become an employer of choice.