SCHOOL OF POSTGRADUATE STUDIESFACULTY OF BUSINESS AND MANAGEMENT

MASTER OF ARTS IN HUMAN RESOURCE MANAGEMENT

GBS 521 – INDUSTRIAL SOCIOLOGYMODULE

STAGE I

ELIPHAS MACHACHA(PhD Scholar, UNZA; MSc, Wageningen; BA, UNZA)

Copyright

©2012 University of Lusaka

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without prior permission from the publisher.

Acknowledgements

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The author of this module wishes to thank those below for their contribution to the GBS 521 MODULE:

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Table of Contents

Welcome to INDUSTRIAL SOCIOLOGY – GBS 521..............................................................................6INDUSTRIAL SOCIOLOGY — is this course for you?..............................................................................6Timeframe...........................................................................................................................................6Study skills..........................................................................................................................................6Need help?.........................................................................................................................................8MODULE INTRODUCTION..................................................................................................................9AIM....................................................................................................................................................9OBJECTIVES......................................................................................................................................9ASSESSMENT..................................................................................................................................10REQUIRED READINGS.....................................................................................................................10

UNIT 1: NATURE AND SCOPE OF INDUSTRIAL SOCIOLOGY............................................................111.1 Introduction..............................................................................................................................111.2 Objectives................................................................................................................................111.3 Activity.....................................................................................................................................11

WHAT IS SOCIOLOGY?.....................................................................................................................11INDSUTRIAL SOCIOLOGY................................................................................................................13Summary..........................................................................................................................................20Self-Assessment................................................................................................................................22

UNIT 2: EXPLOITATION AND ALIENATION: KARL MARX...................................................................232.1 Introduction..............................................................................................................................232.2 Objectives................................................................................................................................232.3 Activity.....................................................................................................................................23

LABOUR POWER AND LABOUR: THE DIFFERENCE..........................................................................25Summary..........................................................................................................................................28Self-Assessment................................................................................................................................29

UNIT 3: THE EVOLUTION OF MANAGEMENT...................................................................................303.1 Introduction..............................................................................................................................303.2 Objectives................................................................................................................................303.3 Activity.....................................................................................................................................30

MANAGEMENT IDEAS: YESTERDAY AND TODAY..............................................................................30HISTORICAL OVERVIEW OF MANAGEMENT.....................................................................................31MANAGEMENT'S CONNECTION TO OTHER FIELDS OF STUDY........................................................34MANAGEMENT AND MANAGERS......................................................................................................35WHO ARE MANAGERS?...................................................................................................................35WHAT DO MANAGERS DO?..............................................................................................................36WHAT IS MANAGEMENT?.................................................................................................................37WHY STUDY MANAGEMENT?...........................................................................................................37Summary..........................................................................................................................................38

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Self-Assessment................................................................................................................................40UNIT 4: MANAGEMENT THEORIES...................................................................................................41

4.1 Introduction..............................................................................................................................414.2 Objectives................................................................................................................................414.3 Activity.....................................................................................................................................41

CLASSICAL MANAGEMENT THEORIES.............................................................................................411. SCIENTIFIC MANAGEMENT: FREDERICK W. TAYLOR (1856 – 1915)..........................................422. ADMINISTRATIVE MANAGEMENT THEORY:..............................................................................49BEHAVIOURAL MANAGEMENT.........................................................................................................541. THE HAWTHORNE STUDIES AND HUMAN RELATIONS.............................................................55MODERN MANAGEMENT THEORIES................................................................................................58MANAGEMENT SCIENCE THEORY...................................................................................................60ORGANIZATIONAL ENVIRONMENT THEORY.....................................................................................61EMERGING VIEWS IN MANAGEMENT...............................................................................................65Summary..........................................................................................................................................67Self-Assessment................................................................................................................................68

UNIT 5: HUMAN REOURCE MANAGEMENT......................................................................................695.1 Introduction..............................................................................................................................695.2 Objectives................................................................................................................................695.3 Activity.....................................................................................................................................69

WHAT IS HUMAN RESOURCE MANAGEMENT?.................................................................................69JOB ANALYSIS.................................................................................................................................70RECRUITMENT AND SELECTION......................................................................................................72TRAINING AND DEVELOPMENT........................................................................................................75PERFORMANCE APPRAISAL............................................................................................................77Summary..........................................................................................................................................78Self-Assessment................................................................................................................................80

UNIT 6: INDUSTRIAL RELATIONS.....................................................................................................816.1 Introduction..............................................................................................................................816.2 Objectives................................................................................................................................816.3 Activity.....................................................................................................................................81

WHAT IS INDUSTRIAL RELATIONS....................................................................................................81INDUSTRIAL RELATIONS PERSPECTIVES........................................................................................85INDUSTRIAL RELATIONS SYSTEM....................................................................................................89INDUSTRIAL DISPUTES, THEIR PREVENTION AND SETTLEMENT....................................................90PREVENTION OF INDUSTRIAL DISPUTES:.......................................................................................91COLLECTIVE BARGAINING: WHAT IS COLLECTIVE BARGAINING.....................................................93Summary........................................................................................................................................105Self-Assessment..............................................................................................................................108

UNIT 7: TRADE UNIONS.................................................................................................................1097.1 Introduction............................................................................................................................109

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7.2 Objectives..............................................................................................................................1097.3 Activity...................................................................................................................................109

WHAT ARE TRADE UNIONS?..........................................................................................................109THE STRUCTURE OF TRADE UNIONS............................................................................................110INDUSTRIAL ACTION......................................................................................................................110PROBLEMS OF INDUSTRIAL ACTION..............................................................................................112BENEFITS OF INDUSTRIAL ACTION................................................................................................113HISTORY OF TRADE UNIONISM IN ZAMBIA....................................................................................113Summary........................................................................................................................................120Self-Assessment..............................................................................................................................121

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Welcome to INDUSTRIAL SOCIOLOGY – GBS 521Industrial Sociology is one of the required courses in Master Arts Degree in Human Resource Management curriculum offered at the University of Lusaka. This course is designed to enable you to acquire an understanding of the role of sociology in social relations or industrial relations in organisations. Industrial sociology deals with the sociological concepts that have relevance to industry. The course will give you knowledge and skills of how to find solutions to industrial disputes and industrial unrest; how to reduce the gap between management and workers; appreciate the role and importance of trade unions; how to advise management and government to undertake social security measures to improve labour welfare.

INDUSTRIAL SOCIOLOGY — is this course for you?

This course is intended for people who are pursuing Master of Arts in Human Resource Management or related fields of study at the University of Lusaka.

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Timeframe

How long?

This course is offered in stage one of the study programme. Stage one takes approximately 16 weeks.

Time allocated for this course is 3 hours of lectures per week and one week individual study prior to the final examination.

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Study skills

As an adult learner your approach to learning will be different to that from your school days: you will choose what you want to study, you will have professional and/or personal motivation for doing so and you will most likely be fitting your study activities around other professional or domestic responsibilities.

Essentially you will be taking control of your learning environment. As a consequence, you will need to consider

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performance issues related to time management, goal setting, stress management, etc. Perhaps you will also need to reacquaint yourself in areas such as essay planning, coping with exams and using the web as a learning resource.

Your most significant considerations will be time and space i.e. the time you dedicate to your learning and the environment in which you engage in that learning.

We recommend that you take time now—before starting your self-study—to familiarize yourself with these issues. There are a number of excellent resources on the web. A few suggested links are:

http://www.how-to-study.com/

The “How to study” web site is dedicated to study skills resources. You will find links to study preparation (a list of nine essentials for a good study place), taking notes, strategies for reading text books, using reference sources, test anxiety.

http://www.ucc.vt.edu/stdysk/stdyhlp.html

This is the web site of the Virginia Tech, Division of Student Affairs. You will find links to time scheduling (including a “where does time go?” link), a study skill checklist, basic concentration techniques, control of the study environment, note taking, how to read essays for analysis, memory skills (“remembering”).

http://www.howtostudy.org/resources.php

Another “How to study” web site with useful links to time management, efficient reading, questioning/listening/observing skills, getting the most out of doing (“hands-on” learning), memory building, tips for staying motivated, developing a learning plan.

The above links are our suggestions to start you on your way. At the time of writing these web links were active. If you want to look for more go to www.google.com and type “self-study basics”, “self-study tips”, “self-study skills” or similar.

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Need help?

Help

University of Lusaka

Plot No. 37413, Off Alick Nkata Road, Mass Media P.O Box 36711

LusakaZambia

Phone: +260966418925 or +260978698950 or +260955220025

E-mail: mceliphas@yahoo.comWebsite: www.unilus.ac.zm

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MODULE INTRODUCTION

Welcome to the module on Industrial Sociology.

Industrial sociology is a comparatively new term which gained popularity about the middle of the 20st Century. It focuses on the study of workplace relations and interactions among employees and employers and how these relations and interactions affect efficiency and effectiveness of an organisation. An independent branch of the Science of Sociology, the history of the industrial sociology has been traced to trade studies introduced by Elton Mayo and his associate between 1924 -32: Thus Elton Mayo; a known sociologist has been identified as the father of Industrial sociology.

This course will give you knowledge and skills of how to use sociological perspectives in explaining industrial relations, the study of functions, the of functional groups, analysis of management thought such as bureaucracy, the influence of

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industrialism on the individual, trade unionism and so on.

AIMThe aim of this module is to enable you to acquire an understanding of the role of industrial sociology in finding solutions to many of industrial disputes; stress the role of trade unions in settling industrial disputes; improving the living conditions of workers and labour welfare; helping government to undertake social security measures for promoting labour welfare in society.

OBJECTIVESBy the end of the module you should be able to:

- Propose remedies to problems of industrial society- Increase their scientific knowledge in industrial relations- Appreciate the stability of industrial society- Help in personality integration- Help in familial integration- Help in labour legislations- Help in industrial management - Help in national industrial peace and management- Carry out Industrial planning.-

ASSESSMENTi. Continuous assessment

Two assignments = 20%Test = 20

ii. Final Examination = 60

REQUIRED READINGS

Michael Salamon (2000) Industrial Relations: Theory and Practice. Wilshire: Ashford Colour Press LtD

Raymond A. Noe et al (2008) Human Resource Management: Gaining a Competitive Advantage. Boston: McGraw-Hill

Ricky W. Griffin (2002) Management. New York: Houghton Mifflin Company.

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Robert Kreitner (2007) Management. New York: Houghton Mifflin Company

UNIT 1: NATURE AND SCOPE OF INDUSTRIAL SOCIOLOGY1.1 Introduction

In this unit you will be introduced to the definition of the field of ‘industrial sociology,’ the scope of industrial sociology; the importance of industrial sociology; and the history of industrial sociology.

1.2 ObjectivesBy the end of this unit you will be able to:

Define the term ‘industrial sociology’

Discuss the scope and importance of industrial sociology

Explain the origin of industrial sociology

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1.3 Activity

Let us assume that you are familiar with the term, industry. Take about 5 minutes to reflect and write down anything that comes to your mind whenever you hear people talk about industry. In what ways have ‘industrial’ activities affected you and your community?

DEFINITION: WHAT IS SOCIOLOGY?The science dealing with the origin, evolution and development of human society and its organization, institution and functions, is known as Sociology. Sociology is a social science.

Sociology is the systematic study of the groups and societies in which people live, how social structures and cultures are created and maintained or changed, and how they affect our behaviour. It studies such groups from large-scale institutions and mass culture to small groups and individual interactions.

Society itself consists in the web of social relationships with the combinations and complexities arising from them, as clique (a small group of people who spend time together and do not allow others to join them), groups, associations, institutions, systems, etc.The root or beginning of society is the social relationship which essentially develops on mutual awareness, followed by reciprocal interrelations and interactions. Thus, we may say that strangers do not make society. Like, two students come to college from different areas, different backgrounds and never seen each other in past. Though physically present in college, they have not found occasion to start talking. But when they come close to each other on introduction, the social relationship begins to emerge and may even become more complex when they begin to deal with each other or talk business.

We can study society from different levels:

Microsociology is the level of analysis that studies face-to-face and small-group interactions in order to understand how they affect the larger patterns and institutions of society. Microsociology focuses on small-scale issues.

Macrosociology is the level of analysis that studies large-scale social structures in order to determine how they affect the lives of groups and individuals. Macrosociology focuses on large-scale issues.

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SOCIOLOGY AND PSYCHOLOGY: A COMPARISONAs we noted earlier on, Sociology is part of the family of social sciences that includes psychology, anthropology, geography, political science and parts of history. All Social Sciences are concerned with human behaviour. Although they share the same basic subject matter, each Social Science focuses on a different aspect of behaviour, for example, psychologist are most interested in the internal sources of behaviour; sociologist in the external sources of behaviour. Psychologists study the workings of the nervous system and the effects of neurotransmitters, hormones, or stress on individual. Sociologists look at the workings of society and the effects that social class, gender roles, age, new technologies, changing attitude towards reckless behaviour, or political revolutions have on people. Psychologists focus on personality, that is on the behaviour and attitudes that are characteristics of a person regardless of the situations. Sociologist focus on roles, that is on the behaviour and attitudes that are characteristic of people in a given social position or situation regardless of their individual personalities.

INDSUTRIAL SOCIOLOGY: A BRANCH OF SOCIOLOGY

Definition of Industrial Sociology:

(i) ‘Industrial sociology is the application of the sociological approach to the reality and problems of industry’. -P. Gisbert.

(ii) Industrial sociology centres its attention on the social organisation of factory, the store, and the office. This focus includes not only the interactions of people playing roles in these organisations but also the ways in which their work roles are interrelated with other aspects of their life”

(iii) Industrial sociology is the sociology of industrial relations and industrial activities of man.

Development of Industrial Sociology

As a specialised branch of sociology, industrial sociology is yet to become mature. In fact, Durkheim and Max Weber in their classical styles have made some analysis of industrial institutions. But systematic research in the field has developed only in recent decades. It gained importance about the middle of the present century.

1. Industrial revolution: This is one of the most important factors which

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contributed to the development of sociology as a social science.

The foundation of modern industry was laid by the Industrial Revolution, which began in England in the late 18th and early 19th centuries. It brought about great changes in the social and economic life of the people first in England, then in other countries of Europe and later in other continents.

It had two important aspects:

1. Systematic application of science and technology to industrial production, particularly invention of new machines and harnessing of new sources of power. These facilitated the production process and give rise to the factory system and mass manufacture of goods.

2. Evolved new ways of organizing labour and markets on a scale larger than anything in the past. The goods were produced on a gigantic scale for distant markets across the world. The raw materials used in their production were also obtained from all over the world.

Industrialization threw into turmoil societies that have been relatively stable for centuries. New industries and technologies changed the face of social and physical environment. Peasants left rural areas and flocked to the towns, where they worked under appalling conditions. Cities grew at an unprecedented rate. Social problems become rampant in the teeming cities. The direction of change was unclear and the stability of social order seemed threatened.

The significant themes of this Revolution which concerned the early sociologists were the condition of labour, transformation of property, industrial city/ urbanism and technology and the factory system.

Against such background, some thinkers of that time were concerned about building their society anew. Those who dealt with these problems are considered as the founding fathers of Sociology because they were seriously concerned with these problems in a systematic way. Most notable among the thinkers have been Auguste Comte, Herbert Spencer, Emile Durkheim, Karl Marx and Max Weber. All these pioneers came from different disciplines.

Working Class Life: Life was not easy for those whose labour contributed to the industrialisation process. Usually factory workers were recent arrivals from agricultural areas, where they had been driven off the land. They frequently moved to the city without their families,

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leaving them behind until they could afford to support them in town.

The working conditions were terrible, as were living conditions. The factories were dirty, hot, unventilated, and frequently dangerous. Workers toiled long hours, were fined for mistakes and even for accidents, were fired at will of the employer or foreman, and suffered from job insecurity. They often lived in overcrowded and dirty housing. If they lost their jobs, they also lost their shelter.

They had little contact with their employers. Instead they were pushed by foremen to work hard and efficiently for long hours to keep up with the machines. Workers had little time on the job to socialise with others; they were fined for talking to one another, for lateness etc. They often became competitors in order to keep their jobs.

Workers often developed a life around the pub, the café’, or some similar gathering place, where there were drinks and games and the gossip and news of the day. On Sundays, their one day off, workers drank and danced; absenteeism was so great on Monday that the day was called “holy Monday.”

2. Hawthorne Studies: Without question, the most important contribution to the development of industrial sociology and Organization Behaviour field came out of the Hawthorne Studies, a series of studies conducted at the Western Electric Company Works in Cicero, Illinois. These studies, started in 1924 and continued through the early 1930s, were initially designed by Western Electric industrial engineers as a scientific management experiment. They wanted to examine the effect of various illumination levels on worker productivity. The researchers conducted an experiment in which they systematically measured worker productivity at various levels of illumination.

Control and experimental groups were set up with the experimental group being exposed to various lighting intensities, and the control group working under a constant intensity. If you were one of the industrial engineers in charge of this experiment, what would you have expected to happen? That individual output in the experimental group would be directly related to the intensity of the light? Seems perfectly logical, doesn't it? However, they found that as the level of light was increased in the experimental group, output for both groups increased.

Then, much to the surprise of the engineers, as the light level was decreased the productivity decrease was observed in the experimental group only when the level of

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light was reduced to that of a moonlit night. What would explain these un-excluded that illumination intensity was not directly related to group productivity, and that something else must have contributed to the results? However, they weren't able to pinpoint what that "something else" was.

In 1927, the Western electric engineers asked Harvard Professor Elton Mayo and his associates to join the study as consultants. Thus began a relationship that would last through 1932 and encompass numerous experiments in the redesign of jobs, changes in workday and workweek length, introduction of rest periods, and individual versus group wage plans. For example, one experiment was designed to evaluate the effect of a group piecework incentive pay system on group productivity.

The experiment produced some unexpected results. The researchers found that regardless of whether they raised or lowered the level of illumination, productivity increased. In fact, productivity began to fall only when the level of illumination dropped to the level of moonlight, a level at which presumably workers could no longer see well enough to do their work efficiently.The researchers found these results puzzling and invited a noted Harvard psychologist, Elton Mayo, to help them. Subsequently, it was found that many other factors also influence worker behaviour, and it was not clear what was actually influencing the Hawthorne workers’ behaviour. However, this particular effect— which became known as the Hawthorne effect—seemed to suggest that workers’ attitudes toward their managers affect the level of workers’ performance. In particular, the significant finding was that a manager’s behaviour or leadership approach can affect performance.

3. Other studies: Investigations of topics that would eventually be labelled industrial sociology began in the early part of the twentieth century. In-depth studies of occupations such as prostitutes, teachers, salespeople, physicians, waitresses, and ministers were conducted in the 1920s at the University of Chicago (Taylor 1968). However, the sub-discipline of industrial sociology is generally considered to have begun with the famous Western Electric research program conducted at the Hawthorne Works in Chicago (Whyte 1968).

These studies, conducted during much of the Great Depression, were designed to understand the factors involved in worker productivity (Simpson 1989). When the studies ended, the researchers claimed to have determined that the social environment—the work group of the worker and the way workers were

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treated by management—had a powerful effect on worker performance (Roethlisberger and Dickson 1939). Although disagreement now exists about whether their results actually support their claims (Carey 1967; Franke and Kaul 1978; Jones 1992), there is little doubt that their conclusions captured the imagination of social scientists interested in worker productivity and culminated in substantial research projects dealing with work, workers, and the workplace.

That research activity eventually became known as industrial sociology and represented, for a time, one of the most vibrant sociology sub-disciplines (Miller 1984). (For examples of the research being conducted during this time, see Chinoy 1955; Walker 1950; Walker and Guest 1952; Walker, Guest, and Turner 1956.)

Industrial sociology gained the grounds comparatively on a wider scale in America. Various factors contributed to the development of industrial sociology in the U.S.A. The development of corporate industry, the achievement of scientific management, the unemployment of the depressed 1930s, the labour legislation of the New Deal (Economic Policy), the rise of human relations’, the manpower shortages and enforced restrictions of wartime, the great awakening of the trade unions, the continued emigration of the population from the American farm, the new technology and mechanisation, the desire for a higher standard of living, the occasional labour strikes involving thousands of workers, the investigation of the Congress, the legislative programme of the Kennedy Administration-and other factors contributed to the growth of this branch in America.

In the beginning, in Industrial Sociology much of the work was limited to the analysis of rather restricted problems. But today industrial sociologist’s field of study is developing. It now includes the analysis of industrial institutions and organisation. It also studies the relation between them. It examines the links between industrial phenomena and institutions of the wider society.

Theoretically, this is correct. But practically much remains to be done. As regards many of the internal problems of industrial organisations, our systematic knowledge is still fragmentary and inadequate. In respect of the links between industrial and other institutions our knowledge is scattered.

The Concept of Industry:

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The key term to be explained here is ‘industry’. ‘Industry’ may be defined as ‘the application of complex and sophisticated methods to the production of economic goods and services’.

In order to improve the quality of production, reduce the cost and maximise the production, the complex methods, that is, the machines were used. This process of mechanisation of production originated during the Industrial Revolution in the 18th century.

Man, in some way or the other, has always been industrial’. He has always used tools to obtain food and satisfy his needs. Advanced industry consists in the use of tools and machines that are far more complicated than the digging stick, the hoe, or the bow and arrow, used by the early Stone Age man to obtain his daily food.

In fact, the original Latin word for industry is ‘industrial’, which means skill and resourcefulness. The term ‘industry’ is applied to the modern sophisticated system of procuring goods and services which began in the Industrial Revolution.

The Sociological Approach:

A complex reality like ‘industry’ can be studied from various points of view – technological, physical, psychological, economic, sociological and so on. Sociology is essentially a science of society, of social relationships, associations and institutions. It analyses the social relations, their forms, contents and the systems they assume. Its method is scientific. Its approach is rational and empirical.

Industrial sociology is that branch of sociology which concerns mainly with the industrial relations of man. It examines the various industrial organisations and institutions, their interrelations and links with the other institutions and organisations of the wider society.

Scope of Industrial Sociology:

Industrial sociology is an applied discipline. It is concerned with the study of human relations as they grow and operate in the field of industries. It deals with the sociological concepts that have relevance to industry. It concentrates upon the social organisations of the work place or industry. It studies the patterns of interaction between people in terms of their roles in industrial organisations.

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Industrial organisations are also studied by other disciplines such as- industrial management, industrial engineering, industrial psychology and economics. But they study the phenomena of industry in different ways. Their studies sometimes may overlap.

Industrial engineering deals with the design of products and equipment. Industrial management is more an art than a science. Industrial psychology studies—the selection of personnel, job satisfaction, motivation and incentive to work, team spirit, accident proneness and such other personal matters and personal behavioural problems.

Economics concentrates on such matters as-prices, wages, profits, full employment, finance, monopoly, marketing, taxation, etc. But none of these sciences focuses its attention on the social or human aspects of industrial organisations. This task is done only by industrial sociology.

Industrial sociology studies industrial organisation not as a technological or economic organisation, but more than that, as a social or human organisation. It stresses upon the social or interactional factors in industrial relations, formal and informal organisation, team work, communication etc.

“When interaction among two or more persons is affected by the fact that one of them is a doctor, a teacher, a plumber, a factory worker, a stenographer, a boss, an employee, a union leader, or an unemployed person, we have before us the raw material of industrial sociology”.

The industrial sociology deals with the total organisation of the workplace. It also deals with three different organisations which may be conceived of as distinguishable but interrelated: namely, (a) management organisation, (b) informal organisation of workers, and (c) union organisation.

(a) ‘Management organisation’ refers to the relations between management and the workers. It also includes policies, programmes-structure and the functioning of the management. Its main emphasis is on the formal relations developed by the workers with the management.

(b) ‘Informal organisation’ of workers consists of informal relations developed voluntarily by the workers themselves. Such relations are established by the individuals and small groups within the factory or industry. Such organisations assume the forms of cliques, gangs, friendship groups, bands etc. These

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organisations develop their own informal norms to control the activities of the members.

(c) Union organisation refers to the role of trade unions and the participation or involvement of workers in union activities. Trade unions are playing a vital role in creating industrial unrest and maintaining industrial peace. They also control the formal and informal relations of the workers.

These three organisations of the industry are affected by the physical conditions of the work place, fashions in management thinking, governmental and other social control, the personalities of employees and their experiences in playing roles in other organisations.

Importance of Industrial Sociology:

Industrial sociology is of great practical importance.

(i) Industrial sociology has been of great help in finding solutions to a lot of the industrial disputes and instances of industrial unrest.

(ii) It has reduced the gap between industrial management and industrial workers; it has also helped both to develop friendly relations.

(iii) Industrial Sociology has stressed upon the important role of trade unions in settling industrial disputes.

(iv) It has thrown light upon the problems of industrial workers. It has suggested ways and means of improving the living conditions of workers.

(v) Various industrial sociological studies have impressed upon the management and the government the need to undertake social security measures for promoting labour welfare.

(vi) Industrial sociology studies the relations between man’s industrial activities on the one hand, and his political, economic, educational and other activities, on the other.

(vii) Industrial sociology also analyses the processes of industrialisation and urbanisation, their magnitude and their mutual interaction.

(viii) Finally industrial sociology plays a vital role in contributing to planned industrial growth.

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Summary

Definition of Industrial Sociology:

(i) ‘Industrial sociology is the application of the sociological approach to the reality and problems of industry’. -P. Gisbert.

(ii) Industrial sociology centres its attention on the social organisation of factory, the store, and the office. This focus includes not only the interactions of people playing roles in these organisations but also the ways in which their work roles are interrelated with other aspects of their life”

(iii) Industrial sociology is the sociology of industrial relations and industrial activities of man.

Development of Industrial Sociology

Industrial revolution: This is one of the most important factors which contributed to the development of sociology as a social science.

Hawthorne Studies: Without question, the most important contribution to the development of industrial sociology and Organization Behaviour field came out of the Hawthorne Studies, a series of studies conducted at the Western Electric Company Works in Cicero, Illinois.

Other studies: Investigations of topics that would eventually be labelled industrial sociology began in the early part of the twentieth century. In-depth studies of occupations such as prostitutes, teachers, salespeople, physicians, waitresses, and ministers were conducted in the 1920s at the University of Chicago (Taylor 1968).

The Concept of Industry:

The key term to be explained here is ‘industry’. ‘Industry’ may be defined as ‘the application of complex and sophisticated methods to the production of economic goods and services’.

The Sociological Approach:

Sociology is essentially a science of society, of social relationships, associations and institutions. It analyses the social relations, their

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forms, contents and the systems they assume. Its method is scientific. Its approach is rational and empirical.

Scope of Industrial Sociology:

Industrial sociology is an applied discipline. It is concerned with the study of human relations as they grow and operate in the field of industries. It deals with the sociological concepts that have relevance to industry. It concentrates upon the social organisations of the work place or industry. It studies the patterns of interaction between people in terms of their roles in industrial organisations.

Self-Assessment

Assessment

1. What is sociology? What is industrial sociology

2. Discuss the factors or events that contributed to the development of industrial sociology as a field of study.

3. What is the role of industrial sociology in the management of organisation?.

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UNIT 2: EXPLOITATION AND ALIENATION: KARL MARX2.1 Introduction

In this unit you will be introduced to Karl Marx’s concepts of exploitation; alienation; labour; and labour power. At the end of this you be able to see the difference between ‘labour’ and ‘labour power.’

2.2 ObjectivesBy the end of this unit you will be able to:

Define the terms ‘exploitation,’ ‘labour and labour power’, and ‘alienation’

Explain the difference between ‘labour power and labour’

2.3 Activity

Let us assume that you are familiar with the term, exploitation. Take about 5 minutes to reflect and write down anything that comes to your mind whenever you hear people talk about exploitation. What about the word ‘labour?’ How do you understand it?

The term “exploitation” may carry two distinct meanings:

1. The act of using something for any purpose. In this case, exploitation will be synonymous with the term “use”

2. The act of using something in an unjust or cruel manner. It is this version of exploitation which we are going to dwell on.

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As an unjust benefit in economics and sociology, exploitation involves a persistent social relationship in which certain persons are being mistreated or unfairly used for the benefit of others. Alternatively, “exploitation” can refer to the use of people as a resource, with little or no consideration for their well-being. This can take the following basic forms:

Taking something off a person or group that rightfully belongs to them Directly or indirectly forcing somebody to work Using somebody against his or her will or without his or her consent or

knowledge.

Most often, the word “exploitation” is used to refer to economic exploitation; that is, the act of using another person’s labour without offering them an adequate compensation.

Theory of ExploitationThe Marxist view of exploitation is based on three structural characteristics of a capitalist society.

1. the ownership of the means of production by a small minority in society (the bourgeoisie or capitalists)

2. the inability of non-property owners (workers or proletariats) to survive without selling their labour power to the capitalists, i.e. without being employed as wage labourers.

3. the state, which uses its strength to protect the unequal distribution of power and property in society

According to the Marxist theory of exploitation, profit is the result of the exploitation of wage earners by their employers. It rests on the labour theory of value which claims that value is intrinsic in a product according to the amount of labour that has been spent on producing the product. Thus, the value of a product is created by the workers who make that product and reflected in its finished price. The income from this finished product is then divided between labour (wages), capital (profit), and expenses on raw materials. The wages received by workers do not reflect the full value of their work, because large part of that value is taken by the employer in the form of profit. Therefore, “making a profit” essentially means taking away from the workers some of the value that results from their labour. This is what is known as capitalist exploitation.

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Theory of AlienationMarx’s theory of alienation, as expressed in his early writings, refers to the separation of things that naturally belong together, or put antagonism between things that are properly in harmony. For the purpose of this discussion this concept refers to the social alienation of people from aspects of their “human nature.” He believed that alienation is a systematic result of capitalism.

In the labour process, Marx’s theory of alienation is based upon his observation that in emerging industrial production under capitalism, workers inevitably lose control of their lives and selves. Workers never become autonomous, self-realised human beings in any significant sense, except the way employers want the worker realised.Karl Marx attributes four types of alienation of workers during the process of production. These include:

the alienation of the worker from his or her “species as a human being rather than a machine;

alienation between workers since capitalism reduces labour power to a commodity to be traded on the market, rather than a social relationship;

alienation of the worker from the product, since this is appropriated by the capitalists, and so escapes the worker’s control;

and alienation from the process of production itself, such that work comes to be a meaningless activity, offering little or no intrinsic satisfaction.

LABOUR POWER AND LABOUR: THE DIFFERENCELabour power is a crucial concept used by Karl Marx in his critique of capitalist economy. He regarded labour power as the most important of the productive forces. According to Karl Marx the concept of labour power refers to the aggregate of the mental and physical capabilities existing in a human being, which he or she exercises whenever they produce a product of any description. He added further that “labour power, however, becomes a reality only when it is exercised.”

According to Karl Marx, there is a distinction between labour and labour power. “Labour” refers to the actual activity or effort of producing goods or services. On the other hand, “labour power” refers to a person’s ability to work, his or her muscle-power, dexterity and brain-power. In some ways, this concept is similar to that of “human capital.” The distinction Marx introduces between labour and labour power was intended to solve the problem of explaining how surplus value could arise out of

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the exchange between capital and labour.

Under capitalism, according to Marx, labour power becomes a commodity, sold and bought on the market. A worker tries to sell his or her labour power to an employer, in exchange for a wage or salary. If successful (the only alternative being unemployed), this exchange involves submitting to the authority of the employer or capitalist for a specific period of time. During that period, the employee or worker does actual labour, producing goods and services. The capitalist or employer then sells these products or services and realise a profit, which Karl Marx called surplus value; since the wages paid to the workers are lower than the value of the goods or services they produce for the capitalist.

However, labour power is a peculiar commodity, because it is an attribute of living human beings, who own it themselves. Because they own it, they cannot permanently sell it to someone else; in that case, they would become slaves. Slaves do not own themselves; they are a property of their master or owner. Labour power can become a marketable object, sold for a specific period, only if the owners are constituted in law as legal subjects who are free to sell it, and can enter into labour contracts.

In general, Karl Marx argues that in capitalism the value of labour power (as distinct from fluctuating market price for work effort) is equal to its normal or average production cost, i.e. the established human needs which must be satisfied in order for the worker to turn up for work each day, fit to work. This involves goods and services representing a quantity of labour equal to necessary labour or the necessary product. It represents an average cost of living, an average living standard of living.Included is both a physical component (the minimum physical requirements for a healthy worker) and a moral-historical component (the satisfaction of needs beyond the physical minimum which have become an established part of the lifestyle of the average worker). The value of labour power is thus an historical norm, which is the outcome of a combination of factors: productivity; the supply and demand for labour; the assertion of human needs; the cost of acquiring skills; state laws stipulating minimum or maximum wages; the balance of power between social classes etc.

Labour power and wagesBuying labour power usually becomes a commercially interesting proposition only if it can yield more value than it costs to buy, i.e. employing it yields a net positive

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return on capital invested. However, in Marx’s theory, the value-creating function of labour power is not its only function; it also importantly conserves and transfers capital value. If labour is withdrawn from the workplace for any reason, usually the value of capital assets deteriorates; it takes a continual stream of work effort to maintain and preserve their value. When materials are used to make new products, part of the value of materials is also transferred to the new product.

Marx regards monetary-wages and salaries as the price of labour power (though sometimes workers can be paid “in kind”). That price may contingently be higher or lower than the value of labour power, depending on the market forces of supply and demand, on skill monopolies, legal rules etc. Normally, unless government action prevents it, high unemployment will lower wages, and full employment will raise wages, in accordance with laws of supply and demand.

There typically a constant conflict over the level of wages between employers and employees, since employers seek to limit or reduce wage-costs, while workers seek to increase their wages or at least maintain them. How the level of wages develops depends on the demand for labour power, the level of unemployment, and the ability of workers and employers to organise and take action with regard to pay claims.When labour has been purchased and an employment contract signed, normally it is not yet paid for. First, labour power must be put to work in the production process. The employment contract is only a condition for uniting labour power with the means of production. From that point on, Marx argues, labour power at work is transformed into capital.

At the end of the working day, labour power has been more or less consumed, and must be restored through rest, eating and drinking, and recreation.

Labour power and Market The commercial value of human labour power is strongly linked to the assertion of human needs of workers as citizens. It is not simply a question of supply and demand here, but of human needs which must be met. Therefore, labour costs have never been simply an “economic” or “commercial” matter, but also a moral, cultural and political issue.

In turn, this has meant that governments have strongly regulated the sale of labour power with laws and rules for labour contracts. These laws and rules affect the minimum wage, wage bargaining, the operation of trade unions, the obligation of

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employers in respect of employees, hiring and firing procedures, labour taxes, and unemployment benefits.

This has led to repeated criticism from employers that labour markets are over-regulated, and that the costs and obligations of hiring labour weigh too heavily on employers. Moreover, it is argued that over-regulation prevents the free movement of labour to where it is really necessary. If labour markets were deregulated by removing excessive legal restrictions, it is argued that costs to business would be reduced and more labour could be hired, thereby increasing employment opportunities and economic growth.

However, trade union representatives often argue that the real effect of deregulation is to reduce wages and conditions for workers, with the effect of reducing market demand for products. In turn, this can lead to lower economic growth and a decline in living standards, with increased casualisation of labour and more “contingent labour.” It is argued that, because the positions of employees and employers in the market are unequal, employees must be legally protected against undue exploitation. Otherwise, employers will simply hire workers as and when it suits them, without regard for their needs as citizens.

Summary The term “exploitation” may carry two distinct meanings:

1. The act of using something for any purpose. In this case, exploitation will be synonymous with the term “use”

2. The act of using something in an unjust or cruel manner. It is this version of exploitation which we are going to dwell on.

Theory of ExploitationThe Marxist view of exploitation is based on three structural characteristics of a capitalist society.

1. the ownership of the means of production by a small minority in society (the bourgeoisie or capitalists)

2. the inability of non-property owners (workers or proletariats) to survive without selling their labour power to the capitalists, i.e. without being employed as wage labourers.

3. the state, which uses its strength to protect the unequal distribution of power

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and property in society

Theory of AlienationMarx’s theory of alienation, as expressed in his early writings, refers to the separation of things that naturally belong together, or put antagonism between things that are properly in harmony. For the purpose of this discussion this concept refers to the social alienation of people from aspects of their “human nature.” He believed that alienation is a systematic result of capitalism.

Labour power and labourAccording to Karl Marx, there is a distinction between labour and labour power. “Labour” refers to the actual activity or effort of producing goods or services. On the other hand, “labour power” refers to a person’s ability to work, his or her muscle-power, dexterity and brain-power. In some ways, this concept is similar to that of “human capital.” The distinction Marx introduces between labour and labour power was intended to solve the problem of explaining how surplus value could arise out of the exchange between capital and labour.

Self-Assessment

Assessment

1. What does the term ‘exploitation’ generally refers to?

2. Discuss the difference between labour and labour power in as far as Karl Marx is concerned.

3. What did Karl Marx mean when he espoused the labour theory of value?

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UNIT 3: THE EVOLUTION OF MANAGEMENT3.1 Introduction

In this unit you will be introduced to the concept of management, its evolution, history and definition. You will also learn what managers do, the traditional functions of managers and why it is important to study management.

3.2 ObjectivesBy the end of this unit you will be able to:

Describe how the need to increase organizational efficiency and effectiveness has guided the evolution of management.

Show evidence that management an activity has existed for thousands of years

Explain the principle of job specialization and division of labour, and tell why the study of person–task relationships is central to the pursuit of increased efficiency.

3.3 Activity

Management is a term that many people use in many discussions. Let us assume that you are familiar with it. Take about 5 minutes to reflect and write down anything that comes to your mind whenever you hear people talk about management.

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MANAGEMENT IDEAS: YESTERDAY AND TODAYThe purpose of this unit is to demonstrate that knowledge of management past history can help you better understand current management theory and practice. Thus, in order to understand the theories and practices used today, it's important for management students to look at the evolution of management thought and practices. The practice of management has always reflected historical times and societal conditions.

Many current management concepts and practices can be traced to early management theories. The practice of management has always reflected the times and social conditions, so many organizations are responding to technology breakthroughs and developing Web-based operations. These new business models reflect today's reality: information can be shared and exchanged instantaneously anywhere on the planet. The purpose of this chapter is to demonstrate that knowledge of management history can help understand today's management theory and practice.

HISTORICAL OVERVIEW OF MANAGEMENTMajor objective of treating "Principles of Management" in a concise, interesting, and understandable manner will be to present management history and theory with an emphasis on the future. Most students will be applying the concepts learned here over a period of next many years. Another objective shall be to identify several areas where management concepts are applicable to the personal and professional goal- setting and also to apply the management skills to the challenge of managing the most difficult peer or subordinate the one that may confront you in the mirror each morning in your professional career. In any treatment of a basic subject like this, there is little that the resource/anchor person can claim to be uniquely his own except his/her tacit knowledge and the presentation style. The write-ups from chapters of recommended text books for this course have also been included and are highly acknowledged.

THE INTELLECTUAL HERITAGE OF MANAGEMENTOrganized endeavors directed by people responsible for planning, organizing, leading, and controlling activities have existed for thousands of years. The Egyptian pyramids and the Great Wall of China, for instance, are tangible evidence that projects of tremendous scope, employing tens of thousands of people, were undertaken well before modern times. The pyramids are a particularly interesting example. The construction of a single pyramid occupied more than 100,000 workers for 20 years. Who told each worker what to do? Who ensured that there would be enough stones at the site to keep workers busy? The answer to such questions is managers. Regardless

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of what managers were called at the time, someone had to plan what was to be done, how to organize people and materials to do it, lead and direct the workers, and impose some controls to ensure that everything was done as planned.

It is not very difficult for us to imagine modern management techniques in the days of the pharaohs. True, we can get a laugh or two thinking of profit sharing and other twentieth-century terms appearing in the ancient land of the Nile, but the generic relationships of people managing people must have borne a great many similarities. In fact, many ancient documents have been translated to reveal that, through the ages, wherever people have worked together to accomplish their goals, many of the same phenomena have prevailed.

Frequently, management is defined as the challenge of creating as environment where people can work together to achieve a mutual objective. While this is true for managers in business, government, and other organizations, I hope that each management student will recognize the opportunities for applying management concepts to personal challenges. For that purpose, management can be defined as the concepts, techniques, and processes that enable goals to be achieved efficiently and effectively.

The Egyptian Pyramid:Approximately four thousand years B.C., the Egyptians were building a civilization edge on the rest of the world. Very few of us can comprehend the extent to which this culture zoomed ahead of its times. If it were possible to make a reliable comparison, we would probably find that no nation in our time is as far ahead of its contemporaries as the land of the Pharaohs was between 4000 B.C. and 525 B.C. The most obvious demonstration of Egyptian power is the construction projects that remain even today. Without the service of cranes, bulldozers, or tea/coffee breaks, the Egyptians constructed mammoth structures of admirable precision. The great pyramid of Cheops, for example, covers thirteen acres and contains 2,300,000 stone blocks. The blocks weigh about two and a half tons each and were cut to size many miles away. The stones were transported and set in place by slave labour and precision planning. The men who built the enduring structures of ancient Egypt not only knew how to use of human resources efficiently but also knew how to manage 100,000 workers in a twenty-year project. In their business and governmental affairs, the Egyptians kept documents to show exactly how much material was received and from whom, when it came in, and exactly how it was used. The military, social, religious, and governmental aspects of Egyptian life were highly organized. There were much

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inefficiency, but the final task was accomplished. Three commodities, which virtually rule modern efforts, seem to have been only minor considerations along the Nile: time, money, and the satisfaction of the worker.

Great China Wall:The Great China Wall built in the time period of 956 years (688 BC 1644 AD). It is 6000 Km long. Its base is 20 feet wide and top 11 feet wide. The height of China Wall is from 7 to 37 feet. The whole China wall is made by hands. Working as united for 956 years, there should be some purposes due to which people worked for a long time.

According to history, the purpose of china wall was: To mark territories To defend the area To protect silk road

These examples from the past demonstrate that organizations have been around for thousands of years and that management has been practiced for an equivalent period.

Adam Smith (1723 – 1790)

Adam Smith was born in 1723, in Scotland, is often known as the father of economics and capitalism. He is the author of “An inquiry into the nature and causes of the wealth of nations”. His “invisible hand”, “division of labour”, “management of specialization” are widely known and referred terms even.

“Of the Division of Labour”

In the first chapter of “The Wealth of Nations”, Adam Smith, explains the optimum organization of a pin factory. Traditional pin makers could produce only a few dozen pins a day. However, when organized in a factory with each worker performing a limited operation, they could produce tens of thousands a day. This was the reason why Smith favoured division of labour.

Smith found that factories in which workers specialized in only 1 or a few tasks had greater performance than factories in which each worker performed all 18 pin-making tasks. In fact, Smith found that 10 workers specializing in a particular task could, between them, make 48 000 pins a day, whereas those workers who performed all the tasks could make only a few thousand at most. Smith reasoned that this difference in

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performance was due to the fact that the workers who specialized became much more skilled at their specific tasks, and, as a group, were thus able to produce a product faster than the group of workers who each had to perform many tasks. Smith concluded that increasing the level of job specialization— the process by which a division of labour occurs as different workers specialize in different tasks over time—increases efficiency and leads to higher organizational performance.

He suggests that there are three causes of increase in the quantity of work:

1. Increase in dexterity in every particular workman: The division of labour reduces every man’s business to some one simple operation, and by making this operation the sole employment of his life, necessarily increases very much the dexterity of the workman.

2. Saving the time which is commonly lost in passing from one species of work to another: He suggests that it is impossible to pass very quickly from one kind of work to another that is carried on in a different place, and with quite different tools. A country weaver, who cultivates a small farm, must lose a good deal of time in passing from his loom to his field and from the field to his loom. When the two trades can be carried on in the same workhouse, the loss of time is no doubt much less.

3. Invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many: According to Smith, a greater part of the machines made use of in manufactures in which labour is most subdivided, were originally the inventions of common workment, who, being each of them employed in some very simple operation, naturally turned their thoughts towards finding out easier and readier methods of performing it.

Based on Adam Smith’s observations, early management practitioners and theorists focused on how managers should organize and control the work process to maximize the advantages of job specialization and the division of labour.

MANAGEMENT'S CONNECTION TO OTHER FIELDS OF STUDY

Management courses have a rich heritage from humanities and social science courses.(i) Anthropology--the study of societies, which helps us learn about humans,

their activities, and differences in fundamental values, attitudes, and behaviour between people in different countries and within different organizations.

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(ii) Economics--concerned with the allocation, distribution of scare resources, and understanding the changing economy, as well as the role of competition and free markets in a global context.

(iii) Philosophy--examines the nature of things, particularly values and ethics.(iv) Political Science--studies the behaviour of individuals and groups within a

political environment, including structuring of conflict, allocating power in an economic system, and manipulating power for individual self-interest.

(v) Psychology--science that seeks to measure, explains, and sometimes changes the behaviour of humans and other animals.

(vi) Sociology--the study of people in relation to their fellow human beings.Pre-classical ContributorsThese contributors presented their ideas before the late 1800s.

1. Robert Owen (1771-1858) was a British factory owner who advocated concern for the working and living conditions of workers, many of them young children. Many of his contemporaries thought he was a radical for such ideas.

2. Charles Babbage (1792-1871) is considered to be the "father of modern computing." He foresaw the need for work specialization involving mental work. His management ideas also anticipated the concept of profit sharing to improve productivity.

3. Henry E. Towne (1844-1924) called for the establishment of a science of management and the development of management principles that could be applied across management situations.

4. An assessment of the pre-classical contributors indicates that their efforts were fragmentary. By and large they applied their efforts towards developing specific techniques or solutions. They laid the groundwork for major management theories which came later.

MANAGEMENT AND MANAGERSThe concepts of organizations, managers, and management are explored in this session. Every organization, regardless of size, type, or location, needs managers who have a variety of characteristics. Managers may come from any nationality or be of either gender.

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Four questions are addressed:1. Who are managers?2. What do managers do?3. What is management?4. Why study management?

WHO ARE MANAGERS?"A manager is someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals."The changing nature of organizations and work has blurred the clear lines of distinction between managers and non-managerial employees. Many workers' jobs now include managerial activities. Definitions used in the past may no longer work. Hence, an organizational member who works with and through other people by coordinating their work activities in order to accomplish organizational goals may be called a manager. However, keep in mind that managers may have other roles and work duties not related to integrating the work of others.

You should be aware that managers may have a variety of titles and roles. They perform various jobs and duties and are responsible for higher profits and for great performance. Managers work in various departments and are employed by many types of organization. You will be meeting different managers in this session and note what jobs, roles and work they perform in their organizations, may it be national or multi-national or entrepreneurial organization.

WHAT DO MANAGERS DO?No two managers' jobs are alike. But management writers and researchers have developed some specific categorization schemes to describe what managers do. We can focus on following five categorization schemes while making mind what do managers do:

Management functions and management process as detailed below:

Traditionally, a manager's job has been classified according to the following four functions i.e.:

i. Planning: determining organizational goals and the means for achieving them

ii. Organizing: deciding where decisions will be made, who will do what jobs and tasks, and who will work for whom

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iii. Leading: inspiring and motivating workers to work hard to achieve organizational goals

iv. Controlling: monitoring progress towards goal achievement and taking corrective action when needed.

Good managers are those who assure themselves to perform these functions well. New-style or 21st century managers are changing the way they perform these functions, thinking of themselves more like mentors, coaches, team leaders, or internal consultants. They work with anyone who can help them accomplish their goals rather than only following the chain of command. They ask others to participate in making decisions and share information with others.

New-style managers perform four functions that have evolved out of the traditional functions: making things happen; meeting the competition; organizing people, projects, and processes; and leading.

A. Making Things Happen: To make things happen you must determine what you want to accomplish, plan how to achieve these goals, gather and manage the information needed to make a good decision, and control performance, so that you can take corrective action if performance falls short.

B. Meeting the Competition: Free trade agreements, shorter product development cycles, and fewer barriers to entering industries have created increased competition. Companies must consider how to deal with international competitors, have a well-thought-out competitive strategy, be able to embrace change and foster new product and service ideas, and structure their organizations to quickly adapt to changing customers and competitors.

C. Organizing People: Projects and Processes: Changes in how a company is organized must consider both people issues and work processes (how the work gets done)

D. Leading: Motivating and inspiring workers.

WHAT IS MANAGEMENT?Simply speaking, management is what managers do. However, this simple statement

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doesn't tell us much. We define management as the process of coordinating and integrating work activities so that they are completed efficiently and effectively with and through other people. The process represents the ongoing functions of primary activities engaged in by managers. These functions are typically labeled planning, organizing, leading, and controlling. Let us remember it by POLCA.

WHY STUDY MANAGEMENT?Management is important for our society, industry and government organizations. The importance of studying management can be explained by looking at the way we interact with organizations every day in our lives. Every product we use, every service we receive, and every action we take is provided or affected by organizations. These organizations require managers.

Modern management ensures to create competitive advantage through People:A. Top-performing companies recognize the importance of the way they treat

their work forces.B. These companies use ideas such as employee satisfaction, selective recruiting,

performance based high wages , reduction of status differences, sharing information, self-managed teams, and training and skill development.

C. Investing in people will create long-lasting competitive advantages that are difficult for other companies to duplicate.

D. Sound management practices can produce substantial advantages in sales, revenues, and customer satisfaction.

E. Poorly performing companies that adopted management techniques as simple as setting expectations, coaching, and rewarding were able to substantially improve return on investment.

F. Good management can increase customer satisfaction because employees tend to treat customers the same way that their managers treat them.

By studying management, students will be able to recognize good management and encourage it, as well as to recognize poor management and work to get it corrected.After graduation, you will either manage or be managed. A course in management provides insights into the way your boss or peer behave and shall help you to be familiar with the internal working of organizations

Summary HISTORICAL VIEW OF MANAGEMENT

Egyptian Pyramids and The Great Wall of China

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Organized endeavors directed by people responsible for planning, organizing, leading, and controlling activities have existed for thousands of years. The Egyptian pyramids and the Great Wall of China, for instance, are tangible evidence that projects of tremendous scope, employing tens of thousands of people, were undertaken well before modern times. The pyramids are a particularly interesting example. The construction of a single pyramid occupied more than 100,000 workers for 20 years. Who told each worker what to do? Who ensured that there would be enough stones at the site to keep workers busy? The answer to such questions is managers.

Adam Smith (1723 – 1790)

In the first chapter of “The Wealth of Nations”, Adam Smith, explains the optimum organization of a pin factory. Traditional pin makers could produce only a few dozen pins a day. However, when organized in a factory with each worker performing a limited operation, they could produce tens of thousands a day. This was the reason why Smith favoured division of labour.

Pre-classical ContributorsThese contributors presented their ideas before the late 1800s.Robert Owen (1771-1858) was a British factory owner who advocated concern for the working and living conditions of workers, many of them young children. Many of his contemporaries thought he was a radical for such ideas.

Charles Babbage (1792-1871) is considered to be the "father of modern computing." He foresaw the need for work specialization involving mental work. His management ideas also anticipated the concept of profit sharing to improve productivity.

Henry E. Towne (1844-1924) called for the establishment of a science of management and the development of management principles that could be applied across management situations.

An assessment of the pre-classical contributors indicates that their efforts were fragmentary. By and large they applied their efforts towards developing specific techniques or solutions. They laid the groundwork for major management theories which came later.

WHO ARE MANAGERS? "A manager is someone who works with and through other people by

coordinating their work activities in order to accomplish

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organizational goals."

WHAT DO MANAGERS DO?Traditionally, a manager's job has been classified according to the following four functions i.e.:

i. Planning: determining organizational goals and the means for achieving them

ii. Organizing: deciding where decisions will be made, who will do what jobs and tasks, and who will work for whom

iii. Leading: inspiring and motivating workers to work hard to achieve organizational goals

iv. Controlling: monitoring progress towards goal achievement and taking corrective action when needed.

WHAT IS MANAGEMENT?

We define management as the process of coordinating and integrating work activities so that they are completed efficiently and effectively with and through other people. The process represents the on-going functions of primary activities engaged in by managers. These functions are typically labelled planning, organizing, leading, and controlling.

WHY STUDY MANAGEMENT?Management is important for our society, industry and government organizations. The importance of studying management can be explained by looking at the way we interact with organizations every day in our lives. Every product we use, every service we receive, and every action we take is provided or affected by organizations. These organizations require managers.

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Self-Assessment

Assessment

1. What are some of historical activities that help us point to the fact that ‘management’ has been part of humanity for thousands and thousands of years?

2. What is a manager? What does the term management refer to? What are the functions of management?

3. Why do you think it is important to study management?.

UNIT 4: MANAGEMENT THEORIES4.1 Introduction

In this unit you will be introduced to classical management theories which scientific management by Fredrick W. Taylor of United States of America, administrative management which is usually broken into two (i) bureaucracy by Max Weber, a German Sociologist, and (ii) Principles of Management by Henri Fayol of France. You will learn that management ideas by these three personalities laid the foundation for today’s management practices and theories, hence the name CLASSICAL. This unit also presents discussion about modern management theories and practices.

4.2 ObjectivesBy the end of this unit you will be able to:

Describe how the need to increase organizational efficiency and effectiveness has guided the evolution of management theory.

Identify the principles of administration and organization that underlie effective organizations

Trace the changes that have occurred in theories about how

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managers should behave in order to motivate and control employees.

Explain the contributions of management science to the efficient use of organizational resources.

4.3 Activity

Theory is a term that many people use in many discussions. Let us assume that you are familiar with it. Take about 5 minutes to reflect and write down anything that comes to your mind whenever you hear people talk about a theory.

CLASSICAL MANAGEMENT THEORIESThe first important ideas to emerge in management are now called the Classical Management perspective. These perspectives consist of two distinct branches – scientific management and administrative management.

1. SCIENTIFIC MANAGEMENT: FREDERICK W. TAYLOR (1856 – 1915)

Born in 1856, Frederick W. Taylor was the epitome of the self –made man. He had a temporary eye problem which prevented him from attending University education. Taylor went to work as a common labourer in as small Philadelphia machine shop. Later he moved to Midvale Steel Works in Philadelphia where he quickly moved up through the ranks to the position of foreman while studying at night for a mechanical engineering degree. There he observed what he called (systematic) soldiering – employees deliberately working at a pace slower than their capabilities.

Prior to scientific management, work was performed by skilled craftsmen who had learned their jobs in lengthy apprenticeships. They made their own decisions about how their job was to be performed. Scientific management took away much of this autonomy and converted skilled crafts into a series of simplified jobs that could be performed by unskilled workers who easily could be trained for the tasks.

Productivity emerged as a serious business problem during the first few years of the twentieth century. Business was expanding and capital was readily available, but labour was in short supply. Hence Managers began to search for ways to use existing labour more efficiently. Their work led to the development of scientific management.

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He is best known for defining the techniques of scientific management, the systematic study of relationships between people and tasks for the purpose of redesigning the work process to increase efficiency. Taylor believed that if the amount of time and effort that each worker expended to produce a unit of output (a finished good or service) could be reduced by increasing specialization and the division of labour, then the production process would become more efficient.

Taylor believed that the way to create the most efficient division of labour could best be determined by means of scientific management techniques, rather than intuitive or informal rule-of-thumb knowledge. Based on his experiments and observations as a manufacturing manager in a variety of settings, he developed four principles to increase efficiency in the workplace:

(Systematic) Soldiering

Working in the steel industry, Taylor had observed the phenomenon of workers' purposely operating well below their capacity that is, soldiering. He attributed soldiering to three causes:

1. Lack of job security: The almost universally held belief among workers that if they became more productive, fewer of them would be needed and jobs would be eliminated.

2. Non-incentive wage systems: This encouraged low productivity if the employee would receive the same pay regardless of how much was produced, assuming the employee could convince the employer that the slow pace really was a good pace for the job. Employees took great care never to work at a good pace for fear that the faster pace would become the new standard. If employees were paid by the quantity they produced, they feared that management would decrease their per-unit pay if the quantity increased.

3. Rule-of-thumb: Workers waste much of their effort by relying on rule-of-thumb methods rather than on optimal work methods that can be determined by scientific study of the task.

To counter soldiering and to improve efficiency, Taylor began to conduct experiments to determine the best level of performance for certain jobs, and what was necessary to achieve this performance.

Taylor sought nothing less than what he termed a “mental revolution” in the practice of industrial management.

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According to an early definition, scientific management is “that kind of management which conducts a business or affairs by standards established by facts or truths gained through systematic observation, experiment, or reasoning.” The word experiment deserves special attention because it was Taylor’s trademark. Taylor’s work had a major impact on U.S. industry. By applying his principles, many organisations achieved major gains in efficiency. His scientific management movement was in four areas:

Principle 1: Develop a science for each element of the job to replace old rule-of-thumb: Study the way workers perform their tasks, gather all the informal job knowledge that workers possess, and experiment with ways of improving the way tasks are performed.

To discover the most efficient method of performing specific tasks, Taylor studied in great detail and measured the ways different workers went about performing their tasks. One of the main tools he used was a time-and-motion study, which involves the careful timing and recording of the actions taken to perform a particular task. Once Taylor understood the existing method of performing a task, he tried different methods of dividing and coordinating the various tasks necessary to produce a finished product. Usually this meant simplifying jobs and having each worker perform fewer, more routine tasks, as at the pin factory or on Ford’s car assembly line. Taylor also sought ways to improve each worker’s ability to perform a particular task—for example, by reducing the number of motions workers made to complete the task, by changing the layout of the work area or the type of tool workers used, or by experimenting with tools of different sizes.

• Principle 2: Supervise employees to make sure they follow the prescribed methods for performing their jobs: Codify the new methods of performing tasks into written rules and standard operating procedures.

Once the best method of performing a particular task was determined, Taylor specified that it should be recorded so that the procedures could be taught to all workers performing the same task. These rules could be used to standardize and simplify jobs further—essentially, to make jobs even more routine. In this way, efficiency could be increased throughout an organization.

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• Principle 3: Scientifically select employees and then train them to do the job as described in step: Carefully select workers so that they possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures.

To increase specialization, Taylor believed workers had to understand the tasks that were required and be thoroughly trained in order to perform the tasks at the required level. Workers who could not be trained to this level were to be transferred to a job where they were able to reach the minimum required level of proficiency.

• Principle 4: Continue to plan the work, but use workers to get the work done: Establish a fair or acceptable level of performance for a task, and then develop a pay system that provides a reward for performance above the acceptable level.

To encourage workers to perform at a high level of efficiency, and to provide them with an incentive to reveal the most efficient techniques for performing a task, Taylor advocated that workers should benefit from any gains in performance.They should be paid a bonus and receive some percentage of the performance gains achieved through the more efficient work process.

By 1910, Taylor’s system of scientific management had become known and, in many instances, faithfully and fully practised. However, managers in many organizations chose to implement the new principles of scientific management selectively. This decision ultimately resulted in problems. For example, some managers using scientific management obtained increases in performance, but rather than sharing performance gains with workers through bonuses as Taylor had advocated, they simply increased the amount of work that each worker was expected to do. Many workers experiencing the reorganized work system found that as their performance increased, managers required them to do more work for the same pay. Workers also learned that increases in performance often meant fewer jobs and a greater threat of layoffs, because fewer workers were needed. In addition, the specialized, simplified jobs were often monotonous and repetitive, and many workers became dissatisfied with their jobs.

Scientific management brought many workers more hardship than gain, and left them with a distrust of managers who did not seem to care about their wellbeing. These dissatisfied workers resisted attempts to use the new scientific management

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techniques and at times even withheld their job knowledge from managers to protect their jobs and pay.

Unable to inspire workers to accept the new scientific management techniques for performing tasks, some organizations increased the mechanization of the work process. For example, one reason for Henry Ford’s introduction of moving conveyor belts in his factory was the realization that when a conveyor belt controls the pace of work (instead of workers setting their own pace), workers can be pushed to perform at higher levels—levels that they may have thought were beyond their reach.

From a performance perspective, the combination of the two management practices—(1) achieving the right mix of worker–task specialization and (2) linking people and tasks by the speed of the production line—makes sense. It produces the huge savings in cost and huge increases in output that occur in large, organized work settings. For example, in 1908, managers at the Franklin Motor Company redesigned the work process using scientific management principles, and the output of cars increased from 100 cars a month to 45 cars a day; workers’ wages increased by only 90 percent, however. From other perspectives, though, scientific management practices raise many concerns. The definition of the workers’ rights not by the workers themselves but by the owners or managers as a result of the introduction of the new management practices raises an ethical issue, which we examine in this “Ethics in Action.”

Fordism in Practice

From 1908 to 1914, through trial and error, Henry Ford’s talented team of production managers pioneered the development of the moving conveyor belt and thus changed manufacturing practices forever. Although the technical aspects of the move to mass production were a dramatic financial success for Ford and for the millions of Americans who could now afford cars, for the workers who actually produced the cars, many human and social problems resulted.

With simplification of the work process, workers grew to hate the monotony of the moving conveyor belt. By 1914, Ford’s car plants were experiencing huge employee turnover—often reaching levels as high as 300 or 400 percent per year as workers left because they could not handle the work-induced stress. Henry Ford recognized these problems and made an announcement: From that point on, to motivate his workforce, he would reduce the length of the workday from nine hours to eight hours, and the company would double the basic wage from US$2.50 to US$5.00 per day. This was a

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dramatic increase, similar to an announcement today of an overnight doubling of the minimum wage. Ford became an internationally famous figure, and the word “Fordism” was coined for his new approach.

Ford’s apparent generosity was matched, however, by an intense effort to control the resources—both human and material—with which his empire was built. He employed hundreds of inspectors to check up on employees, both inside and outside his factories. In the factory, supervision was close and confining. Employees were not allowed to leave their places at the production line, and they were not permitted to talk to one another. Their job was to concentrate fully on the task at hand. Few employees could adapt to this system, and they developed ways of talking out of the sides of their mouths, like ventriloquists, and invented a form of speech that became known as the “Ford Lisp.” Ford’s obsession with control brought him into greater and greater conflict with managers, who were often fired when they disagreed with him. As a result, many talented people left Ford to join his growing rivals.Outside the workplace, Ford went so far as to establish what he called the “Sociological Department” to check up on how his employees lived and the ways in which they spent their time. Inspectors from this department visited the homes of employees and investigated their habits and problems. Employees who exhibited behaviours contrary to Ford’s standards (for instance, if they drank too much or were always in debt) were likely to be fired. Clearly, Ford’s effort to control his employees led him and his managers to behave in ways that today would be considered unacceptable and unethical, and in the long run would impair an organization’s ability to prosper.

Despite the problems of worker turnover, absenteeism, and discontent at Ford Motor Company, managers of the other car companies watched Ford reap huge gains in efficiency from the application of the new management principles. They believed that their companies would have to imitate Ford if they were to survive. They followed Taylor and used many of his followers as consultants to teach them how to adopt the techniques of scientific management. In addition, Taylor elaborated his principles in several books, including Shop Management (1903) and The Principles of Scientific Management (1911), which explain in detail how to apply the principles of scientific management to reorganize the work system.

Taylor’s work has had an enduring effect on the management of production systems. Managers in every organization, whether it produces goods or services, now carefully

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analyse the basic tasks that must be performed and try to devise the work systems that will allow their organizations to operate most efficiently.

The Gilbreths

Two prominent followers of Taylor were Frank Gilbreth (1868–1924) and Lillian Gilbreth (1878–1972), who refined Taylor’s analysis of work movements and made many contributions to time-and-motion study. Their aims were to (1) break up into each of its component actions and analyse every individual action necessary to perform a particular task, (2) find better ways to perform each component action, and (3) reorganize each of the component actions so that the action as a whole could be performed more efficiently—at less cost of time and effort.

The Gilbreths often filmed a worker performing a particular task and then separated the task actions, frame by frame, into their component movements. Their goal was to maximize the efficiency with which each individual task was performed so that gains across tasks would add up to enormous savings of time and effort. Their attempts to develop improved management principles were captured—at times quite humorously—in the movie Cheaper by the Dozen, which depicts how the Gilbreths (with their 12 children) tried to live their own lives according to these efficiency principles and apply them to daily actions such as shaving, cooking, and even raising a family.

Eventually, the Gilbreths became increasingly interested in the study of fatigue. They studied how the physical characteristics of the workplace contribute to job stress that often leads to fatigue and thus poor performance. They isolated factors— such as lighting, heating, the colour of walls, and the design of tools and machines—that result in worker fatigue. Their pioneering studies paved the way for new advances in management theory.

In workshops and factories, the work of the Gilbreths, Taylor, and many others had a major effect on the practice of management. In comparison with the old crafts system, jobs in the new system were more repetitive, boring, and monotonous as a result of the application of scientific management principles, and workers became increasingly dissatisfied. Frequently, the management of work settings became a game between workers and managers: Managers tried to initiate work practices to increase performance, and workers tried to hide the true potential efficiency of the work setting in order to protect their own well-being.

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CriticismTaylor was not without his detractors, however. Labour argued that scientific management was just a device to get more work from each employee and to reduce the total number of workers needed by a firm. There was a congressional investigation into Taylor’s ideas, and evidence suggests that he exaggerated some of the findings. Nevertheless, Taylor’s work left a lasting imprint on business.

General Summary:

The classical management perspective had two primary thrusts. Scientific management focused on employees within organisations and on ways to improve their productivity.

Contributions Laid the foundation for later developments in management theory. Identified important management processes, functions, and skills that are still recognized today. Focused on management as a valid subject of scientific inquiry

Limitations More appropriate for stable and simple organisations than for today’s dynamic and complex organisations. Often prescribed universal procedures that are not appropriate in some settings. Even though some other writers were concerned with the human element, many viewed employees as tools rather than resources

2. ADMINISTRATIVE MANAGEMENT THEORY: Side by side with scientific managers studying the person–task mix to increase efficiency, other researchers were focusing on administrative management, the study of how to create an organizational structure that leads to high efficiency and effectiveness. Organizational structure is the system of task and authority relationships that control how employees use resources to achieve the organization’s goals. Two of the most influential views regarding the creation of efficient systems of organizational administration were developed in Europe. Max Weber, a German professor of sociology, developed the theory of bureaucracy, and Henri Fayol, a French man, developed the principles of management.

2.1 THE THEORY OF BUREAUCRACY: MAX WEBER

Max Weber (1864–1920) wrote at the turn of the twentieth century, when Germany was undergoing its industrial revolution.22 To help Germany manage its growing industrial enterprises at a time when it was striving to become a world power, Weber

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developed the principles of bureaucracy—a formal system of organization and administration designed to ensure efficiency and effectiveness. A bureaucratic system of administration is based on five principles.

• Principle 1: In a bureaucracy, a manager’s formal authority derives from the position he or she holds in the organization.

Authority is the power to hold people accountable for their actions and to make decisions concerning the use of organizational resources. Authority gives managers the right to direct and control their subordinates’ behaviour to achieve organizational goals. In a bureaucratic system of administration, obedience is owed to a manager, not because of any personal qualities that he or she might possess— such as personality, wealth, or social status—but because the manager occupies a position that is associated with a certain level of authority and responsibility.• Principle 2: In a bureaucracy, people should occupy positions because of their performance, not because of their social standing or personal contacts.

This principle was not always followed in Weber’s time and is often ignored today. Some organizations and industries are still affected by social networks in which personal contacts and relations, not job-related skills, influence hiring and promotional decisions.

• Principle 3: The extent of each position’s formal authority and task responsibilities, and its relationship to other positions in an organization, should be clearly specified.

When the tasks and authority associated with various positions in the organization are clearly specified, managers and workers know what is expected of them and what to expect from each other. Moreover, an organization can hold all its employees strictly accountable for their actions when each person is completely familiar with his or her responsibilities.

• Principle 4: So that authority can be exercised effectively in an organization, positions should be arranged hierarchically, so employees know whom to report to and who reports to them.

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Managers must create an organizational hierarchy of authority that makes it clear who reports to whom and to whom managers and workers should go if conflicts or problems arise. This principle is especially important in the armed forces, CSIS, RCMP, and other organizations that deal with sensitive issues involving possible major repercussions. It is vital that managers at high levels of the hierarchy be able to hold subordinates accountable for their actions.

• Principle 5: Managers must create a well-defined system of rules, standard operating procedures, and norms so that they can effectively control behaviour within an organization.

Rules are formal written instructions that specify actions to be taken under different circumstances to achieve specific goals (for example, if A happens, do B). Standard operating procedures (SOPs) are specific sets of written instructions about how to perform a certain aspect of a task. A rule might state that at the end of the workday employees are to leave their machines in good order and a set of SOPs then specifies exactly how they should do so, itemizing which machine parts must be oiled or replaced. Norms are unwritten, informal codes of conduct that prescribe how people should act in particular situations.

For example, an organizational norm in a restaurant might be that waiters should help each other if time permits. Rules, SOPs, and norms provide behavioural guidelines that improve the performance of a bureaucratic system because they specify the best ways to accomplish organizational tasks. Companies such as McDonald’s and Wal-Mart have developed extensive rules and procedures to specify the types of behaviours that are required of their employees, such as, “Always greet the customer with a smile.” Weber believed that organizations that implement all five principles will establish a bureaucratic system that will improve organizational performance. The specification of positions and the use of rules and SOPs to regulate how tasks are performed make it easier for managers to organize and control the work of subordinates.

Similarly, fair and equitable selection and promotion systems improve managers’ feelings of security, reduce stress, and encourage organizational members to act ethically and further promote the interests of the organization.

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If bureaucracies are not managed well, however, many problems can result. Sometimes, managers allow rules and SOPs—“bureaucratic red tape”—to become so cumbersome that decision making becomes slow and inefficient and organizations are unable to change. When managers rely too much on rules to solve problems and not enough on their own skills and judgment, their behaviour becomes inflexible. A key challenge for managers is to use bureaucratic principles to benefit, rather than harm, an organization.

2.2 HENRI FAYOL’S PRINCIPLES OF MANAGEMENTWorking at the same time as Weber but independently of him, Henri Fayol (1841–1925), the CEO of Comambault Mining, identified 14 principles that he believed to be essential to increasing the efficiency of the management process. Some of the principles that Fayol outlined have faded from contemporary management practices, but most have endured. Henri Fayol was a little known French Engineer until late 1940s when Constance Storrs published the translation of Henri Fayol’s “Administration Industrielle et Generale.”

Fayol’s career began as a mining engineer. He moved into geological research and then in 1988, he joined Comambault as Director. He rose through the ranks up to the position of CEO. The company was facing difficulties at the time Henri Fayol took over, but he managed to turn it around.

Upon retirement, Henri Fayol published his work – a comprehensive theory of administration, in which he described and classified administrative management roles and processes. After the translation his work by Constance Storrs, his work became recognised and referenced by others in the growing discourse on management. He is frequently seen as a key, early contributor to a classical management school of thought.

His theory about administration was built on personal observation and experience of what worked well in terms organisation when he was CEO. His aspiration for an “administrative science” sought a consistent set of principles that all organisations must apply in order to run properly.

Both Henri Fayol and F.W. Taylor were arguing that principles existed which all organisations – in order to operate and be administered efficiently – could implement. This type of assertion typifies the “one best way” approach to management thinking.

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Fayol, first of all, started by outlining five functions which are still relevant to discussion today about management roles and action.

v. To forecast and plan – prevoyance: examine the future and draw up plans of action

vi. To organise: build up the structure, material and human resource

vii. To command: maintain activities among the employeesviii. To coordinate: bind together, unify and harmonise activities

and effortix. To control: see to it that everything occurs in conformity with

policy and practice.Henri Fayol then synthesised 14 principles for organisation design and effective administration:

Division of Labour It is a principle of work allocation and specialisation in order to concentrate activities and enable specialisation. Job specialization and the division of labour should increase efficiency, especially if managers take steps to lessen workers’ boredom.

Authority and Responsibility Managers have the right to give orders and the power to exhort subordinates for obedience. If responsibilities are allocated to a position, the post holder needs the requisite authority to carry out these responsibilities. A manager should never be given authority without responsibility, and also should never be given responsibility without the associated authority to get the work done.

Unity of Command An employee should receive orders from only one superior. The basic concern is that tensions and dilemmas arise where we report to two or more bosses. This generalisation still holds – even when we are dealing with matrix structures which involve reporting to more than one boss or being accountable to several clients.

Line of Authority or scalar chain The length of the chain of command that extends from the top to the bottom of an organization should be limited, sensible, clear and understood.

Centralization Authority should not be concentrated at the top of the chain of command.

Unity of Direction The organization should have a single plan of action to guide managers and workers.

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Equity All organizational members are entitled to be treated with justice, fairness and respect.

Order The arrangement of organizational positions should maximize organizational efficiency and provide employees with satisfying career opportunities. Thus policies, rules, instructions and actions should be understandable and understood. Orderliness implies steady evolutionary movement rather than wild, anxiety provoking, unpredictable movement.

Initiative Managers should allow employees to be innovative and creative. Discipline Managers need to create a workforce that strives to achieve

organizational goals. There is need for standards, consistency of action, adherence to rules and values. Without these, no organisation can prosper.

Remuneration of Personnel The system that managers use to reward employees should be equitable for both employees and the organization.

Stability of Tenure of Personnel Long-term employees develop skills that can improve organizational efficiency. Time is needed for the employee to adapt to his/her work and perform it effectively. Stability of tenure promotes loyalty to the organisation, its purposes and values.

Subordination of Individual Interests to the Common Interest Employees should understand how their performance affects the performance of the whole organization. Fayol’s line of thinking was that one employee’s interests or those of one group should not prevail over the organisation as whole.

Esprit de Corps Managers should encourage the development of shared feelings of comradeship, enthusiasm, team work, sound interpersonal relationships or devotion to a common cause.

The principles that Fayol and Weber set forth still provide a clear and appropriate set of guidelines that managers can use to create a work setting that makes efficient and effective use of organizational resources. These principles remain the bedrock of modern management theory; recent researchers have refined or developed them to suit modern conditions. For example, Weber’s and Fayol’s concerns for equity and for establishing appropriate links between performance and reward are central themes in contemporary theories of motivation and leadership.

BEHAVIOURAL MANAGEMENT

The behavioural management theorists writing in the first half of the twentieth century all espoused a theme that focused on how managers should personally behave in order to motivate employees and encourage them to perform at high levels and be

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committed to the achievement of organizational goals. The “Management Insight” indicates how employees can become demoralized when managers do not treat their employees properly.

The Work of Mary Parker FollettProbably because of its radical nature, Follett’s work was unappreciated by managers and researchers until quite recently. Instead, researchers continued to follow in the footsteps of Taylor and the Gilbreths. One focus was on how efficiency might be increased through improving various characteristics of the work setting, such as job specialization or the kinds of tools workers used.

If F.W. Taylor is considered to be the father of management thought, Mary Parker Follett (1868–1933) serves as its mother. Much of her writing about management and about the way managers should behave toward workers was a response to her concern that Taylor was ignoring the human side of the organization. She pointed out that management often overlooks the multitude of ways in which employees can contribute to the organization when managers allow them to participate and exercise initiative in their everyday work lives. Taylor, for example, relied on time-and-motion experts to analyze workers’ jobs for them. Follett, in contrast, argued that because workers know the most about their jobs, they should be involved in job analysis and managers should allow them to participate in the work development process.

Follett proposed that, “Authority should go with knowledge ... whether it is up the line or down.” In other words, if workers have the relevant knowledge, then workers, rather than managers, should be in control of the work process itself, and managers should behave as coaches and facilitators—not as monitors and supervisors. In making this statement, Follett anticipated the current interest in self-managed teams and empowerment. She also recognized the importance of having managers in different departments communicate directly with each other to speed decision making. She advocated what she called “cross-functioning”: members of different departments working together in cross-departmental teams to accomplish project—an approach that is increasingly utilized today.

Fayol also mentioned expertise and knowledge as important sources of managers’ authority, but Follett went further. She proposed that knowledge and expertise, and not managers’ formal authority deriving from their position in the hierarchy, should decide who would lead at any particular moment. She believed, as do many management theorists today, that power is fluid and should flow to the person who

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can best help the organization achieve its goals. Follett took a horizontal view of power and authority, in contrast to Fayol, who saw the formal line of authority and vertical chain of command as being most essential to effective management. Follett’s behavioural approach to management was very radical for its time.

1. THE HAWTHORNE STUDIES AND HUMAN RELATIONS

Without question, the most important contribution to the developing Organization Behaviour field came out of the Hawthorne Studies, a series of studies conducted at the Western Electric Company Works in Cicero, Illinois. These studies, started in 1924 and continued through the early 1930s, were initially designed by Western Electric industrial engineers as a scientific management experiment. They wanted to examine the effect of various illumination levels on worker productivity. The researchers conducted an experiment in which they systematically measured worker productivity at various levels of illumination.Control and experimental groups were set up with the experimental group being exposed to various lighting intensities, and the control group working under a constant intensity. If you were one of the industrial engineers in charge of this experiment, what would you have expected to happen? That individual output in the experimental group would be directly related to the intensity of the light? Seems perfectly logical, doesn't it? However, they found that as the level of light was increased in the experimental group, output for both groups increased.

Then, much to the surprise of the engineers, as the light level was decreased the productivity decrease was observed in the experimental group only when the level of light was reduced to that of a moonlit night. What would explain these un-excluded that illumination intensity was not directly related to group productivity, and that something else must have contributed to the results? However, they weren't able to pinpoint what that "something else" was.

In 1927, the Western electric engineers asked Harvard Professor Elton Mayo and his associates to join the study as consultants. Thus began a relationship that would last through 1932 and encompass numerous experiments in the redesign of jobs, changes in workday and workweek length, introduction of rest periods, and individual versus group wage plans. For example, one experiment was designed to evaluate the effect of a group piecework incentive pay system on group productivity.

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The experiment produced some unexpected results. The researchers found that regardless of whether they raised or lowered the level of illumination, productivity increased. In fact, productivity began to fall only when the level of illumination dropped to the level of moonlight, a level at which presumably workers could no longer see well enough to do their work efficiently.

The researchers found these results puzzling and invited a noted Harvard psychologist, Elton Mayo, to help them. Subsequently, it was found that many other factors also influence worker behaviour, and it was not clear what was actually influencing the Hawthorne workers’ behaviour. However, this particular effect— which became known as the Hawthorne effect—seemed to suggest that workers’ attitudes toward their managers affect the level of workers’ performance. In particular, the significant finding was that a manager’s behaviour or leadership approach can affect performance.

This finding led many researchers to turn their attention to managerial behaviour and leadership. If supervisors could be trained to behave in ways that would elicit cooperative behaviour from their subordinates, then productivity could be increased. From this view emerged the human relations movement, which advocates that supervisors be behaviourally trained to manage subordinates in ways that elicit their cooperation and increase their productivity.

Hawthorne studies reflected the scientific management tradition of seeking greater efficiency by improving the tools and methods of work--in this case, lighting.

1. In the first set of studies, no correlation was found between changes in lighting conditions and individual work performance. In fact, performance nearly always went up with any change--brighter or darker--in illumination.

2. In the second set of studies, the concept of the Hawthorne effect emerged. The Hawthorne effect refers to the possibility that individuals singled out for a study may improve their performance simply because of the added attention they receive from the researchers, rather than because of any specific factors being tested in the study.

3. The third set of studies centred on group production norms and individual motivation.

4. Although simplistic and methodologically primitive, the Hawthorne studies established the impact that social aspects of the job (and the informal group) have on productivity.

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Informal OrganisationThe importance of behavioural or human relations training became even clearer to its supporters after another series of experiments—the bank wiring room experiments. In a study of workers making telephone switching equipment, researchers Elton Mayo and F.J. Roethlisberger discovered that the workers, as a group, had deliberately adopted a norm of output restriction to protect their jobs. Workers who violated this informal production norm were subjected to sanctions by other group members. Those who violated group performance norms and performed above the norm were called “ratebusters”; those who performed below the norm were called “chiselers.” The experimenters concluded that both types of workers threatened the group as a whole. Ratebusters threatened group members because they revealed to managers how fast the work could be done. Chiselers were looked down on because they were not doing their share of the work. Work-group members disciplined both ratebusters and chiselers in order to create a pace of work that the workers (not the managers) thought were fair. Thus, a work group’s influence over output can be as great as the supervisors’ influence. Since the work group can influence the behaviour of its members, some management theorists argue that supervisors should be trained to behave in ways that gain the goodwill and cooperation of workers so that supervisors, not workers, control the level of work-group performance.

One of the main implications of the Hawthorne studies was that the behaviour of managers and workers in the work setting is as important in explaining the level of performance as the technical aspects of the task. Managers must understand the workings of the informal organization, the system of behavioural rules and norms that emerge in a group, when they try to manage or change behaviour in organizations. Many studies have found that, as time passes, groups often develop elaborate procedures and norms that bond members together, allowing unified action either to cooperate with management in order to raise performance or to restrict output and thwart the attainment of organizational goals.32 The Hawthorne studies demonstrated the importance of understanding how the feelings, thoughts, and behaviour of work-group members and managers affect performance. It was becoming increasingly clear to researchers that understanding behaviour in organizations is a complex process that is critical to increasing performance. Indeed, the increasing interest in the area of management known as organizational behaviour, the study of the factors that have an impact on how individuals and groups respond to and act in organizations, dates from these early studies.

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MODERN MANAGEMENT THEORIES1. Theory X and Theory Y: Douglas McGregor

Several studies after the Second World War revealed how assumptions about workers’ attitudes and behaviour affect managers’ behaviour. Perhaps the most influential approach was developed by Douglas McGregor. He proposed that two different sets of assumptions about work attitudes and behaviours dominate the way managers think and affect how they behave in organizations. McGregor named these two contrasting sets of assumptions Theory X and Theory Y.

Theory X According to the assumptions of Theory X, the average worker is lazy, dislikes work, and will try to do as little as possible. Moreover, workers have little ambition and wish to avoid responsibility. Thus, the manager’s task is to counteract workers’ natural tendencies to avoid work. To keep workers’ performance at a high level, the manager must supervise them closely and control their behaviour by means of “the carrot and stick”—rewards and punishments.

Managers who accept the assumptions of Theory X design and shape the work setting to maximize their control over workers’ behaviours and minimize workers’ control over the pace of work. These managers believe that workers must be made to do what is necessary for the success of the organization, and they focus on developing rules, SOPs, and a well-defined system of rewards and punishments to control behaviour.

They see little point in giving workers autonomy to solve their own problems because they think that the workforce neither expects nor desires cooperation. Theory X managers see their role as to closely monitor workers to ensure that they contribute to the production process and do not threaten product quality. Henry Ford, who closely supervised and managed his workforce, fits McGregor’s description of a manager who holds Theory X assumptions.

Theory Y in contrast, Theory Y assumes that workers are not inherently lazy, do not naturally dislike work, and, if given the opportunity, will do what is good for the organization. According to Theory Y, the characteristics of the work setting determine whether workers consider work to be a source of satisfaction or punishment; and managers do not need to control workers’ behaviour closely in order to make them perform at a high level, because workers will exercise self-control when they are committed to organizational goals.

Implications

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The implication of Theory Y, according to McGregor, is that “the limits of collaboration in the organizational setting are not limits of human nature but of management’s ingenuity in discovering how to realize the potential represented by its human resources.” It is the manager’s task to create a work setting that encourages commitment to organizational goals and provides opportunities for workers to be imaginative and to exercise initiative and self-direction.

When managers design the organizational setting to reflect the assumptions about attitudes and behaviour suggested by Theory Y, the characteristics of the organization are quite different from those of an organizational setting based on Theory X. Managers who believe that workers are motivated to help the organization reach its goals can decentralize authority and give more control over the job to workers, both as individuals and in groups.

In this setting, individuals and groups are still accountable for their activities, but the manager’s role is not to control employees but to provide support and advice, to make sure employees have the resources they need to perform their jobs, and to evaluate them on their ability to help the organization meet its goals. Henri Fayol’s approach to administration more closely reflects the assumptions of Theory Y, rather than Theory X.

MANAGEMENT SCIENCE THEORY1. Quantitative Approach to Management:

The quantitative approach involves the use of quantitative techniques to improve decision making. This approach has also been labeled operations research of management science. It includes applications of statistics, optimization models, information models, and computer simulations

How Do Today's Managers use the quantitative approach?The quantitative approach has contributed directly to management decision making in the areas of planning and control. For instance, when managers make budgeting, scheduling, quality control, and similar decisions, they typically rely on quantitative techniques. The availability of sophisticated computer software programs to aid in developing models, equations, and formulas has made the use of quantitative techniques somewhat less intimidating for managers, although they must still be able to interpret the results.

The quantitative approach, although important in its own way, has not influenced

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management practice as much as the next one we're going to discuss organizational behaviour for a number of reasons. These include the fact that many managers are unfamiliar with and intimidated by quantitative tools, behavioural problems are more widespread and visible, and it is easier for most students and managers to relate to real, day-to-day people problems than to the more abstract activity of constructing quantitative models.

Branches in the Quantitative Management Viewpoint:There are three main branches in the Quantitative Management Viewpoint: management science, operations management, and management information systems

1. Management science (or operations research as it has been called) This is an approach aimed at increasing decision effectiveness through the use of sophisticated mathematical models and statistical methods. This is NOT a term to be used synonymously with either the term "Scientific Management" described earlier featuring Taylor and others or "The Science of Management," a term that usually refers broadly, to a deliberate, rational approach to management issues.

2. Operations Management This is the function or field of expertise that is primarily responsible for the production and delivery of an organization's products and services.

3. Management information systems (MIS)This is the name often given to the field of management that focuses on designing and implementing computer-based information systems for use by management

ORGANIZATIONAL ENVIRONMENT THEORYAn important milestone in the history of management thought occurred when researchers went beyond the study of how managers can influence behaviour within organizations to consider how managers control the organization’s relationship with its external environment, or organizational environment—the set of forces and conditions that operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources.

Resources in the organizational environment include the raw materials and skilled people that an organization requires to produce goods and services, as well as the support of groups including customers who buy these goods and services and provide the organization with financial resources. One way of determining the relative success

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of an organization is to consider how effective its managers are at obtaining scarce and valuable resources. The importance of studying the environment became clear after the development of open-systems theory and contingency theory during the 1960s.

(i) The Open-Systems ViewOne of the most influential views of how an organization is affected by its external environment was developed by Daniel Katz, Robert Kahn, and James Thompson in the 1960s. These theorists viewed the organization as an open system—a system that takes in resources from its external environment and converts or transforms them into goods and services that are then sent back to that environment, where they are bought by customers.

At the input stage, an organization acquires resources such as raw materials, money, and skilled workers to produce goods and services. Once the organization has gathered the necessary resources, conversion begins. At the conversion stage, the organization’s workforce, using appropriate tools, techniques, and machinery, transforms the inputs into outputs of finished goods and services such as cars, hamburgers, or flights to Hawaii. At the output stage, the organization releases finished goods and services to its external environment, where customers purchase and use them to satisfy their needs. The money the organization obtains from the sales of its outputs allows the organization to acquire more resources so that the cycle can begin again.

The system just described is said to be “open” because the organization draws from and interacts with the external environment in order to survive; in other words, the organization is open to its environment.

(ii) The closed system ViewIn contrast, this refers to a self-contained system that is not affected by changes that occur in its external environment. Organizations that operate as closed systems, that ignore the external environment and that fail to acquire inputs, are likely to experience entropy, the tendency of a system to lose its ability to control itself and thus to dissolve and disintegrate.

Management theorists can model the activities of most organizations by using the open-systems view. Manufacturing companies like Ford and General Electric, for example, buy inputs such as component parts, skilled and semiskilled labour, and robots and computer-controlled manufacturing equipment; then, at the con- version

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stage, they use their manufacturing skills to assemble inputs into outputs of cars and computers. As we discuss in later chapters, competition between organizations for resources is one of several major challenges to managing the organizational environment.

Researchers using the open-systems view are also interested in how the various parts of a system work together to promote efficiency and effectiveness. Systems theorists like to argue that “the parts are more than the sum of the whole”; they mean that an organization performs at a higher level when its departments work together rather than separately. Synergy, the performance gains that result when individuals and departments coordinate their actions, is possible only in an organized system. The recent interest in using teams comprising people from different departments reflects systems theorists’ interest in designing organizational systems to create synergy and thus increase efficiency and effectiveness.

(iii) Contingency TheoryAnother milestone in management theory was the development of contingency theory in the 1960s by Tom Burns and G.M. Stalker in the United Kingdom and Paul Lawrence and Jay Lorsch in the United States.39 The crucial message of contingency theory is that there is no one best way to organize: The organizational structures and the control systems that managers choose depend on—are contingent on—characteristics of the external environment in which the organization operates. According to contingency theory, the characteristics of the environment affect an organization’s ability to obtain resources. To maximize the likelihood of gaining access to resources, managers must allow an organization’s departments to organize and control their activities in ways most likely to allow them to obtain resources, given the constraints of the particular environment they face. In other words, how managers design the organizational hierarchy, choose a control system, and lead and motivate their employees is contingent on the characteristics of the organizational environment.

An important characteristic of the external environment that affects an organization’s ability to obtain resources is the degree to which the environment is changing. Changes in the organizational environment include: changes in technology, which can lead to the creation of new products (such as compact discs) and result in the obsolescence of existing products (eight-track tapes); the entry of new competitors

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(such as foreign organizations that compete for available resources); and unstable economic conditions. In general, the more quickly the organizational environment is changing, the greater are the problems associated with gaining access to resources and the greater is the manager’s need to find ways to coordinate the activities of people in different departments in order to respond to the environment quickly and effectively.The basic idea behind contingency theory—that there is no one best way to design or lead an organization—has been incorporated into other areas of management theory, including leadership theories.

Mechanistic and organic structures Drawing on Weber’s and Fayol’s principles of organization and management, Burns and Stalker proposed two basic ways in which managers can organize and control an organization’s activities to respond to characteristics of its external environment: They can use a mechanistic structure or an organic structure.40 As you will see, a mechanistic structure typically rests on Theory X assumptions, and an organic structure typically rests on Theory Y assumptions.

When the environment surrounding an organization is stable, managers tend to choose a mechanistic structure to organize and control activities and make employee behaviour predictable.

1. Mechanistic StructureIn a mechanistic structure, authority is centralized at the top of the managerial hierarchy, and the vertical hierarchy of authority is the main means used to control subordinates’ behaviour. Tasks and roles are clearly specified, subordinates are closely supervised, and the emphasis is on strict discipline and order. Everyone knows his or her place, and there is a place for everyone. A mechanistic structure provides the most efficient way to operate in a stable environment because it allows managers to obtain inputs at the lowest cost, giving an organization the most control over its conversion processes and enabling the most efficient production of goods and services with the smallest expenditure of resources. McDonald’s restaurants operate with a mechanistic structure. Supervisors make all important decisions; employees are closely supervised and follow well-defined rules and standard operating procedures.

In contrast, when the environment is changing rapidly, it is difficult to obtain access to resources, and managers need to organize their activities in a way that allows them to cooperate, to act quickly to acquire resources (such as new types of inputs to produce new kinds of products), and to respond effectively to the unexpected.

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2. Organic StructureIn an organic structure, authority is decentralized to middle and first-line managers to encourage them to take responsibility and act quickly to pursue scarce resources. Departments are encouraged to take a cross-departmental or functional perspective, and, as in Mary Parker Follett’s model, authority rests with the individuals and departments best positioned to control the current problems the organization is facing. In an organic structure, control is much looser than it is in a mechanistic structure and reliance on shared norms to guide organizational activities is greater.

Managers in an organic structure can react more quickly to a changing environment than can managers in a mechanistic structure. However, an organic structure is generally more expensive to operate, so it is used only when needed—when the organizational environment is unstable and rapidly changing. To facilitate global expansion, managers at Philips (a Dutch electronics company) were forced to change from a mechanistic to an organic structure, and their experience illustrates the different properties of these structures.

EMERGING VIEWS IN MANAGEMENT Now that you've got a good understanding of the evolution and past history of management theories and practices, what current concepts and practices are shaping today's management history and changing the way that managers do their jobs?

A. Globalization. Organizational operations no longer stop at geographic borders. Managers in all types and sizes of organizations are faced with the opportunities and challenges of globalization.

B. Entrepreneurship refers to the process whereby an individual or a group of individuals uses organized efforts and means to pursue opportunities to create value and grow by fulfilling wants and needs through innovation and uniqueness. Three important themes stand out in this definition:- The pursuit of opportunities; - Innovation; - Growth. Entrepreneurship will continue to be important to societies around the world.

C. Managing in an E-Business World.

1. E-business (electronic business)--a comprehensive term describing the way an

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organization does its work by using electronic (Internet-based) linkages with key constituencies in order to efficiently and effectively achieve its goals.

2. E-commerce (electronic commerce) is any form of business exchange or transaction in which the parties interact electronically.

D. Need for Innovation and Flexibility.

1. The constant flow of new ideas is crucial for an organization to avoid obsolescence or failure.

2. Flexibility is valuable in a context where customers/ needs may change overnight, where new competitors come and go, and where employees and their skills are shifted as need from project to project.

E. Quality Management Systems.

1. Total quality management (TQM) is a philosophy of management that is driven by customer needs and expectations and focuses on continual improvement in work processes

2. TQM was inspired by a small group of quality experts, of whom W. Edwards Deming was one of the chief proponents. He has also developed and presented his quality philosophy and theory of profound knowledge.

3. TQM represents a counterpoint to earlier management theorists who believed that low costs were the only road to increased productivity.

4. The objective of TQM is to create an organization committed to continuous improvement.

F. Learning Organizations and Knowledge Management.

Managers now must deal with an environment that is continually changing. The successful organizations of the 21st century will be flexible, able to learn and respond quickly, and be led by managers who can effectively challenge conventional wisdom, manage the organization's knowledge base, and make needed changes.

1. A learning organization is one that has developed the capacity to continuously adapt and change.

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2. Knowledge management involves cultivating a learning culture where organizational members systematically gather knowledge and share it with others to achieve better performance.

G. Theory Z : William Ouchi's Theory Z combines positive aspects of American and Japanese management into a modified approach aimed at increasing managerial effectiveness while remaining compatible with the norms and values of society and culture.

Summary In this chapter, we examined the evolution of management theory and research over the last century. Much of the material in the rest of this book stems from developments and refinements of this work.

Scientific management theory: The search for efficiency started with the study of how managers could improve person–task relationships to increase efficiency. The concept of job specialization and division of labour remains the basis for the design of work settings in modern organizations. New developments like lean production and total quality management are often viewed as advances on the early scientific management principles developed by Taylor and the Gilbreths.

Administrative management theory: Max Weber and Henri Fayol outlined principles of bureaucracy and administration that are as relevant to managers today as when they were written at the turn of the twentieth century. Much of modern management research refines these principles to suit contemporary conditions. For example, the increasing interest in the use of cross-departmental teams and the empowerment of workers are issues that managers also faced a century ago.

Behavioural management theory: Researchers have described many different approaches to managerial behaviour, including Theories X and Y. Often, the managerial behaviour that researchers suggest reflects the context of their own historical era and culture. Mary Parker Follett advocated managerial behaviours that

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did not reflect accepted modes of managerial behaviour at the time, but her work was largely ignored until conditions changed.

Management science theory The various branches of management science theory provide rigorous quantitative techniques that give managers more control over their organization’s use of resources to produce goods and services.

Organizational environment theory: The importance of studying the organization’s external environment became clear after the development of open-systems theory and contingency theory during the 1960s. A main focus of contemporary management research is to find methods to help managers improve the way they utilize organizational resources and compete successfully in the global environment. Strategic management and total quality management are two important approaches intended to help managers make better use of organizational resources.

Self-Assessment

Assessment

1. Who were these personalities in the field of management?

- Fredrick W. Taylor

- Max Weber

- Henri Fayol

2. Why are the management ideas of the three personalities referred to as classical management theories?

3. With practical examples, discuss any management theory of your choice with particular reference to organisations in private sector?

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UNIT 5: HUMAN REOURCE MANAGEMENT

5.1 IntroductionIn this unit you are being introduced to a very important management function; human resource management. You will learn what is involved in this management function and concepts such as recruitment and selection, performance appraisal, job analysis, training and development and so on.

5.2 ObjectivesBy the end of this unit you will be able to:

Appreciate the meaning and importance of human resource management

Conduct job analysis in your organisation

Explain the recruitment and selection process

Apply performance appraisal techniques

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5.3 Activity

Let us assume that you are familiar with the term, environment. Take about 5 minutes to reflect and write down anything that comes to your mind whenever you hear people talk about environment. In what ways has environment affected you and your community?

WHAT IS HUMAN RESOURCE MANAGEMENT?Human Resource Management (HRM), a relatively new term, that emerged during the 1930s. Many people used to refer it before by its traditional titles, such as Personnel Administration or Personnel Management. But now, the trend is changing. It is now termed as Human Resource Management (HRM). Human Resource Management is a management function that helps an organization select, recruit, train and develops.Human Resource Management (HRM) as a theoretical model involves the acquisition, development, remuneration, motivation and maintenance of an organisation’s workforce. Its functional activities are integrated, proactive and strategically oriented to the achievement of business objectives, and they include the organisational practices of human resource planning, job analysis and job design, recruitment and selection, training and career development, performance appraisal and management, compensation and benefits, health and safety and evaluation (Stone, 2002, pp. 13-14).

JOB ANALYSIS

Job Analysis is a primary tool to collect job-related data. The process results in collecting and recording two data sets including job description and job specification. Any job vacancy cannot be filled until and unless HR manager has these two sets of data. It is necessary to define them accurately in order to fit the right person at the right place and at the right time. This helps both employer and employee understand what exactly needs to be delivered and how.

Job description and job specification are two integral parts of job analysis. They define a job fully and guide both employer and employee on how to go about the whole process of recruitment and selection. Both data sets are extremely relevant for creating a right fit between job and talent, evaluate performance and analyze training needs and measuring the worth of a particular job. Writing them clearly and accurately

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helps organization and workers cope with many challenges while onboard.

Though preparing job description and job specification are not legal requirements yet play a vital role in getting the desired outcome. These data sets help in determining the necessity, worth and scope of a specific job.

1. Job Description

Job description includes basic job-related data that is useful to advertise a specific job and attract a pool of talent. It includes information such as job title, job location, reporting to and of employees, job summary, nature and objectives of a job, tasks and duties to be performed, working conditions, machines, tools and equipment to be used by a prospective worker and hazards involved in it.

Purpose of Job Description

The main purpose of job description is to collect job-related data in order to advertise for a particular job. It helps in attracting, targeting, recruiting and selecting the right candidate for the right job.

It is done to determine what needs to be delivered in a particular job. It clarifies what employees are supposed to do if selected for that particular job opening.

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It gives recruiting staff a clear view what kind of candidate is required by a particular department or division to perform a specific task or job.

It also clarifies who will report to whom.

2. Job Specification

Also known as employee specifications, a job specification is a written statement of educational qualifications, specific qualities, level of experience, physical, emotional, technical and communication skills required to perform a job, responsibilities involved in a job and other unusual sensory demands. It also includes general health, mental health, intelligence, aptitude, memory, judgment, leadership skills, emotional ability, adaptability, flexibility, values and ethics, manners and creativity, etc.

Purpose of Job Specification

Described on the basis of job description, job specification helps candidates analyze whether they are eligible to apply for a particular job vacancy or not.

It helps recruiting team of an organization understand what level of qualifications, qualities and set of characteristics should be present in a candidate to make him or her eligible for the job opening.

Job Specification gives detailed information about any job including job responsibilities, desired technical and physical skills, conversational ability and much more.

It helps in selecting the most appropriate candidate for a particular job.

RECRUITMENT AND SELECTION1. Recruitment

Once an organisation has an idea of its future human resource needs, the next phase is usually recruiting new employees. Recruiting is the process of attracting qualified persons to apply for the jobs that are open. Recruits can be found internally or externally.

Internal recruitment means considering present employees as candidates for openings. Promotion from within can help build morale and keep high-quality employees from leaving the firm. In unionised firms, the procedure for notifying employees of internal job change opportunities are usually spelt out in the union contract. For higher level positions, a skills inventory system may be used to

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identify internal candidates, or managers may be asked to recommend individuals who should be considered. One advantage of internal recruitment is its “ripple effect.” When an employee moves to a different job, someone else must be found to take his or her old position.

External recruitment involves attracting persons outside the organisation to apply for jobs. External recruitment methods include advertising, campus interviews, employment agencies or executive search firms, union hiring halls, referral by present employees, and hiring “walk-ins” or “gate-hires” (people who show up without being solicited). Of course the manager must select the most appropriate methods. Newspaper adverts are often the used because they reach a wide audience and thus allow minorities “equal opportunity” to find out about and apply for job openings.

The organisation must keep in mind that recruiting decisions often go both ways – the organisation is recruiting an employee, but the prospective employee is also selecting a job. Recruiter must mindful of the fact that hiring a wrong person can cost the organisation far more.

One generally successful method for facilitating a good person-job fit is through the so called realistic job preview (RJP). As the term suggests, the RJP involves providing the applicant with a real picture of what performing the job that the organisation is trying to fill would be like.

2. SelectionOnce the recruitment process has attracted a pool of applicants, the next step is to select who to hire. The intent of the selection process is to gather information from applicants that will predict their job success and then hire the candidates likely to be most successful. Of course, the organisation can gather information only about factors that are predictive of future performance. The process of determining the predictive value of information is called validation.

Two basic approaches to validation are predictive validation and content validation. Predictive validation involves collecting the scores of employees or applicants on the device to be validated and correlating their scores with actual job performance. A significant correlation means that the selection device is a valid predictor of job performance. Content validation uses logic and job analysis data to establish that the selection device measures the exact skills needed for successful job performance.

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The most critical part of content validation is a careful job analysis showing exactly what duties are to be performed. The test is then developed to measure the applicant’s ability to perform those duties.

i. Application Blanks: The first step in selection usually is asking the candidate to fill out an application blank. Application blanks are often an efficient method of gathering information about the applicant’s previous work history, educational background, and other job related demographic data. They should not contain questions about areas unrelated to the job such as gender, religion, or nationality. Application blank data are usually used informally to decide whether a candidate merits further evaluation, and interviewers use application blanks to familiarise themselves with candidates before interviewing them.

ii. Tests: Tests of ability, skill, aptitude, or knowledge that is relevant to the particular job are usually the best predictors of job success, although tests of general intelligence or personality are occasionally useful as well. In addition to being validated, tests should be administered and scored consistently. All candidates should be given the same directions, should be allowed the same amount of time, and should experience the same testing environment (temperature, lighting, distractions).

iii. Interviews: Although a popular selection device, an interview is sometimes a poor predictor of job success. For example, biases inherent in the way people perceive and judge others on first meeting affect subsequent evaluations by the interviewer. Interview validity can be improved by training interviewers to be aware of potential biases and by increasing the structure of the interview. This procedure introduces consistency into the interview procedure and allows the organisation to validate the content of the questions to be asked. For interviewing managerial or professional candidates, a somewhat less structured approach can be used. Question areas and information-gathering objectives are still planned in advance, but the specific questions vary with the candidates’ background.

iv. Assessment Centres: Assessment centres are popular methods used to select managers and are particularly good for selecting current employees

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for promotion. The assessment centre is a content-valid simulation of major parts of the managerial job. A typical centre lasts two to three days, with groups of six to twelve persons participating in a variety of managerial exercises. Centres may include interviews, public speaking, and standardised ability tests. Candidates are assessed by several trained observers, usually managers several levels above the job for which the candidates are being considered. Assessment centres are quite valid if they are properly designed and are fair to members of minority groups and women. For some firms, the assessment centre is a permanent facility created for these activities.

v. Other Techniques: Organisations also use other techniques depending on the circumstances. Polygraph tests, once popular, are declining in popularity. On the other hand, more and more are organisations are requiring that applicants in whom they are interested take physical exams (E.g. the army).

TRAINING AND DEVELOPMENTTraining and development is one of the key HR functions. Most organisations look at training and development as an integral part of the human resource development activity. Training and development is a subsystem of an organization. It ensures that randomness is reduced and learning or behavioral change takes place in structured format. The turn of the century has seen increased focus on the same in organisations globally. Many organisations have mandated training hours per year for employees keeping in consideration the fact that technology is deskilling the employees at a very fast rate.

1. What is training?

So what is training and development then? Is it really that important to organisational survival or they can survive without the former? Are training and development one and the same thing or are they different? Training may be described as an endeavour aimed to improve or develop additional competency or skills in an employee on the job one currently holds in order to increase the performance or productivity. In HRM, training usually refers to teaching operational or technical employees how to do the job for which they were hired.

Technically training involves change in attitude, skills or knowledge of a person with the resultant improvement in the behaviour. For training to be effective it has to be a

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planned activity conducted after a thorough need analysis and target at certain competencies, most important it is to be conducted in a learning atmosphere.

2. What is development?

Most of the time training is confused with development; both are different in certain respects yet components of the same system. Development implies opportunities created to help employees grow. Development refers to teaching managers and professionals the skills needed for both present and future jobs. It is more of long term or futuristic in nature as opposed to training, which focus on the current job. It also is not limited to the job avenues in the current organisation but may focus on other development aspects also.

Similarly many organisations choose certain employees preferentially for programs to develop them for future positions. This is done on the basis of existing attitude, skills and abilities, knowledge and performance of the employee. Most of the leadership programs tend to be of this nature with a vision of creating and nurturing leaders for tomorrow.

The major difference between training and development therefore is that while training focuses often on the current employee needs or competency gaps, development concerns itself with preparing people for future assignments and responsibilities.

Training and development objectives

The principal objective of training and development division is to make sure the availability of a skilled and willing workforce to an organization. In addition to that, there are four other objectives: Individual, Organizational, Functional, and Societal.

Individual Objectives – help employees in achieving their personal goals, which in turn, enhances the individual contribution to an organization.

Organizational Objectives – assist the organization with its primary objective by bringing individual effectiveness.

Functional Objectives – maintain the department’s contribution at a level suitable to

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the organization’s needs.

Societal Objectives – ensure that an organization is ethically and socially responsible to the needs and challenges of the society.

PERFORMANCE APPRAISALWhen employees are trained and settled into their jobs, one of management’s next concerns is performance appraisal. Performance appraisal is a formal assessment of how well employees are doing their job. Employees’ performance should be evaluated regularly for many reasons. One reason is that performance appraisal may be necessary for validating selection devices or assessing the impact of training programmes. A second reason is administrative – to aid in making decisions about pay raises, promotions, and training. Still another reason is to provide feedback to employees to help them improve their present performance and plan future careers.Because performance evaluations often help determine wages and promotions, they must be fair and non-discriminatory. In the case of appraisal, content validation is used to show that the appraisal system accurately measures performance on important job elements and does not measure traits or behaviour that are irrelevant to performance.

Common Appraisal Methods: Two basic categories of appraisal methods commonly used in organisations are objective methods and judgemental methods. Objective measures of performance include actual output (that is, number of

units produced), scrap rate, dollar volume of sales, and number of claims processed. Objective performance measures may be contaminated by “opportunity bias” if some persons have a better chance to perform than others (E.g. sales representatives selling same products in different areas).Another type of objective measure, the special performance test, is a method in which each employee is assessed under standardised conditions. This kind of appraisal also eliminates opportunity bias

Judgmental methods include ranking and rating techniques and they are the most common way to measure performance. Ranking compares employees directly with each other and orders them from best to worst. Ranking has a number of drawbacks. Ranking is difficult for large groups because the persons in the middle of the distribution may be hard to distinguish from one another accurately.

Errors in Performance Appraisal: Errors or biases cam occur in any kind of rating or ranking system. One common problem is recency error – the tendency to base

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judgments on the subordinate’s most recent performance because it is most easily recalled. Other errors include overuse of one part of the scale – being too lenient, being too severe, or giving everyone a rating “average.” Halo error is allowing the assessment of an employee on one dimension to “spread” to ratings of that employee on other dimensions. Errors can also occur because of race, gender, or age discrimination, intentionally or unintentionally. The best way to offset these errors is to ensure that a valid rating system is developed at the outset and then train managers in how to use it.

Performance FeedbackThe last step in most performance appraisal system is giving feedback to subordinates about their performance. This step is usually done in a private meeting between the person being evaluated and his or her boss. The discussion should generally be focussed on the facts. Feedback interviews are not easy to conduct. Many managers are uncomfortable with the task, especially if feedback is negative and subordinates are disappointed by what they hear.

Summary Human Resource Management (HRM),

It is a relatively new term that emerged during the 1930s. Many people used to refer it before by its traditional titles, such as Personnel Administration or Personnel Management. But now, the trend is changing. It is now termed as Human Resource Management (HRM). Human Resource Management is a management function that helps an organization select, recruit, train and develops.

Job Analysis

Job Analysis is a primary tool to collect job-related data. The process results in collecting and recording two data sets including job description and job specification. Any job vacancy cannot be filled until and unless HR manager has these two sets of data. It is necessary to define them accurately in order to fit the right person at the right place and at the right time. This helps both employer and employee understand what exactly needs to be delivered and how.

Job description and job specification are two integral parts of job analysis. They define a job fully and guide both employer and employee on how to go about the whole process of recruitment and selection.

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Recruitment and selection1. Recruitment

Once an organisation has an idea of its future human resource needs, the next phase is usually recruiting new employees. Recruiting is the process of attracting qualified persons to apply for the jobs that are open. Recruits can be found internally or externally.

2. SelectionOnce the recruitment process has attracted a pool of applicants, the next step is to select who to hire. The intent of the selection process is to gather information from applicants that will predict their job success and then hire the candidates likely to be most successful. Of course, the organisation can gather information only about factors that are predictive of future performance. The process of determining the predictive value of information is called validation.

Training and developmentTraining and development is a subsystem of an organization. It ensures that randomness is reduced and learning or behavioral change takes place in structured format. The turn of the century has seen increased focus on the same in organisations globally. Many organisations have mandated training hours per year for employees keeping in consideration the fact that technology is deskilling the employees at a very fast rate.

Performance appraisal It is a formal assessment of how well employees are doing their job. Employees’ performance should be evaluated regularly for many reasons. One reason is that performance appraisal may be necessary for validating selection devices or assessing the impact of training programmes. A second reason is administrative – to aid in making decisions about pay raises, promotions, and training. Still another reason is to provide feedback to employees to help them improve their present performance and plan future careers.

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Self-Assessment

Assessment

1. Define the following concepts:

(i) Human resource Management

(ii) Job Analysis

(iii) Recruitment

(iv) Selection

(v) Performance appraisal

2. Discuss the importance of training and development of employees in organisations in the modern era.

3. Why is it always important to conduct job analysis in an organisation?

UNIT 6: INDUSTRIAL RELATIONS6.1 Introduction

Industrial relations constitute a very important component of industrial sociology. In this unit you will be introduced to the definition of industrial relations, the

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importance of industrial relations, industrial relations perspectives, collective bargaining, industrial disputes, unrest and action.

6.2 ObjectivesBy the end of this unit you will be able to:

Define the term ‘industrial relations’ and the forms of industrial relations

Explain the need for industrial relations in organisations

Apply the concept of collective bargaining to your own situations

Explain the causes, effects and possible solutions to industrial disputes and industrial actions

6.3 Activity

Let us assume that you are familiar with the term, relations. Take a few minutes to reflect and write down anything that comes to your mind whenever you hear people talk about industrial relations?

WHAT IS INDUSTRIAL RELATIONS

Industrial Relations (IR) means the relationship between employers and employees in course of employment in industrial organisations. However, the concept of Industrial Relations has a broader meaning. In a broad sense, the term Industrial Relations includes the relationship between the various unions, between the state and the unions as well as those between the various employers and the government. Relations of all those associated in an industry may be called Industrial Relations.

It regarded as a theoretical model involves the rules governing workplace relations and the institutions established to govern and enforce these rules. These “rules” are represented in the terms and conditions of work set out collectively and individually agreed labour contracts and common law contracts, as well as grievance procedures, dispute settlement processes, statutory regulations, codes of conduct, industrial law

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and the like.

The formulation of industrial relations is reached through practices such as negotiation, conciliation, arbitration, collective bargaining, individual bargaining, and their governance and enforcement are mediated through institutions such as trade unions, employer associations, industrial tribunals, state-sponsored regulatory bodies and civil courts (Gospel & Palmer, 1993, p. 3).

According to International Labour Organisation, Industrial relations comprise relationships between the state on one hand and the employer’s and employee’s organisation on the other, and the relationship among the occupational organisations themselves.

According to J.T. Dunlop, “Industrial relations are the complex interrelations among managers, workers and agencies of the government”

Features of Industrial Relations:

Industrial relations are outcomes of employment relationships in an industrial enterprise. These relations cannot exist without the two parties namely employers and employees.

Industrial relations system creates rules and regulations to maintain harmonious relations.

The government intervenes to shape the industrial relations through laws, rules, agreements, terms, charters etc.

Several parties are involved in the Industrial relations system. The main parties are employers and their associations, employees and their unions and the government. These three parties interact within economic and social environment to shape the Industrial relations structure.

Industrial relations are a dynamic and developing concept, not a static one. They undergo changes with changing structure and scenario of the industry as and when change occurs.

Industrial relations include both individual relations and collective relationships.

Objectives of Industrial Relations:

To maintain industrial democracy based on participation of labour in the management and gains of industry.

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To raise productivity by reducing tendency of high labour turnover and absenteeism.

To ensure workers’ participation in management of the company by giving them a fair say in decision-making and framing policies.

To establish a proper channel of communication. To increase the morale and discipline of the employees. To safeguard the interests of the labour as well as management by securing the

highest level of mutual understanding and goodwill between all sections in an industry.

To avoid all forms of industrial conflicts so as to ensure industrial peace by providing better living and working standards for the workers.

To bring about government control over such industrial units which are running at a loss for protecting the livelihood of the employees.

Importance of Industrial Relations:

1. Uninterrupted Production: The most important benefit of industrial benefits is that it ensures continuity of production. This means continuous employment for all involved right from managers to workers. There is uninterrupted flow of income for all. Smooth running of industries is important for manufacturers, if their products are perishable goods and to consumers if the goods are for mass consumption (essential commodities, food grains etc.). Good industrial relations bring industrial peace which in turn tends to increase production.

2. Reduction in Industrial disputes: Good Industrial relations reduce Industrial disputes. Strikes, grievances and lockouts are some of the reflections of Industrial unrest. Industrial peace helps in promoting co-operation and increasing production. Thus good Industrial relations help in establishing Industrial democracy, discipline and a conducive workplace environment.

3. High morale: Good Industrial relations improve the morale of the employees and motivate the worker workers to work more and better.

4. Reduced wastage: Good Industrial relations are maintained on the basis of co-operation and recognition of each other. It helps to reduce wastage of material, manpower and costs.

5. Contributes to economic growth and development.

Causes of poor Industrial Relations:

1. Economic causes: Often poor wages and poor working conditions are the main causes for unhealthy relations between management and labour. 

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Unauthorised deductions from wages, lack of fringe benefits, absence of promotion opportunities, faulty incentive schemes are other economic causes. Other causes for Industrial conflicts are inadequate infrastructure, worn-out plant and machinery, poor layout, unsatisfactory maintenance etc.

2. Organisational causes: Faulty communications system, unfair practices, non-recognition of trade unions and labour laws are also some other causes of poor relations in industry.

3. Social causes: Uninteresting nature of work is the main social cause of poor Industrial relations. Dissatisfaction with job and personal life culminates into Industrial conflicts.

4. Psychological causes: Lack of job security, non-recognition of merit and performance, poor interpersonal relations are the psychological reasons for unsatisfactory employer-employee relations.

5. Political causes: Multiple unions, inter-union rivalry weaken the trade unions. Defective trade unions system prevailing in the country has been one of the most responsible causes for Industrial disputes in the country.

Suggestions to improve Industrial Relations:

1. Sound personnel policies: Policies and procedures concerning the compensation, transfer and promotion, etc. of employees should be fair and transparent. All policies and rules relating to Industrial relations should be fair and transparent to everybody in the enterprise and to the union leaders.

2. Participative management: Employees should associate workers and unions in the formulation and implementation of HR policies and practices.

3. Responsible unions: A strong trade union is an asset to the employer. Trade unions should adopt a responsible rather than political approach to industrial relations.

4. Employee welfare: Employers should recognise the need for the welfare of workers. They must ensure reasonable wages, satisfactory working conditions, and other necessary facilities for labour. Management should have a genuine concern for the welfare and betterment of the working class.

5. Grievance procedure: A well-established and properly administered system committed to the timely and satisfactory redressal of employee’s grievances can be very helpful in improving Industrial relations. A suggestion scheme will help to satisfy the creative urge of the workers.

6. Constructive attitude: Both management and trade unions should adopt positive attitude towards each other. Management must recognise unions as the spokesmen of the workers’ grievances and as custodians of their interests.

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The employer should accept workers as equal partners in a joint endeavour for good Industrial relations.

7. Creating a proper communication channel to avoid grievances and misunderstandings among employees

8. Education and training imparted to the employees

INDUSTRIAL RELATIONS PERSPECTIVES1. Unitary Perspective:

In unitarism, the organization is perceived as an integrated and harmonious system, viewed as one happy family. A core assumption of unitary approach is that management and staff, and all members of the organization share the same objectives, interests and purposes; thus working together, hand-in-hand, towards the shared mutual goals. Furthermore, unitarism has a paternalistic approach where it demands loyalty of all employees. Trade unions are deemed as unnecessary and conflict is perceived as disruptive.

From employee point of view, unitary approach means that:

Working practices should be flexible. Individuals should be business process improvement oriented, multi-skilled and ready to tackle with efficiency whatever tasks are required.

If a union is recognized, its role is that of a further means of communication between groups of staff and the company.

The emphasis is on good relationships and sound terms and conditions of employment.

Employee participation in workplace decisions is enabled. This helps in empowering individuals in their roles and emphasizes team work, innovation, creativity, discretion in problem-solving, quality and improvement groups etc.

Employees should feel that the skills and expertise of managers supports their endeavors.

From employer point of view, unitary approach means that:

Staffing policies should try to unify effort, inspire and motivate employees. The organization’s wider objectives should be properly communicated and

discussed with staff.

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Reward systems should be so designed as to foster to secure loyalty and commitment.

Line managers should take ownership of their team/staffing responsibilities. Staff-management conflicts – from the perspective of the unitary framework –

are seen as arising from lack of information, inadequate presentation of management’s policies.

The personal objectives of every individual employed in the business should be discussed with them and integrated with the organization’s needs

2. Pluralistic-Perspective:

In pluralism the organization is perceived as being made up of powerful and divergent sub-groups – management and trade unions. This approach sees conflicts of interest and disagreements between managers and workers over the distribution of profits as normal and inescapable. Consequently, the role of management would lean less towards enforcing and controlling and more toward persuasion and co-ordination. Trade unions are deemed as legitimate representatives of employees. Conflict is dealt by collective bargaining and is viewed not necessarily as a bad thing and if managed could in fact be channeled towards evolution and positive change. Realistic managers should accept conflict to occur. There is a greater propensity for conflict rather than harmony. They should anticipate and resolve this by securing agreed procedures for settling disputes.

The implications of this approach include:

The firm should have industrial relations and personnel specialists who advise managers and provide specialist services in respect of staffing and matters relating to union consultation and negotiation.

Independent external arbitrators should be used to assist in the resolution of disputes.

Union recognition should be encouraged and union representatives given scope to carry out their representative duties

Comprehensive collective agreements should be negotiated with unions

3. Marxist Perspective:

This view of industrial relations is a by-product of a theory of capitalist society and social change. Marx argued that:

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Weakness and contradiction inherent in the capitalist system would result in revolution and the ascendancy of socialism over capitalism.

Capitalism would foster monopolies. Wages (costs to the capitalist) would be minimized to a subsistence level. Capitalists and workers would compete/be in contention to win ground and

establish their constant win-lose struggles would be evident.

This perspective focuses on the fundamental division of interest between capital and labor, and sees workplace relations against this background. It is concerned with the structure and nature of society and assumes that the conflict in employment relationship is reflective of the structure of the society. Conflict is therefore seen as inevitable and trade unions are a natural response of workers to their exploitation by capital.

Factors of industrial relations

Good industrial relations depend on a great variety of factors. Some of the more obvious ones are listed below:

1. History of industrial relations – No enterprise can escape its good and bad history of industrial relations. A good history is marked by harmonious relationship between management and workers. A bad history by contrast is characterized by militant strikes and lockouts. Both types of history have a tendency to perpetuate themselves. Once militancy is established as a mode of operations there is a tendency for militancy to continue. Or once harmonious relationship is established there is a tendency for harmony to continue.

2. Economic satisfaction of workers – Psychologists recognize that human needs have a certain priority. Need number one is the basic survival need. Much of men conducted are dominated by this need. Man works because he wants to survive. This is all the more for underdeveloped countries where workers are still living under subsistence conditions. Hence economic satisfaction of workers is another important prerequisite for good industrial relations.

3. Social and Psychological satisfaction – Identifying the social and psychological urges of workers is a very important step in the direction of building good industrial relations. A man does not live by bread alone. He has several other needs besides his physical needs which should also be given due attention by the employer. An organization is a joint venture involving a climate of human and social relationships

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wherein each participant feels that he is fulfilling his needs and contributing to the needs of others. This supportive climate requires economic rewards as well as social and psychological rewards such as workers’ participation in management, job enrichment, suggestion schemes, re-dressal of grievances etc.

4. Off-the-Job Conditions – An employer employs a whole person rather than certain separate characteristics. A person’s traits are all part of one system making up a whole man. His home life is not separable from his work life and his emotional condition is not separate from his physical condition. Hence for good industrial relations it is not enough that the worker’s factory life alone should be taken care of his off-the-job conditions should also be improved to make the industrial relations better.

5. Enlightened Trade Unions – The most important condition necessary for good industrial relations is a strong and enlightened labour movement which may help to promote the status of labour without harming the interests of management, Unions should talk of employee contribution and responsibility. Unions should exhort workers to produce more, persuade management to pay more, mobilize public opinion on vital labour issues and help Government to enact progressive labour laws.

6. Negotiating skills and attitudes of management and workers – Both management and workers’ representation in the area of industrial relations come from a great variety of backgrounds in terms of training, education, experience and attitudes. These varying backgrounds play a major role in shaping the character of industrial relations. Generally speaking, well-trained and experienced negotiators who are motivated by a desire for industrial peace create a bargaining atmosphere conducive to the writing of a just and equitable collective agreement. On the other hand, ignorant, inexperienced and ill-trained persons fail because they do not recognize that collective bargaining is a difficult human activity which deals as much in the emotions of people as in their economic interests.

It requires careful preparation and top –notch executive competence. It is not usually accomplished by some easy trick or gimmick. Parties must have trust and confidence in each other. They must possess empathy, i.e. they should be able to perceive a problem from the opposite angle with an open mind. They should put themselves in the shoes of the other party and then diagnose the problem. Other factors which help to create mutual trust are respect for the law and breadth of the vision. Both parties should show full respect for legal and voluntary obligations and should avoid the tendency to make a mountain of a mole hill.

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7. Public policy and legislation – When Government, regulates employee relations, it becomes a third major force determining industrial relations the first two being the employer and the union. Human behaviour is then further complicated as all three forces interact in a single employee relation situation. Nonetheless, government in all countries intervenes in management – union relationship by enforcing labour laws and by insisting that the goals of whole society shall take precedence over those of either of the parties. Government intervention helps in three different ways 1) it helps in catching and solving problems before they become serious. Almost every one agrees that it is better to prevent fires them to try stopping them after they start; 2) It provides a formalized means to the workers and employers to give emotional release to their dissatisfaction; and 3) It acts as a check and balance upon arbitrary and capricious management action.

8. Better education - With rising skills and education workers’ expectations in respect of rewards increase. It is a common knowledge that the industrial worker in India is generally illiterate and is misled by outside trade union leaders who have their own axe to grind. Better workers’ education can be a solution to this problem. This alone can provide worker with a proper sense of responsibility, which they owe to the organization in particular, and to the community in general.

9. Nature of industry – In those industries where the costs constitute a major proportion of the total cast, lowering down the labour costs become important when the product is not a necessity and therefore, there is a little possibility to pass additional costs on to consumer. Such periods, level of employment and wages rise in decline in employment and wages. This makes workers unhappy and destroys good industrial relations.

INDUSTRIAL RELATIONS SYSTEM

An industrial relations system consists of the whole gamut of relationships between employers and employees and employers which are managed by the means of conflict and cooperation.

A sound industrial relations system is one in which relationships between management and employees (and their representatives) on the one hand, and between them and the State on the other, are more harmonious and cooperative than conflictual and creates an environment conducive to economic efficiency and the motivation, productivity and development of the employee and generates employee loyalty and

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mutual trust.

Actors in the IR system: Tripartite system:

Employers: Employers possess certain rights vis-à-vis labour. They have the right to hire and fire them. Management can also affect workers’ interests by exercising their right to relocate, close or merge the factory or to introduce technological changes.

Employees: Workers seek to improve the terms and conditions of their employment. They exchange views with management and voice their grievances. They also want to share decision making powers of management. Workers generally unite to form unions against the management and get support from these unions.

Government: The central and state government influences and regulates industrial relations through laws, rules, agreements, awards of court and the like. It also includes third parties and labour and tribunal courts.

INDUSTRIAL DISPUTES, THEIR PREVENTION AND SETTLEMENT

Industrial disputes are organised protests against existing terms of employment or conditions of work. It is:

“Any dispute or difference between employer and employer or between employer and workmen or between workmen and workmen, which are connected with the employment or non-employment or terms of employment or with the conditions of labour of any person”

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In practice, Industrial dispute mainly refers to the strife between employers and their employees. An Industrial dispute is not a personal dispute of any one person. It generally affects a large number of workers’ community having common interests.

PREVENTION OF INDUSTRIAL DISPUTES:

The consequences of an Industrial dispute will be harmful to the owners of industries, workers, economy and the nation as a whole, which results in loss of productivity, profits, market share and even closure of the plant. Hence, Industrial disputes need to be averted by all means.

Prevention of Industrial disputes is a pro-active approach in which an organisation undertakes various actions through which the occurrence of Industrial disputes is prevented. Like the old saying goes, “prevention is better than cure.”

1. Model Standing Orders: Standing orders define and regulate terms and conditions of employment and bring about uniformity in them. They also specify the duties and responsibilities of both employers and employees thereby regulating standards of their behaviour. Therefore, standing orders can be a good basis for maintaining harmonious relations between employees and employers.

2. Code of Industrial discipline: The code of Industrial discipline defines duties and responsibilities of employers and workers. The objectives of the code are:

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To secure settlement of disputes by negotiation, conciliation and voluntary arbitration.

To eliminate all forms of coercion, intimidation and violence. To maintain discipline in the industry. To avoid work stoppage. To promote constructive co-operation between the parties concerned at all

levels.

3. Works Committee: Every industrial undertaking employing 100 or more workers is under an obligation to set up a works committee consisting equal number of representatives of employer and employees. The main purpose of such committees is to promote industrial relations.  According to Indian Labour Conference work committees are concerned with:-

Administration of welfare & fine funds. Educational and recreational activities. Safety and accident prevention Occupational diseases and protective equipment. Conditions of work such as ventilation, lightening, temperature & sanitation

including latrines and urinals. Amenities such as drinking water canteen, dining rooms, medical & health

services.

The following items are excluded from the preview of the work committees.

Wages and allowances Profit sharing and bonus Programs of planning and development Retirement benefits PF and gratuity Housing and transport schemes Incentive schemes Retirement and layoff

4.  Labour welfare officer: In Zambia, The Industrial relations Act provides for the appointment of a labour welfare officer in every factory employing 500 or more workers. The officer looks after all facilities in the factory provided for the health, safety and welfare of workers. He maintains liaison with both the employer and the workers, thereby serving as a communication link and contributing towards healthy

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industrial relations through proper administration of standing orders, grievance procedure etc.

COLLECTIVE BARGAINING: WHAT IS COLLECTIVE BARGAINING

Collective bargaining is a process whereby trade unions, representing workers, and employers through their representatives, treat and negotiate with a view to the conclusion of a collective agreement or renewal thereof or the resolution of disputes.

A collective agreement is usually an agreement in writing between an employer and a union, on behalf of workers employed by the employer. It contains provisions reflecting terms and conditions of employment of the workers, and conferring to them their rights, privileges and responsibilities.

The process of collective bargaining is in reality a series of negotiations, diplomatic and political manoeuvres, with the influence of economics.

ILO Convention No. 154: The Promotion of Collective Bargaining Article 2For the purposes of this Convention, the term “collective bargaining”  extends to all negotiations which take place between an employer, a group of employers or one or more employers’ organizations on the one hand, and one or more workers’ organizations, on the other, for

1. determining working conditions and terms of employment; and/ or 2. regulating relations between employers and workers; and/or3. Regulating relations between employers or their organizations and a

workers’ organization or workers’ organizations.

Trade union negotiator has to negotiate with his or her principals, the general membership, as well as with the union’s negotiating teams, even as the negotiator negotiates with the employers. The employers’ negotiator is often in a similar situation.

Sometimes the terms “bargaining” and “negotiating” are used to describe the same process. Theoretically, the term bargaining is probably better used to describe the economic interaction between an employer and an employee which is finalized in the individual contract, whether written or unwritten. When an employer hires a worker, he can demand labour, and agree on a price for that labour. The offer, acceptance, consideration, and intention to create a legal relationship constitute a bargain to which

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compliance can be sought in law.When trade unions negotiate a collective agreement with employers, the process and the outcome are somewhat different. In the first place, trade unions do not sell labour to employers, unlike individual workers. Likewise, employers do not pay trade unions for work done. Trade unions use collective bargaining as a means of setting the rules by which labour in the workplace will be regulated and remunerated.

Voluntaristic vs. legal industrial relations systems

In an industrial relations’ system that is predominantly voluntaristic, collective bargaining processes such as recognition, the collective agreement and industrial action are likely to be based on a gentleman’s agreement made acceptable by custom and practice. Gradually voluntarism has lost ground in many societies and most industrial relations system have legislation covering recognition, the collective agreement, the formation and structure of bargaining units and the management of industrial action.

Over time, most countries have ratified the main International Labour Organization’s Conventions on collective bargaining. These include:

Convention No. 87, concerning Freedom of Association and Protection of the Right to Organize;

Convention No. 98, concerning the Application of the Principles of the Right to Organize and Bargain Collectively; and

Convention No. 151, concerning the Protection of the Right to Organize and Procedures for determining conditions of Employment in the Public Sector.

Convention No. 154, concerning the promotion of collective bargaining

All Caribbean countries have developed a legislative and institutional framework supportive of collective bargaining.

Stages in Collective BargainingThe first step in the collective bargaining process is that of organizing a group of workers, gaining recognition and developing a body of proposals to submit to the employer as the basis of a collective agreement. The development of proposals to be submitted on behalf of workers is a delicate process over which great care has to be taken.

Trade union leaders are required to meet with the general membership and seek a

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clear understanding of the changes in their contracts which they require. Such a meeting may demonstrate differences among the members on serious issues, such as levels of remuneration. The submission of many issues, including levels of compensation and conditions, will have to be examined against market considerations. The role of a research facility within a union is thus very important.

Elements of submissionsNegotiators recognize that the submission must encompass various elements. Industrial relations existed at the workplace before the entry of the union. A pattern of benefits, conditions, rules and regulations is usually in place. The negotiator must make an assessment of those provisions that are already adequate and those where improvements can be made.

In terms of wages/salaries and other areas of remuneration, the first agreement is for setting a schedule in place, and must not be confused with a revision. In a situation where wages/salaries are very far below the market value in circumstances that cannot be justified, trade unions can sometimes achieve significant improvements for workers. In some cases, wages/salaries may already be competitive in the market and the union may focus on conditions and other benefits.

Traditionally, the trade union submits a list of changes which forms the agenda for negotiations. In recent times, the list may be enclosed in a draft collective agreement which helps to ensure that a collective agreement is signed early after the closure of negotiations.

With recognition agreed, and proposals submitted, the union will usually inform the employer of the names of the shop stewards at the workplace, and request the extension of courtesies in the performance of their functions.

Composition of negotiating teamIn some instances, union negotiations are led by paid professional staff members and in others, by shop stewards from the workplace. In many instances, the manager, the human resources manager, and the financial officer or accountant may lead the management’s team.

Many trade union negotiating teams are led by generalists who have to develop expertise on a wide area of subjects such as compensation practices, benefit schemes, pensions and safety and health conditions. They must also have some legal training

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for drafting language in agreements.

There is a growing tendency for specialists to sit on negotiating teams. Thus one person will deal with pension issues, another with health care and so on.

In large companies with Human Resource Management Structures, there are officers who specialize in different areas of industrial relations such as counseling, training, safety and health, negotiations, benefits, management and personnel matters.

Steps in Collective Bargaining or Negotiating

With the proposals submitted, and the team selected, the chief negotiator/ leader may recognize the importance of the following phases of negotiations:

Preparing; Arguing; Signaling; Proposing; Packaging; Bargaining; Closing; Agreeing.

Negotiation has already been described as a process involving diplomacy. Some claim that the negotiations forum is a ‘contested terrain’, that the process is akin to an act of war, where words, wit and logic take the place of lethal weapons.

A simple definition of negotiating is a process through which parties move from their divergent positions to a point where agreement may be reached.

This model suggests that the union will submit a set of proposals which it considers as an ideal. However, it may be willing to settle for less than the ideal. At some point between the ideal submission and the settlement, the union will resist any pressures by the employer to go below the resistance point. The employers are in a similar position. Ideally, they may not wish to make any improvements, but they will establish a mandate for settlement, and also have a resistance point.

This model can be problematic. If the ideal positions of the two sides, and the likely settlement position diverge greatly, the chances of an impasse, breakdown and subsequent industrial action looms.

Clearly also, no negotiator wants his position to be known by those on the other side! In the case of the trade unionist, his members may feel that they have the right to set his target, and that he cannot settle other than at the mandate they have given. Such an

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inflexible position may be difficult to maintain, as the more persons who are aware of the mandate, the more likely it is that it may reach the ‘other side’.

Trade union negotiators must be adept at handling meetings and at communicating with the membership to ensure that their goals and objectives are congruent.

1. Preparation

Preparation for any serious negotiations would be incomplete without a thorough examination of factors external and internal to the workplace which has a bearing on the negotiations.

Examining external factors - the macro-economic environmentPart of the ‘mental’ preparation of the negotiator is to be in tune with the environment impacting on industrial relations. The formation of a Single Market and Economy, the existence of trading blocs, such as Free Trade Areas in Africa, Americas etc all have implications for areas of economic and industrial life workplace and the worker.

Trade unionists are very aware that productivity and competitiveness are key issues at the workplace. Workplaces are in competition with each other within territories, across territories, and indeed, across the globe. Those which compete successfully will survive; those which fall behind will disappear. Labour productivity is an important factor in competition and part of the negotiator’s task is to examine the productivity of the workplace.

Preparation for negotiations will include an examination of macro-economic factors such as employment levels, the rate of inflation, the foreign reserves, investment, interest rates, and growth in the economy, among other things. Where the macro-economic situation appears stable and there are signs of prosperity, employers are more likely to make reasonable settlements. A major difficulty in many regions is that there is a great divergence in macro-economic performance. Some countries have also performed in such a way that even in years of solid growth, the benefits have not accrued to the mass of workers.

Examining internal factors - enterprise performance

An examination of the internal performance of the business enterprise is even more important than information on the macro-economic environment. The sharing of

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business information is critically important for effective negotiations. In too many instances management refuses to provide vital information to trade unions. This is especially so where there are single owner proprietorships, partnership, and private limited liability companies. Branch plant operations of foreign-owned companies also often refuse to share information.

Trade unions should be aware of the profit and loss statements, balance sheets, notes and other information provided in the Financial Reports of companies with whom they are negotiating. They also benefit from awareness of the companies’ budgets and strategic plans.

Analysis of financial information can be useful in providing information on the company’s history and its present status, but will not necessarily point accurately to its future performance.

The profitability, liquidity, leverage and activity ratios shown in Table 1 are useful in examining the performance of a company. The ratios are best applied to a manufacturing plant but some have relevance to other business units.

Such information, along with intelligence provided by the workforce on recruitments, expansions, purchases, investments and other details can assist in the type of settlements one can realistically expect from an enterprise based on its capacity to pay.

Another aspect of preparation for the negotiations relates to physical arrangements including ensuring that meeting rooms are adequate, with room for the occasional caucus, and that seating arrangements are adequate.

3. ArguingNegotiators are expected to argue effectively in support of their submissions. Negotiations are not discussions, and they are not consultations. They are about persuasive arguments that can win over a case. Negotiators are expected to argue rationally, reasonably, and to use reliable information in support of a claim. Negotiators use a blend of logic, emotional appeals, persuasion, humour, analogies and pleadings in furtherance of their claims. Argument can become heated, and may even become acrimonious and hostile. This is usually a clear sign of the need for a break or for conciliation.

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How to Calculate Profitability, Liquidity, Leverage and Activity Ratios

Ratio How it is calculated What it shows

Profitability

Net profit margin Profits after taxes / SalesAfter tax profits per dollar

of sales

Returns on total assetsProfits after taxes / Total

AssetsReturns on Total Investment

Liquidity

Current RatioCurrent Assets /Current

LiabilitiesCash coverage of short-term

creditors

Acid TestCurrent Assets-

Inventory /Current Liabilities

Coverage of short term without selling inventory

Leverage

Debts to Assets Total Debt / Total AssetsUse of borrowed ratio 

funds for financing

Debt to Equity ratioTotal Debt / Total

Stockholder’s Equity Funds created by owners to

handle debt

Activity

Inventory turnoverSales / Inventory of

Finished GoodsIs inventory over or under

stocked?

Average Collection Period(Accounts Receivable /

Total Sales) *365Time after making a sale to

receive a payment

3. SignalingNegotiating is interactive and dynamic. Active listening is a skill which has to be developed. Also, negotiators have to be able to ask questions to elicit useful responses. Negotiators send signals through words, some plain and easily

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apprehended, others are more obtuse. Negotiators also send signals through body language. For those who are adept at receiving signals, the process of moving negotiations onward becomes less onerous. It is through signals that a negotiator begins to perceive:

proposals that will meet with little resistance; those that can be accepted with some modification; and those that have low chances of success in the current round of negotiations.

4. Proposing

Armed with the reading of signals, a negotiator will then know which proposals can be prioritized with almost certain chances of success.

5. PackagingThe negotiator may then decide to package proposals, making concessions and linking strong winners with others with less chances of success. A total package proposal is placed on the table with an agreement of all elements crucial for settlement.

6. BargainingAt this stage, it is likely that both sides will be proposing packages, each with a core that signifies ‘the irreducible’ that is required by each for settlement. At this stage, negotiators might be suggesting that their proposals are the ‘last, last’ that they will be making.

At this stage, each negotiator is searching for an advantage, while helping the opponent to feel a winner. It is often wise to break out of formal negotiations and engage in creative scenario building on a menu of options that may provide a settlement. Negotiators talk about taking “pens off the table”, instructing the takers of minutes not be record the creative exercise in problem-solving. In case the creative efforts fail, the negotiators can return to formal discussions at the level of their last formal submissions. Bargaining in earnest can be a painstaking and lengthy exercise with all of the features of an Olympic exercise between formidable contestants.

7. ClosingExpert negotiators develop a sense of when it is best to close negotiations. Closing too early or too late can lead to the loss of the strategic moment when greatest success can be reached. In assessing the best time to close, consideration must be given to issues such as the mood of the workers and the prevailing economic climate.

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At the end of the bargaining session, negotiators should be able to walk back over the negotiations and summarize all of the positions. They should note the agreements reached issues that are withdrawn and others that are deferred. Ambiguities should be cleared up and joint language discussed.8. AgreeingThe final stage in the formal negotiation process is reached when the draft agreement has been vetted, and has been produced in a formal form by the negotiators.

Discussions are then held about issues such as the starting date for the payment of new salaries/wages; issues related to retroactive pay, where relevant; the timing of the introduction of new benefits; and indeed, areas of housekeeping and tidying up the business of the table. The discussions are then closed with appropriate addresses, bringing a civilized end to a round of negotiations.

Communicating with the union membershipMention has already been made of the fact that negotiation leaders must always keep their principals informed and seek their support in reaching acceptable settlements. To this end, they should hold a general meeting to get workers to vote for the settlement they propose to close on.

A negotiator can receive a shock if his tentative agreement at the table is met by a refusal from his principals, and this can happen if they have not been included throughout the various stages of the process.

Meetings, circulation of minutes and the use of position summaries can all help to ensure the smooth process of collective bargaining.

A skilled negotiator has little difficulty in having a vote at the end of the negotiation process and getting majority support for his agreement. He should not however, be unduly concerned if support is not unanimous. He should be wary, nevertheless, if there is resistance from a substantial minority of his principals.

Breakdown in Collective BargainingTrade unions have traditionally recognized the value and importance of industrial action when there is a failure to reach agreement through the established procedures. Industrial action can take many forms such as work-to-rule, go slow, strike etc.

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In some countries the strike is highly regulated through statutory provisions. In most countries Essential Services are clearly defined and industrial action in these areas is circumscribed.

Machinery for settlement of Industrial Disputes:

1. Conciliation: Conciliation refers to the process by which representatives of employees and employers are brought together before a third party with a view to discuss, reconcile their differences and arrive at an agreement through mutual consent. The third party acts as a facilitator in this process. Conciliation is a type of state intervention in settling the Industrial Disputes. The Industrial Disputes Act empowers the Central & State governments to appoint conciliation officers and a Board of Conciliation as and when the situation demands.

Conciliation Officer: The appropriate government may, by notification in the official gazette, appoint such number of persons as it thinks fit to be the conciliation officer. The duties of a conciliation officer are:

a) To hold conciliation proceedings with a view to arrive at amicable settlement between the parties concerned.

b) To investigate the dispute in order to bring about the settlement between the parties concerned.

c) To send a report and memorandum of settlement to the appropriate government.

d) To send a report to the government stating forth the steps taken by him in case no settlement has been reached at.

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The conciliation officer however has no power to force a settlement. He can only persuade and assist the parties to reach an agreement. The Industrial Disputes Act prohibits strikes and lockouts during that time when the conciliation proceedings are in progress.

2. Arbitration: A process in which a neutral third party listens to the disputing parties, gathers information about the dispute, and then takes a decision which is binding on both the parties. The conciliator simply assists the parties to come to a settlement, whereas the arbitrator listens to both the parties and then gives his judgment.

Advantages of Arbitration:

It is established by the parties themselves and therefore both parties have good faith in the arbitration process.

The process in informal and flexible in nature. It is based on mutual consent of the parties and therefore helps in building

healthy Industrial Relations.

Disadvantages:

Delay often occurs in settlement of disputes. Arbitration is an expensive procedure and the expenses are to be shared by the

labour and the management. Judgment can become arbitrary when the arbitrator is incompetent or biased.

There are two types of arbitration:

Voluntary Arbitration: In voluntary arbitration the arbitrator is appointed by both the parties through mutual consent and the arbitrator acts only when the dispute is referred to him.

Compulsory Arbitration: Implies that the parties are required to refer the dispute to the arbitrator whether they like him or not. Usually, when the parties fail to arrive at a settlement voluntarily, or when there is some other strong reason, the appropriate government can force the parties to refer the dispute to an arbitrator.

3. Adjudication: Adjudication is the ultimate legal remedy for settlement of Industrial Dispute. Adjudication means intervention of a legal authority appointed by the government to make a settlement which is binding on both the parties. In other

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words adjudication means a mandatory settlement of an Industrial dispute by a labour court or a tribunal. For the purpose of adjudication, the Industrial Disputes Act provides a 3-tier machinery:

Labour court Industrial Tribunal National Tribunal

a) Labour Court: The appropriate government may, by notification in the official gazette constitute one or more labour courts for adjudication of Industrial disputes relating to any matters specified in the second schedule of Industrial Disputes Act. They are:

Dismissal or discharge or grant of relief to workmen wrongfully dismissed. Illegality or otherwise of a strike or lockout. Withdrawal of any customary concession or privileges.

Where an Industrial dispute has been referred to a labour court for adjudication, it shall hold its proceedings expeditiously and shall, within the period specified in the order referring such a dispute, submit its report to the appropriate government.

b) Industrial Tribunal: The appropriate government may, by notification in the official gazette, constitute one or more Industrial Tribunals for the adjudication of Industrial disputes relating to the following matters:

Wages Compensatory and other allowances Hours of work and rest intervals Leave with wages and holidays Bonus, profit-sharing, PF etc. Rules of discipline Retrenchment of workmen Working shifts other than in accordance with standing orders

It is the duty of the Industrial Tribunal to hold its proceedings expeditiously and to submit its report to the appropriate government within the specified time.

c) National Tribunal: The central government may, by notification in the official gazette, constitute one or more National Tribunals for the adjudication of Industrial Disputes in

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Matters of National importance Matters which are of a nature such that industries in more than one state are

likely to be interested in, or are affected by the outcome of the dispute.

It is the duty of the National Tribunal to hold its proceedings expeditiously and to submit its report to the central government within the stipulated time.

Summary Industrial Relations (IR)

IR means the relationship between employers and employees in course of employment in industrial organisations. However, the concept of Industrial Relations has a broader meaning. In a broad sense, the term Industrial Relations includes the relationship between the various unions, between the state and the unions as well as those between the various employers and the government. Relations of all those associated in an industry may be called Industrial Relations.

Industrial relations perspectives

1. Unitary Perspective:

In unitarism, the organization is perceived as an integrated and harmonious system, viewed as one happy family. A core assumption of unitary approach is that management and staff, and all members of the organization share the same objectives, interests and purposes; thus working together, hand-in-hand, towards the shared mutual goals. Furthermore, unitarism has a paternalistic approach where it demands loyalty of all employees. Trade unions are deemed as unnecessary and conflict is perceived as disruptive.

2. Pluralistic-Perspective:

In pluralism the organization is perceived as being made up of powerful and divergent sub-groups – management and trade unions. This approach sees conflicts of interest and disagreements between managers and workers over the distribution of profits as normal and inescapable. Consequently, the role of management would lean less towards enforcing and controlling and more toward persuasion and co-ordination. Trade unions are deemed as legitimate representatives of employees.

3. Marxist Perspective:

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This view of industrial relations is a by-product of a theory of capitalist society and social change. Marx argued that:

Weakness and contradiction inherent in the capitalist system would result in revolution and the ascendancy of socialism over capitalism.

Capitalism would foster monopolies. Wages (costs to the capitalist) would be minimized to a subsistence level. Capitalists and workers would compete/be in contention to win ground and

establish their constant win-lose struggles would be evident.

This perspective focuses on the fundamental division of interest between capital and labor, and sees workplace relations against this background.

Industrial Relations system: Three main parties are directly involved in industrial relations:

Employers: Employers possess certain rights vis-à-vis labour. They have the right to hire and fire them. Management can also affect workers’ interests by exercising their right to relocate, close or merge the factory or to introduce technological changes.

Employees: Workers seek to improve the terms and conditions of their employment. They exchange views with management and voice their grievances. They also want to share decision making powers of management. Workers generally unite to form unions against the management and get support from these unions.

Government: The central and state government influences and regulates industrial relations through laws, rules, agreements, awards of court and the like. It also includes third parties and labour and tribunal courts.

Industrial disputes, their prevention and settlement

Industrial disputes are organised protests against existing terms of employment or conditions of work. It is:

“Any dispute or difference between employer and employer or between employer and workmen or between workmen and workmen, which are connected with the employment or non-employment or

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terms of employment or with the conditions of labour of any person” In practice, Industrial dispute mainly refers to the strife between

employers and their employees. An Industrial dispute is not a personal dispute of any one person. It generally affects a large number of workers’ community having common interests.

Collective bargaining: what is collective bargainingCollective bargaining is a process whereby trade unions, representing workers, and employers through their representatives, treat and negotiate with a view to the conclusion of a collective agreement or renewal thereof or the resolution of disputes.

A collective agreement is usually an agreement in writing between an employer and a union, on behalf of workers employed by the employer. It contains provisions reflecting terms and conditions of employment of the workers, and conferring to them their rights, privileges and responsibilities.

The process of collective bargaining is in reality a series of negotiations, diplomatic and political manoeuvres, with the influence of economics.

Machinery for settlement of Industrial Disputes:

1. Conciliation: Conciliation refers to the process by which representatives of employees and employers are brought together before a third party with a view to discuss, reconcile their differences and arrive at an agreement through mutual consent. The third party acts as a facilitator in this process.

2. Arbitration: A process in which a neutral third party listens to the disputing parties, gathers information about the dispute, and then takes a decision which is binding on both the parties. The conciliator simply assists the parties to come to a settlement, whereas the arbitrator listens to both the parties and then gives his judgment.

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Self-Assessment

Assessment

1. Define the concept of industrial relations (IR) and name any two major perspectives of IR.

2. What is meant by industrial disputes?

3. What is collective bargaining? Discuss the relevant steps in collective bargaining.

4. Discuss some of the techniques that can be used to settle industrial disputes.

UNIT 7: TRADE UNIONS7.1 Introduction

Trade unions are a very important stakeholder in organisations where workers are unionized. Trade unions are also very crucial in fostering, promoting and

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maintaining good industrial relations in organisations, the industry and society at large.

7.2 ObjectivesBy the end of this unit you will be able to:

Explain the role of trade unions in industrial relations

Understand the functions of trade unions in society

Explain the causes of different form of industrial action

7.3 Activity

We know you familiar with the concept of trade unions. What do you think trade unions do in organisations? If you are in employment and you also to a union, in what ways have your union affected your welfare as a member?

WHAT ARE TRADE UNIONS?

Trade union (British English) or labour union (American English): Trade unions are organisations that represent people at work. Their purpose is to protect and improve people's pay and conditions of employment through collective bargaining. They also campaign for laws and policies which will benefit working people.

Trade unions exist because an individual worker has very little power to influence decisions that are made about his or her job. By joining together with other workers, there is more chance of having a voice and influence.

THE STRUCTURE OF TRADE UNIONS

Trade unions are democratic organisations which are accountable to their members for their policies and actions. Unions are normally modeled on the following structure:

members - people who pay a subscription to belong to a union shop stewards - sometimes called union representatives - who are elected by

members of the union to represent them to management

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Branches - which support union members in different organisations locally. There is usually a branch secretary who is elected by local members

District and/or regional offices - these are usually staffed by full time union officials.  These are people who are paid to offer advice and support to union members locally

A national office - the union's headquarters which offers support to union members and negotiates or campaigns for improvements to their working conditions. At the top of the organisation there is usually a General Secretary and a National Executive Committee, elected by the union's members.

INDUSTRIAL ACTION

It is possible to distinguish between unorganised and organised industrial action. Unorganised action occurs when the worker responds to a situation of conflict in the only way he knows how.  This reaction is rarely based upon any calculated strategy.

1. Unorganised (or unofficial) action by the employees can come in a number  of forms:

High labour turnover: workers leave the company without giving the necessary notice.

Poor time keeping High levels of absenteeism Low levels of effort Inefficient work Deliberate time wasting Unofficial strikes: these are not backed by the employers union.  These are

often taken when workers down tools in immediate reaction to an employer’s decision.

2. Organised (official) action: This is action that is backed by the union.  This action can take a number of different forms:

Work to rule

This means that workers do not carry out duties that are not in their employment contract.  They also may carry out management's orders to the letter.  This can mean workers observing safety laws to the letter, when they are normally disregarded.  Working to rule does not mean that workers are working in breach of their contract,

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simply that they carry out tasks exactly as their contracts state.  This has the implication that tasks are carried out inefficiently.  For example if train drivers were to work to rule, trains would be late arriving or even cancelled. 

Go slow

Employees deliberately attempt to slow down production, whilst still working within the terms of their contract.

Overtime ban

This limits the working hours to the agreed contract of employment for normal hours.  It is used by unions to demonstrate that workers are prepared to take further collective actions if their demands are not met.  It has the drawback for workers because it results in lost wages.  It can lead to a decrease in costs for the business, but it can also result in a fall in the production.  It can be especially effective where production takes place overnight, e.g., coal mines, large production lines.

Sit-ins

Are mass occupations of the work premises by the workers where production ceases to continue?  The aim is to protest against management decisions, and in the case of closure it prevents the movement of machinery to other premises, this is a redundancy sit-in.  A collective bargaining sit-in can be used as an alternative to other forms of employee action. 

Work-ins

This occurs when the workers refuse to stop working in the hope of showing that the factory is still a viable concern.  It is used when there is a threat or order of closure. Sit-ins and work-ins are both illegal occupation of the premises by the workers.  These forms of action offer the employees a degree of control over the premises and it enables them to maintain group solidarity and morale.

Strike

This is seen as the ultimate sanction that can be used by the trade unions.  They are normally called in connection with terms and conditions of employment and wages.  They can be official or unofficial.  Official strikes occur when the union officially

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supports its members in accordance with union rules during a dispute.  Unofficial strikes have no union backing or support.  They have in the past usually been called by shop stewards in response to a particular incident.  Such strikes tend to be short term, local, unpredictable and disruptive for business.

Picketing

Primary Picketing is legal.  This involves members of a union on strike standing outside a firm’s entrance trying to persuade other workers not to cross it. 

Secondary Picketing is not legal.  This involves workers who are on strike from one firm trying to dissuade workers at a firm not involved with the strike from going to work.  Secondary picketing is resorted to by workers to try and spread the impact of their action.

PROBLEMS OF INDUSTRIAL ACTION

There can be problems for both employers and employees.

EMPLOYERS’ PROBLEMS A go slow or work to rule can reduce output.  Strike action could mean threat

orders are unfulfilled and revenue and profits could fall.

If it causes production to stop, then machinery and other resources will be lying idle.  Businesses have fixed costs which have to be covered, even if production is not taking place.

Industrial action can lead to poor future relationships with customers.  Grievances can carry on after settlement of action, leading to poor motivation and communication.

Managers who are concerned with settling a dispute will neglect planning for the future.

EMPLOYEES’ PROBLEMS A work to rule, go slow or a strike can lead to a loss of wages.

Prolonged industrial action may lead to the closure of the plant.  Employees would then be made redundant.

If industrial action fails then it can leave the employees in a weaker position than before.  Members may also leave a union if they feel that the union is unable to support them.

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BENEFITS OF INDUSTRIAL ACTION It clears the air.  Employers and employees may have grievances that an

industrial dispute can bring out into the open.  Once the dispute is resolved the atmosphere could improve.

New rules that were previously contested could be modified leading to better feeling around the factory.

Management goals may be changed.  For example managers may consult unions in any future change of working practice.

It can provide each side with a better understanding of the other sides desires and objectives.

HISTORY OF TRADE UNIONISM IN ZAMBIA

The discovery and opening up during the late 1920’s and 1930’s of the rich underground ore bodies along the Zambian Copperbelt were soon to make this small region - 120 km long by forty km wide - one of the worlds’ most concentrated and renowned mining areas.

A number of small gold and copper mines had operated during BSAC times, but they were hardly viable, though the lead and Zinc development at Kabwe (first called Broken Hill - where the prehistoric skull was found in 1921), was.

The deep ore bodies of the Copperbelt, most of which were located beneath ancient workings, were promising enough to attract large-scale investment from abroad. Over the years, the industry came to be controlled by two large groups, the South African Anglo American Corporation and Roan Selection Trust with a predominantly US shareholding. The BSAC, which owned the mineral rights, was to earn handsome royalty payments - 83 million pounds by 1963.

Exploitation of the reserves required a large labour force and Zambians from all over the territory were drawn to the Copperbelt. There was as wide spread rural-urban migration of people in search of paid employment around the Copperbelt and along the line of rail. Migration was in part fuelled by the introduction of poll tax for each adult African male. Migration occurred from all over the country including migrants from neighbouring countries such as Congo, Malawi and Tanzania. While the migratory system of the past tended to disperse people, the Copperbelt concentrated them so that a permanent population of African miners, working in a modern, technically advanced industry soon took root. They were essential to the production of up to 800 000 tons of refined metal a year.

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The management of the mines and all skilled jobs were in the hands of Whites, many of them from South Africa and filled with racialism. An occupational colour bar prevented Blacks rising above manual or menial labour, but strengthened their unity of purpose. The African worker in the mines was treated unfairly compared to the European who enjoyed better treatment. The African workers reaction was to organise themselves to resist the unfair treatment at the work place.

In 1935, they staged a strike against unfair taxes and poor working conditions. In 1940, there was a pay strike with 13 miners killed. In 1948, the first African Mineworkers Union was formed; in 1955 there 100% work stoppage over pay conditions – ending with victory for the African mine workers. The mining companies now started seriously moving Africans into management positions. The European mineworkers reacted by forming their own union called the European Mineworkers Union to protect their interests and maintain the status quo.

Legislative and Political Developments of the Trade Unions in Zambia

In terms of post-independence legislative developments the Trade Unions and Trade Disputes Act of 1964 was the earliest piece of legislation to regulate trade union activities. This was repealed in 1971 and replaced with the Industrial Relations Act which did not become operational until 1974. This Act was again repealed in 1990 and another Industrial Relation Act was introduced. In 1993 the new government repealed the Industrial Relations Act of 1990 and in its place the Industrial land Labour Relations Act was introduced.

It is the purpose of this chapter to consider the historical development of trade union law and practice in Zambia in so far as they have a bearing on the present day trade union status.

The Zambia Congress of Trade Unions (ZCTU)

The ZCTU was established by an amendment to the Trade Unions and Trade Disputes Act (TUTDA) of 1964. All the subsequent and successive Acts have retained the statutory proclamation of the ZCTU with variations as to its powers. For example, the 1971 Act expressly registered by the Labour Commissioner without any application being made on its behalf. Automatic registration of the ZCTU has implications on the structure of trade unions and, in particular, on the question of trade union affiliation to the ZCTU.

The Affiliation to the ZCTU

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Under section 43 of the TUTDA affiliation to the ZCTU could only be effected if a majority of its officers resolved to affiliate. Under this Act, therefore, the question of affiliation was a matter left to the decision of the members: it was not mandatory to affiliate to the ZCTU.

The 1971 Industrial Relations Act (IRA: 1971) made some radical changes to this matter by providing for the principle of affiliation by registration.

The Act stipulated under section 15(i)(b) that every trade union in possession of a valid certificate of registration shall be deemed to be a trade union duly affiliated to the Congress.

Under sub-section (2) it was provided that upon registration and, therefore, affiliation, such a trade union ‘shall be entitled to the rights and privileges, and be subjected to the obligations specified in the constitution of the congress.’ Thus the influences and authority wholly depended on what the constitution of the ZCTU stipulated. Indeed section 27 (i) required that the constitution of the ZCTU ought to spell out the rights, privileges, duties and obligations conferred or imposed upon trade unions by virtue of their affiliation to the congress.

The powers of ZCTU over its affiliates were also defined under section 28. It was provided that where a dispute arose between two or more trade unions as to which of them had or should have the exclusive right to represent employees of a specified class or category then the parties were under an obligation to refer such a dispute to the ZCTU with a right of appeal to the Industrial Relations Court. It has to be noted that section 27 was in effect a limitation of the scope of issues on which the ZCTU could have influences on. The trade unions in dispute could only refer the matter to the ZCTU if the issues in dispute related to representation.

The relationship between the ZCTU and its affiliates was judiciary tested in the case of Luciano Mutale and Jackson Chomba vs Newstead Zimba in 1988. [ Fn 1:

unreported] The facts of the case were that the National Union of Building, Engineering and General Workers (NUBEGW) General Council passed a resolution in September 1987 to suspend the union chairman Frederick Chiluba who was also the Chairman General of the ZCTU. This was followed up by the ZCTU convening its own General Council which decided to intervene by way of suspending the entire Executive Committee of NUBEGW and some of NUBEGW’s full time employees. NUBEGW objected to the intervention by the ZCTU arguing that it (the ZCTU) did not have legal authority to

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do so. When the matter was taken to the High Court it ruled that the action by the ZCTU was not in breach of the law.

On appeal the Supreme Court reversed the decision of the High Court. It was decided that the rules or the constitution of the ZCTU did not give the ZCTU the power to intervene in the internal affairs of the affiliates in the manner in which it did. The court observed that the power to expel or suspend members could only be enforced if such a power was expressly provided by the rules or could arise by necessary implication. The court refused to draw such an implication from the constitution of the ZCTU.

Under the short lived 1990 Industrial Relations Act the matter was put to rest when it was expressly provide that the ZCTU could not intervene in the internal affairs of its affiliates. Similarly, automatic affiliation was removed and provided that only by a two thirds majority of all members of a union could affiliate to or disaffiliate from the ZCTU.

The 1993 legislation makes it obligatory for unions affiliated to the ZCTU to refer their dispute to the ZCTU for reconciliation. If this fails the parties have recourse to the Minister of Labour and Social Security for arbitration with final appeal to the Industrial Relations Court [ Fn 2: The Industrial and Labour Relations Act] .

It is important however to note that under the same 1993 Act [ Fn 3: s. 34] , it is provided that each trade union shall maintain its separate status and shall have the right to organize itself as it considers fit.

It is further provided that the ZCTU shall have no jurisdiction over any trade union affiliated to it in any domestic management or domestic matter unless such a matter has been referred to it by the trade union concerned.

Finally, affiliation to the ZCTU [ Fn 4: S.17] is by a simple majority decision of the members present and voting at a General Conference.

These three aspects require some clarification. Section 35 only makes it mandatory that where there is a dispute between two or more trade unions affiliated to the ZCTU then such a dispute has to be referred to the ZCTU in the first instance.

On the hand, section 34 declares that where a dispute is purely domestic within the trade union then the ZCTU has no right to intervene unless such a dispute has been referred to it by the trade union concerned.

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Lastly, section 17 deals with the question of affiliation to and disaffiliation from the ZCTU. It provides that by a simple majority a trade union may decide at its General Conference to affiliate or cease to be affiliated to the ZCTU. This last point is particularly important on the trade union situation in Zambia - a point which is a central make of this treatise.

Trade Union Registration

It has been noted that the 1971 legislation provided for automatic affiliation to the ZCTU by registration. It is also significant to note that under Rule 3 or the ZCTU constitution it was stipulated that every trade union which was duly registered under the Industrial Relations Act was deemed to be affiliated to the ZCTU.

The 1971 legislation, like the TUTDA of 1964, provided that an application to register a trade union had to be signed by not less than seven members. This application had to be lodged with the Labour Commissioner. The Labour Commissioner could, under that legislation, refuse a trade union on any of the following two grounds:

1. that it has a name that is identical with that by which any other trade union has been registered or so nearly resembling such a name as to be likely to deceive its own members or the members of the public;

2. that it purports to represent a class or classes of employees already represented by or eligible for membership of another trade union [ Fn 5: s.7(8)] .

The first of the above grounds had no bearing on the strength or structure of the labour movement. It is the second reason that had far-reaching implication on trade union structure and organisation and needs to be examined in some detail.

What the second ground effectively meant was that no trade union could be registered if another union existed in such industry. By extension no single employer could have more than one union to deal with. This interpretation is derived from section 112 of the 1971 legislation. This section provided that every recognition agreement ‘shall provide that the employer has duly recognised the trade union as the sole representative of and exclusive bargaining agent for employees employed by such an employer.’

The net effect of these sections was to define the structure of trade unions based on the principle of one union in one industry. Indeed in his opening address to the National Assembly of 7th January 1979 the then President Kenneth Kaunda stated as follows:

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‘...our policy still remains one of supporting one union for one industry, for we are convinced that a proliferation of trade unions weakens the bargaining strength of the workers.’

One can hardly doubt the suitability of this philosophy because of its implicit spirit for good industrial relation and a strong trade union movement.

The pattern of one union in one industry has more advantages than disadvantages. Apart from strengthening trade unions this pattern avoids the problem of multiple representation and it associated disadvantages of inter union conflict, multiplicity of negotiations within the industry as well as the problem of overlapping membership.

Proliferation of unions also has the disadvantage of promoting industrial disharmony which has the ultimate effect of compromising trade unions in their collective bargaining engagements and other industrial relations obligations.

These problems were endemic shortly after 1967 when Zambia got her political independence, for example. At that time the mining sector had three unions, the railways had two and the transport sector also had two.

[ Fn 6: See Elena Berger, Labour Race and Colonial Rule ( Oxford: Clrendon Press, 1974) and Cherry

Gertzel, Industrial Relation in Zambia on 1975’ in Damachi, U.G. et at (Eds) Industrial Relations in

Africa (London: The Macmillan Press Ltd, 1979) pp 324-5]

At that there were twenty four unions in Zambia. By 1974 the number had dropped to eighteen because of the re-organisation of the labour movement necessitated by the introduction of the principle of one union in one industry by the 1971 legislation. Thus the three unions in the mining sector amalgamated for form the Mineworkers Union of Zambia (MUZ) while the two unions in the transport industry, namely, the National Union of Transport and General Workers and he Zambia Long Distance and Heavy Haulage Union merged to form those in the railways amalgamated to form the Zambia Railways Amalgamated Workers Union which changed its name to the Railway Workers Union of Zambia.

The law has drastically changed and the whole process has been reversed. These changes have also seriously affected the bargaining power of the trade unions especially in view of the Structural Adjustment Programme which the Movement for Multiparty Democracy (MMD) government is pursuing. With the privatisation programme firmly in place, jobs have been lost thereby reducing union membership

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and in some cases, seriously undermining trade union unity.

The Impact of Political Pluralism on Trade Unionism

The advent of political pluralism in 1990 in Zambia was used as a major thrust to justify the liberalisation of the labour movement by the former government of Kenneth Kaunda. While it was publicly admitted in 1970 by the former head of state that the bargaining strength of trade union is undermined by the proliferation of trade unions, there was a major policy shift in 1990 when it was stated that trade unions had a duty to compete for membership and that therefore, the law should allow the proliferation of trade unions within industries. This, it was argued, was consistent with the spirit of liberalisation.

It is interesting to note that while the MMD was strongly opposed to the 1990 Industrial Relations Act introduced by the former government as it was perceived to be divisive of the labour movement the MMD now in power have done nothing significant to address the divisive character of the law. While the 1990 legislation did not place any restrictions on trade union formation and registration, the 1993 Industrial Relations Act, introduced by the MMD, states that no union could be registered within an industry where another union exists unless it is shown that such a union is intended to represent a specific trade or profession. This has been broadly interpreted and has led to a liberal registration of trade unions on the basis that they are distinctly professional and that the existing trade unions cannot sufficiently represent such members. As pointed out above, the 1993 legislation also makes affiliation to the ZCTU optional. These developments have put the labour movement in Zambia in disarray because of disaffiliation from and non-affiliation to the ZCTU. There are also serious cracks in some unions arising from splinter unions.

These are some of the factors that h have compromised the strength of unions such that they have failed to make much impact on government policies, especially in the area of the adjustment programmes and the lack of initiatives towards labour law or policy reforms.

For example over 7000 employees lost their jobs between January and October of 1995 from 310 companies as a result of the structural adjustment programme. According to the Bank of Zambia 1995 Annual Report the highest job losses occurred in the transport, manufacturing, wholesale, retail and financial sectors of the economy. The Report stated that the liquidation of the United Bus Company, a public corporation and three commercial banks contributed significantly to the rate of

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redundancies and unemployment.

Further, according to the statistics at the Ministry of Labour and Social Security, formal sector employment has been on a declining trend since 1992 and now only represents 10-15% of the entire labour force. On the other hand the informal sector has emerged as the main source of employment in the country. Divisions and internal fighting in the labour movement has made it impossible for the unions to be assertive in the face of such employment related developments.

Summary A Trade Union

Trade union (British English) or labour union (American English): Trade unions are organisations that represent people at work. Their purpose is to protect and improve people's pay and conditions of employment through collective bargaining. They also campaign for laws and policies which will benefit working people.

Trade unions exist because an individual worker has very little power to influence decisions that are made about his or her job. By joining together with other workers, there is more chance of having a voice and influence.

Industrial action

It is possible to distinguish between unorganised and organised industrial action. Unorganised action occurs when the worker responds to a situation of conflict in the only way he knows how.  This reaction is rarely based upon any calculated strategy.

Unorganised (or unofficial) action by the employees can come in a number  of forms:

Organised (official) action: This is action that is backed by the union.  This action can take a number of different forms: Strike, go-slow, sit-in, work-ins, picketing, overtime ban etc.

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Self-Assessment

Assessment

1. What is a trade union? How is a trade union structured?

2. Discuss the history of trade unionism in Zambia.

3. What is industrial action? What forms of industrial action are there?

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