EMPLOYEE RELATIONS, ENGAGEMENT, AND TERMINATION by Sandy Lea Rendon and Anna Dela Cruz Employee Relations It refers to the relationships between employers and employees. It is used to denote the employment relationships concerning management and employees or among employees and their associations. In the Philippines, the Bureau of Labor Relations (BLR) is the lead agency duly authorized to manage and resolve any issues involving unions, collective bargaining agreements and labor disputes in the organized establishments. Trade Union It is an association of workers or employees formed mainly to negotiate with the employers on various workplace issues and improve the terms and conditions of work. The first trade union is believed to be was the General Union of Trades, also known as the Philanthropic Society, founded in 1818 in Manchester. In February 1902, Isabelo de los Reyes founded the first labor union in the Philippines, which is the Union Obrera Democratica (UOD). According to International Labour Organization (ILO.org), currently some 600 national trade unions, industrial federations and plant-level unions from private and public sectors are registered in the Philippines. Trade Union Examples of trade union in the Philippines are Federation of Free Workers (FFW), Kilusang Mayo Uno (KMU), Sentro ng Nagkakaisa at Progresibong Manggagawa (SENTRO) and the Trade Union Congress of the Philippines (TUCP). TUCP is the largest national trade union center in the Philippines, founded by labor leader Democrito Mendoza in 1975. The trade unions primary concern in the Philippines includes decent work for job seekers and job preservation for the employees. Collective Bargaining According the BLR, collective bargaining is the process where the parties agree to fix and administer terms and conditions of employments which must not be below the minimum standards fixed by law, and set a mechanism for resolving grievances. The rights to freedom of association and collective bargaining are enshrined in the 1997 Philippine Constitution. According to Neil W. Chamberlain and James W. Kuhn, there are two major forms or model of bargaining namely, cooperative bargaining and conjunctive bargaining. Models of Collective Bargaining 1. Cooperative bargaining involves negotiation of an issue on which both the parties may gain, or at least neither party loses. It is complementary or integrative in nature. Both accept that ‘neither will gain unless the other gains too’, therefore, there is willingness to concede and be pliant. It is also called the win-win bargain. 2. Conjunctive bargaining arises from the requirement that some agreement may be reached so that the operations on which both are dependent may continue. It is competitive in nature. It may be characterized by mutual coercion and hostility. It is based on a zero-sum game—‘my gain is your loss and your gain is my loss’. It is more a win-lose or even a lose– lose solution as the final outcome may lead to more hostility in future. Most bargains in reality tend to become a conjunctive bargain where one party tries to dominate the other. Three Stages of Collective Bargaining Process 1. Pre-negotiation phase • Preliminary request - Both parties try to develop the issues that they believe are most important. This phase involves placing initial demand by one party and consideration of the demand by the other party. • Preparation of collective bargain - This involves determination of issues for bargain. Composition of negotiation teams may be required. Determination of scope and level may also take place and agenda of bargain may be spelled out. Three Stages of Collective Bargaining Process 2. Negotiation phase • Setting the stage/Ice-breaking - Negotiations may start with setting the tone to start discussions. It may also necessitate attitudinal restructuring. This involves shaping some attitudes such as trust, developing a congenial bargaining environment, and working out the modalities. • Propose - This phase involves the initial opening statements and the possible options that exist to resolve them. • Discuss - Issues are discussed in a threadbare fashion. Each party may discuss pros and cons in detail. This phase could be described as ‘brainstorming’. • Bargain and decide - Negotiations are easy if a problem-solving attitude is adopted. This stage comprises the time when ‘what ifs’ and ‘supposals’ are set forth. Giveand-take is decided and final decision taken. Three Stages of Collective Bargaining Process 3. Post-negotiation phase • Final documentation - Once bargaining is done, the contract agreement is written down. The agreement should include the agreed matters as also the frequency of its review. • Arbitration clause - The agreement must include an arbitration clause. Whenever the parties have any differences pertaining to the matter, an arbitration clause can be resorted to. • Implementation of contract agreement - This stage is described as consisting of effective joint implementation of the agreement. Both parties must respect the agreement and see that it is implemented in a fair and justifiable manner. Employee Participation in Management Participation in management refers to participation of employees in the decision-making process of the organization. It is also known as labour participation or workers’ participation in management. It gives the employee a sense of importance, pride, and accomplishment. It helps to establish industrial democracy and strengthen cooperation, and, thus, maintain industrial peace and harmony. Different Level of Employee Participation 1. Information participation - It ensures that employees are able to receive information pertaining to the matter of general importance. 2. Consultative participation - Here, workers are consulted on the matters of employee welfare, such as work, safety, and health. However, final decision always rests with the top-level management. 3. Associative participation - It is an extension of consultative participation as management here is under the moral obligation to accept and implement the unanimous decisions of the employees. 4. Administrative participation - It ensures greater share of workers’ participation in the administration of various functions that concern them (for example, canteens, welfare facilities, and employee benefits). 5. Decisive participation - This is the highest level of participation where decisions are jointly taken by employees and managers. Forms of Employee Participation 1. Indirect/Informal Participation - refers to mechanisms that indirectly provide employees a sense of involvement and participation. •Collective Bargaining - This involves mutual negotiations on matters of common interest. The process of bargaining can at best be considered as a basic level of participation where workers have a platform to express, discuss, and negotiate. • Job enlargement and enrichment - Job enlargement refers to expanding the job content or adding task elements horizontally. Job enrichment refers to adding ‘motivators’ to the job (for example, status and autonomy) to make it more rewarding. This is participation in the sense that it offers freedom for employees to use their judgement and be more creative. • Suggestion schemes - Employees’ views are invited and incorporated in final decisions and rewards may be given for the best suggestion. It gives the employee a sense of selffulfillment. It provides the employee with an outlet to vent his concerns. Forms of Employee Participation 1. Indirect/Informal Participation (continued…) • Total quality management and quality circles - Also known as continuous process improvement, total quality management (TQM) represents a long-term effort to orient all activities around the concept of quality. It is based on the belief that quality can be improved by everyone through participation. Quality circle (QC) is a mechanism to improve quality. It is based on the premise that quality control planning could only succeed with ‘qualitymindedness’ at every level. A QC has 7–10 people from the same work area who meet regularly to analyse and solve quality-related problems in their area. They are called participative because they involve every employee in the organization in improving quality continuously. • Autonomous/empowered teams - Autonomous teams are established to manage projects or specific tasks. Authority and responsibility are passed on to the employees who then experience a sense of empowerment, ownership, and control. They are given latitude to establish their own internal goals and work practices. Forms of Employee Participation 2. Direct/Formal Participation - refers to mechanisms that directly promote participation through formalized schemes. They may also be statutory in nature. • Board-level participation - This refers to representation of employees at the board of directors’ level. The workers’ representative on the board can play a useful role in safeguarding the interests of workers. This is seen as the highest form of industrial democracy. • Work councils and joint committees - Staff councils or work councils are bodies of employee representatives that play varied roles, which range from seeking information on the management’s decision to carrying out administrative responsibilities such as managing canteens and rest rooms. On the other hand, joint councils or committees are bodies comprising of representatives of employers and employees which take decisions on a wide range of topics connected to welfare and working conditions. Forms of Employee Participation 2. Direct/Formal Participation (continued…) • Financial participation - It involves a stake of the employee in the finances of the organization. The logic behind this is that if an employee has a financial stake in the organization, he/she is likely to be more positively motivated and involved. It gives the employee a sense of ‘shared destiny’. Some popular schemes of financial participation are performance-linked pay, profit sharing, gain sharing (sharing gains from productivity improvements or cost reductions), employees’ stock option schemes, and performance bonus. Employee Engagement It is the commitment and involvement an employee has towards the organization and its values. It is the ‘emotional connection of organizational members’ to their work roles and tasks. It is a barometer that determines the association of a person with the organization Elements of Engagement • Job involvement - is the degree to which the job situation is central to the person and his or her identity. It is a ‘cognitive or belief state of psychological identification’. It depends on need identification and the potential of a job to satisfy these needs. It is concerned with how the individual involves himself during the performance of his job. • Flow - refers to the ‘holistic sensation’ that people feel when they act with total involvement. It is the state in which there is little distinction between the self and work. When individuals are in ‘flow state’, little conscious control is necessary for their actions. Because of job involvement, an individual may experience natural flow of work abilities— things seem to just fall in line as per an individual’s requirements. Work becomes part of an individual’s interest. Typology of Employee Engagement Typology of Employee Engagement 1. Engaged - These are employees who are active and constructive. These employees are the builders of an organization. They show high level of engagement. They perform at consistently high levels. They work with passion and innovation and move their organization forward. They have a strong connect with the company. They are the champions, catalysts of high performance, and are star employees. Strategy: Organizations should uphold them as opinion leaders, change agents, and brand ambassadors. They typically exert a positive influence on the performance of their coworkers and subordinates. It is important to reward their contribution and give them opportunities for growth. Typology of Employee Engagement 2. Not Engaged/Enrolled - These employees are passive but constructive. They tend to concentrate on tasks rather than the goals and outcomes. Employees who are not engaged tend to feel their contributions are being overlooked. They choose to silently keep working and are not actively involved in any negative activity. They show up for work but do little beyond the minimum effort required to complete their job. This is the biggest segment of employees. Strategy: Not engaged employees may need careful and empathetic counselling and mentoring to shed their complacent behaviour. Most ‘not engaged’ employees neither improve nor detract from current performance, as they tend to do their jobs quietly. It is important to recognize their small contributions and build a conducive environment for them to get engaged. Typology of Employee Engagement 3. Disengaged/Disenchanted - They are passive and destructive. There is a very subtle distinction between ‘not engaged’ and ‘disengaged’ employees. While not engaged employees tend to concentrate on their tasks, disengaged employees frequently ignore tasks and may be involved in serious negligence at work. They are unhappy employees. Their behaviour may be passively destructive. Strategy: It is important to address the cause of their apathy. They require motivation and counselling. It is not about healing disengagement, but about preventing it. By the time disengagement translates into active disengagement, the damage is already done. Typology of Employee Engagement 4. Actively Disengaged - These employees are actively destructive. They are not just unhappy at work, rather their unhappiness gets actively manifested. They create problems, indulge in uncivil behaviour, and sow seeds of negativity. They undermine what their engaged coworkers accomplish. They are problem creators and spread a sense of disgruntlement. Strategy: Ignoring actively disengaged employees is dangerous. Their lack of commitment and the negative effect they have on the performance of others is too great to be ignored. Management should make efforts to identify these employees and take appropriate actions to correct the problem. They either need disciplining or training, or they may even be fired in case of repetitive offence. The Cost of Disengagement The psychological costs of disengagement may be even greater than the financial costs. Poor performance by disengaged coworkers is an important reason that engaged employees leave their jobs. Type of Cost of Disengagement 1. Direct Cost - Disengaged employees generally take more leaves, are often absent, are negligent, miss deadlines, and show poor results. Disengaged employees create disengaged customers because they naturally pass on their negativity. Disengaged employees cause damage to company property and indulge in theft of office equipment. 2. Decrease in Company Performance - Employee disengagement leads to lowering of company performance. Highly profitable companies have more engaged employees versus unprofitable companies. Disengaged employees drag down overall company performance. 3. Turnover and Training Costs - Disengagement leads to talent loss. There is a huge cost of employee turnover. Further, the cost of fresh recruitment and training is also high. There is also a hiatus or gestation period involved in this process. This is also a serious cost. 4 step approach in Measuring Employee Engagement Step I: Communication - The employer must regularly interact with employees and listen to them in order to identify potential problems and concerns. Regular communication and feedback helps build trust and enables managers to get a feel of the undercurrents. Step II: Measure employee engagement - Employee engagement needs to be measured at regular intervals. Engagement surveys may be designed to know the current levels of engagement and classify employees into various categories of engagement typology. Various kinds of survey tools exist to aid organizations in mapping engagement. Step III: Identify the problem areas - Based on survey findings, problem areas and causes of disengagement may be identified. Step IV: Take action - Once the issues and concerns have been identified, it is important to initiate action plans to take corrective steps. Surveys may be meaningless if the results are not analysed for remedial action. Fostering Employee Engagement • Listen to the employees: Most people want to work for an employer who listens to their problems and takes care of their needs. • Provide clear, consistent expectations: Vague policies and unclear expectations can make employees feel disengaged. Organizations must spell out clearly what they expect from employees. • Give employees a sense of importance: Valuing people and giving them a sense of importance has a greater impact on loyalty and engagement. • Develop opportunities for advancement: The chance to work the way up the corporate ladder is a tremendous incentive for productivity and employee engagement. • Create good relationships: Organizations need to build relationships around trust and authenticity. • Celebrate and reward successes: Managers must set realistic targets, and then reward and celebrate when they are attained. • Create a sense of belongingness: Managers must move from ‘the company’ to ‘our company’ orientation. Employees have to be seen as partners in everything. • Identify causes of disengagement: Organizations need to have smoke detector mechanisms in order to identify causes behind any form of disengagement and take remedial action. Employee Retention and Termination Employee retention - refers to the policies and practices that let employees stick to an organization for a longer period of time. Termination of employment - is an employee’s departure from a job, willingly or unwillingly. Termination Planning - involves assessing termination/separation causes on a periodic basis. Primary causes of termination • Voluntary termination - is termination of employment by the employee (for example, attrition/turnover and voluntary retirement). Past trends and data as well as the present industry scenario helps in anticipating this. Frequent feedback, surveys, and candid exchange with employees helps in identifying the possibilities. • Involuntary termination - is termination of employment as part of the company policy or other circumstances not in the hands of the employee (for example, termination of contract, retrenchment, dismissals, retirements/superannuations, and death). Issues in termination planning and strategy • Termination target selection - In case of retrenchment, it is important to determine who is to be terminated, when, and how. Key employees have to be valued. A lot of organizations follow last-in-firstout (LIFO) method to identify targets for termination. However, inadequate performance report will always be a basis of retrenchment. Dismissals for misconduct will target problem employees after carrying out the due process of disciplinary action. It is important to provide initial feedback or warnings so that the targeted employee knows that he is failing. • Termination notice and etiquette - It involves carefully handling issues such as detailing causes of termination, selection of person-in-charge who gives the notice, timing of termination, and language and timing of notice. It is advisable to at least give the employee some notice period or compensation in lie of that. Due consideration has to be given to legal and ethical issues at the time of termination. • Preparing for reactions - Often employees react in unexpected ways after hearing about their termination. They may become violent or agitated. Companies should try to be sensitive to how they might be feeling but not get swayed emotionally. Care has to be exercised that the employee’s impulsive reactions may not cause dismay among others. • Informing the team - Once it is decided to terminate an employee, it is important to inform the team or unit about the action as well as intimate them about plans for filling the vacancy. The staff will appreciate being kept in the know so that they can adjust their priorities as necessary. Issues in termination planning and strategy (continued…) • Compensation and benefits of separation - Employees should be handed the benefits they are entitled to—often called a severance package. This should be done fairly, judiciously, and as compassionately as possible. In case of retirement, passing on retirement benefits may take place. In case of termination by death, compensation may be given to family, as ordained by the company policy. • Handing over charge - Employee may be asked to hand over the charge to a designated person, often the supervisor. It may involve handing over all documents and possessions. • Protecting data - One should make sure that adequate security measures are taken after terminating any employee. Before the employee leaves the premises, any keys or company document or property must be returned immediately. Moreover, changing any necessary passwords or access code information is essential. • Exit interview - An exit interview, especially in the case of voluntary turnover, is important. This helps gain insights into the employee’s perception of his work, team, and the company. It also helps get feedback about potential problems at the workplace. • Post-termination formalities and strategies - Termination does not always involve complete severing of ties. Some high-performing employees who are retiring may be offered extensions. Improving Employee Retention • Strategic HR planning and staffing - A carefully designed staffing approach helps hire the right people with the right skills. When there is a match between people and the organization, it helps improve retention rates. • Onboarding and orientation - Every new hire should be oriented to fit with the organization’s culture. Right onboarding and orientation helps acclimatize the incumbent to the organization. Pairing new employees with mentors helps in ensuring that the employee feels comfortable in the new settings. Mentors can offer guidance and be a sounding board for newcomers. • Recognition and rewards systems - Every person wants to feel appreciated for what he/she does. It is important to show appreciation to employees. Both monetary and nonmonetary rewards are important. These recognition programmes go a long way in arresting employee turnover. • Work–life balance - A healthy work–life balance is essential for employees. Organizations need to have in place work–life balance policies. Flexible work arrangements, time-offs, vacations, recreation, child care support, and elderly care support are some of the work–life balance initiatives. Improving Employee Retention • Learning and development - Employees always look forward to learning opportunities and possibilities of career advancement. Organizations need to invest in their employees’ professional development and provide opportunities for them to grow. • Communication and feedback - Keeping open lines of communication is vital for employee retention. There must be upward, downward, and lateral communication. A culture of open communication and feedback builds trust in the system and helps improve retention. • Fostering teamwork - When people work together, they can achieve more than they would have individually. Fostering a culture of teamwork and collaboration that accommodates individuals’ working styles encourages everyone. It is also important to celebrate major milestones for individuals and for the team. Thank You!
