HRM107 GROUP REPORT

Tutor – Renee Cunial

BY

MATTHEW LEE

ACHILLE COTESSAT

MIKAEL RIMLAND

(Total Word Count – 3108)

We as On-Target Consulting have prepared this report for Mr Anderson of Matrix Holdings to advise

on the following issues:

1. What are the main types of “personal compacts” made between employees and an

organisation? What role does the Human Resource Management (HRM) function play in

shaping these compacts and why is this important?

2. Mr Anderson believes that HRM is nothing more than a management system to enhance

control over workers. Do you agree with his view? Why?

3. Does the approach to collective bargaining found under the Fair Work Act 2009 (Cth) ensure

employers and employees will always be able to negotiate working conditions effectively? In

your answer, consider the relevant provisions of the Act discussed in lectures and in your

textbook.

Part 1 - Written by Matthew Lee - 45162654

(Word Count – 1059)

1. What are the main types of “personal compacts” made between employees and an

organisation? What role does the Human Resource Management (HRM) function play in

shaping these compacts and why is this important?

1.0 Executive summary:

This report will identify and expand upon the three main types of personal compacts which exist

within the interdependent employment relationship. This report will also recognise the role that

human resource management plays in developing and establishing the interconnected contracts that

exist between the employers and employees. And finally, this report will highlight the value that

strong personal compacts have upon improving function and productivity within a working

organisation; whilst providing recommendations to consolidate these compacts.

1.1 Corporate descriptor:

On-Target Consulting have prepared this report for Mr Anderson of Matrix Holdings, aiming

to identify and analyse the benefits, limitations and outcomes that strong personal compacts can have

on improving the relationship between the employee and organisation. These compacts are strongest

when intertwined, but can be separately identified as the:

Legal compact – legal employment contract is disclosed in written contracts, legislation or

agreements acknowledging the desired expectations and obligations between the employer

and employee, it must satisfy the minimum legal requirements during the proposed period

(Pryor, 2018, Lecture 4).

Social Compact – encompasses the employee’s beliefs, values and cultural norms regarding

expected behaviour within the workplace (Aycan and Kabasakal, 2006, p.471)

Psychological Compact – address the mental ‘models’ entailing what the employee expects

the employers to fulfil in return for working efforts (Restubog et al., 2013, p.673)

2.0 Legal Compacts:

Legal compacts can be seen as the base level compact, where expectations within the

organisation are clearly set out and must be agreed on by both parties. The legal contract clearly states

the relevant laws to be followed by the employee, whilst ensuring the employee is aware of the

consequences if they fail to abide by the law (Courpasson and Dany, 2003, p.1247). Due to the risk

that illegal behaviour extends upon the entire organisation, HR practitioners must be familiar with the

legal base framework in order to protect the company and its reputation. As a result, HR usually

produce the employment contract before hiring new staff, this not only legally protects the company,

but also guarantees a base level of obedience on the employee’s behalf, at the same time, safeguarding

against the unfair exploitation of the employee (Courpasson and Dany, 2003, p.1247). Therefore,

creating the legal compact within an organisation has many benefits regarding the legal and fair work

within an organisation, however is limited in the ability to regulate the employee’s productivity levels.

The legal compact within the workplace is an invaluable base within every organisation, creating a

mutual trust and understanding of the obligations that will be followed by the employees and

employers (Pryor, 2018, Lecture 4). Although, the legal compact only really address’ the formal and

physical behavioural aspects, by overlaying strong social and psychological compacts, the

organisation can capitalise on improving workplace function.

3.0 Social Compacts:

The social contract within a workplace can be seen to link strongly with the organisational

culture, shaping the way employees and employers interact. Aycan’s study in 2006 found that

companies upholding a paternalistic structure with strong social compacts were more likely to

generate a more positive response to organisational change. The companies with stronger social

contracts were also seen to be more focused in the workplace, whilst displaying greater attention to

high quality output (Aycan and Kabasakal, 2006, p.493). In contrast, but sharing the same outcome,

Courpasson and Dany’s study in 2003 established that working as equal partners resulted in more

empowered and committed work in the company. Consequently, both studies demonstrate that

regardless of the organisational structure, a sense of social compact in the employment relationship

proves to result in higher productivity and drive to succeed as a company. Generating a social

compact through the use of HRM can be controlled by the culture of place, therefore, it is important

that the employees feel valued. To build a social compact when HRM are forced to make changes, the

employees must be treated fairly, and in their best interest building the respect that is required and

makes the individuals feel appreciated in the workplace. As a result, the employees often reciprocate

with higher working efforts. Therefore, the social compacts within a company can strengthen the

culture, and increase the productivity from employees, but can be more difficult to establish given the

contract isn’t in writing and requires the involvement of a large portion of the company.

4.0 Psychological Compacts:

Maintaining strong psychological compacts significantly reduces the risk of employees

undertaking organisational defiance (Restubog et al., 2013, p.675). The study shows a positive

correlation between breaches in psychological contract leaving the employee’s feelings violated,

resulting in behavioural changes that align with job dissatisfaction. Consequently, making clear the

importance of management acknowledging the hard work of employees, in order to maintain the

reciprocal cycle, encouraging and rewarding hard work. HRM can construct this contract rewarding

hard work and by ensuring the communication channels from supervisor to employee is open,

allowing for opportunities to build a more familial relationship. This familial relationship was seen to

produce far less breaches in psychological contract, in turn, affirming that employees may be

generally more productive and less likely to undergo in divergent conduct (Restubog et al., 2013,

p.684). Although this compact is limited as it is impossible for management to never breach the

psychological contract, it is important that employees service a realistic mindset that management will

try to break compact as infrequently as possible, rather than never breaching the compact. Through

open communication, those of higher status may be able to discuss the breach, as often large changes

required to stabilise a company may involve larger alterations than lie within the day-to-day

psychological contract formed. The psychological compact can be seen as the strongest personal

compact, because of the involvement of the underlying presence of the social compact, and the

influence on both workplace behaviour and employee cooperation within the working environment.

5.0 Conclusion:

To conclude, the legal, social and psychological compacts are integral parts of any company and can

be managed by HRM to increase employee productivity and commitment, whilst preventing illegal or

deviant behaviour from occurring. By establishing, strengthening and maintaining strong personal

compacts, Matrix Holdings should enjoy greater cooperation, collaboration and success as a company

through understanding the benefits and limitations of each individual compact. On-Target Consulting

recommends the interweaving of these individual compacts to strengthen and generate strong personal

compacts consolidating a positive employment working relationship.

Part 2 - Written by Achille Cotessat - 44466781

(Word Count – 1020)

2. Mr Anderson believes that HRM is nothing more than a management system to enhance

control over workers. Do you agree with his view? Why?

1.0 Introduction:

Human resource management is not as simple as having only the duty to control workers. Although

this is an important and difficult task, the functions of HR managers are diverse and depend of the

type of organisation. The responsibilities of HR managers are often distributed between strategic,

operational and functional roles.

2.0 HRM Risk and Responsibilities:

In the first part, we will focus on the challenging controlling aspect of an HR manager and on

the risks that this responsibility involves. Controlling is an operational organizational practice and

managers have many different choices and strategies to enhance the control over workers.

In a context of performance management systems, managers and employees could be focused on

performance review to enhance the control of the productivity.

Managers have the opportunity to see the periodic employee performance review and exercising a

pressure on workers. It is almost assured to be a cause of dissatisfaction and won’t have positive

results. Furthermore, Most HR executives think that many of their managers are not brave enough to

provide feedback on performance to workers. On the other hand, according to M. T. Matteson and J.

M. Ivancevich 1989: “organizational practices in human resource management can create supportive

work environments that reduce the negative effects of stress”. So, we should not reduce the role of a

manager on only controlling but make it deal with the whole organizational practices that include

controlling. We can see that controlling wisely employees, with reflected organizational practices lead

to positive impacts on organizations. Controlling is effective, but a HR manager have to choose the

most appropriate method to do so, because lack of control or too strict control often mean a decrease

in productivity of workers.

3.0 The Organisational Environment:

Secondly, the environment and the nature of an organisation define the visions and skills

needed by managers. Political factors, government legislations, ownership, history or organisational

size are example of what affect the way of managing a company.

But, it is true that some main functions of a HR manager are significant in all types of companies,

such as ensuring that organisations have the right number of employees at the good places to meet

present and future needs. As stated by Frenkel et al., 1999, HRM have to be focused on the economic

environment of today linked to the growing technological aspects: “The knowledge economy is now

an integral part of our economic systems, with a demand for higher levels of thinking and analytical

skills, as well as for more information technology and social and interpersonal skills”. Because of the

growing new technologies, the spreading of knowledges, the mutations of the labor market and of the

skills needed, HR manager have to be aware of the evolution of the economy and must adapt the

organizational system to the society. HR Managers must deal with many growing issues such as talent

attraction selection or workplace negotiation process.

4.0 HRM Planning:

One of the most important function of HRM is planning. Organisations need effective and

efficient programs for being able to coordinate their needs to the reality. In more, HR managers

should be aware of the economic fluctuations of the labour market, because needs of organisations

have to be interrelated with the market for effectively matching supply and demand of labour.

Long-term strategies must be taken in a society in constant mutations. Therefore, HR manager shall

be visionary to deal with the future, strategies often take a long time to be achieved. Failing to plan is

always a loss of efficiency. Health human resources planning become something meaningful today.

According to Amanda Glassman, Loren Becker, Marty Makinen and David de Ferranti in 2008:

“Human resources are crucial for the provision of health care and represent the largest single use of

public spending on health in developing countries” It is a challenging role because HR manager plans

should consider population health needs and institutional demands for HRH hiring.

Workers needs physical, psychological and emotional security in compagnies. That is why HR

managers are responsible to hire the right number of employees to provide individual and

organizational health objectives. The establishment and maintenance of a healthy and safe work

environment for all employees is required by Australian law, but it involves a huge cost in more of the

cost allocated for the traditional HR activities. Finally, we can say that workplace health and safety

issues are linked to most of the HR functions: job design; quality of life in work programs;

recruitment, selection, training and development; performance management and remuneration

systems.

5.0 Strategic Human Resource Planning:

The last paragraph will deal with the idea that Strategic human resources management

(SHRM) include new functions that have to be considered by HR managers.

For Bill Reffett, senior vice president of personnel at the Grand Union, a 20,000-person supermarket

operation on the East Coast, strategic human resources management means “getting everybody from

the top of the human organization to the bottom doing things that make the business successful.”

Then, SHRM is about integration and adaptation, those roles are far from only controlling people and

emphasize that managers are not anymore only close to the directors but are also close to the

employees. Contrary to HRM, all employees are affected by strategic human resources management,

they help to analyze and define the new roles they would play linked to the strategic business needs.

Moreover, HR management is reinforcing role behaviors. HRM have an impact on the future and the

improvement of companies. Managers must think about personal details as maternity leaves options

and how to improve them. They can redesign the recruitment, the trainings and the career

management to suit the strategic needs.

6.0 Conclusion:

To sum up, we can say that Mr Anderson beliefs are wrong, HRM is much more than a management

system to enhance control over workers. The goal of HR manager is to create supportive work

environments, to adapt the organisation to the economic and political changes without skipping the

personal consideration and needs of workers. Therefore, Strategic human resource management

practices are increasing to meet the changing intern and extern requirement of organisations.

Part 3 - Written by Mikael Rimland - 44464037

(Word Count 1029)

3. Does the approach to collective bargaining found under the Fair Work Act 2009 (Cth) ensure

employers and employees will always be able to negotiate working conditions effectively? In

your answer, consider the relevant provisions of the Act discussed in lectures and in your

textbook.

1.0 Introduction:

To ensure one thing will always happen, you need to rule out the possibility of everything else to

happen. In other words, in order to make sure employers and employees will always be able to

negotiate working conditions effectively during collective bargaining, there is a need to rule out any

other outcome. Is this the consequence of The Fair Work Act 2009 (Cth)?

2.0 Collective Bargaining in Good Faith:

Bargaining in good faith is a requirement provided under the Fair Work Act 2009 (Cth)

regarding collective bargaining which means everyone involved in the bargaining process, including

bargaining representatives, are required to bargain in good faith. This is established to promote a

productive and cooperative bargaining process between the parties involved (Fells, Donella and

Leighton 2018). Whether good faith bargaining actually takes place in an enterprise negotiation

depends on the eye of the beholder, but the provisions seems to be working rather well (Fells, Donella

and Leighton 2018). According to Fells, Donella and Leighton (2018) their research suggests that the

information-related provisions of the Fair Work Act 2009 (Cth) promotes a positive behaviour on a

representative’s approach to the bargaining, facilitating a more educational rather than competitive

approach. This encourages workplace cooperation (Fells, Donella and Leighton 2018), and could

therefore conduce to effective collective bargaining since it removes the incentive of being

competitive towards the other party. Though this undeniably is a step in the right direction, Fells,

Donella and Leighton (2018) goes on by saying there is need for more facilitative approaches in order

to enhance this positive effects on the good faith bargaining provisions. Another positive outcome for

the collective bargaining process is the Fair Work Act 2009 (Cth) implementation of power to the Fair

Work Commissions to make majority support determination – forcing the employer to bargain even

though they refuse, as long as the majority of employees wants to bargain collectively (Forsyth et al.

2017). Undeniably this enforces the employees’ power, providing a promise that the employer cannot

simply hide from a problem that the majority of employees experience. This enables the whole

bargaining process and consequently streamlines the making of an enterprise agreement, removing the

need for employees to take other measures such as industrial actions.

However, the indications that collective bargaining needs further adjustments in order to

provide effective results, are still present. In contrast to Fells, Donella and Leighton (2018), Walpole

(2016) focus not on the relationship nor behaviour of the representatives facilitated by the Fair Work

Act 2009 (Cth), but how employee involvement is included in the process. Their analysis suggests

that the degree of employee involvement facilitated by the Fair Work Act 2009 (Cth) differs between

the two types of decisions that are made in the process – the authorial and the regulatory. Regarding

the authorial decision, employee involvement can vary from communication and consultation to

shared control but does not involve codetermination of the content of an agreement (Walpole 2016).

Involvement in the regulatory decision is structured through voting, and when employees are deciding

whether to engage or not in a proposal, theory suggests employee deliberations would focus more on

the cost of further delays and whether the proposal is below “the worst offer they will accept”

(Walpole 2016). In regards to the good faith bargaining provisions, requirements for attendance and

participation is certainly met, however giving information in a timely manner and responding to

proposals made by other bargaining representatives is something else entirely. The fact that theory

shows employees focus on their lowest acceptable offer gives the other party the upper hand, and the

employees might not be giving genuine consideration to agreements that would benefit them better.

By delaying information to the employees, further advantages can be acquired since this increases

costs for the employees and their lowest acceptable offer will be more tempting to settle with. What is

a timely manner in regards to providing information must vary from case to case given the complexity

of the situation, and this extra room for interpretation and argument might not smoothen the collective

bargaining process. Furthermore, The Fair Work Act 2009 (Cth) seems to value employee vote over

the participation of bargaining representatives when negotiating terms of an agreement (Walpole

2016). This arguably undermines the authority of the representational relationship, and favours the

regulatory decision over the authorial – making potentially deeper involvement secondary (Walpole

2016). Direct involvement in the authorial decisions for employees could contribute to a more

effective process in collective bargaining, making it possible for employees not only to vote on

already made suggestions but also make suggestions themselves, however this is not how the current

process is formed. Furthermore, making every individual able to cast a vote enables individual

incentives in the decision, and the outcome might not reflect the will of the majority. This

empowerment of the individual’s right to make their own choices provided by the Fair Work Act

2009 (Cth), both in terms of agreement making and representation, makes little encouragement

towards settling terms of an agreement through bargaining relations and collective forms of employee

representation (Walpole 2015). As a consequence “the realisation of collective bargaining is passively

left to the choices of employees, employers and their representatives” (Walpole 2015, p. 216), which

once again leads to a process that facilitates but not guarantee effectiveness. The more choices left for

every party involved the less effective the process become, and though the choices empower the

individuals they also come with disadvantages.

3.0 Conclusion:

The Fair Work Act 2009 (Cth) in its current shape does not guarantee employers and employees will

always be able to negotiate terms of an agreement effectively, though the process it provides of

reaching an enterprise agreement to some extent facilitates attributes for effective bargaining. In order

to make sure every negotiation and agreement is efficient, all room for interpretation and flexing of

the provisions must be dealt with. Furthermore, the choices in regards to representation left to

individuals empowers then, but at the same time contributes to a rougher process and inconsistency.

At first look it would seem the Fair Work Act 2009 (Cth) provides the support needed for just and

efficient agreement-making, though a deeper insight shows flaws and provisions that still not provides

the sought-after effect.

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