Employment Relations

Employment Relations

Table of Contents

1.0 Identify & explain the most significant causes of employee relations at Vertex

1.1 Change in employee relations post merger

The North West Waters and Norweb merge in 1996 formed United Utilities Plc. Vertex is a wholly owned subsidiary. Throughout Vertex??™s organisational history, the employee relations have been significantly influenced by external factors including; changes in employment legislations, the growth of partnership agreements within business and meeting stakeholder expectations. Vertex has experienced some very dramatic changes in its approach to employee relations over the years and these adaptations have not gone unnoticed, in 2001 Vertex achievements were recognised and were awarded by People Management for their efforts. This report hopes to assess and discuss the influential factors on employee relations within Vertex and later to critically analyse Social Partnership Agreements.

When the two organisations combined so did the cultures and approaches to employee relations. Norweb??™s administrative employees were still members of Unison and followed a traditional pluralist approach to collective bargaining.

A pluralistic perspective assumes management foster a freedom of expression and development of groups, which establish their own norms and elect their own leaders (CIPD). Because of this there is a permanent sense of competitiveness amongst the groupings, leadership and authority. Fox (1996) claimed that this gives rise to a complex of tensions and competing claims which have to be ???managed??™ in the interest of maintaining a collaborative structure.

In contrast, Unison had been derecognised at North West Waters and unitarism approach had been adopted, suggesting that any union presence or collective bargaining was unnecessary (Fox, 1966).

Vertex was then tasked with bringing together two entirely different cultures; one that recognised collective bargaining and the other individual bargaining. Concerned a pluralist model, that incorporated collective bargaining, would be bad for business and that unions would be an obstacle in achieving their organisational objectives Vertex decided to adopted a non-union model. The underlying assumption therefore is that the organisational system is in basic harmony and conflict is unnecessary and exceptional: it is not a ???them and us??™ situation (Salamon, 2000).

Collective bargaining is summarised as the negations??™ concerning pay and conditions of employment between trade unions on the one hand and either an employer or an employer??™s association on the other (Jackson, 1977, p118). The shift in the coverage and content of collective bargaining has been reflected in a dramatic reduction in industrial action since 1980 (CIPD, 2010a). The rate of decline has slowed in the most recent decade, but we find that unions remain vulnerable to further erosion of their membership and influence. This creates a perception that organisations are moving away from a pluralist perspective.

When the decision to move away from collective bargaining was made, Vertex offered all employees an attractive contract of employment that equated to a 15% pay increase, making it increasingly difficult for Unison to dissuade members from signing away their trade union negotiating rights. The move from collective bargaining to individual contracts suggests that management were concentrating on a human relations approach and appealing to the loyalty of the workforce. However, it is important to note that the majority of Norweb??™s administrative workforce did not relinquish their union membership, suggesting that employees were cautious of the changes. Evans & Hudson (1995) research suggests that in these situations there is very little evidence to show that individuals will negotiate the terms and conditions that they are employed and many feel pressured into signing.

This unitarist approach allows for management to consult on the issues that they feel do not require negotiation and provides the basis for human resource management. However the employer must now exert more effort into managing relations with individual employees to maintain their engagement and commitment through projection of common interest, value and culture.

1.2 Trade union recognition at Vertex
The White Paper, Fairness at Work, published in May 1998 contained a range of Government proposals for individual and collective employment right??™s, particularly emphasising on statutory union recognition and collective bargaining, which is one of the channels in which employment relations is conducted. The then Secretary of State for Trade and Industry, Margaret Beckett, emphasised the Governments desire to encourage a new “partnership” approach to industrial relations in her statement to the House;

???The White Paper looks to the future, not the past. There will be no going back to the days of strikes without ballots, mass picketing and the closed shop. We are setting out to foster and support a new culture in the workplace-a culture of partnership??™. (Fairness at Work White Paper 1998, p7).

Around the same time the workforce at Vertex elected trade union officials as employee representatives on the company wide employee consultation forum, presumably as these individuals possessed the necessary skills when negoitiating. Duncan Brown (CIPD Assistant Director-General) said that;

???After the 1970s, rhetoric had focused on the question of a migration from the structural framework of collective industrial relations, towards ???empowerment??™ of individuals in the workplace??™.

The recognition of trade unions can make a positive contribution by working with employers to develop a culture of continuous improvement. This was evident when the representatives collaborated with management at Vertex to successfully change their reward strategy.

The introduction of the White Paper also established the ???The Employment Relations Act, 1999??™ whereby a statutory procedure enables trade unions to gain recognition by an employer (with 20 or more employees) for collective bargaining purposes when the majority of the workforce want this. This then empowered trade unions to have a significant increase of power and assertion now the state had produced this legislation.

This legislation contributed to the difficulties Vertex faced when trying to obtain contracts from local authorities, possibly also including the lack of a strong union influence. Research from the CIPD, (2010c) reveals that 46% of the public sector workforce subscribe to a union membership, compared to 12% in the private sector. Business was ultimately lost due to Vertex??™s de-recognition of unions. As a result HR engaged in discussions to return to a collective bargaining model using the Fairness at Work paper as a mechanism for the process.

As Unison requested recognition for employee representation Vertex decided that rather than returning to a pluralist model that a joint working group would help create a partnership in business. The joint working group is an opportunity for the employee to be involved in organisational decisions collectively. In the 1980s and 1990s, organisations came to understand that if employees are involved and entwined in their work, then organisations are more likely to benefit from increased motivation, commitment, productivity and success. Initiatives on working in teams and quality, which involved employees directly and often originating from Japanese manufacturing practices, grew and were seen to succeed (CIPDd, 2010)

Research from Marchington and colleagues (YEAR) identified that Employee Involvement (EI) can be viewed via four paradigms. Each in some way reflects the objectives the organisation hopes to achieve and can be seen as a key factor in enabling partnerships at work. In this case study, Vertex focused on representation participation with a view to increasing cooperation and reducing conflict, therefore adopting a Co-operation/EI approach. Johnston et al (2004) personify this by stating;

Greater direct participation and autonomy over work, together with a collective voice in organisational decision making are seen by enthusiasts as the hallmark of the partnership approach.

A result of this this joint way of working created a positive organisational culture, more public sector businesses were awarding contracts to Vertex and new pay deals were agreed through joint consultation. Trade unions were also involved in Vertexs bidding process enablign key stakeholders to feel they were unlikely to suffer from a break down in relations or disputes. If issues were unable to dealt woth locally then the matter would be escualted to a HR and union representatives before any formal action would be needed (Vertex-Unison Agreement, 2000).

This approach resulted in a draft form for a potential partnership agreement to deal with any future workplace changes. The proposal was presented to the board and subsequently to a ballot. Interestingly, 89% of the workforce were in favour of the agreement but Team Leaders (who voted seperatley) were marginly against. The agreement compromised of several principles which define the corporate relationship between Vertex and Unison. Vertex acknowledge in the agreement that;

..those in Level 1 Customer Service Job Family, may have ligitimate expectation of representation of collective bargaining. The business will therefore positively engage in partnership with trade unions who are able to demonstrate support from employees either through membership or through a secret ballot. (Vertex – Unison Agreement, 2000).

The agreement acknowledges the importance of frequent communication of information (subject to legal requirements) between all stakeholders, including the involvement of trade union officials. The characteristics of such participation is that the employees are indirectly involved and their union representatives act as a mediator between them and management. The ultimate aim for organisation and indeed Unison is to enable constructive and effective collective barganing and develop better employment relations at all levels.

1.3 Post partnership agreement

In 1999, The Department of Industry and Trade (DTI) created a Government grant to encourage employers and employees to work together effectively and thus encourage the development of industrial relations. This grant named The Partnership at Work Fund was formed as part of the Governments non legislative approach to maximise potential in the workplace.

Thirty-three projects benefited from an investment of ?2.5m, Vertex being one of them. The funding allowed managers and union officials to support the development and application of the new agreement, as well as to explore the potential for a shared business agenda.
This new collabrated way of working resulted in many success including; obtaining large new contracts within the public sector, integration of Vertexs formal consultation with unionised collective bargaining and finally, improving key business issues such as flexible working, pay progression and diversity. (Brown ,2000; Oxenbridge and Brown, 2005 in Marchington and Wilkinson, 2009, p413) explain that one of the main reasons for firms to enter into partnership agreements is to win public sector contracts, which in this case study would seem to be a priority for Vertex when entering into this agreement, perhaps suggesting that gaining employee involvement was not the main motivator when joining an alliance with Unison. With that said, what ever the key drivers were for Vertex to join efforts with Unison, employees are seen to benefit from greater job security, training, quality jobs, good communication and a more effective voice (Kochan and Osterman, 1994; TUC 1999; guest and Peccei, 2001 in Marchington and Wilkinson, 2009, p413).

2.0 Strengths and weaknesses of Social Partnership

2.1 What is a social partnership

Farnham (2000) explains that there are a variety of types of collective agreements which reflect the nature and character of the parties making those agreements. One of those agreements is known as social partnerships. Research defines the social partnership as one that is centred on co-operation and benefits all parties involved. Suff et al (2004) adds that it is an opportunity to increase and enhance union membership. The Involvement Participation Asscoitian (IPA) and Trades Union Congress (TUC) have both produced guidelines for action within agreements.

Ackers & Payne (1998, p530 in Stoney, 2002, p60) further this explanation by adding;

the institutional process of applying the spirit of the business ethics and the theory of stakeholding to the employment relationship.

Stoney (2002) strongly suggests that there has been a putative shift from conflictual to consesual workplace relationships….stakeholder cooperation being at the heart of enlightened management and commercial success within the modern economy.

The funding of partnership agreements were encouraged by the Labour Government in the late 1990s. Research by Nottingham University Business School suggests that there are currently close to 250 signed partnership agreements in the UK, encompassing an estimated 1.4 million employees (Bacon & Samual, 2007).

Partnership agreements can be beneficial to all parties involved. According to Johnston et al (2004) it provides a greater sense of job security, better training and a more effective voice whilst for the unions it allows them a greater role in shaping business strategy as joint architects. However, if partnership agreements are to work effectively they require dense and reciprocal communication networks with enhanced information sharing, greater trust between parties, more effective problem solving processes, and constant attention to consistuent interests (Heery, 2002).

Within the IPA guidelines they envisage that partnership agreements will encourage employers to offer their workers enhanced employment, though not necessarily job, security, a larger stake in the financial success of the business and broader information and consultation agreements (Suff et al, 2003). Similiary, the TUC guidelines state much the same but applying a greater emphasis on the desarbility of union presence and the need for improvements to the quality of working lives (Couper and Stevens, 1998; IPA, 1992; TUC, 1999 in Suff et al, 2003).

2.2 Social partnerships in practice

Legal and General are just one of the UK largests orgnaisation that has a history of a sucessful working partnership with unions, in their case Unite. Although initially dubious about the partnership, Unites National Secretary, Finance Sector, Andy Case commented to People Management (2008) that depsite the envitable difficulties that come with any partnership, there is a commitment from both parties to work through it;

a dialogue and understanding that we can still work toegther even though our interests are sometimes different.

Ultimately there are two approaches that management can take towards partnership agreements, firstly and perhaps the more favourable intrepretation reflects a high commitment managemet (HCM). The HCM compromises of a set of practises that allow flexible working practices that contribute to an improved bottom line and are seen as good for the employee. Alternatively some view partnership agreements as management opportunists whereby it is a quick fix to removing labour costs and bypassing employee involvement or expanding the collective bargaining agenda (Heery, 2004). Research conducted by Blyton and Turnbull (2004) found that the Tesco-USDAW agreement named A real partnership – Working better together was seen as the HCM approach and described the agreement as;

??™A vechicle for a broader approach to shifting relations with employees from a detached arms length relationship (exemplified by high labour turnover, low levels of communication, minimum union-management interactio) to a more engaged relationship (lower quit rates, higher levels of communication and consultation with employees and trade unions.

Evidently the shift towards employee involvement has established an opportunity to create a normative pattern of order, cohesion and stability within the organisation centred around long term trust between the stakeholders (Salamon, 2004 P.21). Tesco have also demonstrated going that extra mile for their employees by the introduction of family friendly policies and being the best paid food relatiler in the UK. Are these perks a means of increasing employee engagement for an improved business performance Perhaps so, employee engagement is a culture of attitudes and behaviours that show a commitment to the workforce. TUC (2010) suggest that there are synergies between engagement appraoches and partnership, working between unions and employees, where trust, cooperation and information sharing are key.

It seems that there are many great advantages in fostering a partnership agreement, however the Tesco-USDAW partnership has not been without its difficulties. At the USDAW annual conference in 2000 there was a request from some members that the agreement should be reviewed. It was deemed that the union were loosing their grasp on negotitaing powers and that agreement was in the interest of management in that they received commercial benefit, defeating the object of a social partnership agreement. According to research by Guest and Pecci (2001) they may be some truth in USDAWs allegations, they state that;

The balance of advantage in partnership agreements was often skewed towards management. They conclude that a lack of trust between the parties was often a barrier to effective partnership relationships.(Johnston et al, 2004, p.356).