I am a full time academic researcher, mainly working with the projects related to Human Resource Management. I have completed my Bachelors in Business Information Technology from Curtin University of Technology, Australia, after which I worked for a multinational firm in the Human Resource Department for a year and a half, which developed my interest in the field of Human Resources, so to further enhance my skills and capabilities I decided to go for MSc in Management with Human Resources which I completed recently from University of Bath, UK and now working my way towards PHD in the same discipline.
Union and non-union forms of employee voice and its impact on organizational performance as a whole.
The main theme of this assignment revolves around the union and non-union forms of employee voice and its impact on organizational performance as a whole. A lot of research has been done on this issue (Dundon, Wilkinson, Marchington and Ackers 2002; Dundon et al. 2004, Gollan 2001; Lloyd 2001; Benson 2000; Pettinger 1999). According to Pyman, Cooper, Teicher and Holland (2006) employee voice has been challenged usually through the representation and recognition of unions due to a considerable gap between the actual and desired level of employee representation, he further argued that this gap has been narrowed with the growth in non-union and direct forms of employee representation.
There are lot of differing theories regarding union and non-union representation of employee voice; according to Freeman and Medoff (1984) unions are the key mechanisms for improving workers productivity, reducing economic inequality and stabilizing the work force. While on the other hand with the emergence of HRM there has been an increasing focus on information sharing, collective decision-making and employee participation (Benson, 2000); researchers like Guest (1987) argued that in these conditions the role of unions is quite ambiguous and unnecessary.
Though different researchers have different view points regarding union and non-union forms, but empirical evidence shows that both forms have their own benefits and drawbacks, in accordance with the business environment in which they are practiced; but these arguments need further clarification and research in determining that whether unionisation should be preferred, or employer should create the in-house representative bodies like JCCs and WCs.
Hence, this paper will try to explore contradicting theories and their applicability in industrial and corporate environment, and finally try to suggest the best possible way to pertain those theories in relevance with the required situation.
McCabe and Lewin (see Dundon et al., 2004) defined employee voice as the expression of complaints or grievances and the participation of employees in decision making process of organization. In the last two decades the initiatives that have been taken to improve the employees’ performance focuses mainly on enhancing the means of joint consultation, which appeals to both employers (who are looking for better business outcomes) and employees (who are looking for recognition of employee rights) (CIPD, 2007). Most researchers share the common view point that for a business to be successful, the importance of employee voice cannot be neglected; as argued by Dundon et al. (2004) that employee voice recognition could positively affect their quality and productivity, and on the other hand it could help to deflect the problems, which other wise might explode. Employee turnover rate is believed to be directly related to the opportunities they have to voice their issues, as according to Spencer’s (1986) findings, the more opportunities employees have to voice their dissatisfaction and changing the disgruntling work situations, more they will be interested in staying with the organization.
Employee Voice Systems
Over the last few decades employee voice recognition have taken many forms and been labelled with a wide variety of terms; this continuous change is the indication of shifting priorities and values, associated with different types of voice systems (Boxall and Purcell, 2003).
There are two widely discussed types of voice acknowledgment, direct (i.e. initiated by employees, non-elective etc) and indirect (i.e. Trade unions and elected members e.g. JCCs and WCs) (Lecture 7). The main thing to consider in this assignment is the difference between the unionised and non-unionised forms of employee voice, which is to look at the major advantages and drawbacks unions has to offer against the non-union forms like works councils and joint consultative committees. The importance of both forms cannot be neglected, as they are beneficial in their own specific ways in different business environments.
Unionised Employee Voice
According to Boxall and Purcell (2003) in the industrial relations, the main focus for representation of employee voice has been on the collective bargaining and consultation. Freeman (1976) defined unions as the institutions of collective voice in the labour market. He further asserted that collective forums, for voicing employee issues are more effective in some situations as they help strengthening worker communities and provide a direct mean of communication between them and management; but Addison and Belfield’s (2004) findings tend to negate these arguments as according to them more formalized union structure may create a communication gap between workers and management, because they have to deal with their issues through a third party. Freeman and Medoff (1984) argued that union plays a vital role in minimizing turnover rate as they provide employees with the voice mechanisms through which they can rectify the work related problems and can negotiate higher compensation packages. Their arguments are supported by Batt, Colvin and Keefe (2002), who believes that employees in union set-ups are expected to have higher compensation than they could earn in similar jobs in non-union set-up and secondly unions strengthen employees, by providing them with a voice in determining policies that reduce the pay inequality, grievance and arbitration procedures for appealing managerial decisions.
Unions play a vital role in employee development and provide a wide range of benefits including health and pensions schemes, financial benefits and training up-to some extent, which is attractive for different types of employees in certain conditions (Pettinger, 1999); as pension schemes are highly regarded by the older work force, training is beneficial to almost every employee, who is committed to learn and deliver, similarly financial benefits (e.g. reduced rates on certain products) awarded as a result of union interaction is appreciated at every level. Pettinger (1999) stated that trade unions are independent employee representative bodies; hence, they are more effective in raising broader issues concerning legislation, with the organizations.
If we take a deep look in to the empirical evidence and real world scenarios, unions not only strengthen employees but they also help employers in certain ways, minimized turnover ratio help reducing hiring and training cost associated with new employees (Addison and Belfield, 2004); Pettinger (1999) believes that many organizations prefer to have a unionised set-up for employee voice recognition, rather than following individualistic approach, due to the fact that it consumes less time and resources. Freeman and Medoff (see Addison and Belfield, 2004) further added that unions can exert pressure on organizations to stop them from being engaged in the opportunistic behaviours, which is helpful for them in a way that if they take proper care of worker’s concerns they will be much more motivated and committed toward fulfilling their job responsibilities.
Undoubtedly, unions offer a wide range of benefits to both employees and employers, but there are few reasons, which lead to the drastic fall in union’s support. First and the foremost of them is creation of monopoly by over powered trade unions; many researchers and employers share the common view point in this regard, one thing which hurt business and employers quite badly is the stoppage of work or strikes carried out by unions for fulfilment of their demands. A very recent example of Royal Mail (UK) can be taken into consideration, where CWU went on a series of strikes from July to October, 2007 on the issue of pay raise, which not only hurts Royal Mail but other businesses and normal people as well. This situation gives rise to the argument that unions always work for their own vested interests rather than securing the long-term future of organizations and hence acting as a barrier to progress (Pettinger, 1999). It is a common belief among researchers that unions help increasing worker’s efficiency and productivity, but work of Addison and Hirsch (1989) denies that, as according to them average effect of unions on employee productivity is quite small, as they are mostly located in industries with the low growth rate or where there is no need for practicing innovative behaviours; they further believe that unionised set-ups experienced lower profit margins; though there isn’t much empirical evidence to support this argument, as if we have a look on Asian organizations like Sony, Habib Bank Ltd. (Pakistan), Tata Motors (India) and others, they all have very well organized union structures and still making huge profits, most probably a lot more than others, so the efficiency and effectiveness of unions also depends on operating environment of business.
Non-Unionised Employee Voice
There are two widely known forms of joint consultation including Joint Consultative Committees and Works Councils. JCCs are considered as the mean of providing formal information sharing mechanisms among management and employee tiers through their representatives (Pettinger, 1999). Joint consultation has a long standing history, co-existing with the collective bargaining forms of voice recognition; it has been described as the management and worker’s discussion regarding matters of joint concern which are not subject of negotiations with trade unions, leading to advice to management in making rightful and fair decisions (Salamon, 2000). Pettinger (1999) further supported his views, he argued that in presence of joint consultation ideas are exchanged, viewed and implemented according to their practicality and benefits to both business and workers simultaneously. Hence, it can be rightly said that joint consultation not only takes employer’s perspective in to account but also works for the employee’s welfare through proper representation of their views. In the last few decades, weaknesses in union structure have generated a debate over the efficacy of non-unionised collective forms for employee representation, Frege (see Brewster, Wood, Croucher and Brookes, 2007). Due to the certain problems with the unions most of the employers now prefer to have non-unionised forms of employee representation as an alternative to unionisation (Lloyd, 2001).
The main difference between union and non-union forms of employee representation is the variety of decision making and exercise of power; in contrast to unionised view, joint consultation not only allows management to determine the issues in which they want employee participation and seek their opinions for efficient solutions to problems but also retain the right to decide the final outcome without subjecting it to joint agreement with employees or their representatives (Salamon, 2000). Hence, it is more inclined towards the management view rather than taking the employee or union’s perspective in account, as employers are the one investing money in the business and they want the better performance at any cost, so they must be the one to decide rather then the unions who work for their own vested interests. According to researches the joint consultation is not about expanding employees influence in organizational decision making but to seek for their opinions and ideas for increasing the productivity and commitment towards the organizational goals and removing the operational problems (Salamon, 2000).
Works Councils on the other hand are formally constituted by the organizations and representatives are chosen from all the business departments for representing employee’s views and concerns in the same way as shareholders interests, financial and operational management issues are addressed; they are constituted for representing employee’s interests in an effective manner as the need arises (Pettinger, 1999). Muller-Jentsch (see Brewster et al., 2007) also defined works councils as collective representative bodies for employee participation at organizational levels with specific informational, consultative and codetermination rights. According to the researches works councils provide a wide range of benefits to both employees and employers through creating improved systems for information flow, working for increasing trust and cooperation, spreading the use of best practices and promoting industrial up-gradation (Brewster et al., 2007). They further pointed out the fact that in contrast to trade unions who are membership based, works councils are the representative of whole workforce regardless of the membership; this difference has created major difficulties for trade unions and due to this fact WCs appear to be more representative of workforce than unions. Croucher and Brewster (1998) added that due to the support of legal bodies WCs are more effective than trade unions in dealing with issues related to flexible work practices. These arguments are further supported by Pettinger (1999) who believes that WCs act as open and legitimate forums for exchange of ideas, which in turn encourage employees to actively participate in continuous well being of organization and give rise to flexible working environment, through reducing isolation between the ranks, hierarchies and different departments in organizations.
There is no doubt about the importance of WCs and JCCs in the current business environment, but there are few potential problems which need to be taken care of in order to maintain the integrity of WCs and JCCs. Unlike the trade unions, they are created in-house and not the independent bodies representing employees concerns, hence there are additional administrative costs related to them, which might be a reason to worry for employers (Pettinger, 1999). Though there is no empirical evidence to support this, but still it is a common believe that employees might not understand the wider strategic perspectives of organizations (Pettinger, 1999). He further believes that due to the in-house creation of these committees and councils, they might bog down to management pressure where there are difficult decisions to make; for example, if a situation arises where due to the operational difficulties and reduced profit margins management has to cut down their workforce it will be a difficult thing to agree upon, due to the resistance on the part of staff representatives. Independence of works councils put under heavy criticism when they fail to arrive at consensus and if matter ever gets to cast a vote, there is quite a fair chance of lobbing votes (Pettinger, 1999). Critics of works councils argued that they are the employers-initiated structures, based on their own terms so they cannot be effective in voicing employee’s concerns and issues, and are most likely to secure management position on certain issues (Gollan, 2001). He further stated that these structures are believed to have more management supporters, so they are not fully independent of bias factor.
After careful review of all the theories proposed by researchers, it can be precisely concluded that choice of employee voice mechanism entirely depends on the circumstances and the environment in which employers are conducting their business activities. Brewster et al. (2007) mostly take theories in to account which deal with the German work environments, where Works Councils are protected by the law, similarly in most EU countries legislation embodies the presence of Works Councils. Gollan (2001) consider the theories, which exemplifies the British way of doing things and empirical evidence proved that unions are highly disregarded in this system. Other authors like Adams (1985) took U.S. and Canadian system into account and so on so forth. Most of the researchers argue that unions do not take employer’s perspective into account, they don’t care what is the situation of the business, they just want their demands to be fulfilled at any cost, recently in October, 2007 French people and government were badly affected by the misuse of power exercised by unions representing interests of rail and airline workers over the pay, retirement age and pension issues.
Different authors proposed different theories in country specific situation, similarly according to my perceptions, there are some situations where presence of union is extremely important to provide employees with the recognition they deserve. There hasn’t been much research done in this particular scenario, so I want to take Asian markets into consideration while concluding my arguments on the base of current theories. If we consider the businesses specifically in Pakistan, India and China where most of the population is living under the poverty line, labour is quite cheap and due to lack of knowledge, labour laws are not practiced in their right spirit, in these situations employers tend to take advantage and exploit workers, hence there is a strong need of union presence to protect the workforce from being abused and giving them the necessary support they need.
On the other hand, as mentioned earlier that unionised employee voice recognition mechanism are more likely to be successful in the industries experiencing low growth rate and where there is less room for innovation to be practiced, hence in situations where main focus is on changing technology, information sharing and worker groups are more organized, role of unions become quite unnecessary (Chasion, 2002); in these circumstances its better to have an environment of joint consultation which encourages the flow of information through all levels and innovative ideas are rewarded according to their practicality and applicability in the real business environment. Firms like Apple, where exchange of ideas and innovation plays a major role in achieving the organizational goals, its better to have JCCs and quality circles in place rather then supporting unionism. Therefore, in my view WCs and JCCs are more likely to be successful in EU and American markets, where a lot of legitimate protection is given to employee rights and companies consider their employees as the key to organizational success.
Keeping in view all the research that has been done, it can be rightly argued that unions and non-union forms both provide a mean of corroboration, sense of security and support to employees and help them doing their job effectively and efficiently in their own specific ways; on the other hand they provide employers to build and maintain their credibility among employees; but the fact that unions misuse their power and emphasise more on the self vested issues make them a threat to most employers and similarly the additional administrative resources and lack of independence factor involved with non-union forms weaken their position in researcher’s minds. So, it’s really difficult to say that only unions are effective or only non-union forms should be adopted by organizations, but in my view it entirely depends on the situation and circumstances in which the businesses are operated and there are situations where unions are the better representatives of employee voice and where non-unions forms give a boost to employees performance.
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