LER400:
Lesson 2: History and Values in ER
Introduction
So far we have defined employment relations, anticipated some of the rules and rule-making processes we will study in this course, and looked, in a very general way, at the nature and objectives of employment relations systems.
In this topic we continue to examine concepts that help to understand the nature of ER as a subject and that contribute to better comparative analysis of ER systems. To begin, we note the importance of history (along with context and agency) as an important explanatory variable. We then move on to explore the impact of values (or frames of reference) on different approaches towards the management of the employment relationship. We draw on Fox’s and Budd’s taxonomies to explore the impact of values on both the theory and practice of employment relations.
Objectives
At the end of this lesson, you should be able to:
- recognize the importance of history as an explanatory variable;
- understand why values are important in analyzing ER;
- critically evaluate the taxonomy of values in ER as derived from Budd and Bhave;
- define and compare the four types of values: egoism, unitarism, pluralism and radicalism;
- provide examples of each of the three types of values and how they shape the behavior of the different parties in the practice of ER.
Lesson Readings & Activities
By the end of this lesson, make sure you have completed the readings and activities found in the Lesson 2 Course Schedule.
Importance of History in ER
Whether we are studying employment relations in one country, comparing employment relations in more than one country, or analyzing global phenomena across countries, we will be trying to describe and explain employment relationships and the systems in which they operate.
In Part 1 of this topic, we considered the important concepts of ‘context’ and ‘agency’. Another factor very important to describing and explaining employment relations is history. Indeed, according to Kochan (1998: 35-36), a defining feature of the academic discipline of employment relations is the importance it places on history.
History is important because it influences the attitudes and behaviors of the parties to the employment relationship. All nations and employing organisations are affected by what happened in the past. The notion of ‘path dependency’ is another way of saying that employment relations systems are not re-created on a daily basis but are built incrementally on the past; that is, historical features or patterns are often repeated (Kaufman 2004, p. 59). Thelen (1999, p. 387) explains that institutions, once founded, ‘continue to evolve in response to changing environmental conditions…but in ways that are constrained by past trajectories.’
The effect of history on employment relations can perhaps most easily be seen in Britain, where the employment relations system evolved gradually from the 19th century through the 20th century and into the 21st century without civil wars or invasions or any significant breaks or sudden changes. But history is also important in countries that have seen radical changes at some point in time. For example, radical changes in employment relations systems occurred in the USA after the great depression, Japan and Germany after WWII, Australia as a result of the Work Choices laws in 2005 or China in the last 10 years.
Role of Values in ER
Values and beliefs are very important in employment relations because they influence how we perceive and interpret events; they inform our assumptions about what is valuable, possible, important and what will work or not work (Fox 1966, in Flanders 1969, p.390).
Indeed, we need to remember that all ER scholars and actors adopt ideologies and frames of reference, even when this is not done consciously or explicitly. It is only when we truly appreciate this diversity that we can achieve a deeper, more conceptual understanding of the world of work (Budd and Bhave 2012, p. 108).
British scholar, Alan Fox (1966) was the first to analyze the influence of values – or what he called ‘frames of reference’ – when he developed a taxonomy of management frames of reference in 1966 and then expanded it in 1974. Whilst written as a commentary on ER in the British private sector during the 1960s, the Fox reading offers powerful insights into ER everywhere. As he argues, ‘one’s attitude to anything depends on ones frame of reference’ and ‘the importance of the frame of reference is plain. It determines judgment, which in turn determines subsequent behavior’ (1966, p. 390).
Fox (1966, 1974) distinguishes between three frames of reference, or ‘sets of values’, to define the nature of the employment relationship. Two American scholars, Budd and Bhave (2012), extended Fox’s ideas by recognising a distinction between unitarism and a fourth frame of reference, which they called egoism. Their account of the four frames of reference is summarised in Table 5.1.
| ER Model | Egoist | Unitarist | Pluralist | Critical (Radicalism) |
|---|---|---|---|---|
| General Philosophy | Freedom and individual self-interest yield optimal outcomes through free market transactions | Corporate policies can align the interest of employers and employees | Optimal outcomes are achieved when there is a balance between employer and employee interests | Capital dominates labor in the employment relationship and in broader societal institutions. |
| Employer interests | Profit-maximization | Profit- maximization | Profit-maximization or stakeholder value | Power and control |
| Employee interests | Utility-maximization (survival and income) | Fulfillment | Equity and voice | Power and control |
| State interests | Freedom and rule of law | Freedom and rule of law | Equitable outcomes | Dominance of the elite |
We shall now consider each perspective in more detail. In each case, we will begin with broad concepts and then briefly explore some examples of their application to ER scholarship, public policy positions in ER and the practice of ER at workplace level.
Befort & Budd (2009) is particularly useful in applying these perspectives to American public policy, while Bray et al. (2014) use the categories to analyse aspects of Australian public policy and practice.
Egoism represents a perspective on the employment relationship which privileges markets and the individual pursuit of favourable market outcomes. Employers are assumed to be singularly motivated by profit maximisation, employees seek to maximise their utility (usually focusing on employment opportunities and wage outcomes) and the state seeks to create the legal and policy circumstances that allow the free operation of market forces. Management is therefore seen as the dominant rule maker. Employees can participate as individuals in the negotiation of individual employment contracts, but once these contracts are consummated employees are assumed to consent to management’s directions.
It is most closely associated with scholarship in the tradition of neoclassical economics.
In the practice of Australian ER, an egoist perspective can be seen in claims by mining employers that individual employment contracts would lead to improved productivity:
‘....employees enter into workplace agreements with management free from interference by and conflicting allegiances to third parties (namely, unions); the agreements therefore represent a true ‘meeting of the minds’, with rights and obligations between the parties in fair balance; with both parties willing participants to the bargain, employees will more readily ‘march to the beat of the same drum’ with management in the enjoyment of their rights and in the commission of their obligations. It is therefore a corollary that workplace agreements serve to unify and harmonise effort, with greater productivity a natural result.’ (Moore & Gardner 2004, p. 296)
Unitarism assumes that organisations (and the employment relationship) are essentially unitary, with one shared set of ‘organisational’ goals; there are no structural sources of conflict. Employers are seen to be motivated by profit maximisation, but the central distinction egoism is that profits are seen to flow from management delivering the corporate policies that align the interests of employees with those of the organisation. Employees are seen to be motivated by far more than wages, especially by a desire for fulfilment in the employment relationship. The state is considered necessary to develop laws and policies that provide employers with the space to implement corporate policy of their making.
Unitarism is represented in the research and prescriptions of many management and human resource management (HRM) scholars. Purcell (1992, p. 4) argued that these value positions are central to HRM:
‘HRM is the visual embodiment of the unitarist frame of reference both in the sense of the legitimation of managerial authority and in the imagery of the firm as a team with committed employees working with managers for the benefit of the firm’.
In Australia, the application of the unitarist perspective can be seen in the Australian Mines and Metals Association’s (AMMA) advocacy of ‘employee engagement’ and the responsibility of managers to deliver engagement:
‘… improving and maintaining organisational effectiveness is dependent on the level of employee engagement in the workplace. A high level of engagement can be achieved through the leadership, structure and systems. If an organisation actively commits to employee engagement as a means of lifting its business performance, it cannot delegate the work involved to a third party (AMMA 2007, p. 9).
The pluralist perspective recognises the potential for conflict between employers and employees as a result of social structures, but conflict is considered legitimate and resolvable provided the respective interests of the parties are balanced. Efficiency, equity and voice are central to this balancing. Employers are seen as motivated by profit maximisation, while employees seek equitable outcomes and opportunities to share in rule-making within the employment relationship. The state seeks to provide a legal and policy framework that balances the competing interests and achieves both efficiency and equity.
Pluralism is the dominant scholarly tradition in the field of employment relations (for the USA, see Kochan 1998).
Pluralism underlies the approach and prescriptions of the ILO. The ILO is the only 'tripartite' United Nations agency, consisting of governments, employers’ organizations and workers’ organizations that jointly shape policies and programs. Thus, the ILO has a highly pluralist philosophy.
In Australia, a classic pluralist public policy position can be seen in statement by a senior union official advocating the central role of unions in Australia’s labour law regime (Lyons 2013):
‘Without labour law disproportionate power lies with the employer. The historic heart of Australian industrial regulation is the recognition that the bargain between an employer and an employee is inherently unequal, absent the intervention of the state in the form of legislation and the existence of trade unions.’
The ‘critical’ or ‘radical’ perspective sees employers (the capitalist class) dominating the employment relationship and broader social institutions, with little prospect for employees (the working class) gaining genuine rewards or influence without major changes in social structure. The state is also considered deeply pro-employer, maintaining the stability of capitalism and therefore the privileged position of capital, even if this sometimes means making political concessions to the working class.
The retirement of a long-term union official in the Australian construction industry led to his union journal quoting his ‘proudly militant’ views, which are quintessentially radical:
‘The battle is between capital and labour; a class war. The struggle is between the haves and the have-nots. The haves always want more and we, the members, want our share.’ (p. 13)
NB. Radicalism has a very specific meaning in ER; it does not simply mean someone has ‘radical’ views.
Some questions to think about to check your understanding:
- Can management have a radicalist frame of reference?
- Can unionists have a unitarist frame of reference?
- What happens when management and unions with different frames of reference meet in the workplace?
- What happens when management of an organisation do not all share the same frame of reference? Has this happened to you?
Have a think about your value system. What is your perspective of ER? How do you see the world?
To get you thinking –
- How do you view workers on strike?
- Troublemakers?
- Hardworking, honest people?
- What about the State – how do you see the role of the courts in ER?
- Meddlesome and unnecessary?
- Vital and indispensible?
- Unions?
- Harmful, unnecessary, intrusive?
- Beneficial, essential?
Summary
Part 2 of this first (busy) week has introduced additional concepts that help us to explain patterns of employment relations and understand why they vary. In particular, we have noted the importance of history as an explanatory ‘contextual’ variable. We have also introduced ‘Values’ in ER and noted how each ‘value’ emphasises different aspects of the employment relationship. We discussed how our values, or our ‘frames of reference’, have an important influence on how we see the world, what we believe to be interesting, or important, or right. Thus, values help us to understand the nature of the employment relationship because we can better understand how the decisions and actions of the parties to the employment relationship are shaped.
This has been a BIG week; please take the time to make sure you have grasped all the concepts. Please utilise the discussion board to make comments or raise issues about any aspects of the topics covered so far on which you may not be totally clear.
Next week we move on to consider the Four Topics, which will inform the analysis across our five countries.
Additional Readings
Australian Mines and Mineral Association (AMMA) 2007, ‘Employee Engagement – A lifetime of Opportunity’.
Befort, S. and Budd, J. (2009) Invisible Hands, Invisible Objectives: Bringing Workplace Law and Public Policy into Focus, Stanford University Press.
Blanpain, R (2010) ‘Comparativism in labour law and industrial relations’ in R. Blanpain (ed), Comparative Labour Law and Industrial Relations in Industrialised Market Economies, Kluwer Law International, The Netherlands, 10th Edition, pp. 3-24.
Bray, M, Waring, P, Cooper, R and Macneil, J (2014). The study of employment relations: Analytical tools, Chapter 2 in Employment Relations: Theory and Practice (3rd ed.). Sydney: McGraw-Hill. Some of the material from this chapter (from Part 1) is also referenced.
Fox, A (1966) ‘Management’s Frame of Reference’, excerpt from Industrial Sociology and Industrial Relations, Royal Commission on Trade Unions and Employer Associations, Research Papers 3, HMSO, London, Part 1, pp.2-14 in A. Flanders (ed) (1969) Collective Bargaining, Penguin, Harmondsworth, p.390-409
Fox, A (1973) Industrial Relations: A social critique of pluralist ideology, in J. Child (ed) (1973) Man and Organization. London: George Allen and Unwin Ltd. pp. 185-233
Gall, G (2003), ‘Marxism and Industrial Relations’ in P. Ackers and A. Wilkinson (eds) Understanding Work and Employment: Industrial Relations in Transition. Oxford: Oxford University Press, pp. 316-24.
Heery, E. (2015), ‘Frames of reference and worker participation’, in S. Johnstone and P. Ackers (eds), Finding a Voice at Work? New Perspectives on Employment Relations. Oxford University Press. Oxford. Chapter 2.
Hyman, R (1975), Industrial Relations: A Marxist Introduction, Macmillan, London.
Kaufman, B (2004) ‘Employment Relations and the Employment Relations System: A guide to theorizing’ in B. Kaufman (ed) Theoretical Perspectives on Work and the Employment Relationship, IRRA, Illinois (see p. 59 for short discussion on the role of History)
Kaufman, B (2015), ‘The future of employee voice in the USA’, in S. Johnstone and P. Ackers (eds), Finding a Voice at Work? New Perspectives on Employment Relations. Oxford University Press. Oxford. Chapter 13 (especially pp. 279-282).
Kelly, J (1998), Rethinking Industrial Relations: Mobilization, Collectivism and Long Waves, Routledge, London.
Kochan, T (1998), ‘What is distinctive about industrial relations research?’ in K. Whitfiled and G. Strauss (eds) Researching the World of Work, Cornell University Press, Ithaca, pp. 31-45.
Lyons, T (2013), Cause and Effect, Means and Ends, Seeds and Fruit: Reflections on Role, History and Future of Labour Law Reform. Paper to the 21st Labour law Conference, Workplace Research Centre and Law School, Sydney University.
Moore, B and Gardner, S (2004), ‘HR Managers, SHRM and the Australian metals mining sector: Embracing the unitarist vision’, Asia pacific Journal of Human Resources, 42 (3), pp. 274-300.
Purcell , J (1992), ‘Human resource management – implications for teaching, theory, research and practice in industrial relations’, Proceedings of the IIRA 9th World Congress, Vol. 3, Sydney.
Wailes, N., Wright, C, Bamber, G. & Lansbury, R (2016) ‘Introduction: An internationally comparative approach to employment relations’, in Bamber et al. (eds), International and Comparative Employment Relations, SAGE, London, 6th Edition, Chapter 1.
Whitfield, K. Delbridge, R & Brown, W (1999): Comparative research in industrial relations: helping the survey cross frontiers, The International Journal of Human Resource Management, 10 (6), pp. 971-980.
Discussion: Values in Action
Please begin by introducing yourself and telling us a bit about your background (Note: This does not form part of the assessment or word count – it would just be good to know!)
Exercise: “Values in Action: Walmart versus Costco”
TASK:
You may have seen many stories in the media about the actions of CEOs/management at both Walmart and Costco. Do an on-line search for information about management behaviour at both companies.
(a) How would you characterize the values of management at both Costco and Walmart? Why? Provide an example to prove each case.
(b) Does your analysis of values help you to understand the different approaches taken by management at these two organisations? How?