Workplaces are social and economic systems, made up of a series of processes and interactions
between people, hence the scope and nature of HRM practice should not be limited solely to
Industrial Relations (IR) recognizes the imbalance of power between the employer or
management and the worker.
Traditionally there is an emphasis on issues of social justice, hence the importance of
institutional mechanisms to protect workers from unfair treatment or harm and promote decent
work (eg- employment legislation and trade union activity).
HRM has been associated with a managerial view of strategies and practices for managing
workers to achieve organisational goals, focusing on practices within the workplace and largely
ignoring or resisting institutional protections favored by IR.
Employment Relations (ER) is said to be the umbrella term for HRM and IR.
Unitarist – the assumption that managers and employees in an organisation share the same
interests in all respects and that any differences are dysfunctional.
Pluralist – recognizes that while managers and employees may share some common interests it
is inevitable that in some areas their interest will differ, this expression of differences of opinion
is not dysfunctional rather it should be positively encouraged if open and honest workplace
cultures are to be built.
Predictive Theory’s (cause and effect) – what and how questions, descriptive frameworks are
described observes practices or classification systems.
Theory can be normative/predictive suggesting things should be done in a certain way
Ideologies become operationalized as theories to explain predict and shape action.
Conflict frames of reference- Unitarist, Pluralist and Radical Pluralist.
Represent 3 different sets of beliefs and ideas about power, authority, control and the
management of competing interests in organizations.
Bureaucratic formalization – draws on sociological notions.
Scientific Management – resides in the management canon.
Managerialism underpinned by economic thinking.
Humanist beliefs which emanate from the psychology discipline.
Unitarist – the organisation is an unitary structure, all with common objectives and values.
There is a need for a unified structure of authority, leadership and loyalty with full managerial
prerogative. Expression of conflicting views is considered dysfunctional, and it is believed that
there are no need for trade unions or organized work groups to represent worker views.
Pluralist – the organisation is a complex of tensions and competing claims which have to be
managed so as to maintain a viable collaborative structure in which all stakeholders can pursue
their aspirations. Taking into account multiple interests.
Conflict between competing interests is expected and needs to be balanced. Trade unions are
seen as an important counterbalance to managerial governance. State/Government is seen as
legitimately being involved in creating the institutions which facilitate this balance of power (eg-
employment laws.) This perspective emphasizes more of a collective focus and responsibility , firms are a part of society and are therefore not exempt from taking responsibility for their
impact on workers and on society.
Radical Pluralist – (roots in Marxist view of power, fundamentally opposed to capitalism and thus
Emphasizes the impact of societal structures on social order, and that these may embed certain
social inequities, making it difficult for those with less power to ever access available resources
in order to represent their interests.
The core of bureaucracy as a mode of organisation is its reliance on a rational legal form of
authority which looks to a hierarchal structure and the consistent application of formal rules in
order to regulate organisational behavior to achieve goals.
Highly specified policies and procedures, standardized approaches to practice and an emphasis
on compliance with these HRM rules.
Scientific Management – (Taylorism/Fordism) synonymous with efficiency and productivity.
Restricts autonomy, creating boring repetitive tasks suppressing innovation.
Managerialism – Management is good and all organizations should have it
Mistrusts workers, emphasizes efficiency.
HRM – Hard and Soft Approaches
Hard – People are a resource, disposable, managed as efficiently as possible in order to achieve
Soft – Humans with needs to be met by organisation, long-term focus on building loyalty and
commitment through investing in teamwork, communication, training and development.
Organizations may choose to adopt an combination of both approaches.
Harvard Method – takes a systems view of HRM
Takes into account situational factors impacting HRM policy choices. Creates a strategic and
distinct approach to managing people through HRM policies and processes in order to achieve
Michigan Model – takes a strategic approach to HRM but is much narrower in focus.
Focuses on the congruence of HR policies and processes within the organizations strategy in
order to achieve organisational goals. It has been criticized for having an internal focus and
ignoring the interests and influence of the external environment on the organisation, and takes a
distinctly hard HRM approach as people are considered as resources and a unitarist approach
only considering the interests of the organisation is taken.
High-Performance Models – recommend certain HRM practices or bundles of practices, including
teamwork, employee involvement and functional flexibility in work design.
Often portrayed as a central element of soft HRM and of best-practice.
Best-Fit and Best-Practice Approaches-
Harvard and Michigan Models are Best-Fit approaches emphasizing that HRM choices are
contingent on situational factors within and external to the organisation.
Originating from the contingency theories of organisation, there is no one best way.
Best-Practice approach is seen in high-performing models, emphasizing that key HRM practices
are universal in their application.
WHEN CRITICALLY ANALYSING A SITUATION
Identify all the issues in an HR situation
Identify the assumptions driving the issues
Examine these from several perspectives. Chapter 3
From 1980’s onwards a range of traditional protections were dismantled, making the NZ
economy one of the worlds most open and competitive economies.
During this period unemployment rose rapidly , the social and economic costs of this adjustment
were significant and left a deep impression on many New Zealanders.
SME’s commonly do no believe that it makes sense to develop systematic policies and procedures
for dealing with staff. As a result informal practices often based on ‘gut instinct’ and word of
There is a high churn of businesses in NZ and therefore a relatively high proportion of
workplaces are new and without established HR policies and procedures. This can act as a source
of innovation in HRM practice if used to advantage, but can also result in instability with
management being on a continuous learning curve.
Employment Contracts Act (ECA) was controversial legislation that took a laissez-faire approach,
favoring market regulation of wages and conditions of work, in place of regulation through
collective bargaining. This caused a significant drop in trade union membership and collective
agreements, cuts in labor costs and a general deterioration in wages and conditions of
employment. However many skilled workers saw improvements in their wages and conditions.
State Sector Act 1988 gave individual departments the responsibility to establish their own HRM
policies and practices including negotiating wages and conditions of employment.
Additional obligations are also imposed on state sector employers, public service chief executives
are required to be good employers and must have HRM policies in place to ensure fair and proper
treatment of employees in all aspects of their employment.
Good Employer –
Good and safe working conditions
Equal employment opportunities program
Important selection of suitably qualified persons
Recognition of Maori aims and aspirations, and the need for greater Maori involvement
in the public service.
Opportunities to enhance the abilities of individual employees.
Recognition of aims, aspirations, employment requirements and cultural differences of
ethnic or minority groups.
Recognition of women’s employment requirements.
Recognition of the employment requirements of people with disabilities.
Macky – Employment Relations
The distinctions between Industrial Relations and HRIR have become blurred creating the
discipline of ER. This covers all aspects of the employment relationship both individual and
collective it is concerned with all sectors of employment and all types of paid employment.
ER has become a much wider theoretical and empirical research area of HRM.
Dominant emphasis in HRM is:
Strong unitarist managerial and business perspective, with an intention to align individual
aspirations and behaviors with organizations interests.
Dominant emphasis in ER is:
A plurality of perspectives which may be in conflice with each other at times. Multiple levels of
analysis, which incorporate both the ‘macro’ and ‘micro’ approach to managing the employee
relationship. A strong emphasis on collective interests (eg – the interaction of employers, union and government, as well as collective bargaining and conflicts, as well as an emphasis on
individual employment aspirations and rights.
3 Frames of Approach-
Social Approach – focuses on the subjective and individual social responses of employers
and employees in different situations, and attempts to understand particular actions
rather than just observing behavior.
-Emphasizes the fact that people do not share the same ideology and will therefore
attach different meanings to their interactions.
-This approach sets out to classify the meanings people may give to their behavior and
the behavior of others.
Actions can be categorized into 4 types:
*traditional or habit bound
*spontaneous or emotional
*rational action based on ones own behavior in response to others behavior
*strategically planned action in which decisions that have been made take into account
all short, medium and long-term consequences.
Unitatian – Bypasses the existence of different interests among individuals in the
workplace, from this perspective there should not be division or conflicts of interest
between employees and managers, conflicts are considered pathological.
-Source of authority lies with management and sees management as the sole decision
- Employers believe that it is unacceptable for their to be third-parties intervening in the
direct employer-employee relationship, unions are viewed as an illegitimate intrusion
creating conflict in an otherwise harmonious working environment.
Pluralism – ER’s constitute a complex system that incorporates sectional groups with
-Organizations are composed of coalitions of individuals and groups pursuing their own
goals, yet each being dependent on the others for mutual survival.
-Conflict is accepted as both inevitable and legitimate within any organisation and is
tempered and controlled through structures and procedures. Greater stability can be
achieved by working with unions.
-Too much focus on controlling and resolving conflict rather than understanding why it
Radical Pluralism - Conflict is inherent in ER.
Because society is class-based and ownership acts as a source of power and control. Also
the vulnerability of employees as individuals leads to them forming unions to protect
their own interests.
Because individuals have different attitudes and beliefs creating tension and conflict.
The Systems Theory Approach emphasizes the interdependencies and interactions between
organizations and their environment, and how order and stability are established in a changing
Under the ERA, unions have the sole authority to negotiate and to be party to collective
agreements on behalf of their members. They must however operate independently from
employers and failure to do so can lead to the registration being revoked.
Formal use of authority has limitations when innovation, discretionary effort and collaboration
are necessary. Therefore attention must be drawn to ‘below the waterline’ issues such as
whether people are capable and motivated. Employment contracts and relationships extend beyond legal agreements and reflect
psychological phenomena such as fairness, trust and identity. These have a considerable impact
on how people work together. HRM aims for worker well-being and productivity growth in a
complex and changing environment.
Productivity benefits from effective HRM-
High Performance Work Systems (HPWS) – the opportunity to participate, increase skills and
create incentives fro workers to participate effectively.
Often regarding the importance of implementing and adapting these systems to fit different
contexts and workplaces in order to raise productivity.
Workers need the skills, tools and resources to make decision close to the source at which issues
Positive employee attitudes, trust in managers and job satisfaction are all important parts of the
high performance formula.
Satisfied happy workers = long-term productive workers.
When staff know why they are doing their job they have more meaning and understand how
their job effects others.
Behavior and Results
Performance = Ability x Motivation x Opportunity
These factors can be influenced through recruitment and selection and training.
The biggest gains have been seen to come from consulting with staff on workplace practices,
conveying common values, measuring HR performance, carrying out performance reviews,
training and encouraging non-managerial staff to identify and solve problems.
Benefits of this include, higher staff retention and improved human capital.
A change has occurred in the way work is done from a mass production(Fordist and Taylorist),
to more niche production.
Skilled and motivated workers who are given the opportunity to participate are more likely to
exercise discretionary effort, showing initiative, be innovative, productive and collaborative.
Common HPWS practices:
Decentralized decision making
Flexible job assignments
Bundles of practice are more effective than single practices in isolation.
HPWS can lead to either increased stress or increased rewards from the job depending on the
nature of the technology production process, whether additional responsibilities are matched by
pay rises, whether jobs are secure and whether workers get adequate training.
This can add intensity and be considered exploitative particularly with low-skilled jobs.
Employees are more likely to commit if their interests are recognized, rather than assumed to be
the same as those of owners and managers.
Introducing changes is challenging for organizations as they threaten existing power structures,
require new skills and workers, can intensify work and add stress.
The challenge for HRM is being able to effectively recruit for skill, develop it, utilize it and
recognize, reward and retain it. Beckers Human Capital Theory – The more an individual invests in themselves the greater the
rewards they will have over their lifetime (eg increased earning, interesting jobs, less
unemployment). This theory underpins argument that individuals should pay for their own
development as they will derive the benefit from it.
Skills can be generated:
“In-house” through development and training, this is referred to as a ‘soft’ or high-
“Outsourced” or brought, these are ‘hard’ HRM approaches.
Governments, Organizations and Individuals are concerned about work-related skill. As there is a
clear connection between skill, productivity and economic prosperity or personal wellbeing.
Where do organizations get skills?
Import – from overseas or form other organizations
Create – through education
HRM is concerned with the management of the employment relationship in its legal sense,
related to terms and conditions of employment. In its operations sense, related to ensuring
skilled staff and well-designed jobs are fulfilling the organisation strategy, In its social sense,
facilitation and supporting good workplace relationships.
Good workplace relationships are at the heart of employee engagement, job satisfaction and well-
Employee Voice – employees are being encouraged to become involved in decision making
aspects of their job, and are being provided with job development opportunities.
Employee voice refers to the ability of workers to have a say about what goes on in a workplace.
When used positively this overlaps with the notions of employee participation and involvement.
Voice is all about two-way communication between management and workers, handled well it
can create a basis of mutual trust for building the manager-employee relationship.
Some of what workers want from their jobs are required by law, and HRM policy and practices
can address employee voice opportunities, development opportunities and pay and staffing
levels. However ultimately it is the behavior of supervisors and managers which helps or hinders
actual practice at work.
It is important to strike a balance between the ER goals of efficiency, equity and voice between
workers and management.
“If you want people to do a good job, give them a good job to do.” - Frederick Herzberg
Employment practices oriented to employee engagement deliver ‘win-win’ returns in terms of
employee motivation, commitment, retention and quality of work.
Good work is more likely to be intrinsically interesting, varying or challenging and involve a
certain level of responsibility that permits a sense of personal achievement and fulfillment.
However interesting jobs alone do not imply good work or a good workplace. Managerial agency
is a key dimension in the experience of work. To experience good work or to inhabit a good
workplace requires good managers and a good managerial practice.
A high degree of employee co-operation and commitment does not come automatically
employers must earn it. Employee engagement refers to a level of com