August 19, 2009

Human Resource Management Lesson 5 Exercise

The question of the relations nature between employee and employer does not have the clear straight answer. There are too many factors that influence these relations. From the first sight, these relations have contradictional nature. The employer and the employee have different targets of their activity. If the employer's target is connected with the overall organization's performance (that may be measured in different way for different types of organization like: number of units produced, revenue, gross profit, PTI, net income, or some other for governmental and non-commercial organizations for example); the employee usually interested only in his personal well-being (salary, bonuses and incentives, different additional benefits). So having different goals the employee and the employer have to have the conflict.

Looking at the history of economics we can see a huge number of the explicit display of this conflict. In some countries (like Russia) this conflict became one of the reasons for the revolution.

Nowadays, most of the employers understand that this conflict is not only socially dangerous, but also has a huge negative impact on the productivity of the personnel. As a result of that we can see the shift of the employers' position to the "win-win" solutions with their employees. As an example I can point such programs as a: profit sharing, incentive bonus the size of which depends on the employee performance, different non-monetary benefits like education (i.e. MBA), company shares options etc. All these initiatives are targeted on one single aim to motivate and to consolidate the interests of the employee and of the employer.

Unfortunately it is not possible to achieve 100% consolidation but to some extend it allows switching the conflict to consensus.

The factors that may influence on the nature of the relations between employer and employee we can split into external and internal.

External factors are:

1. Economy. The economic situation has a dramatic influence on the employee's and employer's wish to move their opposite positions towards each other. HR specialists usually point two extremums in this field: "Labor market of the candidates" and "Labor market of employers". During the economic growth times the employment rates were high. The demand for experienced employees was high and the supply of the open positions was also high. As the result, employers had to accept the rules of the employees like: high salaries, number of additional bonuses and benefits, additional security (golden parachutes) etc. At the crisis time the situation is opposite and the employees are much more flexible today in terms of compensations.

2. Legal. How far the legislation is defending the employees' and employers' rights.

3. Market environment. Under this factor I mean the labor market standard for the geography in terms of the labor relations. The example can be the difference between US and Japan.

Internal factors are:

1. Management style and level of the employees' involvement. This is definitely very important factor as if the employee is satisfied with these this may be a very strong non-monetary motivation for him.

2. Personal relations between manager and employees.

3. Psychological climate in the teams and organization overall.

These are the main factors from my point of view.


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  1. Kim White

    Alexander,

    This question really seeks an extension from your previous answer. I think the approach that you are describing is clearly an attempt to deal robustly with uncertain times. Insofar as the prosperity of the individual relies upon the prosperity of the firm so the performance of the firm relies on the performance of the individual. If times are hard the hard times are shared just as the prosperity in prosperous times is shared. In this sense the sophisticated human relations approach remains and prevails regardless of external circumstances.

    Incidentally, one consequence of dualism is that it deals with issues on a kind of Pareto Principle i.e. dealing with the biggest things first. Sometimes minor things get left without being dealt with properly. However, when circumstances change so the relative importance of issues changes. Something that was accepted as normal and of not great significance suddenly becomes a bone of contention. A recent strike by oil refinery workers in the UK was over the use of workers from overseas by contractors. The practice has continued for years without any concern but it suddenly became an organisational concern because of the context of the economy. A solution had to be found to a problem that was there all along but previously just not important enough to deal with.

    You need to be anchoring this piece to theory much more overtly – you know, Purcell, Storey etc.

    Regards,

    Kim

    23 Aug 2009, 20:51


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