Employer–employee relations or employment relations replaced industrial relations as the study of the relationship between employers and employees, a relationship that may be affected by government and unions. The employer–employee relations field is comprised of industrial relations and human resource management (HRM). Recently more importance is given to the legal characteristics of the employment relationship and to HRM than during the traditional industrial relations era, which emphasized collective bargaining. This is a consequence of the weakening influence of trade unions that enabled employers to redefine employment contracts and job content. Increased employment protection legislation, however, provides regulation and protection to employees, but it does so at the individual rather than the collective level. Management thinking about the relationship also changed with more emphasis on a personal relationship between employers and employees based on commitment rather than control in an increasingly competitive business context.
Despite differences in perspectives, there is agreement that the employment relationship is changing in most parts of the world. This change is the consequence of a number of factors including economic, technological, and structural developments; organizational downsizing and restructuring, the composition of the labor force which has changed from male, blue collar, and manufacturing to female, white collar, and service. Globalization also affects the employment relationship as it leads to the deregulation of labor markets to improve flexibility and facilitates convergence of employment relations systems around the world.
In addition, the employment relationship has been affected by the rise of nonstandard contracts of employment that became more prominent as organizations sought to improve flexibility and more women entered the labor force, the individualization of the workplace that led to the reduction in union membership, and the shift away from the unitarist and toward a pluralistic perspective of organizations. Traditionally the relationship was fundamentally one of conflict represented by industrial relations, but more recently issues of trust, fairness, employee voice, involvement and participation, and dignity and respect are increasingly important in the relationship with more emphasis on moral as well as economic issues and concerns.
The two main models of the employment relationship are the unitarist and pluralist. In addition to these, the egoist and the critical models also examine the employment relationship. John Budd provides an overview of the four models and explains that the unitarist perspective assumes that employers and employees have shared interests and any conflict is a consequence of inadequate management practices. This perspective emphasizes the individual and views government and trade unions as unnecessary. This is the model adopted by applied human resource management.
The pluralist perspective views employers and employees in a bargaining relationship within imperfect labor markets and with the presence of conflicts of interest in organizations. This model accepts that employees and employers may have shared or conflicting interests. A fundamental principle of this view is that labor is not a mere commodity and therefore it is entitled to voice and equity. Government and unions are important in this perspective because they assist in leveling the inequalities that exist due to market imperfections.
The egoist model subscribes to the view that freedom and individual self-interest result in optimal outcomes through the free market transactions. The employment-at-will doctrine (the right of employers to hire and fire for any reason or no reason at all and the right of the employee to accept a job and resign at will) is based on the egoist model adopted in the United States. Finally, the critical perspective sees the employment relationship as a struggle for power and control, a struggle that is not confined to this relationship but is found throughout society.
An increasingly important aspect of the employment relationship is the psychological contract, which represents the relationship between an employer and an employee and the perceptions of their duties and obligations in that relationship. The psychological contract is based on social exchange theory, and it has been used extensively to research and understand the employment relationship despite the debate about its conceptualization, because it develops the relationship beyond the employment contract and highlights the mutual expectations that exist.
Denise Rousseau’s work on psychological contracts, which she defines as an individual’s beliefs about the terms and conditions of a reciprocal exchange agreement, further developed the concept focusing on the individual rather than the relationship and on the more powerful mutual obligations in the relationship rather than the expectations. The psychological contract between employees and employers has changed from exchange of life-long employment for loyalty and mutual commitment to an exchange of opportunities. This development, it is argued, led to the extinction of “the organization man,” the employee who would obediently discount all other interests for the benefit of the organization. Others, however, argue that the new employment relationship that relies on the base of “no long term,” i.e., on free agents and not life-long employees, is a relationship that corrodes trust, loyalty, and commitment, thus having a negative impact on people’s quality of life.
The focus of the employment relationship is now on individual employees rather than on the employees as a collective, a relationship that is focusing on cooperation rather than antagonism. Discussion of the new employment relationship in the literature focuses on the changes in the employment contract as well as the psychological contract. It identifies training and development, employee involvement and participation, and two-way communication as the elements that characterize the new relationship.
- Ackers and A. Wilkinson, Understanding Work and Employment: Industrial Relations in Transition (Oxford University Press, 2003);
- Tennyson C. Beckles, Human Resource Management: Its Nature and Significance with Practical Techniques for Improving Employer/Employee Relations and Enhancing Productivity (Tennyson Beckles, 2008);
- W. Budd, “Values, Ideologies, and Frames of Reference in Employment Relations,” in The SAGE Handbook of Industrial and Employment Relations, N. Bacon, P. Blyton, J. Fiorito, and E. Heery, eds. (Sage, 2008);
- Peter Cappelli, Employment Relationships: New Models of White-Collar Work (Cambridge University Press, 2008);
- Coyle-Shapiro, L. M. Shore, S. Taylor, and L. E. Tetrick, eds., The Employment Relationship: Examining Psychological and Contextual Perspectives (Oxford University Press, 2004);
- Ian Cunningham, Employment Relations in the Voluntary Sector (Routledge, 2008);
- V. Roehling, M. A. Cavanaugh, L. M. Moynihan, and W. R. Boswell, “The Nature of the New Employment Relationship: A Content Analysis of the Practitioner and Academic Literatures,” Human Resource Management (2000);
- M. Rousseau, Psychological Contracts in Organizations (Sage, 1995);
- Sennett, The Corrosion of Character (W. W. Norton, 1998);
- Rebecca Tonn, “Maximizing Human Capital,” Colorado Springs Business Journal (April 25, 2008);
- Harry J. Van Buren III and Michelle Greenwood, “Enhancing Employee Voice: Are Voluntary Employer–Employee Partnerships Enough?” Journal of Business Ethics (v.81/1, 2008).
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