Introduction to HRM

Lecture 2:

An Introduction to
Industrial Relations
Niels-Erik Wergin
 What are Industrial Relations?

 “Interaction between employers, employees, and the

government; and the institutions and associations through
which such interactions are mediated”.
Source: The Concise Oxford Dictionary of Politics (OUP 2003)

 “The relations between the management and workforce of an

enterprise, particularly bargaining through trade unions. This
mainly concerns pay, hours and conditions of work (…). Many
of these matters are affected by legislation.”
Source: A Dictionary of Economics (OUP 2004)

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 Typical topics

 Trade unions
 Works councils
 Collective bargaining
 Strikes
 Minimum wage
 Apprenticeships

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 Why are IR important?

“If industrial relations are good, the whole

workforce will be well motivated to work hard
for the benefit of the organization and its
customers.”

Source: A Dictionary of Business (OUP 2002)

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 IR: Main Actors

State
Executive, Legislature,
Judiciary, Administration

Labour Capital
Employees & Employers &
Trade Unions Managers

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 IR: Main Actors

Superstructure State
Executive, Legislature,
Judiciary, Administration

Labour Capital
Employees & Employers &
Trade Unions Managers

Economic base

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 Main Actors I: The State

 Government (executive)
• Central government (“Whitehall”)
• Regional government (not very important)
• Local Government
 Parliament (legislature) (“Westminster”)
 Employment Tribunals (judiciary)
 Administration
 ACAS (Advisory, Conciliation and Arbitration Services)
 Role of the European Union
• Legislation in the areas of employment, health and safety

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 Main Actors II: Capital

 Individual employers and their managers

 Employers’ Organisation (less important now)

• E.g. EEF (Engineering Employers’ Federation)

 Umbrella organisations
• CBI (Confederation of British Industry, mainly large
companies)
• BCC (British Chambers of Commerce,mainly SMEs)
• IoD (Institute of Directors, individual CEOs/MDs, more
right-wing than CBI)

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 Main Actors III: Labour

 Trade Unions
• e.g. TGWU, Amicus, UNIOSN (large unions)
• e.g. FBU, ASLEF, RMT (small but powerful)
• Paid union representatives: full-time officers
• Lay union representatives in companies: shop stewards
 TUC (Trades Union Council) – umbrella organisation
• Counterpart of CBI
• Negotiates with governments
 European Level
• ETUC (European TUC)
• European Industry Federations
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 Differences between IR and HRM

 Individualist vs. collectivist perspective

• HRM: relations between individual employees & management
• IR: relations between all (or groups of) employees & management
 Focus on micro-level vs. focus on macro-level
• HRM: focus on the company and plant-level,
external environment is seen as “given” (I.e. constant, not changeable)
• IR: focus on companies, but also on whole economy and society,
external environment not given – government as an actor
 Unitarist vs. critical/Marxist perspective
• HRM: employees and employers have same interest: well-being of
company
• IR: capital and labour have different, incompatible interests
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 Different Interests

 Employers’ interest:
• Higher profits
 Employees’ interests:
• Higher wages
• Better working conditions
 Problem:
• Contradictory interests:
Higher wages mean lower profits, and vice versa
 Common interest:
• Competitiveness and survival of the company

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 Collective Bargaining
 Collective bargaining is a process which attempts to accommodate these
opposing interests (of capital and labour), by means of collective
negotiations between the two parties
 Definition: “The process of negotiation between unions and employers in
respect of the terms and conditions of employment of employees” (source:
EMIRE)

 With other words: trade unions negotiate on behalf of all employees with
management, on topics such as wages, working hours etc.
 Outcome: collective agreements

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 Collective Agreements:
Types and Contents
 Different types of agreements:
• Multi-employer agreements
 Apply to a whole sector or industry
• Single employer agreements
 Apply to only one company, or even a plant

 Different contents:
• Procedural part
 Establishes how management interacts with both unions and
individual employers
 e.g. strikes, disciplinary and grievance procedures
• Substantive part
 Issues such as wages, working hours, conditions of work

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Collective Agreements: Legal
Issues
 Collective agreements are not contracts, they are
“gentlemen’s agreements” which are “binding in honour only”
 Thus, collective agreements cannot be enforced legally
 This is a peculiarity of British IR – and a result of voluntarism
 However, the contents of collective agreements are usually
included in individual employment contracts (which are
legally enforceable) subsequently

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 Power in Industrial Relations
 The concept of power is central to understanding Industrial
Relations
 Reason: It affects the bargaining position of capital and labour
 Depends on the economic, political, legal & technological
environment
 The balance of power changes over time as a result
• Late 1970s: unions were very strong
• Late 1990s: unions weakened considerably by successive conservative
governments

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 Conclusion

Human Resource Management and Industrial

Relations (also called “Employment
Relations”) are complementary subjects.
If you want to become a good Personnel
Manager, you need a good knowledge of both
subjects (even if the posts is now more
likely to be called “HR manager”).
A good knowledge of
HRM practices alone is not sufficient!
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