Employee relations: Cost management v people management? (page 1 of 2)

Industrial relations encapsulated a confrontational 'them and us' scenario where union leaders negotiated basic terms of work and pay through collective bargaining. However, today the shift to 'Employee relations' belies a more modern approach, the U.A.E is a good example of an originally industrial production based economy, which is shifting to a service based industry and of course the tourism sector in Dubai. With a service based sector, individual worker skills have a larger impact on business and some would argue that skill sets increase from medium to high skills and on to knowledge working; where a high degree of experience, qualification and autonomy are required within the job role. The Chartered Institute of Personnel Development (2005) defines employee relations as;

'...the relationship with individual employees.'

'The ideas of 'employee voice' and the 'psychological contract' have been accepted by employers and reflected in their employee relations policies and aspirations'

'Employee relations skills and competencies are still seen by employers as critical to achieving performance benefits through a focus on employee involvement, commitment and engagement.'

With employee relations, managers are more concerned with individual performance and therefore individual working concerns, or should be. This concept has been slow if not pedestrian to reach these shores, where a predominately cost-based form of management is generally, with a few notable exceptions, much in evidence. Cost based management has its roots in Taylorism, where a task is broken down into its various component actions and the basic action allotted to an individual to do ceaselessly day in and day out. The luckless worker was then subjected to a time and motion assessment and production standards and a time limit set for the monotonous action. If the standard was not achieved penalties were introduced. It is this restrictive practice of treating even knowledge workers as machines, not valuing their human contribution or providing development opportunities, which is so prevalent in the region. Practices include having employees clock in and clock out, making them account for every single minute of their day with endless time logs and setting rigid 'production' quotas. This destroys any hope of a psychological contract with a win/win outcome, when hard working employees feel valued and appreciated by employers and employers get the benefit of high production, loyal staff and a low turnover. Good employee relations rely in part to a well structured organisation with basic HRM facets in place such as, job specification, job evaluation, induction, training, objectives, appraisals, performance management and reward management, but don't underestimate the importance of the psychological contract. The CIPD defines the psychological contract as;

'Joint obligations which are often informal and imprecise: they may be inferred from actions or from what has happened in the past, as well as from statements made by the employer, for example during the recruitment process or in performance appraisals. Some obligations may be seen as 'promises' and others as 'expectations'. The important thing is that they are believed by the employee to be part of the relationship with the employer '

Guest (2002) said that the extent to which employers adopt people management practices influences the health of the psychological contract.

High quality people management results in a vibrant psychological contract leading to increased employee commitment and satisfaction and a positive impact on business performance.

Cost based management/low quality people management results in a poor or broken psychological contract, where an employees' sense of fairness and trust and their belief that the employer is honouring the 'deal' between them is shattered resulting in poor or even disastorous business performance results.