Chapter 6
MANAGEMENT
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6–1
Learning objectives
 Define the term ‘management’ and locate the
management of employment relations within the
structure of organisations.
 Discuss the role of employer associations in assisting
management with employment relations matters.
 Identify the goals and functions of management.
 Discuss the effect of different systems of corporate
governance on employment relations.
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6–2
Learning objectives
 Distinguish between different managerial strategies to
control the labour process.
 Describe the impact of business strategies on
employment relations practices.
 Outline the reasons why employment relations policies
are often not integrated with business strategies.
 Identify how different ‘management styles’ may affect
the conduct of employment relations.
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6–3
Overview
• Structures for the management of employment relations
• Resources and staff
• The division of responsibilities
• The role of employer associations
• Goals and functions of management
• The management of labour
• Management control strategies
• Business strategies and employment relations
• Evidence on managerial practices
• Understanding management practices
• Managerial style and attitudes
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6–4
Goals and functions of management
• Why study management?
– A more assertive approach in recent years:
• international competition
• labour costs
• flexibility
– Employers have choices:
• subject to some external constraints
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6–5
Goals and functions of management
• Management policies and practices need to be
understood within the broader context of business
objectives.
• Much debate about:
– separation of ownership from control
– implications for organisational goals
– reassertion of shareholder control
• Forms of ownership and control:
– Anglo–American/Australasian ‘outsider’ system
– Continental European/Japanese ‘insider’ system
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6–6
Management of labour
• Management’s role is to combine, allocate and
utilise resources to achieve organisational
objectives.
• Labour resources:
– converting labour power into productive labour
– structures of control/methods of consent
– underlying conflict of interests
• Use of specialists by the organisation to manage
employees and their unions.
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6–7
Management control strategies
• Basic difficulty for management: the open-ended
nature of the employment relationship.
• Categorisation of strategies:
– Direct control:
• tight supervision
• minimum of industrial discretion
– Responsible autonomy:
• workers have status and autonomy
• discretion at work
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6–8
Management control strategies
• Forms of control
– Personalised control: workers under the direct and
personalised control of supervisors.
– Technical control: work design and production system─
– limits worker discretion
– sets the pace for worker effort
– identifies poor performance
– Bureaucratic control: controls embedded in a system of─
– work rules
– company policy
– rewards
– Commitment-based control: selection and cultivation of
worker discretionary efforts to be better aligned with the
organisation’s interests.
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6–9
Management control strategies
• Management’s choice of strategy is influenced by a
variety of factors, including:
• employee acceptance/resistance
• state regulation
• market forces
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6–10
Business strategies and employment
relations
•
Business-level strategies impact on the management
of labour.
•
Porter’s three types of business strategies:
1. Innovation (or product differentiation) strategy
2. Quality-enhancement strategy
3. Cost-reduction strategy
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6–11
Management control strategies
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6–12
Business strategies and employment
relations
• Implications of innovation strategy
– Jobs require close interaction among groups of
individuals
– Performance appraisals emphasise group-based
achievements
– Emphasis on skill development
– Importance attached to internal pay equity
– Employees as stockholders
– Broad career paths
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6–13
Business strategies and employment
relations
• Implications of a quality-enhancement strategy
– High levels of employee participation
– Individual and group criteria used in performance
appraisal
– Egalitarian treatment of employees
– Ongoing training and development of employees
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6–14
Business strategies and employment
relations
• Implications of a cost-reduction strategy
– Explicit, tight job descriptions
– Narrow, specialised jobs
– Short-term results orientation
– Emphasis on market pay
– Little employee training and development
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6–15
Evidence on managerial practices
• From a control perspective to a commitment
perspective.
• Transformation of business and industrial-relations
strategies:
– owing to market changes
– away from mass production for mass markets to
specialised production for niche markets
• Take-up rates of the new approach:
– partial versus complete adoptions
• Implication for employees:
– work intensification
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6–16
Understanding management practices
• There is limited evidence of integration of business
and industrial relations strategies.
Why?
– Use of multiple strategies at one time.
– Management’s strategies are not always consistent:
• continually adapting to changing circumstances
– Organisations may be unwilling to embrace change:
• ‘pick and mix’ approach
• bundles of practices
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6–17
Understanding management
practices
• There is limited evidence of integration of business
and employment relations strategies.
Why? (cont.)
– Lack of ER representation at executive levels─
• limits input in strategic decisions
– ER managers─
• can lack understanding of the goals of the business
• may lack broader business skills
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6–18
Understanding management
practices
• Katz and Darbishire (2000) point to four types of
management strategy employed across the global
car industry:
1. Low-wage employment pattern: cost-control,
Taylorism, high turnover and opposition to unions.
2. HRM employment pattern: corporate culture,
teamwork, high wages and union substitution.
3. Japanese-oriented workplace pattern:
standardisation, teamwork, seniority pay and enterprise
unionism.
4. Joint team-based approach: semi-autonomous
workgroups, ongoing training and development, high pay
and union involvement.
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6–19
Understanding management
practices
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6–20
Role of market conditions
• Pressures of domestic and international competition
• Emphasis on change in working hours and numerical
flexibility:
– definition of standards hours
– growth in the use of part-time labour
• Employee reactions:
– reductions in earnings
– unequal impact
– limited career progression
– access to training
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6–21
Managerial styles and attitudes
• Importance of management values and philosophies
• Two dimensions:
1. individualism
2. collectivism
• Six management styles:
1.
2.
3.
4.
5.
6.
sophisticated human relations
paternalist
traditional
bargained constitutional
modern paternalist
sophisticated consultative
• Evidence on management style
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6–22
Managerial styles and attitudes
Source : Purcell and Ahlstrand (1994, p.189).
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6–23
Managerial styles and attitudes
• Two dimensions
1. ‘individualism’—emphasis on the employee
2. ‘collectivism’—emphasis on employees as a group
• Individualism ranges from nurturing of individual
employees through to commodification
• Extent of collectivism is measured by:
– extent, form and level of employee participation
– degree of managerial acceptance of employee representation
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6–24
Managerial styles and attitudes
•
Six management styles
– Unitarist/Non-collectivist styles:
1. ‘sophisticated human relations’:
employees are a resource to be developed
2. ‘paternalist’:
▪ union avoidance
▪ emphasis on welfare and stability
3. ‘traditional’:
employees are a cost to be minimised
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6–25
Managerial styles and attitudes (cont.)
• Six management styles
– Collectivist styles (i.e. recognise trade unions):
4. ‘bargained constitutional’:
 development of rules, policies and procedures to
closely define the relationship
5. ‘modern paternalist’:
 paternalist approach but with unions recognised
 stress on developing cooperative relationships
6. ‘sophisticated consultative’:
 sophisticated human relations approach
supplemented by structured consultative
approaches
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6–26
Managerial styles and attitudes
• Evidence of management style
– There has been little research on management
style in Australia, but:
• little management interest in dealing with
unions
• management attitudes affect the presence or
absence of unions in the workplace
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6–27
Managerial styles and attitudes
• Factors impacting on management style
1. Need to maintain relations with employees:
• removing union workplace presence may harm ongoing
relationship with employees
2. Cultural factors (organisational and national):
• distinct approaches between organisations
• distinct approaches between nations
3. State regulation
4. Product-market and labour-market conditions:
• competition based on price, innovation or quality
• labour shortage or oversupply
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6–28
Structures for the management of ER
• Two aspects
1. Resources and staff:
• larger organisations are more likely to have
specialists
2. Division of responsibilities:
• centralisation versus decentralisation
• corporate function
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6–29
Final observations
• Research into management’s role in ER has refocussed our
understanding of the processes involved in employment
regulation:
– labour-process theorists led this development
• Increased management interest in IR is due to changes in
broader business context:
– increasing international competition
– increased need to align IR/HR strategies with business
strategies
• Wide range of management practices:
– employer behaviour is not clearly understood
– varies between industries and nations, and within organisations
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6–30
Summary
• ‘Management style’ refers to the guiding principles for
management ER approach.
• Managers and organisations possess degrees of choice in
the conduct of ER, but it is shaped by:
– business objectives
– market conditions
• Modern organisations typically have a separation of
ownership from control.
• Australian management more assertive in past two
decades.
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6–31