7MER – Managing Employee Relations Literature Review



Employee relations is central to organisational growth, development, and performance. It comprises the relationship between the employer and employee. According to Ngo, Lau, and Foley (2008), employee relations is the foundation of establishing a suitable working environment that promotes workforce performance and motivation. Employee relations is broad and comprises various issues, including voice, workforce engagement, diversity management, bargaining, and participation. According to CIPD (2021b), employee voice entails how people communicate their opinions to the employer and influence the decision making process at the workplace. Employee voice is critical in building trusting and opening relationships between the different stakeholders (. This is significantly associated with the firm’s success. From the employers’ perspective, employees voice impacts productivity, company’s improvement, and innovation. For employees, voice involves enhancing job satisfaction and identifying opportunities for employees’ development. According to Guest (2017), employee relations is also related to retention since the individual’s views are considered when developing organisational strategies. Concerning employee motivation, enhancing workforce relations can be explained through various theories. For instance, Herzberg two-factor theory of motivation postulates that the employees’ morale is enhanced by meeting the motivators and hygiene factors. Identifying and addressing these elements are influenced by employee relations and providing employees with a supportive working environment.

This paper entails a literature review on various issues surrounding employee relations. It is structured in five sections. These include an evaluation of various perspectives and theories on employee relations, evaluating the impacts of local, national, and global contexts shaping employment relations climates, assessing the functions and roles of various parties to manage employee relationship, understanding the organisational-level employment relations processes, and examining the impacts of employee relations procedures that help in averting organisational risks. The literature on the impacts of the employee relations process on the policies and organisational outcomes, including employee engagement and performance, is also evaluated.

Analysis of literature

  1. Understand, analyse and critically evaluate different theories and perspectives on employment relations.

Employee relations is explained by various theories and is characterised by employee and employer expectations. Through ANOVA on the impacts of employee branding in retention, Bussin and Moutn (2019) noted that employees expect a wide range of issues, including better compensation and a suitable working environment. This is vital in the individual’s motivation and enhances one’s intention to stay in the organisation. Applying Vroom’s theory, employee’s expectations are described by the instrumentality, valence, and expectancy variables (Lloyd and Mertens, 2018). Compensation, in this regard, is a critical expectation that influences the individual’s morale to demonstrate remarkable performance. On the other hand, the employer expects the employee to demonstrate competence and contribute to the achievement of organisational goals and objectives. As described by Protsiuk (2019), this relationship is described in the contract where each stakeholder’s expectations are outlined. Notably, the impacts of psychological expectations are also reflected in one’s motivation. To ensure a profound relationship between employees and employers, it is essential to develop a psychological contract.

Employee relations is underpinned by various theories, including unitarism, pluralism, and radical. Cradden (2011) define these theories and their application in an organisation. Unitarism is based on the values and assumptions that conflict at the workplace is not an inevitable element of relations between the employees and managers. According to Abbot (2006), conflict at work may develop between the two and such occurrences are perceived to be aberrations in an interaction that is set to be cooperative. Pluralism, on the other hand, postulates that companies are complex social constructions comprising of various interest groups. Employees and the management are two different groups and subscribe from various objectives and values. Pluralism theory introduces other concepts in employee relations, particularly power and authority. As Van Buren et al. (2020) describe, varying sources of authority within a company and conflict originate from organising tasks and allocating rewards. Radical theories draw from Karl Marx work (Abbot, 2006). The view is that capitalist society is defined by a struggle in the perpetual classes.

Profound employee relations are further based on abiding by the employment laws, ethical principles, and collaboration between employers and the workforce. According to CIPD (2021a), employment law in the United Kingdom is drawn from case laws and Acts of Parliament. Abiding by these laws ensures that employees are treated according to the regulations, central to their motivation. CIPD (2021c) describes the differences between the legal employment contract and the psychological one. The latter is not tangible and has a significant impact on the company’s strategy. HR plays an important role in managing the psychological contract through interactions and engagement. Abiding by the legal requirements is not sufficient in promoting employee rations. Other aspects that define the relationship are observing the ethical guidelines, including justice, fairness, and consistency. Through a qualitative case study by Dahanayake et al. (2018), the principles of fairness and justice are crucial in employee engagement and managing diversity. Notably, managing diversity is crucial in promoting the individual’s performance and satisfaction.

Conflict management is a critical element in employee relations. Structured antagonism reflects on the conflict as central in employment relations. As described by Wood and Lehdonvirta (2019), managing employee relationship involves dealing with contradictory forces. The antagonism is founded on the relationship and daily interactions. Companies are prompted to establish approaches to managing the conflicts and address the parties’ interests. Among the core approaches of addressing conflicts in the workplace is ensuring a supportive working environment for the employees and meeting their interests. Applying Herzberg two factor theory, the role of HR is to ensure that both the motivators and hygiene factors have been met (Thant and Chang, 2021). The contradictions at the workplace should be structured and guided by principles of respect and effective engagement. This demonstrates the impacts of various skills and competencies among the employees. These include communication, teamwork, engagement, critical thinking, and decision making. Leaders and managers in this regard should demonstrate competence in these abilities to avert the conflicts, which impede effective working relationship and achievement of the firm’s goals and objectives. Conflict management approaches, including collaboration and compromise, should be consulted to arrive at the most suitable solution.

  1. Understand, analyse and critically evaluate the impact of local, national and global contexts shaping employment relations climates.

Employee relations are shaped by internal and external factors across the local, national, and international contexts. Lee and Kim (2018), through a national survey in South Korea, identified the relationship between the economy and the employee’s wellbeing. Notably, the country and global economy influence the employment and compensation levels, which affect one’s overall health. In the hospitality sector, Chen and King (2018), through a survey in Taiwan, noted that there are several elements impacting an individual’s performance and wellbeing. These include technology, valuing diversity at the workplace, and the firm’s culture and structure. An aspect such as technology determines the employability of the individual. In contemporary society, information and communication technology skills are crucial in increasing the prospects of being employed. As Yaokumah, Walker, and Kumah (2019) noted through a cross-sectional study in five industries, ICT plays a mediating role in employee relations. Other factors influencing employee relations are globalisation and political development. Notably, a region characterised by political instability is unlikely to attract expatriates. On the other hand, globalisation has enhanced interconnectedness, crucial in creating a diverse workplace climate.

Labour, product market, liberal-market economic influences, and coordinated market also affect employee relations. Jacobsen and Skillman (2008) describe the labour markets’ economic analysis and employment relations through the theoretical framework of labour exchange conditions. Drawing from the human capital theory, game theory, and differentials in compensating wages, Jacobsen and Skillmann (2008) note that a competitive labour market affects the recruitment, selection, and retention of employees. Bridges and Villemez (1991) explain the labour and market influences in terms of the structured employment relationships. Notably, the international labour market (ILMs), which commenced in the 1970s is also related to the labour, product market, and the liberal-market economic influences. ILM involves the informal employment market existing internationally to meet the demand and supply of the required talent for multinational enterprises. Employee relations are also influenced by the difference between liberal and coordinated economies. In coordinated markets, most of the organisations use college-trained employees, and union coverage is higher compared to the liberal economies.

Employee relations are influenced by local, national, and global regulations. According to CIPD (2021a), the UK joined the European Economic Community (EEC) in 1973, and the European employment law covers various areas. These include data protection, working time, discrimination, transfers of undertakings, health and safety, and information and consultation. These elements are central in achieving a collaborative community at the workplace and enhancing the individual’s satisfaction, promoting one’s performance. In a CIPD (2016) report involving a comparative analysis of five countries to determine their employment, industrial relations, and social welfare, it was revealed that they apply varying laws and are distinguished by cultural and social norms, dialogue, and collective bargaining. Taking an example of employing the aged, the countries differ in the working groups and legislations. For instance, in the Czech Republic, there are various initiatives aimed to retain the aged and reduce early retirement. The role of trade unions is also critical in employee relations. As described in CIPD (2021b), trade unions give employees the voice to share their concerns across various issues, including a better working environment and compensation. Various approaches of representative participation include partnership schemes, collective representation, employee forums, and joint consultations.

  1. Understand, analyse and critically evaluate the roles and functions of the different parties to control and manage the employment relationship.

Please click the icon below to receive the assessment for only $15