Balance of Power in Employment Relationships
Introduction
Workplace relations are a significant aspect of most people’s lives. Many individuals spend a large duration with fellow employees and colleagues than with their families, and consequently, association with colleagues has a noteworthy influence on the well-being. For this rationale, many broadminded individuals argue that long-term employment contracts are unacceptable, as they leave employees with poor exit alternatives as well as working conditions. The concept is that workers should have the liberty of receiving employment contracts because the relationship is mutual. On one hand, without contracts, employers have the chance to sack any employee while on the other hand; employee can also quit their jobs without prior notice. However, the relationship between the employee and employer is somewhat skewed in favor of the manager for several reasons. One, they have far superior authority and influence and two; employers have the advantage of networks and experience. The company under examination in this essay will be Chevron PLC. Even though there is no specific, inclusive description of power, it can be considered as the capability to inflict one’s interest on others, even if those people showed aspects of resistance. Power within interpersonal relationships originates from the capacity of one party to inflict expenses on another. The motivation to comply with implicit terms of a relational agreement can be considered as the power of each party to restrain the conduct of the other, comes from the ability of both parties to enforce contract termination expenses on the other. It is important to know that power derives from the apparent capability and keenness to inflict costs. Different aspects of the organization such as ethics, values, structure and culture contributed towards influencing the employment relationships in the workplace (Pollert & Charlwood 2009).
Organization Structure and Impact on Employment Relationships
Chevron PLC has an organizational structure that is characterized by a panel of board members that are coordinated by two co-chairmen. This type of structure distributes the power across several sources instead of concentrating the authority in one center. By distributing the power in several board members, this affects the balance of power between the employees and the employers management (Prior, Taylor, Llewellyn-Thomas, Fevre, & Nichols 2009). The decisions made by the employers become less unpredictable and irrational due to the increased consideration by different power sources among the management alone. Chevron PLC has experienced high levels of employee satisfaction and cooperation due to the carefully deliberated decisions made by the board members (Nickell, Nunziata & Ochel 2005).
The type of organizational structure also influences the nature of the relationship between the employee and the employer both positively and negatively. Low trust organizations have little or no contact with their employees and mainly rely on coercion and incentives to create motivation among its workers. Management handles proposals and ideas in a top down fashion that leaves no room for employee contribution. More importantly, the employers use their power to hire and fire as the negotiating factor in keeping employee activity in check. It therefore is understood that any industrial or trade union activity is discouraged and mitigated in such organizations (Ram & Edwards 2010). Consequently, the balance of power is greatly skewed in favor of the employer. Conversely, in high trust organizations, the employers and employees are treated as equally valuable contributors towards realizing the company’s objectives (Mahajan 2005). The sharing of communication and feedback is mutual in such situations. The subject of arbitrary dismissal or interference with the remuneration terms is a hardly ever witnessed in such establishments. This is the current situation in Chevron PLC where the remuneration terms are deliberated by a joint team of trade unions and the employer (Fevre, Nichols, Prior & Rutherford 2009). In the process, the balance of power is restored to equilibrium.
The code of ethics in an organization also greatly affects the nature of the relationship between employers and employees. In the conventional sense, these code of ethics stand for a set of principles that have been formulated by different stakeholders and parties with the intention of streamlining the procedures and relationships within the formal workplace (Fevre 2007, Manning 2003). Consequently, these codes of ethics control the behavior of an employer towards their employees and vice versa. Some of the significant ways through which code of ethics achieve this feat include prescribing the procedures to be followed in several corporate events and processes such as appointment, promotion and demotions (Forth, Bewley, & Bryson 2006). They also define the responsibilities of each party thereby making it relatively easy toward blame and penalties in the workplace.
Trade Unions and Activity
For the employee, the employment opportunity is typically the only source of earnings. Losing the career means losing all of their income. In addition, because the typical worker barely survives on a monthly basis and this contributes greatly towards the uneven bargaining power between the employer-employee relationships. It is much more difficult for an employee to get a new job with another employer than vice versa. Furthermore, being sacked from a job lowers the reputation and qualification of the employee. The only situation where the employer and the employer experience almost similar consequences involve union activity particularly strikes (Forth, J, and Millward 2004). Conflict within Chevron PLC Company has become perpetual and distressing to an extent that it has restricted the development of some organizations in Europe (Edwards & Wajcman 2005). In many organizations in Europe currently, intrapersonal and interpersonal conflict consume the larger part of organizational time and focus that companies have managed to convert conflicts into the main subject matter (Brown, Bryson, Forth & Whitfield 2009).
The relationship between employers and trade unions is somewhat more complex and evenly matched than the previous one. Backed by legislation specifically the Labor Act, trade unions serve to introduce an aspect of equilibrium between capital and labor (Christensen, Lentz, Mortensen, Neumann & Werwatz 2005). When companies and employers are expected to comply with the procedures, trade unions are entitled to change the working environment for employees in several ways. These changes include setting new standards for performance among employers as well as setting codes of conduct for member’s employees. All these procedures conducted by trade unions serve to benefit employees in two major ways: employees are protected from arbitrary dismissal as well as being subjected to unjust labor practices. The Labor Acts allows for equality in the employer-employee relationship by introducing a framework where both parties operate under a similar set of rules, strive to accomplish organizational goals and work fairly (Taylor 2008).
The undesirable aspect of industrial relations that is normally exploited by trade and industrial unions is strikes. The strike illustrates a collapse in the amicable relationship between the employer and the employee embodied by the labor union. Strikes are the most explicit and noteworthy feature of industrial conflict. However, they form only a small part of the conflict. Most strikes are created by efforts from either the union or employees with the intention of shifting the bargaining power of the other faction. When a strike is properly applied to solve the demand of the workers, it can coerce employers to give in to the wants of the employees. Industrial actions can inflict excessive costs and thereby convince them to arrive at an agreement. A strike can be used to cause a modification in the bargaining structure and to win significant demands for workers (Grimshaw & Rubery 2010).
Balance of Power
Academics have conceptualized several ways of explaining the employee-employer relationship. Conventional economics perceives both parties as engaging in a mutual agreement to offer services and skills in exchange for financial and other rewards. However, the theory that best describes the relationship between employers and employees is the pluralist industrial relations approach. In pluralism, the organization is regarded as a unit containing influential and contradictory sub-groups for instance, trade unions and management. This approach perceives conflicts in interest and differences between employers and employees over the allocation of profits as customary and unavoidable. As a result, the role of employers concentrates more on negotiation and persuasion rather than enforcing regulations in the workplace. Trade unions are considered the rightful representatives of the labor force. Disagreements were handled through collective bargaining, were not necessarily perceived as a negative aspect, and could be manipulated towards making positive modifications (Kersley et al 2006).
A successful relationship between employers and employees entails reaching a balance of interests. From the employer’s perspective, industrial associations involves having the privilege of managing – the capability to plan for the future success of the company, to maximize profits and to motivate its employees constantly. From the employee’s perspective, the main concern is to secure the best working and living conditions. In cases where employees are dissatisfied with the working conditions, there is a consequent high labor turnover, poor timekeeping, and increased instances of absenteeism (Doherty 2009). This dissatisfaction may also present itself in the form of slothfulness among the workers, dismal performance, and intentional time wasting (Dickerson & Steward 2009).
Industrial unions and employers have a propensity of having contradictory opinions because of the discrepancy between the expectations of employers and workers in organizations that regularly creates conflicts. Conflict is a natural invariable phenomenon in any manmade organization. It is so omnipresent in the society that it has been considered something distressing, atypical, dysfunctional and despicable; nonetheless, it could be a predecessor of constructive change if beneficially handled (Keep, Mayhew & Payne 2006). Basic economic examination proposes that for so long as an employment association remains fiscally feasible, both parties to the principal contract have some level of influence to coerce the other to conform with the openly or silent agreed terms. This is favorable to resourceful employment of labor in production (Kaufman 2004). If an employment relationship stops being economically viable that is, one of the parties does not enjoy the contracted benefits then the influence of one of the parties to manipulate the actions of the other disappears (Dean & Liff 2010).
While this may be considered a possible source of power imbalance, it is symmetric for both parties. Additionally, it has the socially and economically desirable effect of creating authoritative and continuing motivation for people to distribute their labor and other resources to their most esteemed uses. An employer’s authority to administer an employee in accomplishing tasks might be considered as comprising of lop-sidedness in power that is innate in employment relationships. However, as addressed later, the power to direct is relinquished willingly by workers and cannot be categorized as pathological (Clark & Postel-Vinay 2005). It is an advantage for both parties. In short, while from an economics viewpoint, the authority of actors in employment relationships to manipulate each other’s actions has important repercussions. The employee’s apparent ease in getting a new job, in the same office they earlier lost their job offers an indicator of the position of the balance of power in respect to the control of the external labor market (Cahuc, Pierre & Zylberberg 2004).
Effect of External Factors on the Organization
For a long time, the government has been a key player in influencing the nature of relationships between employers and employees. Other factors include the type of labor legislation, the behavior of the economic and political class, and economic management at the national level as well as the reallocation of wealth within the society. It is imperative to note that all these factors affect both workers and employers and while others may directly affect the organization, others influence social expectations (Bryson & Forth 2009; Roscigno, Hodson & Lopez 2010). The European Union has established a social policy that seeks to foster increased sharing of roles among workers and employers in areas including working conditions, remuneration and other minor areas. Dubbed as the ‘co-determination’ policy, the main concept was to create harmony and establish principles that would guide the associations. Other policies initiated by the state are normally directed towards developing increased employment opportunities and growing the economy with the intention of offsetting the power balance dominated by employers. The intention behind the policies is to empower most workers and give them a promising environment to apply their expertise and effort.
Rayasam (2008) stated that the origins of industrial conflict in Europe were caused by the indifferent attitude of the federal government and employers in answering the demands of the labor force or handling their demands with humor. Another major factor has been the non-recognition of political parties as an instrument for harmonizing potential disagreements between the employers and the labor force (Hudson 2006). Rayasam also argued that a large amount of union leaders is politically inspired by generating a massive case with the purpose of gaining trivial recognition. Usually, this creates confusion within the organization when they focus on inconsequential matters to drum up their own support (Acocella 2007). Changes in technology have also contributed greatly towards diminishing the number of employees in different industries. This in turn affects the nature of the relationship between employees and employers. Technology creates an alternative that promotes lower remuneration rates for workers as they take up jobs for many individuals. Conversely, technological developments have transformed several industries into capital-intensive sectors thus making the value of employees go higher. Lastly, globalization has also introduced several elements such as awareness of human rights and adjustments in minimum wages that have shaped the workplace environment and greatly restricted the employer’s activities (Brown, Charlwood, Forde, & Spencer 2006).
Roles and Balance of Power
Partly due to their waning membership of employees in trade unions, the resultant institutions have considerably diminished power and influence in determining salaries and working conditions for two decades although some sectors still experience a high amount of union activity. For instance, covered in the UK law, employers are obligated to acknowledge trade unions in salary and employment deliberations when the bulk of the labor force demands representations and has made a vote for it.
Bargaining Power in Employer-Employee Contract Negotiation
Employee-employer relationships within the workplace are highly dynamic and this means that at any one moment, there is a significant number of employee seeking positions and an almost similar number of employers looking for workers. Using the above example, it is almost impossible for either party to impose any demands or expense on the other. This statement is difficult to accept for economists who wrongly assume that employers hold the upper hand in the power scale as they have access to financial resources. If this were true, then large employers would have the opportunity to coerce employees into poor working conditions (Budd, John & Devasheesh 2010). However, both large and small employers suffer from industrial action in equal measure. Economists also argue that most employees are faced with non-negotiable job opportunities presented by employers as a sign that the management has the upper hand in the power balance. All employer always bear in mind that workers who believe that their working conditions are too extreme, compared to the unspoken pact on the amount of contribution or other unconditionally agreed terms, can give up their positions, thereby inflicting enrollment and training expenses on the employer and, if the uncertainty is confirmed, hidden costs on the reputation.
These sequences of events have a propensity to restrain employers from imposing unwarranted demands on the labor force. Outstandingly, because severance on the contract has a damaging effect on both parties, they each have reasons not to apply their influence erratically. This is usually the result even in cases where the expenses that one party can inflict on the other are significantly higher (Abowd & Kramarz 2003; Tribunals Service 2009). Both parties are bound to endure losses whenever a practicable employment relationship is ended. For this reason, it can be safely concluded that there is no natural imbalance of power. It is significant to point out that employer’s ability to inflict expenses on a worker is closely related to the level of unemployment. This is important, because conventions that have the unintentional consequence of escalating unemployment also have the unplanned outcome of raising the level of termination costs for employees, thereby providing employers with more range to misuse employees. The labor markets acts as the only sure way of protecting employees from the ravaging effect of employers.
The existence or lack of a written contract of recruitment has the effect of affecting the balance of power in the employment relationship since the presence of a written contract is a significant factor in assisting to establish whether an existing worker can be considered a legitimate employee and therefore entitled to take advantage of legal employment rights (Bacon 2008). Workers employed without a written contract have a difficult time acidifying their status and this may draw attention to their susceptibility to unfavorable treatment. In the same way, whether an employment relationship was expected to be provisional or enduring is a relevant factor. Employers will definitely be expected to possess a superior degree of influence in relation to provisional workers than on employees having fixed contracts, since temporary personnel are reliant on the employer to take up new contracts at the expiry (Budd 2004).
Variance of Balance Of Power within the Organization
Chevron PLC adopted a power culture that concentrated the authority in one leader particularly the CEO. Such leaders act in a unidirectional manner with the best intentions of the company first. This type of power culture is very efficient if the CEO is a motivated, experienced and skilled individual (Epstein 2005). However, such kind of leaders may also engage in political games or become overwhelmed with responsibilities. The overall function of a single employment contract is to restrict the conduct of both the employee and the employer and, in particular, to discourage one party from exploitatively misusing the other. The concept behind a long-term employment relationship is the steadiness of the fundamental contract.
Conclusion
Reflect on the repercussions of an intrinsic power imbalance that permit company owners to modify unilaterally the conditions of long-term employment contracts. Utilizing this power to lower labor expenses would necessarily augment the employer’s profits. If all employers were unselfish in that they would be prepared to relinquish profits to improve workers’ welfare, then the supposition of power imbalance could possibly be consistent with the noted stability of ongoing employment contracts. Nonetheless, if even several employers, while pursuing increased profits, decided to implement their power by unilaterally trimming wages or other conditions of employment, the cost benefits present to these profit-maximizing companies would allow them to eradicate unselfish employers out of operation. Therefore, balance of power in employment relationships is naturally inclined towards employers and only profit-seeking employers are able to survive.
References
Abowd, John M and Kramarz, Francis, 2003, ‘The costs of hiring and separations’, Labour Economics, 10 (5), 499–530.
Acocella, N, 2007, Social pacts, employment and growth: a reappraisal of Ezio Tarantelli’s thought, Heidelberg: Springer Verlag.
Bacon, N, 2008, “Management strategy and industrial relations”, The SAGE Handbook of Industrial Relations, London: Sage.
Brown, A, Charlwood, A, Forde, C, and Spencer, D, 2006, Changing job quality in Great Britain 1998-2004.
Brown, W, Bryson, A, Forth, J, and Whitfield, K, 2009, The Evolution Of The Modern Workplace, Cambridge.
Bryson, A, and Forth, J, 2010, Union Organization and the Quality of Employment Relations, London: Trades Union Congress.
Budd, John W, 2004, Employment with a Human Face: Balancing Efficiency, Equity, and Voice, Cornell University Press.
Budd, John W, and Bhave, Devasheesh, 2010, “The Employment Relationship,” Sage Handbook of Handbook of Human Resource Management, Sage.
Cahuc, Pierre and Zylberberg, Andre, 2004, Labour Economics, Cambridge Mass: The MIT Press.
Christensen, BJ, Lentz, R, Mortensen, D, Neumann, GR and Werwatz, A, 2005, ‘On-the-Job Search and the Wage Distribution’, Journal of Labor Economics, 23 (1), 31–58.
Clark, Andrew and Postel-Vinay, Fabien, 2005, ‘Job Security and Job Protection’, Institute for the Study of Labor IZA Discussion Paper No 1489.
Dean, D, and Liff, S, 2010, “Equality and diversity: the ultimate industrial relations concern”, Industrial Relations: Theory and Practice, 3rd edition, Oxford: Blackwell.
Dickerson, A, P, and Steward, M, B, 2009, is the public-sector strike prone, Oxford Bulletin of Economics and Statistics, 55 (3).
Doherty, M, 2009, When the working day is through: the end of work as identity? Work, Employment Society, 23; 84.
Edwards, P, and Wajcman, J, 2005, The Politics of Working Life, Oxford: Oxford University Press.
Epstein, Richard A, 2005, Is There Unequal Bargaining Power in the Labour Market? Wellington: New Zealand Business Roundtable.
Fevre, R, 2007, Employment insecurity and social theory: the power of nightmares, Work, Employment & Society, 21 (3), pp. 517-535.
Fevre, R, Nichols, T, Prior, G, and Rutherford, I, 2009, Fair Treatment at Work Report: Findings from the 2008 Survey, 23 (1), pp. 67-198.
Forth, J, and Millward, N, 2004, “High involvement management and pay in Britain”, Industrial Relations, 43, 1: 98-119.
Forth, J, Bewley, H, and Bryson, A, 2006, Small and Medium-sized Enterprises: Findings from the 2004 Workplace Employment Relations Survey, London: Department of Trade and Industry.
Grimshaw, D, and Rubery, J, 2010, “Pay and working time: shifting contours of the employment relationship”, Industrial Relations: Theory and Practice, 3rd edition, Oxford: Blackwell.
Hudson, M, 2006, The Hidden One-in-Five: Winning a Fair Deal for Britain’s Vulnerable Workers, London: Trades Union Congress.
Kaufman, Bruce E, 2004, Theoretical Perspectives on Work and the Employment Relationship, Industrial Relations Research Association. 17 (2), pp.130-29.
Keep, E, Mayhew, K, and Payne, J, 2006, Skills Revolution to Productivity Miracle – Not as easy as it sounds? Oxford Review of Economy Policy, 22 (4), pp.34-98.
Kersley, B, Alpen, C, Forth, J, Bryson, A, Bewley, H, Dix, G, and Oxenbridge, S, 2006, Inside the Workplace, Workplace Employment Relations Survey, Routledge.
Mahajan, S, 2005, “Concentration ratios for business by industry in 2003”, Economic Trends, 624: 52-62.
Manning A, 2003, Monopsony in Motion: Imperfect Competition in Labor Markets, Princeton, NJ: Princeton University Press.
Nickell, S, Nunziata, L, and Ochel, W, 2005, ‘Unemployment in the OECD since the 1960s: What do we know?’ Economic Journal, 115, 1–27.
Pollert, A, and Charlwood, A, 2009, “The vulnerable worker in Britain and problems at work”, Work, Employment and Society, 23, 2: 343-362.
Prior, G, Taylor, L, Llewellyn-Thomas, S, Fevre, R, and Nichols, T, 2009, Fair Treatment at Work Survey 2008: Technical Report, London: Department for Business Innovation and Skills.
Ram, M, and Edwards, P, 2010, “Industrial relations in small firms”, Industrial Relations: Theory and Practice, 3rd edition, Oxford: Blackwell.
Rayasam, R, 2008, ‘Why Workplace Democracy Can Be Good Business’, U.S. News & World Report, pp, 389-410.
Roscigno, V, Hodson, R, And Lopez, S, 2009, “Workplace incivilities: the role of interest conflicts, social closure and organizational chaos”, Work, Employment and Society, 23, 4: 747-773.
Taylor, S, 2008, Defining and Researching ‘Worker Vulnerability’, unpublished research paper, Department for Business, Enterprise and Regulatory Reform.
Tribunals Service, 2009, Employment Tribunal and EAT Statistics GB: 1 April 2008 to 31 March 2009, London: Tribunals Service.
Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.
[order_calculator]