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Tough economic conditions are pushing employee relations (ER) to the top of HR agendas

PA Consulting Group
HR Zone
9 September 2008

Tough economic conditions are pushing employee relations (ER) to the top of HR agendas

The credit crunch, rising inflation and escalating fuel and food prices are more than 'water cooler' talk and are increasingly becoming a real workplace concern; relationships between employers and employees are subsequently being tested. Employees are looking to their representatives to act on their behalf and put pressure on pay deals; the UK's largest unions in the public sector are responding by wanting to reopen negotiations on long-term pay agreements. Recruitment freezes and the threat of redundancies have led many employees to feel insecure about their future.

Revealing the hidden costs of unhealthy relationships between employer and employee

We often think of strikes when we talk about the fallout from unhealthy working relationships. However, disputes are still relatively rare in the UK and are really just the tip of the iceberg. The hidden costs of poor employee relations (ER) are much more common, including low work morale, a lack of employee engagement and employee reluctance to take part in change. Plus, organisations with poor ER are proven to have a higher number of grievance cases, employment tribunal claims and absenteeism rates.

The health of an organisation's ER environment is critical to its ability to respond to and manage future change and uncertainty

"Organisations with poor employee relations are proven to have a higher number of grievance cases, employment tribunal claims and absenteeism rates."

At all times, a good ER climate is a real advantage for organisations as they ask employees to support change and accept new ways of working. However, during difficult periods, this becomes even more important.

An organisation characterised by a sense of unfairness, inequality or distrust is unlikely to find employees willing to engage in cost reduction or productivity improvement programmes during difficult economic times. On the other hand, employees who work in organisations where their line manager and leaders have a genuine interest in their wellbeing and seek to involve staff and their representatives in change are more likely to find ways of working through problems for the benefit of all parties.

What can employers do to strengthen their ER culture and gain employee commitment during these tough times?

Organisations are wise to undertake a review of their current ER environment as we head towards a difficult period - one that takes into account strategy, behaviours, structures, policies, competence and external benchmarking.

  • Articulate your organisation’s strategic ER objectives, style and approach that will lead to success: This is more than a vision statement – it sets out the behaviours that are expected from managers and representatives, the values of the organisation and how managers will work with their employees and their representatives to achieve an engaged, informed and committed workforce. Having jointly agreed objectives ensures that all parties buy into, agree and enact them.

  • Understand how employees are feeling at all levels of the organisation: Having a thorough understanding of all the issues that affect the motivation and engagement of each employee group allows an organisation to be proactive and limit the number of surprises and knee-jerk reactions to problems. Employee surveys can be helpful. However, this is about combining survey data with the views and skills of line managers to create a culture where employees are encouraged to give their views and managers are receptive to feedback.

  • Assess ER structures, policies and processes to make sure they are resolving issues quickly and effectively: A review of ER structures and policies allows organisations to ensure that these mechanisms are facilitating ER rather than hindering it. Are ER meetings resolving problems at the right level or are minor issues being pushed into forums and taking time away from more strategic issues? Are too many issues being resolved through formal policies rather than by informal means? If you have senior managers and senior representatives trying to resolve “tea and toilet” issues, there is room for improvement. 

  • Develop, support and coach line managers and employee representatives to deal with ER issues locally to reduce escalation of problems or conflict: Line managers and local representatives play a crucial role in resolving issues in their part of the organisation. However, not all managers feel comfortable or confident dealing with conflict or differences of opinion. This is a critical issue and ignoring it will lead to problems escalating, affecting the morale and productivity of employees. Identify business coaches who are willing to share their capability in this area and introduce them to new line managers who are less confident in tackling issues without guidance. 

  • Proactively listen, capture and analyse ER data: Collecting data on grievances, absences and employment tribunal cases is crucial, as are discussions with the ER or HR team to find out what is taking up their time or which issues line managers are finding difficult to resolve.

  • Undertake external trend analysis to ensure that ER strategy and approach is amongst the best and most appropriate: It can be a productive exercise to take time to find out what best ER practice looks like in other organisations. It can provide the evidence organisations need to challenge whether their approach needs refreshing and updating to meet ER risks.

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