CIPD - Employee relations: an overview

Employee relations

Revised July 2008

This factsheet gives introductory guidance. It:

outlines the decline in formal industrial relations work in organisations
describes what HR professionals think of as 'employee relations'
assesses the state of the employment relationship
discusses how to secure an engaged workforce and the skills required of employee relations specialists
includes the CIPD viewpoint.

What is employee relations?

The term 'employee relations' was conceived as a replacement for the term 'industrial relations' but it's precise meaning in today’s workplaces needs clarification. In 2004/5 CIPD undertook research into the changing nature of employee relations work in UK organisations, through interviews with HR and Employee Relations managers to provide a snapshot of current attitudes and practice. The findings are reported in our What is employee relations Change agenda and are summarised in this factsheet.

Go to the Change Agenda

The decline of ‘industrial relations’

‘Industrial relations’ is generally understood to refer to the relationship between employers and employees collectively. The term is no longer widely used by employers but summons up a set of employment relationships that no longer widely exist, except in specific sectors and, even there, in modified form.

The decline can be measured on a number of different dimensions. From a peak of some 12 million plus, union membership has fallen to around 7 million today. Between 1980 and 2000, the coverage of collective agreements contracted from over three-quarters to under a third of the employed workforce. At the same time, the range of issues over which bargaining took place decreased massively. The Workplace Employment Relations Survey (WERS) 1998¹ showed that union officials spent most of their time not on negotiating pay and conditions but in supporting grievances on behalf of individual members. Even where collective bargaining continued, its impact on the exercise of management discretion was greatly diminished.

The shift in the coverage and content of collective bargaining has been reflected in a dramatic reduction in industrial action since 1980. The number of working days lost per 1,000 union members decreased from an annual average of 1,163 in the 1970s to 76 in the 1990s. They remain low and are below the levels in many other developed countries.

What does employee relations mean for employers?

Some broad conclusions emerging from research are:

Employee relations can be seen primarily as a skill-set or a philosophy, rather than as a management function or well-defined area of activity.
Despite well-publicised instances of industrial action, the emphasis of employee relations continues to shift from 'collective' institutions, such as trade unions and collective bargaining, to 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 (see our factsheets on employee voice and the psychological contract for more information).
- Go to our factsheet on employee voice
- Go to our factsheet on The psychological contract
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.
Employee relations is seen as strategic in terms of managing business risk: both the downside risk of non-compliance with an expanded body of employment law, and the upside risk of failing to deliver maximum business performance.

What is the state of the employment relationship?

The findings of the WERS 2004² give a mixed picture of the state of employee relations. Managers in 30 per cent of workplaces report that relations have improved a lot since 1998. However, employees’ views have changed little over the period. Despite the introduction in April 2005 of the Information and Consultation of Employees Regulations (see our factsheet on thes regulations) the survey records a decline in the incidence of joint consultative committees.

Go to our factsheet on Information and Consultation of Employees Regulations

A key issue for managers is focus. Are they directing their attention to the issues that will make a real difference to business performance? There is strong evidence that a positive psychological contract with employees will lead to superior economic performance, but managing the psychological contract appears to figure fairly low in the list of management, and specifically of the HR function’s, priorities: in our survey Where we are, where we’re heading³, only one in two respondents placed employee involvement among the top five priorities for the HR function in their organisation.

What is employee engagement?

The achievement of business goals and financial returns is increasingly dependent on delivery by front-line employees. ‘Engagement’ has been described as a combination of commitment and organisational citizenship. These are both shown by CIPD surveys to be routine outcomes of a positive psychological contract.

There is no shortage of evidence about people management policies and practices that contribute to building employee engagement. They include:

Employee voice: Research for the CIPD by Professor Mick Marchington⁴ shows that managers are much more convinced than they were a decade ago that involvement produces business benefits. This is confirmed by the range of methods for direct communication and recognising individual employee contribution that HR departments now implement and operate. See our factsheet on employee voice for more information.
- Go to our factsheet on employee voice
Teamworking: WERS 1998¹ commented that ‘training, teamworking, supervisors trained in employee relation matters and problem-solving groups are all associated with one another. In combination, this group of practices might be construed as a model of direct employee participation in decision-making.’ See our teamworking factsheet for more information.
- Go to our factsheet on Teamworking
Work-life balance: Policies on work-life balance are being used by employers to underpin positive workplace behaviours. Our various surveys of employee attitudes, for example Guest and Conway⁵, have underlined the link between work-life balance, commitment and performance, and there is strong support by employers for the current legislation giving employees the right to request flexible working. See our work-life balance factsheet for more information on this topic.
- Go to our factsheet on Work-life balance

There are clear links with the business performance model constructed by John Purcell and his colleagues at Bath University⁶. The model focuses on the implementation of HR practices by line managers, and on employees’ ability, motivation and opportunity to practise discretionary behaviour. Employee relations can be seen as a critical ingredient in the ‘black box’.

For more detail, see our separate factsheets employee engagement and the people and performance link, and our survey on engagement.

How do HR professionals display employee relations competencies?

Communication is the glue that makes policies real and without which they are ineffective. The fact that communication is necessarily a two-way process, involving dialogue rather than simply instruction, is well established. Yet many organisations perform badly in this area, failing to give communication the priority it deserves.

Getting communication right involves both professionalism and persistence. The qualities required include focusing on positive behaviours and outcomes, taking a positive, problem-solving approach, anticipating problems, recommending solutions and being able to offer sound advice to senior managers about implementation. Negotiating skills are still useful but needed less often. A much wider area of knowledge is now required, along with the skills to apply it, including surveying and interpreting employee attitudes, communications and conflict management. Most important is the ability to ‘fit’ policies and practices to suit the organisation’s goals and the character of its workforce.

Managing workplace conflict

The ability to manage conflict remains a key issue for many organisations. Mediation as a method or technique of resolving workplace issues represents an important shift from the traditional industrial relations framework, with its emphasis on formal discipline and grievance procedures, towards more of a ‘win-win’ approach consistent with the philosophy of HR management.

See our latest survey on Managing conflict at work

The decline of industrial relations means that managers may need to be reminded that employees’ interests are not necessarily identical with those of their employer; that despite the decline in strikes and other forms of industrial action, workplace conflict still needs to be managed; and that HR management philosophies may understate the ‘messy realities’ of managing people.

What is the continuing value of employee relations?

To a considerable extent, it is only in the public sector that trade unions retain a measure of their former strength and influence in the workplace. This is partly through the existence of institutions of collective consultation, reinforced by continued reliance in many cases on industry-level bargaining and the public policy emphasis on ‘partnership’.
Union influence in the private sector, on the other hand, continues to decline. The main areas of the private sector where industrial disputes are still experienced from time to time, for example, public transport, are those where there’s a clear public or political interest and/or the Government is seen as the ultimate ‘banker’.
‘Employee relations’ as a term remains ambiguous, with no clear boundaries. Most HR people don’t use the term on an everyday basis. It is not calculated to help managers focus on what they need to know and do to increase performance – the language has echoes of a historical era that offers few insights into contemporary practice.
The traditional academic models of industrial relations have only limited relevance to what managers do today. Employers are in charge and the role of ‘joint control’ and ‘rule-making’ by employers and trade unions has been substantially replaced by employment regulation and organisational values.
Employee relations can nevertheless point to an underlying philosophy and attitudes and skills that are still needed by HR practitioners. The current ‘business partner’ model is helpful in identifying an ‘added value’ framework within which HR practitioners need to operate, but an unreflecting business focus may lead to a neglect of the softer skills, which are essential to managing the employment relationship, and of employee interests and influence. Employers also need HR managers with a positive, ‘can do’ attitude who will resist the temptation to adopt a defensive or compliance-led HR culture.
Commitment and engagement are crucial to performance but they are not consistently high enough in the hierarchy of line management – or, often, HR – priorities. The Employee Information and Consultation Regulations may be helpful in raising the profile of employee voice and involvement, but the WERS 2004² findings give little basis for optimism that this will happen.
More effort needs to be put into training and supporting line managers in, for example, teamworking and change management as the basis for establishing and maintaining motivation and commitment, which is a critical role for employee relations managers. Issues about ‘alignment’ of HR and business strategies have mostly to be resolved within this area. There is too much focus within organisations on strategy formulation and planning, and not enough on implementation and delivery. Managing the employment relationship rests heavily on the shoulders of line managers, but their competence in this area is, in general, seriously neglected.
The concept of engagement is helpful in promoting wider interest in the measurement of HR outputs, including through the widespread use of employee attitudes surveys and in performance management/appraisal systems.

Conclusion

Engagement offers managers a framework for monitoring a range of indicators, including employee attitudes and behaviours, of the state of the employment relationship. But beyond that, it represents an aspiration that employees should understand, identify with and commit themselves to the objectives of the organisation they work for. What does this mean for employee relations specialists? It means being more strategic and seeing the ‘bigger picture’. It means being familiar with a wide range of techniques and skills, including mediation and communications. But, ultimately, it may also mean asserting more strongly the employee interest and agenda. This may not fit well with a management culture still based on ‘command and control’: it’s a genuinely transformational message. But without some significant progress in this direction, both high-performance working and strategic business partnering are unlikely to succeed (see our factsheets on high performance working and HR business partnering for more information on these topics).

CIPD viewpoint

CIPD research underlines the continuing significance of good employee relations:

Managers see employee attitudes and commitment as contributing to business performance via better employee contributions and productivity gains.
The psychological contract model, validated by successive employee attitude surveys, suggests that HR practices strongly affect the way people feel about their work.
The informal climate of involvement and consultation appears to be more strongly associated than collective machinery for negotiation and consultation with employee satisfaction and commitment.
Mechanisms in use for employee voice include two-way communications, project teams and joint consultation but there is also growing interest in electronic media, attitude surveys and 'partnership'.
The major constraints on employee commitment are lack of skills and enthusiasm on the part of managers and employees.

For more details of our work on employee relations, visit our Research projects pages.

Visit our Employee relations research page

References

CULLY, M., WOODLAND, S. and O`REILLY, A. (1999) Britain at work: as depicted by the 1998 Workplace Employee Relations Survey. London: Routledge.
KERSLEY, B., ALPIN, C. and FORTH, J. (2005) Inside the workplace: first findings from the 2004 Workplace Employment Relations Survey (WERS 2004). London: Economic and Social Research Council.
EMMOTT, M. (2003) HR survey: where we are, where we're heading. Survey report. London: Chartered Institute of Personnel and Development.
MARCHINGTON, M. et al. (2001) Management choice and employee voice. Research report. London: Chartered Institute of Personnel and Development.
GUEST, D.E. and CONWAY, N. (2004) Employee well-being and the psychological contract: a report for the CIPD. Research report. London: Chartered Institute of Personnel and Development.
PURCELL, J. at al. (2003) Understanding the people and performance link: unlocking the black box. Research report. London: Chartered Institute of Personnel and Development.

Employee relations: an overview