Contents
Executive Summary
This essay studies the case of a utility
business organisation which has struggled to implement a change process
concerning employee relations.
The researcher has employed tools such as
Strategic negotiations framework and framework of voice systems and managerial
styles to unearth factors such as high control, low trust and withholding
information by the management under a distributive negotiation process (that
too against a workforce which has a high bargaining power) as causes which lead
to a loss-loss scenario.
The same models and theories have been
utilised to analyse the corrective measures taken by the new management and
suggest a future course of action for the organisation.
The conclusion reached is, following an
indirect/direct voice enabling system which fosters co-operation and
partnership for mutual growth can only lead to smooth strategy implementation
and, long term sustenance and stability of the employee relations in an
organisation.
Introduction
This report presents the case of a large
utility business based in a wealthy region of the country. The case presents a
classic problem in Human Resource Management, wherein the importance of good
employee relations and voice management strategies is highlighted to ensure
smooth and profitable operations.
In this essay, the researcher endeavours to
analyse a change management process (in context of Human Resource Management)
using the Strategic Negotiations model developed by Walton, Cutcher-Gershenfeld
and McKersie. The recent happenings in the organisation are traced on the
relating section of the model and then the probable reasons behind such a
situation are unearthed.
Further, the researcher also tries to
contrast the differences in management style of the current and past
leadership; highlighting the differences in approach and the reasons behind the
success or failure of a particular leadership.
Also, a study is made of the framework of
voice systems and management styles to suggest a future course of action in
order to achieve efficiencies. Focus here being, the detailing of an
implementation plan (in addition to providing a theoretical framework).
In the sections to follow, the issue, its
analysis, contrasts between leaderships and recommendations are studied using a
structured approach.
The Issue
Case
The issue is broadly concerned with a
‘change management’ process gone wrong. Five
years ago, the key management of a large utility business (employing 4000
people) realised that its employee relations program needed a review to meet
the current industry standards and efficiencies. This thought was inspired by
benchmarking the success of a firm in the same industry, which was highly
successful in cutting down costs and increasing profitability by adapting to a
system of ‘annualisation’ of employee pays. However, the management of the
business in purview remained ignorant of the exact change management process
that the bench marked firm took.
The HR director in consultation with the
CEO, initiated talks regarding the implementation of the new process, with the
full time union official (at the regional union office). However the HR
director failed to note that the real influence over the workforce rested with
the workplace union delegates thus, excluding them from discussions.
These union delegates becoming wary of
change initiation, became hostile towards the management’s efforts labelling
such moves having an ulterior motive of profiteering at the expense of the
worker by exploiting the workforce.
Ultimately the management has to give in to
the resistance of these delegates by providing a raise to the salaries (as the
labour market becomes strong the management loses bargaining power). However,
in the ensuing years the change efforts still fail and profitability declines,
forcing the CEO and HR Director to resign from their position. The new
management in place is trying to win over the union’s confidence and some
positive efforts have been actualised however, the management still lacks a
clear approach to achieving full efficiencies.
Annualised work hours
Every industry especially manufacturing,
experiences certain periods of demand peaks and falls. This alternation between
high and lows requires the employment of more labour/work hours when the demand
is on the rise and less working hours when the demand is on the decline.
This characteristic of business has
entailed a system of overtime wages and special compensations in times of
emergency call outs. However it was noticed that certain workers tend to abuse
the overtime wage norms leading to greater costs to the company at relatively
no output being produced or needed at certain times. Thus, HR and Operations
researchers worked on to find a system which could counter this abuse problem,
adjusted well to the industry highs and lows (thus serving the business
efficiently) and also take care of employee’s welfare.
The result of such a find was the
Annualised work hour approach. This approach entails that salaries remain the
same over each give out period (that is usually a month); employees work over
time/put in extra effort in periods of high demands and emergency call outs –
at the same pay; however, this extra effort gets compensated by holidays and
lesser working hours in periods of low demand. Thus employee’s pay remains
unaffected (as it was before the adoption of Annualised work hours) and the
firm can ensure proportionate supplies according to demand, without having to
run the hassle of lay off, re-hiring or contract recruitment.
Resistance against the Annualised
working hours system
Usually employees and unions will accept
the stability that an Annualised system promises. However, there are a few
quarters who will resist such change for certain vested interests. These
particular reasons and sources are:
1. Employees who are exploiting the overtime
work wage rate will be against such moves.
As they are already earning more than the basic pay by working overtime even in
periods of low demand. Thus, getting a pay not proportional to the effort
made.
2. Some employees may have family commitments or other time commitment issues which may hold them from
participating in ‘emergency call outs’ and over time working hours.
3. Lack of knowledge about the operations of the annualised working hours system may be
a limiting factor for some unions or employees. Lack of a clear understanding
of the process and the general tendency to resist change may muster resistance
from various quarters of the workforce of the organisation.
By now we have a
clear understanding about the issue. In the following sections we will analyse
‘what went wrong’ and ‘how to go about it’ with the help of various models and
theories formulated by leading researchers in HR, psychology and related fields
of knowledge.
Old management’s strategy in light
of the Strategic Negotiation’s Framework
1. Introduction to the Strategic Negotiation Framework
Walton,
Cutcher-Gershenfeld and McKersie’s Strategic Negotiation Framework is a model
that provides a behavioural approach to managing Human Resources and especially
employee relations in an organisation.
The
model studies the relations management systems in an organisation under the
light of the determinants of a negotiator’s choices, the approach a negotiator
uses to interact and negotiate with the concerned group and the outcomes of
such negotiation.
Given
the various motivations and choices made by the HR managers in an organisation
the final approach can be of three possible types; firstly, a ‘Fostering’
approach which will involve total commitments from all the parties to the
agreement and will provide the best possible solution to a problem hence, a
win-win situation; Secondly, the ‘forcing’ approach, which follows distributive
bargaining tactics. This process is followed when the negotiator realises that
the other party is at a weaker bargaining position and can be forced to submit
by the policy of divide and rule. This is an exploitative win-lose strategy,
unhealthy for long run as it does not secure total commitment and cannot
achieve full efficiencies. It merely achieves the short term needs. The last
approach is that of ‘escape’. This approach is utilised by managers who are
scared or unskilled to manage the inhibitions and oppositions arising while
managing change. Such an approach is one of an escapist who runs away from the
problems neither by implementing policies which do not achieve any real goals
nor in consultation from other parties involved. Such a loss-loss approach does
great damage to the organisation by undercutting relationships and
non-achievement of organisational goals.
2. Old management’s Position in the model
By studying the model it can be aptly said
that the management followed the ‘Escape’ route. The researcher’s position on
the same is substantiated by the following factors:
1. Determinants- the old HR manager’s choices were influenced by substantive
objectives. He/ She viewed the change as a mere revision of employment contract
(restructuring employee salaries) to improve profitability.
Also, the manager failed
to take into account or ignored the change management process followed by the
organisation bench marked for such a move. Also the manager was ignorant about
the proper chain of command/ influence that could shape employee behaviour. In
this case, he consulted only with the full time union officials rather than the
workforce union delegates who held actual control over employee relations.
3. The process employed- is one of escaping the real issue. The HR manager merely stated
that the annualisation would not affect the earning levels of the employees,
and ignored the importance of explaining the why and how of the process; and to
understand the workforce’s point of view and their concerns regarding the
change. Also, the management bargained with the wrong authority as it failed to
take note of the levels of authorities employed in the process.
4. Outcomes-
As the HR manager looked for substantive outcomes, giving precedence to
compliance over commitment, the change management process failed miserably ending
in further loss to the company (in form of a raise, without any change to the
employment terms) and loss to the workforce (by reduced profitability and high
vulnerability and stability issues of the organisation due to inefficiencies).
3. Rating
the choice of the strategy adopted
The researcher has reached a sufficient
understanding regarding the factors that influence the choice of the strategy.
These factors being:
1. Desirability of the objectives- the management desired revising the employment terms of the
current workforce so as to reduce the abuse of overtime pay rates by some
employees and increase profitability by proportional distribution of the
working hours according to demand volumes (annualised work hours). This goal
motivated the change management process.
2. Feasibility of change- the management viewed this as a substantive goal that is merely
modifying the employment terms and hence followed a substantive approach
bringing the policy proposal as a mere notice to the union officials; ignoring
the importance of explaining the issue and securing commitment to it by open
discussion with parties going to be affected (workforce and its delegates).
By keeping such a
limited view of the issue the management was following a policy of compliance
and containment; forcing workforce agreement to a certain issue and then
ensuring achievement of certain ends. However, it failed to take notice of the
increased bargaining power in the labour market and the union delegates’ and
employees’ strict resistance to change since they were unaware of its
implications and it adversely affected a fraction who were earning due to
overtime pays. Thus, the business’ choice of strategy can be rated as extremely
undesirable given the state of affairs the business functioned in.
4. Accounting
for the poor performance of the strategy
Since the choice of the strategy was
undesirable, it lead into a dismal performance and complete failure. The
reasons for non performance are listed below:
1. Strong labour market
The labor market was quite buoyant at the
time the change management process was initiated. This left a lot of bargaining
power at the hands of the worker. The management did not take note of this and
proceeded to try and force its decision (which concerned the employees critically)
on the workforce. This alerted the representatives of the union, of the
organisation’s ulterior motives to exploit the staff to increase profits and
hence they resisted.
2. Parties involved
The HR director involved the full time
union officials in the proposal and implementation of the annualised work hours
scheme. The director was either ignorant or oblivious of the influence, the
workplace union delegates held as opinion leaders of the employees. Thus the
issue was addressed to the wrong party, leaving the workforce angry and
reproachful about the motives of the managers.
3. Forcing the issue
The HR director tried to force the change
on the workforce rather than involving them in a joint decision making process
winning their partnership in addressing organisational problems and ensuring
their commitment to organisational growth. Moreover by continually pursuing the
issue (in a similar fashion) next issue, the management seemed desperate in its
zeal to exploit and profiteer.
Company’s new employee relation
attitude/position
The new management follows an approach of
partnership and internal differences management when it comes to maintaining
employee relations. The same is evidences by the following steps of the new
management:
1. Managing irksome issues
The new management wanted to avoid the
ongoing confrontation in collective bargaining so as to gain a breather for
‘thinking’ a better approach to solve the problem. The new management tried to
do away with all the issue that were bothering the workforce and their
representatives. Moreover the management sorted out pays at the going rate and
declared that it will not pursue the plan to move towards annualisation, any
further. This was a very necessary step, to start with the process of building
employees’ confidence in the new management team and the corrective policies
they intended to take up.
2. Inclusive discussions
Although the new management declared that
it wouldn’t proceed with the change to annualised working hours process, it
certainly did need to make amends in order to cope up with the rising costs and
the growing inefficiencies of the current systems. Hence, the management
communicated and discussed with the union delegates the need to conduct an
efficiency study, in a private meeting. Since the parties to be affected were
directly involved in the consultation process, confrontations were reduced to a
mere ‘wait and watch’ attitude of the delegates.
3. Using tools which are mutually trusted
The efficiency study to be commissioned was
conducted by a third party consultancy. The choice of the consultancy was such
that it enjoyed the confidence of both the workforce and the management. This
went a long way in securing employees’ willingness in being part of the survey
as well as establishing trust on the consultant organisation and credibility of
the report produced; thus, ensuring minimum obstacles in implementing the
recommendations of the reports.
4. Managing implications of negative actions
The recommendation of the consultancy with
regards to the efficiency report required to lay off an excess of 10% of the
workforce in order to restore efficiencies and cut costs. This would have been
a difficult to implement step had the management not included the
representative of the workforce itself in the change process entailing surveys
and then chalking out terms of such lay off by explaining the problem and
devising an amicable solution. The end result was to promote voluntary
resignation (subject to management’s approval) and compensating out going
employees at the best rates in the industry. Thus, a change which could have
gathered great resistance as it was concerned with employee welfare directly,
was implemented smoothly by sharing the ownership of the decision making
process with the party going to be affected by the decision.
1. Managing internal differences
The new management has followed a fresh
approach in dealing with employee relations. It seeks to address the issues and
differences in the organisation rather than ignoring them (as was the case with
the old management) by holding an all inclusive discussion and decision making
process. Addressing and accepting internal differences will provide better
understanding to special organisational needs and lower resistance, while
designing a change management process in future.
2. Shaping attitudes
The current management also follows a
policy of shaping attitudes rather than that of coercing a policy on the
concerned parties. The managerial attitude towards change is that of forging
partnerships to ensure mutual benefits and ensuring dedication and commitment
to work. As against earlier management, the new one is not resisting any ideas
from the workforce; rather it is spearheading a discussion which will forge
ideas and shape opinions which are weighed with reason.
Recommendations
In this section the researcher aims to
provide certain recommendations for future course of action, utilising the
framework of voice systems and managerial styles.
The framework of voice systems and
managerial styles studies a mix of various types of relations with the
employees and types of relations with the unions the intermingling of which
gives birth to different managerial styles and voice systems in an
organisations.
There is a continuum of various voice
systems and managerial styles at either end of which are two extremes. On one
end is a no voice, no trust, high control and avoidance system; and on the
other is a direct/indirect voice system, high trust, high commitment,
cooperation based organisation. The movement from the first to the second is
not a direct leap but rather a process which entails risk, dedication and goal
orientation.
The previous management team in the
organisation operated somewhere towards the first extreme, showing needs for
control and exhibiting low trust by withholding sharing of information; but,
the current management is trying to move to the other side of the continuum to
an ideal state of partnership, trust, commitment, open to all voice systems and
mutual ownership. This is only going to happen if:
1. Relations with employees are commitment
oriented- This will involve gaining back the
trust of workforce by committing to the cause of their welfare. All material
developments in the company should be shared with its workforce, its
implication explained to them ensuring understanding of the issue. All efforts
are to be made towards securing the people of the organisation from any
negative outcomes. Putting the people first will go a long way in winning their
trust ensuring long lasting commitment and self motivation from the workforce.
2. Relations with unions and elected work
councils- The relations with such
representatives should be based on co-operation. This will only happen when the
attitude of the management is that of inclusive growth rather than of
undermining the authority of such councils (as was the case with the old
management). By making such unions part of the discussion, debate or, decision
making process a partnership can be established instilling a sense of ownership
in all the members of such a process. By forging a positive association with
the opinion leaders in the organisation, it becomes easy to steer change.
Once these optimal relationship dynamics
are achieved the new management can once again think of moving towards adapting
annualised working hours system to meet bench marked industry standards in
order to restore the long term sustainability of the organisation.
The recommended approach to change
management for adopting annualised working hours system is as follows:
1. Due attention to previous mistakes
Mistakes such as discussing the issue with
the wrong party and failing to take into account sections which are likely to
react negatively (such as those profiting from overtime rate provisions and
those having prior time commitments) should not be committed again.
2. Planning
A business plan must be written laying down
the exact requirements and the manner in which they are to be fulfilled. This
will help in bringing to surface all material issues which may bring criticism
and resistance.
3. Discussion
After the business plan is made, a
discussion must be initiated with all concerned parties. Especially with those
it is going to affect critically. For example, in case of annualised working
hours, shift patterns must be discussed with employees to design them according
to employee willingness and their prior commitments. Also, terms such as
emergency call out premiums and abolition of overtime rates must also be
discussed at this stage.
The aim of discussion is to reach a
thorough understanding of the issue and let all concerned parties make a
consensual decision for mutual benefit, backed by sound logic and reason.
Conclusion
This report has carefully studied the role
of human resource management techniques in managing changes and employee
relations in an organisation. The report has even utilised the strategic
negotiations framework and the framework of voice systems and managerial styles
to analyse the situation presented in the case; that of a blunder committed by
the old management of the company by following a loss-loss escape route in
managing change and how the new management in the same organisation is now
trying to restore the stability of the organisation.
The report makes some valuable suggestions
on how the new management can work towards winning back the trust of the
workforce and forge partnerships to gain the commitment of the staff on
achieving organisational goals and growth objectives.
Summing up, the essay has been helpful in
establishing the importance of a people first attitude in ensuring long terms
sustenance and growth of any organisational machinery.
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