Industrial Relations BSMH 5033

Zulkiflee Bin Daud Universiti Utara Malaysia

INDUSTRIAL RELATIONS
DEFINITION : 1. A relationship involving employer and employees (Green, 1991). 2. A set of phenomenon that operates inside and outside workplace involving identification and creating employment relations rules and regulations (Salamon, 1998). Salamon (2000) indicated two terms that always been highlighted in industrial relations: 1. INDUSTRIAL RELATIONS the relationship between employer and employees. 2. EMPLOYEES RELATIONS the relationship between employees.

INDUSTRIAL RELATIONS DEVELOPMENT The common variable that all organizations must cope with is change. The environment is
dynamic and is continuously change, so managers, trade union and other participants in industrial relations have to cope with dispute over what is appropriate in the changed circumstances. (Salamon, 2000)

- The development of IR has to be dynamic in line with the organizational development. For instance, presently many organizations were looking towards product and service diversity. Hence, the demand for specialize employees have been increased and the relationship between employer and employees becoming more complex (for example compensation structure, organizational climate etc.). - Changes in sociological aspects were also influencing IR development. Now, organizations were no longer implementing master and slave approach. The acceptance of industrial democracy has been increased. The management is no longer unilaterally making decision particularly on working procedure. The participation and involvement concepts have been implemented widely. - The construction and amendment of employment and employment related acts have affected the IR development.

Changes in labor market are due to: 1. The increment of female workers. 2. The increment of unemployment rate due to economic down turn and changes in technology. 3. Diversification in employment structure from manufacturing to service sector. 4. Employer and employees are more emphasize on work and less emphasizing on career development. 5. Changes in government strategies in controlling labor market. 6. The increment of foreign workers.

Government plays a vital role through statutory provisions in determining labor supply for example age, salary, working hours, compensation, etc. Government also has to support economic development by controlling unemployment rate and maintaining industrial harmony. Roles of government in labor market: 1. Passive labor policy Government will take actions in recession for instance giving cost of living allowance to support people during their period of unemployment and retrain unemployed workers. 2. Active labor policy in this policy the government involve directly in managing labor market for example determining training needs and implementing job support program that will effect the level and the structure of labor market.

FOCUS IN INDUSTRIAL RELATIONS

According to Blyton and Turnbull (1954), industrial relations were focusing on collective aspect that evaluate 2 main subjects: 1. Employees social welfare 2. Social pressure Therefore in managing industrial relations, managers are not only predicting organizational effectiveness but also controlling employees, resolving conflict, identifying employees needs, maintaining harmonious working environment and determining employees compensation parallel with their work.

Maimunah (1999) indicated that IR emphasized on 3 main aspects: 1. Relationship between employer and employees. 2. Employment lawsuits. 3. Disciplinary procedure and terminating employment contract. Hence, according to Maimunah (1999) industrial relations are focusing to: Legal and regulation that bring an effect to working environment. Terms and conditions of employment. Employer and employees right and responsibility. Process determining terms and conditions of employment (i.e collective bargaining process).

Experiences (past)

Future Planning Economics Market Technology Employment level

Social Poverty rate Level of education Class of community

IR
1. 2. 3. 4. Institusi Character Procedure Topic

Politics Political parties Legislative Government

Context in industrial relations

The effect of time period on industrial relations - Time period plays an important role in industrial relations system. The present consequences may be due to results from past actions or future assumptions. For example conflicts confront by an organization may be due to the consensus decided in the past and these conflict will affect organizations operation in the future. - Context in time period 1. The existence of problems in present may be from the decision making result made in the past and its resolution may create a conflict in future. 2. The behavior, aims and relationship among actors in industrial relations system are resulted from their experiences in past.

IR INVOLVES 4 MAIN SUBJECTS

1. INSTITUSI refers to any parties that directly involve in industrial relations. For example trade union, employers association and industrial court. 2. CHARACTERS refers to individual involves directly in industrial relations. For example Human Resource Department manager and officers, Minister of Human Resources Ministry, officers in Industrial Relations Department MOHR and arbitrator. 3. PROSEDUR refers to process and procedure used in industrial relations. For example grievance procedure, disciplinary procedure, collective bargaining procedure and procedure to perform industrial actions. 4. TOPIK refers to subjects discuss in industrial relations. For example salary, working hours, employment contract, picket and strike.

PERSPECTIVES IN INDUSTRIAL RELATIONS

Industrial relations can be discussed in various aspects, either from the aspect of sociology, politics, economics and legislative. Industrial relations system is not influence by any fundamental because this system encompass with individuals and organizations who believe in various opinions and values. Therefore, this system is electic. Meaning, parties involve in industrial system are free to choose from any sources. The most important thing in industrial relations in resolving any conflict existed in organization and maintaining harmonious working environment mutually. Green (1991) indicates that there is no universal perspective that can define industrial relations clearly. But, each perspective helps defining industrial relations system. 3 perspectives in industrial relations including: 1. unitary, 2. pluralist and 3. marxist.

UNITARY PERSPECTIVE This perspective assumes that units in an organizations have the same interest, objectives and values. Organizational structure in this perspective is single authority and loyalty In this perspective, organization will not recognize the establishment of union. An autocratic leadership is used by organization to resolve any disputes.

PLURALIST PERSPECTIVE
This particular perspective is opposite from unitary perspective This perspective assumes that employer and employees have the different objectives and interests. Therefore, this perspective recognize the existence on industrial conflicts. Conflicts are rooted from organizational structure, compensation structure and working environment. This perspective recognizes union to represent employees to voice their dissatisfactions. Organization with this perspective always collaborate with union in conflict resolution process. So that all conflict resolution results will be mutually accepted.

MARXIST PERSPECTIVE This perspective is more towards capitalist. According to Hyman (1975) in capitalist, a production system is belongs to organization and getting profit is the main aim. Therefore, the management have their right to control production processes in order to maximize organizational profit. This perspective recognizes the existence of conflict. Conflict is important as an agent for change. This perspective believes that a conflict will exist if there is a imbalance in economic distribution in society. Social nature in a society is resulted from imbalance economic distribution and pressure from dominant group. Social and political conflict are constructed from economic conflict in a society.

INDUSTRIAL CONFLICTS Pluralist and Marxist perspectives recognize the existence of conflict. Conflicts can be resolved in 3 ways:

1. Employer use his discretion in resolving conflict. 2. Collaborate with employees or trade union. 3. Social or political institutions help employers to determine management system and the role of management in managing employees.

To identify the existence of conflicts :

1. Latent conflict This type of conflict is hard to identify. It exist to a particular worker. Worker will file a complaint, absent, go-slow or even resign from the job. 2. Collective conflict exist to a group of workers. We can identify the existence of collective conflict if: a. a collective bargaining was conducted. b. an industrial action was taken by workers. For example strike and picket. c. an industrial action was taken by employer. For example lock-out and retrenchment.
** note : employees retrenchment is not only shows industrial conflict. This procedure may be implemented due to economic recession or organizational restructuring.

Conflict can be resolved through: 1. Legislative by referring to suitable acts, provisions or court cases. 2. Functional a. unilaterally the management make decision dominantly without discussing with employees. The conflict may be related to companys rules and regulations or employment lawsuits. b. bilaterally the management will resolve conflict by negotiating with employees in collective bargaining process.

VALUES AND CONCEPTS IN INDUSTRIAL RELATIONS IR is not a subject that underpinned by any fundamental. There is no certain facts that can identify its objectives. Arguments in IR must be embedded with moral terminology.

Concepts in IR must be identified technically with underpinned by value judgment

There are no criteria in IR that can be accepted universally. There are a lots of perceptions on IR concepts and there is no right or wrong on these perceptions. Individual or group of individuals have different opinions and views on good or bad and right or wrong

1. Justice vs Equity
These concept and value are used to construct compensation structure and level as well as employees termination and dismissal. There is no universal justice. Therefore, a set of rules and regulations has to be constructed. This set of rules and regulations become the fundamental to any decisions made by any parties in order to uphold the concept of justice. Brown (1979) indicated that a concept of justice is an ideology to cover a mistake. This concept is use by parties to rationalize their decision. The concept of justice always related to equality where not all equality portray justice. For instance employees salary were differ according to their job description and job specification. But if we talk about justice, it must be equal. To implement justice, commitment from employer and employees are needed.

The concept of justice between pluralist, capitalist and marxist perspectives

Capitalist A dominant value was predicted by the successful in competition between individuals. This competition may direct to injustice. For capitalist, imbalance in competition is just because individuals are free to control their market and maximize their profit. In monopoly environment, individual may discard other individual from entering market.
Marxist assumes that equality in rights and opportunities are important. If there is imbalance in macro level, this will effects imbalance in micro level. Pluralist assumes that justice is uphold if the society agree that justice was uphold.

A concept of justice is used in the following situations: 1. Used in resources allocation between groups or department in organization. 2. Identify whether the allocation of resource is consistence with other resources. In some situations, resources have to be allocated fairly regardless the importance of situation. In other situations the allocation of resources have to follow the critical demand. 3. The concept of justice is also happen in non-monetary allocation. For instance balance in concerning employees welfare.

Justice can be divided into 3: Distributive justice allocation of resources must be equal among individuals or groups. Procedural justice any decision must be made through proper processes or procedures that was mutually accepted by parties. Interactional justice any circumstances will be portrayed as justice if parties involved in the situation feel that justice was uphold.

2. POWER AND AUTHORITY

There are 2 interrelated concepts 1. Authority is reached by power. 2. Power is reached by authority. Koontz and ODonnel indicated that power will create authority.

Hyman exhibited that power is an ability of individual or group to control their physical and social environment and ability to influence others decision.

Power can be defined by various aspects:

1. Power is defined as an ability to control when an individual or a group can dominate a situation. This domination portrays power. 2. Power is meant as ability to influence and make a change on decision-making process. Divided into 2 situations: a. Ability to influence the decision through treat for disciplinary action. b. Ability to create an implicit influential that portray the importance of certain facts so that these facts will be considered in decision-making process.

Sources of power:

1. Reward influencing others decision through compensation. 2. Coercion influencing others decision through threat. 3. Legitimized influencing others decision through position in organization. 4. Referment - using personal idea to influence others decision. 5. Expertise using unique knowledge and experiences to influence others decision.

Internal and external dimensions of Power Internal individual or group use their advantages and strength to construct power. For instance trade union use large number of member as its advantage to bargain with management.

External individual or group use their networking with other parties to create power. For example domestic trade union refers to national trade union to bargain with management.

Authority Definition Right to instruct an individual to implement a task (Fox). Authority is a value that portray the utilization of power.

The important aspect that has to take note in the utilization of power is socialization process. For example socially, workers have to obey any instruction comes from head of department. Hence, head of department has an authority to instruct his workers to implement tasks with expected performance standard.

Management right is created from socialization process. In industrial relations management right is called management prerogative. This prerogative is needed to control employees movement and productivity objectives. In confronting with managerial prerogative, employees will decrease their autonomy relatively. Employees will not disobey managerial decision in implementing his prerogative as long as the management implement his prerogative with bonafide. Section 13 (3) of Industrial Relations Act 1967 has listed managerial prerogative.

Section 13(3) of Industrial Relations Act 1967 No trade union can include in its proposals for a collective bargaining the following items: The promotion of any workmen. The transfer of any workmen. The employment of any workmen. The termination of any workmen. Dismissal or reinstate of any workmen. The assignment or allocation of tasks to any workmen. (please refer to the particular section for further reading)

3 implications of power and authority in Industrial Relations. 1. The usage of power is unacceptable but the usage of authority is acceptable (power abuse). 2. There is a conflict on loyalty among employees. They will be in dilemma to show their loyalty to his management or to trade union as a union member. 3. Employees right is in line with the implementation of power and authority or his span of control. a. Employee has his right to demand a conducive working environment through collective bargaining.

3. INDIVIDUALISM vs COLLECTIVISM In Industrial Relations we look into the freedom given to individual and how far the needs of collective system. Usually, The relationship between employer and employee is in the form of individualism. The relationship between employer and trade union is in the form of collectivism.

The concept of individualism and collectivism will determine the pattern of communication. In individualism, unilateral communication will be used. Management will use his power and authority to make decision. Dominating or even avoidance become styles that will be utilized in resolving conflicts. In collectivism, bilateral communication is conducted. In decision making process, management will negotiate with employees or their representative. Integrating and compromising styles of conflict resolution will be performed.

4. RIGHT AND RESPONSIBILITY

Right is defined as legal claim and entitlement from legislative, tradition and nature aspects. The concept of right. 1. Free and entitlement this concept has give a positive impact where right is used as the fundamental of nature and well accept by the society. For example, freedom of speech. 2 Immunity this concept of right sometime gives a negative impact where right is seen as an advantage to certain society. Individual or society who have immunity right may use it to eliminate their responsibility.

In industrial relation, management right is translated as management prerogative. This prerogative has to be used wisely so that no unfair labor practice being performed. For example unfair dismissal or constructive dismissal. Responsibility is defined as duty and obligation.

The definition brings 2 approaches of responsibility:

1. It brings an obstacle to individual freedom. For example training officer is responsible to conduct training but he has no right to do any payment to training provider. 2. It implies individual freedom. For instance, Human Resource Manager is responsible for maintaining employees KSAOs. Therefore, he has his right to give training to the employees in order to achieve organizations objectives.

Responsibility evolves from: 1. Individual perceptions. For example, employees have responsibility to tidy their own table. 2. Instruction from higher management. For example the management will impose a penalty to employees who have a mess table. Therefore, the employees are responsible to clean their table.

Right and responsibility are created from interaction between 2 parties. In industrial relations, right and responsibility involve in legislative construction. 3 issues in discussing right and responsibility: 1. Must a right carry with it some equal and opposite responsibility? Employees have their right to strike. Must they perform this action if their demands are not fulfill or should their negotiate with the management first? 2. Does the existence of a right imply a responsibility on the part of others to ensure that the right can be exercised effectively? For example, employees right to speech will be effective if the management responsible conducting collective bargaining. 3. Can responsibility in terms of accountability be raised only if there is the right to control? For example, managers have responsibilities to manage their workers. Therefore they have their right to secure their workers well being. But is this responsibility implies to unions leadership?

5. INTEGRITY AND TRUST Integrity means individuals behavior based on their value and trust. The quality of an integrity can be seen from the behavior that embedded from a consistent set of value. If there is a conflict between ones value and the value of others, he will dismiss from the group.

The most important thing in integrity and trust is how far an individual can maintain his integrity.

Usually trust exists between individual compare to between groups or organizations. There are 3 types of trust in industrial relations: 1. High-trust in this type of trust the management is ready to accept ideas and opinions from its employees. The management will use compromising and integrating style in making decision. In high-trust the management performs decentralization. 2. Low-trust this trust exist where controlling mechanism is formal. The management use its discretion in managing workers. Dominating and avoiding styles are used in making decision. In low-trust, the management performs centralization. 3. Interpersonal trust exist when an individual trust with one another. In industrial relations, trust is rarely exist in competitive situations.

Take a break.