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Managing Human Element at Work

Notes products and services, and the belief in a customer driven culture. None of these shifts is
feasible without a substantial change in traditional modes of dealing with people in an
enterprise.

Labour relations should be seen as an essential part of management
systems and techniques, and not as a discipline or activity apart from
management.

7.1.1 Industrial Relations: Theories and Attitudes

At its inception, the labour market was dominated by the classical economics view which
espoused free and unregulated labour markets. This laissez-faire capitalism led to social
injustices and inequities since labour did not have the power to bargain with employers on
terms which even approached a degree of equality in bargaining strength. Industrial relations,
therefore, initially came to espouse a degree of labour market regulation to correct this
unequal bargaining power. Consequently, industrial relations developed in the context of
the theory that problems in labour relations emanate largely from market imperfections
which operate against the interests of labour and cause imbalances in the power relationships
of employers and employees. These imperfections were external to the enterprise.
Additionally, the dominant position of the employer in what was formerly called the
“master and servant” relationship prevented labour from enjoying rights. These causes for
labour problems external and internal to the enterprise - needed to be addressed through
a range of initiatives, both by the State through protective labour laws, conciliation and
dispute settlement machinery, by voluntary action on the part of employees to protect
themselves and further their interests through trade unionism (but backed by State
interventions to guarantee this right in the form of freedom of association), and by redressing
the balance of power (through collective bargaining).
The focus on relations external to the enterprise, especially through national and industry
level collective bargaining was initially welcomed even by employers in several industrialized
countries because it reduced competitive advantage based on labour costs. Besides, collective
bargaining in particular transferred one of the most conflictual aspects of the employment
relationship - wages - out of the workplace, and made it the responsibility of the respective
representatives of employers and employees. Unions naturally welcomed it as it gave them
an influential base outside the workplace. When ‘transferred’ to developing countries, this
concept sometimes had disastrous consequences because it facilitated the politicization of
unions. Moreover, the workability of a system of industrial relations in which the emphasis
was on decisions outside the enterprise presupposes a high degree of literacy, education and
awareness among employees able to monitor the actions of their representatives operating
at a level a removed from the workplace.
However, regulation of the external labour market did not necessarily address all the causes
of labour problems. A more pluralistic view recognized that labour problems or issues do
not relate only to conflict between employers and employees. They include many other
forms of problems such as low productivity, absenteeism, high labour turnover, lack of job
security, unsatisfactory or unsafe working conditions, non-recognition of performance in
standardized wage systems, and lack of motivation. Many of these problems cannot be
addressed through measures directed purely at the external labour market, and require
measures to be taken within the enterprise. Therefore another view, emanating from human
resource management and increasingly important since the 1980s, is that labour problems arise
not so much from factors external to the enterprise, as from unsatisfactory management of
human resources within the enterprise. Corrective action should include the installation of
human resource management policies and practices embodied in concepts such as recruitment
and selection, leadership and motivation, employee development and retention, etc.

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