Employee Relations and the Workplace Climate Notes

Employee Relations and Workplace Climate

Lecture Goals

• Discuss challenges, theory, research, and practice in employee relations.
• Understand how employee relations affects employee attitudes and the overall workplace climate in organizations.
• Recognize the impact on individual motivation.

The AMO Model of Performance

• Source: Boxall, P and Purcell J (2022) Strategy and Human Resource Management. London: Bloomsbury Academic, p. 180.

Psychological Contracting

• Expectations are built on perceived promises at recruitment and individual interpretations of HR practices and management behavior over time.
• Perceived delivery of the deal?:
  • Yes: Higher trust and greater commitment.
  • No: Lower trust and commitment due to violation or accumulated breaches.

Definitions

• Employee relations: The way management relates to employees as stakeholders, including the style of management in negotiations and avenues for employee voice.
• Workplace climate: The atmosphere of the workplace, characterized by variables like trust in management and personal inclusion.

What’s at Stake in Employee Relations and the Workplace Climate?

• The employment relationship is an 'effort-reward' bargain with both specified and ambiguous parts.
• Long-term employment is an ongoing, negotiated relationship.
• Emotions matter, and taking advantage of the other party can have negative consequences.

Common/Complementary Interests

• A profitable organization.
• A growing organization.
• High level of safety.

Typical Areas of Conflict

• Wage share versus profit share.
• Fair workload versus work intensification.
• Self-control of methods versus management control.
• Job security versus organizational restructuring.

Moments of Negotiation

• Occur at the beginning of employment and when employees expect rewards for improved skills or contributions (psychological contracting).
• Formal Negotiation:
  • At the point of the employment offer.
  • During collective bargaining with a union.
• Informal Negotiation:
  • E.g., negotiating with a supervisor over hours or holidays.

Effect of Individual Talent

• Employees with critical and hard-to-replace skills have greater bargaining power.
• Example: Chefs in Edwards and Ram’s (2006: 909) study of Indian restaurants in Britain had greater autonomy due to their skills being in short supply.

General Economic Effect

• A strong economy shifts the balance of power towards workers, while a weak economy shifts it towards employers.

Effect of the Legal Context

• Countries with reasonable and well-enforced employment laws provide employees with negotiating rights.
• NZ Rights: www.employment.govt.nz/starting-employment/rights-and- responsibilities/employee-rights-and-responsibilities?stage=Live

Test for New Job Acceptances

• Given a written offer?
• Asked if you had any questions?
• Given satisfactory answers?
• Told you could get independent advice?
• Given sufficient time to get advice?
• Given a copy of the final signed agreement?
• Score out of 6?

Duty of ‘Good Faith’ in New Zealand

• Applies to both parties.
• Includes telling the truth, listening, being responsive, and ensuring a fair process in changes that could lead to job loss.
• See: www.employment.govt.nz/starting-employment/rights-and- responsibilities/good-faith

Union Rights and Collective Bargaining

• Union members have rights to collective bargaining.
• Union advocates have constituents (union members).
• HR managers also have constituents (other managers and company directors).

Impact of Low Trust

• Negotiations may be protracted and involve conflict (picketing, strikes, lock-outs, boycotts, media campaigns) when there is a low-trust climate.
• Negotiation styles create ‘legacies’ that affect future change.

Types of Negotiation: Position-Based Bargaining

• Traditional approach: Parties develop claims ('positions') and argue for their own position against the other party’s.
• Key Concepts:
  • Opening Claim
  • Target Point
  • Resistance Point
  • Solution/Settlement

Preparation for Position-Based Bargaining

• Consider:
  • What matters most to your constituents?
  • What evidence and arguments are strongest?
  • Where to avoid or minimize concessions?
  • What matters most to the other side?
  • What are you prepared to concede?
  • Where to compromise?
  • Where can joint problem-solving be used?
• Thinking from the other side's perspective is crucial.

Process of Position-Based Bargaining

• Tabling of claims and counter-claims (written, numbered, and dated).
• Giving explanations, reasons, and data.
• Advocates do the talking.
• Use of adjournments for intra-party debate.
• Rewriting of claims.
• Splitting differences at the end (50/50 is common).

Strengths and Weaknesses of Position-Based Bargaining

• Strengths:
  • Constituents understand the process well.
  • Seasoned advocates know what to expect.
• Weaknesses:
  • Conflict can escalate.
  • Opportunities for joint problem-solving can be lost.
  • Can create ill-feeling, lower productivity, and greater employee turnover.

Types of Negotiation: Problem-Based Bargaining

• An alternative or complementary approach.
• Starts from the premise: 'we have a problem' or 'we both have an interest in making a change'.

Behaviors in Problem-Based Bargaining

• Openly acknowledge the shift of approach.
• Tabling of investigations/studies.
• Anyone can talk about the problem.
• Use of longer processes (joint working parties).
• Development of a common proposal.

Strengths and Weaknesses of Problem-Based Bargaining

• Strengths:
  • Opportunities for mutual gain through joint problem-solving ('creating value').
  • Improves the bargaining experience.
• Weaknesses:
  • Constituents may not understand the process well.
  • May be seen as 'selling-out'.
  • Can be time-consuming and costly.
  • Can be subverted by a party who is not genuine.

What Type of Negotiation is Best?

• Joint problem-solving is useful in areas of shared concern.
• Many collective negotiations blend both approaches.
• HR managers and union advocates should be versatile.

Negotiation Skills

• Skilled negotiators avoid insults and self-praise.
• They control their emotions.
• They use only the best arguments.
• They are good at asking questions and active listening.

Rules of Active Listening

• (a) Don’t jump to conclusions or think only about what you're going to say. Hear the other person first and don’t interrupt
• (b) Reflect back what they have communicated before making your own point
• (c) Periodically summarise where the discussion has come to and ask the other person if they agree with your summary

Applying Psychological Contracting Theory to the Collective Level: The Renco Case

• Gap between employee expectations and experience in HRM.
• Grant (1999) explores four types of psychological contract between management and a workforce.

Four Types of Psychological Contracts

• Congruent Contract: Management’s rhetoric coincides with employee perceptions of reality.
• Mismatched Contract: Rhetoric fails because it has no appeal and does not match the perceived reality.
• Partial Contract: Parts of the rhetoric appeal, and parts do not.
• Trial Contract: Rhetoric is given a chance to prove itself.

The Renco Case Study

• UK consumer electronics sector.
• Japanese-owned company promised Japanese practices.
• Workers were keen to give the approach a chance (trial contract).
• After 18 months, management practice diverged from rhetoric.
• Consultative practices decayed.
• Employees revised their effort.
• The psychological contract shifted to a mismatched one.

Implications of the Renco Case

• Danger of raising expectations and then dashing them.
• Cynicism is bred, damaging the workplace climate.

Trust vs. Distrust

• A trigger event (breaking a critical commitment) can lead to distrust.

Creating a Climate for Diversity in Organizations

• Houkamau and Boxall (2011) discuss creating a positive climate for diversity.

Diversity Support Activities in NZ Organizations

• (n = 479)
• Source: Houkamau, C. and Boxall, P. (2011) ‘The incidence and impacts of diversity management: A survey of New Zealand employees’, Asia Pacific Journal of Human Resources 49(4): 448.

Family-Friendly Employment Practices in NZ

• (n = 479)
• Source: Houkamau, C. and Boxall, P. (2011) ‘The incidence and impacts of diversity management: A survey of New Zealand employees’, Asia Pacific Journal of Human Resources 49(4): 449.

Proactive EEO Practices

• (n = 479)
• Source: Houkamau, C. and Boxall, P. (2011) ‘The incidence and impacts of diversity management: A survey of New Zealand employees’, Asia Pacific Journal of Human Resources 49(4): 450.

Worker Perceptions of Diversity Climate in NZ

• (n = 479)
• Source: Houkamau, C. and Boxall, P. (2011) ‘The incidence and impacts of diversity management: A survey of New Zealand employees’, Asia Pacific Journal of Human Resources 49(4): 453.

Mean Scores by Type of Organization

• Source: Houkamau, C. and Boxall, P. (2011) ‘The incidence and impacts of diversity management: A survey of New Zealand employees’, Asia Pacific Journal of Human Resources 49(4): 450.

Likelihood Ratio Chi-Square Statistic

• Source: Houkamau, C. and Boxall, P. (2011) ‘The incidence and impacts of diversity management: A survey of New Zealand employees’, Asia Pacific Journal of Human Resources 49(4): 452.

Typical Management Actions

• Leadership commitments to diversity and inclusion.
• Development of key practices (e.g., flexibility, bias checks, zero tolerance).
• Management training in key HR processes.

Formal Policy and Resources

• Larger companies and public sector organizations are likely to have:
  • More formal policy (e.g., targets for gender representation).
  • Better resources (e.g., dedicated specialists).
  • Better measurement of outcomes (e.g., workforce survey).

Backfire Effect

• The public sector has the lowest rating in terms of diversity climate despite greater formal diversity management.
• A ‘backfire effect’ (shifting from a trial to a mismatched psychological contract).

Positive Outcomes for Employees

• Can be achieved effectively in organizations with little formal policy or few resources.
• Key issue: responding positively to family-friendly needs and diversity concerns.

Lecture Conclusions

• Long-term employment is a negotiated relationship; emotions matter.
• Management actions in employee relations affect individuals through the climate they create.
• Low trust leads to protracted negotiations and conflict.
• Psychological contracting theory applies to the collective level.
• NZ workers value family-friendly HR practices and an inclusive workplace climate, achievable in all sizes of organizations, but can be damaged by the ‘backfire effect’.