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CHAPTER 1: INTRODUCTION
1.1. Background:
A Case Study of Indian Business Organizations, In this era of globalization, the efforts are being made to eliminate or reduce barriers between employee and employer in order to develop good relationships in organizations. Employment relationship refers to a communication or behaviour between a supervisor and an employee. This typically relates to satisfaction and rights of employees. As described by ILO (2006), employment relationship deals with the legal connection or link between employees and employers. ILO has emphasized upon the two major actors of employment relationship which include, the worker and the employer.
Generally, employment relationship is functioned at two levels, which include representative or individualized. At an individual level, there is a direct link between employer and individual employee without any interference of trade unions. Whereas, a trade union usually serves as an intermediary between employer and employee at a representative level and forms a formal relationship (Yan, Zhu & Hall, 2002).
Today, most organizations are struggling to create good employment relationship by embracing effective communication systems, empowering employees and enhancing their participation rate.
Successful and good employment relationships are important to build so as to create a sound business environment. It has been seen that organizations are likely to be successful if they support good employment relationships (Guest, 2004). This report will focus on detailed research study on the subject of employment relationships in business organizations in emerging countries, while keeping a wide spotlight on the case studies of two Indian companies, Tata Group and Maruti Suzuki.
1.2. Research Statement:
This research paper deals studies of employment relationships in developing countries, particularly in India. This report will intensely focus on emerging trends of employment relationships in business organizations at a global level as well as in emerging countries, while centering limelight on the case studies of the Tata Group and Maruti Suzuki. Moreover, the report will also discuss the quality of employment relationships and its effects on employee’s performance.
1.3. Research Objectives:
The research objectives set the direction for researchers to gain the required outcomes. Objectives are designed in such a detailed way that helps out researchers to achieve the research aim (Saunders, Thornhill, & Lewis, 2011). For the research regarding employment relationships in business organizations, the research objectives are designed as follows:
• To determine the concept of employment relationships interpreted and treated by contemporary business organizations.
• To identify the emerging trends and quality standards associated with employment relationships.
• To evaluate the weaknesses and strengths of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki.
• To propose the recommendations for improvement of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki.
1.4. Research Questions:
The research questions are prepared to keep the research objectives aligned with the aim of research study. These questions help the researcher to focus on each and every objective separately and support the findings with reference to research aim (Alvesson and Sandberg, 2011). Following research questions are prepared for the underlying project:
• How is the concept of employment relationships interpreted and treated by contemporary business organizations?
• What are the emerging trends and quality standards associated with employment relationships?
• What are the weaknesses and strengths of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki?
• What are the recommendations for improvement of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki?
1.5. Significance of Research:
In order to lead a competitive drive, it is essential to improve and establish healthy employment relationships in organizations. Since this trend is extremely lower in emerging economies, which is the reason to undertake the study particularly for emerging country such as India. At an international platform, employees are given self-assurance by maintaining strong communication between employee and employer which subsequently leads to low turnover rate and thus higher productivity.
To conduct this research, analyst has undertaken two major companies, named Tata Groups and Maruti Suzuki and examined their policies and practices regarding employment relationships. Maruti Suzuki has recently been dealing with severe issues of employees and workplace while compromising on the relationship between employees and employers. Contrary to this, Tata Group has maintained good employee-employer relationships throughout which contributed radically in the success of company.
These are the reasons the case studies of Maruti Suzuki and Tata Groups will give a good and significant amount of practical implementations of labour laws and execution of employment relationship strategies.
This research work will help to identify the significance of employment relationships in business organizations of emerging countries where mostly employees are reluctant to communicate frankly with employers. This research will signify the emerging trends that are associated with employment relationships at a global level while taking into consideration the quality standards at employee as well as organizational level. Since this research report aims to target the two major Indian organizations named, Tata Group and Maruti Suzuki, the researcher will emphasize on the weaknesses and strengths of employment relationships in respective companies by analyzing the organization-wide trends and surveying their employees.
Furthermore, the project will draw and evaluate methods to improve the system and embrace good employment relationships in organizations. It will also be highlighted that good employment relationships actually save up the cost of company by means of increasing retention rate of skilled and valuable employees in organization. Therefore, this project holds immense importance since the study and findings are expected to help employees as well as the company largely.
CHAPTER 2: LITERATURE REVIEW
2.1. Concept of Employment Relationships Interpreted and Treated by Contemporary Business Organizations
2.1.1. Employment Relationship:
The employment relationship refers to the connection between employees and employers of an organization (Hui, Lee & Rousseau, 2004). The relationship creates when a person work for his/her employer against agreed remuneration under definite conditions. Roehling, Cavanaugh, Moynihan & Boswell (1998) has defined the employment relationship as the communication between an employee and employer or management of the company.
The communication can be about anything regarding work such as participation in decision making, problem solving, grievances, sharing ideas, conflict resolution, issue concerning collective bargaining and unions, etc. (Kirby & Krone, 2002). Shore & Barksdale (1998) has argued that the intensity of good employment relationship is identified from the variety and severity of issues an employee can discuss with his/her employer. Tsui, Pearce, Porter & Tripoli (1997) has discussed in the research study that many employees are reluctant to discuss their workplace problems or share their ideas with their employers due to lack of communication. Osterman (1995) has stated in his argument that employment relationship does not only concern to communication between employees and employers, but poor relationship leads to numerous detrimental effects on work and thus organization.
It has been claimed by many entrepreneurs and major leaders of the world that employees are the company’s valuable asset, and keeping them satisfied is the responsibility of employers (Civi, 2000). Since satisfying employees is the major concern, now organizations make real efforts to build good employment relationships and create a strong bonding between employees and employers (Luthans, 2002).
Here is the model to understand the employment relationship, which suggests that characteristics of employees and labour market context make up the employment relationship by developing trust, effective communication, commitment to organization, etc (Colquitt, Scott & LePine, 2007). Also the model below depicts that employment relationship directly relates to organizational performance as well as individual productivity.
(Lowe & Schellenberg, 2001)
Moreover, Guest (2004) has also described employment relationship as an organization’s effort to avert and elucidate work related issues of employees. Duncan & Moriarty (1998) has argued that communication is not the only major element to create good employment relationship but building and maintaining faith between employees and employers is the foundation to create healthy employment relationships. Harrison & Carroll (1991) supported the above statement and added that faith establishes when people are dealt with mutual respect and honesty from both the ends.
Cutlip (1962) argued that good relationship builds when employees are allowed to participate and make decisions to some extent. However, for such act, it is important that employer should also share proper information with employees and stay responsive.
2.1.2. Elements of Good Employment Relationship:
It is commonly said that the most productive employees are the one who are happy and satisfied with the work and work environment (Harter, Schmidt & Keyes, 2003). Seeing this fact, leaders and managers work in the favour of employee satisfaction in order to gain higher returns in terms of their higher performance (Ugboro & Obeng, 2000).
Since the definition of employment relationship implies to create connection between employees and employers, this section will identify the elements that help to build and maintain good connection between workers and employers.
A connection between employee and employer begin from the day when an agreement of employment is accepted (Guest, 2004).
The employment agreement consists of all policies, rights, regulations and procedures in the workplace that are followed by every employee in a business organization. There are several elements that are necessary to implement in the system in order to create good employment relationship.
Communication: communication with employees is the most significant element for successful employee relations. According to Mumby (1988), Good communication keeps the employees engage in work and gives them a feel that they are an essential part of organization. Fisher (1993) defined that communication entails conveying each and every detail that is relevant to organization, such as plans, organizational change, and management’s commands either in writer or verbal form. Kotter (2008) argued that daily interactions between employees and employers enhance the sense of responsibility and commitment within employees and this results in high productivity and greater profits.
Employee Recognition: Giving an identity to employees is the best way to make employees satisfied and thus creating healthy relationship. Meyer, Becker & Vandenberghe (2004) identified in his research that employees tend to perform more if their hard work is recognized and praised. This encourages employees to bring new ideas and contribute to organization.
Leana & Van Buren (1999) also supported the above statement by emphasizing that relationship between employees and employers tend to be stronger if employees and their efforts are recognized properly.
Reward System: To create a good relationship with employees, it is significant to recompense their efforts fairly. According to Lindner (1998), rewards either financial or non-financial are the basis to provide inspiration and satisfaction to workforce.
Schuler & Jackson (1987) has depicted the importance of rewards by affirming that employee relations become stronger when employers give benefits, rewards or incentives to employees. Pfeffer (1995) also supported this fact and stated that reward system enhances the employee’s commitment to work and builds good relationship between employees and the management.
Trusting Employees: Trusting employees is an essential element of building good relationship.
According to Claydon & Doyle (1996), business organizations can gain employees’ confidence by trusting them and empowering them to some extent at each level. Spreitzer & Mishra (1999) fostered the above thought and stated that most of the world leading organizations in the world now empower their employees and give them authority to take decisions by trusting their employees.
Hence, by studying various research reports, it can be stated that communication is the most important tool to develop good employment relationships in organizations. However, there are several other which include rewarding employees, recognition of employees and trusting employees. These build in the sense of ownership among employees, thus enhance the job commitment and productivity at individual as well as collective level (Bartol & Srivastava, 2002).
2.1.3. Importance of Employment Relationship at Business Organizations:
Human brains need to share ideas, feelings by communicating to each other. This characteristic makes human beings work well in any circumstance under every condition. Healthy relationship at workplace is important in any business organization. Good employment relationship helps employee to mingle with other employees and employers in short period of time (Cohen & Prusak, 2001).
Employees can easily express their feelings and ideas which may lead to expose many prospects of doing work or project. Moreover, when the relationship between employees and employers are good, the work responsibilities are divided among all workers equally (Tsui, Pearce, Porter & Tripoli, 1997). An employee with a good rapport can earn the favours of colleagues and supervisors.
Alvesson (2000) stated in the study that good relationship in workplace tend to avoid numerous problems regarding absenteeism, high turnover, conflicts at workplace and much more. According to Carmeli (2003), when employees encounter friendly work environment, they tend to work more productively, thus this results in higher employee performance. Burke, Singh & Fiksenbaum (2010) argued that the intensity of demand of increments decreases as an employee feels a part of an organization.
This depicts that good employment relationship helps the organization to lower its cost as employees demand less increments in salary. In addition to this, employees feel motivated and satisfied when employers interact with them in a friendly way (Wang & Walumbwa, 2007). All these studies reveal that employment relationship is of major concern now a days at international platform, which is the reason why every international organization is focusing on reshaping policies regarding employment issues and improving relationships between employees and employers.
2.2. The Emerging Trends and Quality Standards Associated With Employment Relationships
2.2.1. The Global Employment Relation Trends in Competitive Drive:
As the economies and markets are expanding at the international level and competition is becoming intense, the drive to motivate employees and create good relationship within the organization is increasing. Leaders and managers are of the view that success of organization depends on the extent of employee satisfaction at workplace (Laschinger, Finegan & Shamian, 2001).
Thus, companies now mainly focus on building healthy relations with employees and giving them comfort space to increase their satisfaction level (Bakker, A. B., & Schaufeli, W. B., 2008). In order to create good employment relationship, organizations are making efforts to engage employees and increase their participation rate in tactical decision making. Saks (2006) has depicted that higher employee engagement leads to improved employee relations. Coyle‐Shapiro (2002) has also supported this statement and concluded that employee relations with employers can be judged with the degree of employee engagement in organization. Thus, organizations are now working to improve engagement of employees and consistently evaluate employee engagement by measuring Employee Engagement Index Score. The below chart depicts that by the time from 2007 to 2011, Employee Engagement Index was declined, indicating that employees were less motivated and therefore effected employee relations.
(Kenexa, 2011)
Moreover, another graph shows the trend of employee engagement across the world. This graph depicts that India is the most emerging country in supporting employee engagement, though the intensity has declined in the year 2011. China and United Kingdom have marked least percentages in employee engagement.
(Kenexa, 2011)
This clearly shows that India is thriving to improve employment relationship in its organizations, whereas other countries such as China, United Kingdom, Germany, Brazil and United States indicate the lowest point in employment relationships.
The global trend of employee engagement has also been analysed across various industries. The major industries include retail, technology manufacturing, healthcare, banking and finance, government and machine manufacturing industry have been analysed which showed the following results:
(Kenexa, 2011)
The above graph and table depict that employee engagement trend was drastically effected in the year 2011, in which industries such as machine manufacturing, banking and retail portrayed decline in employee engagement by the greatest degree. However, government marked the least percentage that is 49%, followed by 52% of retail industry. This verify that manufacturing and production companies are more leaned to build good relationships between employees and employers and retail and banking industry serve the least to their employees in terms of satisfaction and motivation.
While seeing the global trend by classifying the job, the following trend is revealed:
(Kenexa, 2011)
The graph shows that the top managers and supervisors experience high level of engagement which is obvious, however, production workers are less exposed to direct participation in organizational decision making concerns. The table depicts that employee relations at the level of supervisors, technical workers and sales representatives encountered decline in employment relationship by the greater degree. Hence, sales employees and technical staff in companies tend CHAPTER 1: INTRODUCTION
1.1. Background:
In this era of globalization, the efforts are being made to eliminate or reduce barriers between employee and employer in order to develop good relationships in organizations. Employment relationship refers to a communication or behaviour between a supervisor and an employee. This typically relates to satisfaction and rights of employees. As described by ILO (2006), employment relationship deals with the legal connection or link between employees and employers. ILO has emphasized upon the two major actors of employment relationship which include, the worker and the employer.
Generally, employment relationship is functioned at two levels, which include representative or individualized. At an individual level, there is a direct link between employer and individual employee without any interference of trade unions. Whereas, a trade union usually serves as an intermediary between employer and employee at a representative level and forms a formal relationship (Yan, Zhu & Hall, 2002).
Today, most organizations are struggling to create good employment relationship by embracing effective communication systems, empowering employees and enhancing their participation rate. Successful and good employment relationships are important to build so as to create a sound business environment. It has been seen that organizations are likely to be successful if they support good employment relationships (Guest, 2004). This report will focus on detailed research study on the subject of employment relationships in business organizations in emerging countries, while keeping a wide spotlight on the case studies of two Indian companies, Tata Group and Maruti Suzuki.
1.2. Research Statement:
This research paper deals studies of employment relationships in developing countries, particularly in India. This report will intensely focus on emerging trends of employment relationships in business organizations at a global level as well as in emerging countries, while centering limelight on the case studies of the Tata Group and Maruti Suzuki. Moreover, the report will also discuss the quality of employment relationships and its effects on employee’s performance.
1.3. Research Objectives:
The research objectives set the direction for researchers to gain the required outcomes. Objectives are designed in such a detailed way that helps out researchers to achieve the research aim (Saunders, Thornhill, & Lewis, 2011). For the research regarding employment relationships in business organizations, the research objectives are designed as follows:
• To determine the concept of employment relationships interpreted and treated by contemporary business organizations.
• To identify the emerging trends and quality standards associated with employment relationships.
• To evaluate the weaknesses and strengths of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki.
• To propose the recommendations for improvement of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki.
1.4. Research Questions:
The research questions are prepared to keep the research objectives aligned with the aim of research study. These questions help the researcher to focus on each and every objective separately and support the findings with reference to research aim (Alvesson and Sandberg, 2011). Following research questions are prepared for the underlying project:
• How is the concept of employment relationships interpreted and treated by contemporary business organizations?
• What are the emerging trends and quality standards associated with employment relationships?
• What are the weaknesses and strengths of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki?
• What are the recommendations for improvement of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki?
1.5. Significance of Research:
In order to lead a competitive drive, it is essential to improve and establish healthy employment relationships in organizations. Since this trend is extremely lower in emerging economies, which is the reason to undertake the study particularly for emerging country such as India. At an international platform, employees are given self-assurance by maintaining strong communication between employee and employer which subsequently leads to low turnover rate and thus higher productivity. To conduct this research, analyst has undertaken two major companies, named Tata Groups and Maruti Suzuki and examined their policies and practices regarding employment relationships. Maruti Suzuki has recently been dealing with severe issues of employees and workplace while compromising on the relationship between employees and employers. Contrary to this, Tata Group has maintained good employee-employer relationships throughout which contributed radically in the success of company. These are the reasons the case studies of Maruti Suzuki and Tata Groups will give a good and significant amount of practical implementations of labour laws and execution of employment relationship strategies.
This research work will help to identify the significance of employment relationships in business organizations of emerging countries where mostly employees are reluctant to communicate frankly with employers. This research will signify the emerging trends that are associated with employment relationships at a global level while taking into consideration the quality standards at employee as well as organizational level. Since this research report aims to target the two major Indian organizations named, Tata Group and Maruti Suzuki, the researcher will emphasize on the weaknesses and strengths of employment relationships in respective companies by analyzing the organization-wide trends and surveying their employees. Furthermore, the project will draw and evaluate methods to improve the system and embrace good employment relationships in organizations. It will also be highlighted that good employment relationships actually save up the cost of company by means of increasing retention rate of skilled and valuable employees in organization. Therefore, this project holds immense importance since the study and findings are expected to help employees as well as the company largely.
CHAPTER 2: LITERATURE REVIEW
2.1. Concept of Employment Relationships Interpreted and Treated by Contemporary Business Organizations
2.1.1. Employment Relationship:
The employment relationship refers to the connection between employees and employers of an organization (Hui, Lee & Rousseau, 2004). The relationship creates when a person work for his/her employer against agreed remuneration under definite conditions. Roehling, Cavanaugh, Moynihan & Boswell (1998) has defined the employment relationship as the communication between an employee and employer or management of the company. The communication can be about anything regarding work such as participation in decision making, problem solving, grievances, sharing ideas, conflict resolution, issue concerning collective bargaining and unions, etc. (Kirby & Krone, 2002). Shore & Barksdale (1998) has argued that the intensity of good employment relationship is identified from the variety and severity of issues an employee can discuss with his/her employer. Tsui, Pearce, Porter & Tripoli (1997) has discussed in the research study that many employees are reluctant to discuss their workplace problems or share their ideas with their employers due to lack of communication. Osterman (1995) has stated in his argument that employment relationship does not only concern to communication between employees and employers, but poor relationship leads to numerous detrimental effects on work and thus organization.
It has been claimed by many entrepreneurs and major leaders of the world that employees are the company’s valuable asset, and keeping them satisfied is the responsibility of employers (Civi, 2000). Since satisfying employees is the major concern, now organizations make real efforts to build good employment relationships and create a strong bonding between employees and employers (Luthans, 2002). Here is the model to understand the employment relationship, which suggests that characteristics of employees and labour market context make up the employment relationship by developing trust, effective communication, commitment to organization, etc (Colquitt, Scott & LePine, 2007). Also the model below depicts that employment relationship directly relates to organizational performance as well as individual productivity.
(Lowe & Schellenberg, 2001)
Moreover, Guest (2004) has also described employment relationship as an organization’s effort to avert and elucidate work related issues of employees. Duncan & Moriarty (1998) has argued that communication is not the only major element to create good employment relationship but building and maintaining faith between employees and employers is the foundation to create healthy employment relationships. Harrison & Carroll (1991) supported the above statement and added that faith establishes when people are dealt with mutual respect and honesty from both the ends. Cutlip (1962) argued that good relationship builds when employees are allowed to participate and make decisions to some extent. However, for such act, it is important that employer should also share proper information with employees and stay responsive.
2.1.2. Elements of Good Employment Relationship:
It is commonly said that the most productive employees are the one who are happy and satisfied with the work and work environment (Harter, Schmidt & Keyes, 2003). Seeing this fact, leaders and managers work in the favour of employee satisfaction in order to gain higher returns in terms of their higher performance (Ugboro & Obeng, 2000). Since the definition of employment relationship implies to create connection between employees and employers, this section will identify the elements that help to build and maintain good connection between workers and employers.
A connection between employee and employer begin from the day when an agreement of employment is accepted (Guest, 2004). The employment agreement consists of all policies, rights, regulations and procedures in the workplace that are followed by every employee in a business organization. There are several elements that are necessary to implement in the system in order to create good employment relationship.
Communication: communication with employees is the most significant element for successful employee relations. According to Mumby (1988), Good communication keeps the employees engage in work and gives them a feel that they are an essential part of organization. Fisher (1993) defined that communication entails conveying each and every detail that is relevant to organization, such as plans, organizational change, and management’s commands either in writer or verbal form. Kotter (2008) argued that daily interactions between employees and employers enhance the sense of responsibility and commitment within employees and this results in high productivity and greater profits.
Employee Recognition: Giving an identity to employees is the best way to make employees satisfied and thus creating healthy relationship. Meyer, Becker & Vandenberghe (2004) identified in his research that employees tend to perform more if their hard work is recognized and praised. This encourages employees to bring new ideas and contribute to organization. Leana & Van Buren (1999) also supported the above statement by emphasizing that relationship between employees and employers tend to be stronger if employees and their efforts are recognized properly.
Reward System: To create a good relationship with employees, it is significant to recompense their efforts fairly. According to Lindner (1998), rewards either financial or non-financial are the basis to provide inspiration and satisfaction to workforce. Schuler & Jackson (1987) has depicted the importance of rewards by affirming that employee relations become stronger when employers give benefits, rewards or incentives to employees. Pfeffer (1995) also supported this fact and stated that reward system enhances the employee’s commitment to work and builds good relationship between employees and the management.
Trusting Employees: Trusting employees is an essential element of building good relationship. According to Claydon & Doyle (1996), business organizations can gain employees’ confidence by trusting them and empowering them to some extent at each level. Spreitzer & Mishra (1999) fostered the above thought and stated that most of the world leading organizations in the world now empower their employees and give them authority to take decisions by trusting their employees.
Hence, by studying various research reports, it can be stated that communication is the most important tool to develop good employment relationships in organizations. However, there are several other which include rewarding employees, recognition of employees and trusting employees. These build in the sense of ownership among employees, thus enhance the job commitment and productivity at individual as well as collective level (Bartol & Srivastava, 2002).
2.1.3. Importance of Employment Relationship at Business Organizations:
Human brains need to share ideas, feelings by communicating to each other. This characteristic makes human beings work well in any circumstance under every condition. Healthy relationship at workplace is important in any business organization. Good employment relationship helps employee to mingle with other employees and employers in short period of time (Cohen & Prusak, 2001). Employees can easily express their feelings and ideas which may lead to expose many prospects of doing work or project. Moreover, when the relationship between employees and employers are good, the work responsibilities are divided among all workers equally (Tsui, Pearce, Porter & Tripoli, 1997). An employee with a good rapport can earn the favours of colleagues and supervisors. Alvesson (2000) stated in the study that good relationship in workplace tend to avoid numerous problems regarding absenteeism, high turnover, conflicts at workplace and much more. According to Carmeli (2003), when employees encounter friendly work environment, they tend to work more productively, thus this results in higher employee performance. Burke, Singh & Fiksenbaum (2010) argued that the intensity of demand of increments decreases as an employee feels a part of an organization. This depicts that good employment relationship helps the organization to lower its cost as employees demand less increments in salary. In addition to this, employees feel motivated and satisfied when employers interact with them in a friendly way (Wang & Walumbwa, 2007). All these studies reveal that employment relationship is of major concern now a days at international platform, which is the reason why every international organization is focusing on reshaping policies regarding employment issues and improving relationships between employees and employers.
2.2. The Emerging Trends and Quality Standards Associated With Employment Relationships
2.2.1. The Global Employment Relation Trends in Competitive Drive:
As the economies and markets are expanding at the international level and competition is becoming intense, the drive to motivate employees and create good relationship within the organization is increasing. Leaders and managers are of the view that success of organization depends on the extent of employee satisfaction at workplace (Laschinger, Finegan & Shamian, 2001). Thus, companies now mainly focus on building healthy relations with employees and giving them comfort space to increase their satisfaction level (Bakker, A. B., & Schaufeli, W. B., 2008). In order to create good employment relationship, organizations are making efforts to engage employees and increase their participation rate in tactical decision making. Saks (2006) has depicted that higher employee engagement leads to improved employee relations. Coyle‐Shapiro (2002) has also supported this statement and concluded that employee relations with employers can be judged with the degree of employee engagement in organization. Thus, organizations are now working to improve engagement of employees and consistently evaluate employee engagement by measuring Employee Engagement Index Score. The below chart depicts that by the time from 2007 to 2011, Employee Engagement Index was declined, indicating that employees were less motivated and therefore effected employee relations.
(Kenexa, 2011)
Moreover, another graph shows the trend of employee engagement across the world. This graph depicts that India is the most emerging country in supporting employee engagement, though the intensity has declined in the year 2011. China and United Kingdom have marked least percentages in employee engagement.
(Kenexa, 2011)
This clearly shows that India is thriving to improve employment relationship in its organizations, whereas other countries such as China, United Kingdom, Germany, Brazil and United States indicate the lowest point in employment relationships.
The global trend of employee engagement has also been analysed across various industries. The major industries include retail, technology manufacturing, healthcare, banking and finance, government and machine manufacturing industry have been analysed which showed the following results:
(Kenexa, 2011)
The above graph and table depict that employee engagement trend was drastically effected in the year 2011, in which industries such as machine manufacturing, banking and retail portrayed decline in employee engagement by the greatest degree. However, government marked the least percentage that is 49%, followed by 52% of retail industry. This verify that manufacturing and production companies are more leaned to build good relationships between employees and employers and retail and banking industry serve the least to their employees in terms of satisfaction and motivation.
While seeing the global trend by classifying the job, the following trend is revealed:
(Kenexa, 2011)
The graph shows that the top managers and supervisors experience high level of engagement which is obvious, however, production workers are less exposed to direct participation in organizational decision making concerns. The table depicts that employee relations at the level of supervisors, technical workers and sales representatives encountered decline in employment relationship by the greater degree. Hence, sales employees and technical staff in companies tend CHAPTER 1: INTRODUCTION
1.1. Background:
In this era of globalization, the efforts are being made to eliminate or reduce barriers between employee and employer in order to develop good relationships in organizations. Employment relationship refers to a communication or behaviour between a supervisor and an employee. This typically relates to satisfaction and rights of employees. As described by ILO (2006), employment relationship deals with the legal connection or link between employees and employers. ILO has emphasized upon the two major actors of employment relationship which include, the worker and the employer.
Generally, employment relationship is functioned at two levels, which include representative or individualized. At an individual level, there is a direct link between employer and individual employee without any interference of trade unions. Whereas, a trade union usually serves as an intermediary between employer and employee at a representative level and forms a formal relationship (Yan, Zhu & Hall, 2002).
Today, most organizations are struggling to create good employment relationship by embracing effective communication systems, empowering employees and enhancing their participation rate. Successful and good employment relationships are important to build so as to create a sound business environment. It has been seen that organizations are likely to be successful if they support good employment relationships (Guest, 2004). This report will focus on detailed research study on the subject of employment relationships in business organizations in emerging countries, while keeping a wide spotlight on the case studies of two Indian companies, Tata Group and Maruti Suzuki.
1.2. Research Statement:
This research paper deals studies of employment relationships in developing countries, particularly in India. This report will intensely focus on emerging trends of employment relationships in business organizations at a global level as well as in emerging countries, while centering limelight on the case studies of the Tata Group and Maruti Suzuki. Moreover, the report will also discuss the quality of employment relationships and its effects on employee’s performance.
1.3. Research Objectives:
The research objectives set the direction for researchers to gain the required outcomes. Objectives are designed in such a detailed way that helps out researchers to achieve the research aim (Saunders, Thornhill, & Lewis, 2011). For the research regarding employment relationships in business organizations, the research objectives are designed as follows:
• To determine the concept of employment relationships interpreted and treated by contemporary business organizations.
• To identify the emerging trends and quality standards associated with employment relationships.
• To evaluate the weaknesses and strengths of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki.
• To propose the recommendations for improvement of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki.
1.4. Research Questions:
The research questions are prepared to keep the research objectives aligned with the aim of research study. These questions help the researcher to focus on each and every objective separately and support the findings with reference to research aim (Alvesson and Sandberg, 2011). Following research questions are prepared for the underlying project:
• How is the concept of employment relationships interpreted and treated by contemporary business organizations?
• What are the emerging trends and quality standards associated with employment relationships?
• What are the weaknesses and strengths of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki?
• What are the recommendations for improvement of employment relationships in contemporary business organizations from India like Tata Group and Maruti Suzuki?
1.5. Significance of Research:
In order to lead a competitive drive, it is essential to improve and establish healthy employment relationships in organizations. Since this trend is extremely lower in emerging economies, which is the reason to undertake the study particularly for emerging country such as India. At an international platform, employees are given self-assurance by maintaining strong communication between employee and employer which subsequently leads to low turnover rate and thus higher productivity. To conduct this research, analyst has undertaken two major companies, named Tata Groups and Maruti Suzuki and examined their policies and practices regarding employment relationships. Maruti Suzuki has recently been dealing with severe issues of employees and workplace while compromising on the relationship between employees and employers. Contrary to this, Tata Group has maintained good employee-employer relationships throughout which contributed radically in the success of company. These are the reasons the case studies of Maruti Suzuki and Tata Groups will give a good and significant amount of practical implementations of labour laws and execution of employment relationship strategies.
This research work will help to identify the significance of employment relationships in business organizations of emerging countries where mostly employees are reluctant to communicate frankly with employers. This research will signify the emerging trends that are associated with employment relationships at a global level while taking into consideration the quality standards at employee as well as organizational level. Since this research report aims to target the two major Indian organizations named, Tata Group and Maruti Suzuki, the researcher will emphasize on the weaknesses and strengths of employment relationships in respective companies by analyzing the organization-wide trends and surveying their employees. Furthermore, the project will draw and evaluate methods to improve the system and embrace good employment relationships in organizations. It will also be highlighted that good employment relationships actually save up the cost of company by means of increasing retention rate of skilled and valuable employees in organization. Therefore, this project holds immense importance since the study and findings are expected to help employees as well as the company largely.
CHAPTER 2: LITERATURE REVIEW
2.1. Concept of Employment Relationships Interpreted and Treated by Contemporary Business Organizations
2.1.1. Employment Relationship:
The employment relationship refers to the connection between employees and employers of an organization (Hui, Lee & Rousseau, 2004). The relationship creates when a person work for his/her employer against agreed remuneration under definite conditions. Roehling, Cavanaugh, Moynihan & Boswell (1998) has defined the employment relationship as the communication between an employee and employer or management of the company. The communication can be about anything regarding work such as participation in decision making, problem solving, grievances, sharing ideas, conflict resolution, issue concerning collective bargaining and unions, etc. (Kirby & Krone, 2002). Shore & Barksdale (1998) has argued that the intensity of good employment relationship is identified from the variety and severity of issues an employee can discuss with his/her employer. Tsui, Pearce, Porter & Tripoli (1997) has discussed in the research study that many employees are reluctant to discuss their workplace problems or share their ideas with their employers due to lack of communication. Osterman (1995) has stated in his argument that employment relationship does not only concern to communication between employees and employers, but poor relationship leads to numerous detrimental effects on work and thus organization.
It has been claimed by many entrepreneurs and major leaders of the world that employees are the company’s valuable asset, and keeping them satisfied is the responsibility of employers (Civi, 2000). Since satisfying employees is the major concern, now organizations make real efforts to build good employment relationships and create a strong bonding between employees and employers (Luthans, 2002). Here is the model to understand the employment relationship, which suggests that characteristics of employees and labour market context make up the employment relationship by developing trust, effective communication, commitment to organization, etc (Colquitt, Scott & LePine, 2007). Also the model below depicts that employment relationship directly relates to organizational performance as well as individual productivity.
(Lowe & Schellenberg, 2001)
Moreover, Guest (2004) has also described employment relationship as an organization’s effort to avert and elucidate work related issues of employees. Duncan & Moriarty (1998) has argued that communication is not the only major element to create good employment relationship but building and maintaining faith between employees and employers is the foundation to create healthy employment relationships. Harrison & Carroll (1991) supported the above statement and added that faith establishes when people are dealt with mutual respect and honesty from both the ends. Cutlip (1962) argued that good relationship builds when employees are allowed to participate and make decisions to some extent. However, for such act, it is important that employer should also share proper information with employees and stay responsive.
2.1.2. Elements of Good Employment Relationship:
It is commonly said that the most productive employees are the one who are happy and satisfied with the work and work environment (Harter, Schmidt & Keyes, 2003). Seeing this fact, leaders and managers work in the favour of employee satisfaction in order to gain higher returns in terms of their higher performance (Ugboro & Obeng, 2000). Since the definition of employment relationship implies to create connection between employees and employers, this section will identify the elements that help to build and maintain good connection between workers and employers.
A connection between employee and employer begin from the day when an agreement of employment is accepted (Guest, 2004). The employment agreement consists of all policies, rights, regulations and procedures in the workplace that are followed by every employee in a business organization. There are several elements that are necessary to implement in the system in order to create good employment relationship.
Communication: communication with employees is the most significant element for successful employee relations. According to Mumby (1988), Good communication keeps the employees engage in work and gives them a feel that they are an essential part of organization. Fisher (1993) defined that communication entails conveying each and every detail that is relevant to organization, such as plans, organizational change, and management’s commands either in writer or verbal form. Kotter (2008) argued that daily interactions between employees and employers enhance the sense of responsibility and commitment within employees and this results in high productivity and greater profits.
Employee Recognition: Giving an identity to employees is the best way to make employees satisfied and thus creating healthy relationship. Meyer, Becker & Vandenberghe (2004) identified in his research that employees tend to perform more if their hard work is recognized and praised. This encourages employees to bring new ideas and contribute to organization. Leana & Van Buren (1999) also supported the above statement by emphasizing that relationship between employees and employers tend to be stronger if employees and their efforts are recognized properly.
Reward System: To create a good relationship with employees, it is significant to recompense their efforts fairly. According to Lindner (1998), rewards either financial or non-financial are the basis to provide inspiration and satisfaction to workforce. Schuler & Jackson (1987) has depicted the importance of rewards by affirming that employee relations become stronger when employers give benefits, rewards or incentives to employees. Pfeffer (1995) also supported this fact and stated that reward system enhances the employee’s commitment to work and builds good relationship between employees and the management.
Trusting Employees: Trusting employees is an essential element of building good relationship. According to Claydon & Doyle (1996), business organizations can gain employees’ confidence by trusting them and empowering them to some extent at each level. Spreitzer & Mishra (1999) fostered the above thought and stated that most of the world leading organizations in the world now empower their employees and give them authority to take decisions by trusting their employees.
Hence, by studying various research reports, it can be stated that communication is the most important tool to develop good employment relationships in organizations. However, there are several other which include rewarding employees, recognition of employees and trusting employees. These build in the sense of ownership among employees, thus enhance the job commitment and productivity at individual as well as collective level (Bartol & Srivastava, 2002).
2.1.3. Importance of Employment Relationship at Business Organizations:
Human brains need to share ideas, feelings by communicating to each other. This characteristic makes human beings work well in any circumstance under every condition. Healthy relationship at workplace is important in any business organization. Good employment relationship helps employee to mingle with other employees and employers in short period of time (Cohen & Prusak, 2001). Employees can easily express their feelings and ideas which may lead to expose many prospects of doing work or project. Moreover, when the relationship between employees and employers are good, the work responsibilities are divided among all workers equally (Tsui, Pearce, Porter & Tripoli, 1997). An employee with a good rapport can earn the favours of colleagues and supervisors. Alvesson (2000) stated in the study that good relationship in workplace tend to avoid numerous problems regarding absenteeism, high turnover, conflicts at workplace and much more. According to Carmeli (2003), when employees encounter friendly work environment, they tend to work more productively, thus this results in higher employee performance. Burke, Singh & Fiksenbaum (2010) argued that the intensity of demand of increments decreases as an employee feels a part of an organization. This depicts that good employment relationship helps the organization to lower its cost as employees demand less increments in salary. In addition to this, employees feel motivated and satisfied when employers interact with them in a friendly way (Wang & Walumbwa, 2007). All these studies reveal that employment relationship is of major concern now a days at international platform, which is the reason why every international organization is focusing on reshaping policies regarding employment issues and improving relationships between employees and employers.
2.2. The Emerging Trends and Quality Standards Associated With Employment Relationships
2.2.1. The Global Employment Relation Trends in Competitive Drive:
As the economies and markets are expanding at the international level and competition is becoming intense, the drive to motivate employees and create good relationship within the organization is increasing. Leaders and managers are of the view that success of organization depends on the extent of employee satisfaction at workplace (Laschinger, Finegan & Shamian, 2001). Thus, companies now mainly focus on building healthy relations with employees and giving them comfort space to increase their satisfaction level (Bakker, A. B., & Schaufeli, W. B., 2008). In order to create good employment relationship, organizations are making efforts to engage employees and increase their participation rate in tactical decision making. Saks (2006) has depicted that higher employee engagement leads to improved employee relations. Coyle‐Shapiro (2002) has also supported this statement and concluded that employee relations with employers can be judged with the degree of employee engagement in organization. Thus, organizations are now working to improve engagement of employees and consistently evaluate employee engagement by measuring Employee Engagement Index Score. The below chart depicts that by the time from 2007 to 2011, Employee Engagement Index was declined, indicating that employees were less motivated and therefore effected employee relations.
(Kenexa, 2011)
Moreover, another graph shows the trend of employee engagement across the world. This graph depicts that India is the most emerging country in supporting employee engagement, though the intensity has declined in the year 2011. China and United Kingdom have marked least percentages in employee engagement.
(Kenexa, 2011)
This clearly shows that India is thriving to improve employment relationship in its organizations, whereas other countries such as China, United Kingdom, Germany, Brazil and United States indicate the lowest point in employment relationships.
The global trend of employee engagement has also been analysed across various industries. The major industries include retail, technology manufacturing, healthcare, banking and finance, government and machine manufacturing industry have been analysed which showed the following results:
(Kenexa, 2011)
The above graph and table depict that employee engagement trend was drastically effected in the year 2011, in which industries such as machine manufacturing, banking and retail portrayed decline in employee engagement by the greatest degree. However, government marked the least percentage that is 49%, followed by 52% of retail industry. This verify that manufacturing and production companies are more leaned to build good relationships between employees and employers and retail and banking industry serve the least to their employees in terms of satisfaction and motivation.
While seeing the global trend by classifying the job, the following trend is revealed:
(Kenexa, 2011)
The graph shows that the top managers and supervisors experience high level of engagement which is obvious, however, production workers are less exposed to direct participation in organizational decision making concerns. The table depicts that employee relations at the level of supervisors, technical workers and sales representatives encountered decline in employment relationship by the greater degree. Hence, sales employees and technical staff in companies tend to experience weaker relationship with employers as compared to managers.
2.2.2. Emerging Trends in Employment Relations in India:
India has been facing the lots of challenges regarding employment relations and labour laws as the new economic factors and globalization have changed the labour market significantly. The policies and bureaus of labour are now working to solidify the laws in the interests of employees and exerting stress to initiate extensive labour reforms. The following are the emerging trends of employment relationship in India:
• Increase in conflicts of employee management:
According to Shyam (2009), the shifts in comparative bargaining power in support of capital led the economic reforms to recover industrial and labour conflicts. Government has taken various actions to imply strategies which would decrease the ratio of incidents of labours or reduce the intensity of employee conflicts. Davala (1996) stated that rising amount of work stoppages, restructuring procedures, lockouts systems, all these result in increase in mobilization of employees.
• Collective Bargaining:
India has recorded the collective bargaining power at the lowest rate of 3% (Venkata, 2003). Collective bargaining is one of the most essential processes of generating rules in IRS in diverse Indian industries. Some new trends in collective bargaining are initiated in India to improve employment relationships in organizations. Government of India now prefers to undertake long term contract based employees and has changed the appraisal method to performance based evaluations (Bhattacherjee, 2001). Managerial goals are stated in collective bargaining with the aim of reducing labour costs, enhancing production, providing flexible time and environment to employees and much more. In addition to this, Bardhan (2002) has stated that trade unions were now kept aligned with the management of organizations to reduce conflicts as well as implementing new evaluation processes. Also, trade unions set marginalized sectors of the employees such as contract employees, security of employees, benefits, and other communal contracts (Krishna, 2006).
• Managerial Strategies:
Organizations in India have executed entirely different strategies that give flexibilities to employees, improve work processes, decrease regular employees and increase contractual based workers, job freezing, transferring and so on (Bardhan, 2002). As the consequence of this, contractual employees tend to work more with greater productivity than regular employees in India.
2.2.3. Quality Standards Associated with Employee-Level and Organizational-Level Relationship Attributes:
Employment conditions and quality influence the employment relationships to the greater extent. If quality of employment is fair enough, and conditions are satisfied, the relationship will build stronger between employees and the company. To evaluate the employment quality, several indicators are measured, which include:
• Part time jobs
• Low-paid jobs
• Form of employment contract
• Elongated working hours
• Normal working hours
• Flexibility in working times (voluntary)
• Safety and occupational health concerns
• Training periods
• Employee representative and other information
• Empowerment and decentralization issues
• Communication system and involvement of employees with top managers
These are the quality standards, set within the organizations in order to ensure high degree of employee satisfaction and work contentment. These indicators have addressed on the organizational as well as employee level attributes. It has been stated that if the above measures are taken into consideration, employee-employer can live up a good relationship at their workplace (Patterson, Warr & West, 2004).
The chart below depicts the employment quality which is determined as according to the socioeconomic and demographic indicators.
(Eurofound, 2013)
This shows that there is no quality difference on the basis of gender; however age is the matter as younger employees mark lower score in employment quality. A trend has been seen that employment quality is improving by the educational advancement and occupational groups (Govindarajulu & Daily, 2004). On the other hand, employees working in shops, sales, services departments tend to experience lowest point of employment quality.
2.3. The Weaknesses and Strengths of Employment Relationships in Contemporary Business Organizations from India Like Tata Group and Maruti Suzuki:
At a global level, the Indian market is one of the most budding markets which reflects the strong working conditions, employment relations and labour market. However, numerous companies in India are now coming across workplace disputes. It has been seen in a variety of studies that Indian business organizations are dealing with three forms of employment relationship which include pluralism, unitarism and radicalism. According to the case study of TATA Group, management has collective as well as individualized approach to employees (Tata Sons Limited, 2011). However, the pluralism aspect is more prominent in employment relationship prevailed in TATA Group. In case of Maruti Suzuki India LTD, employment relationship has always been the most challengeable charge. The company majorly focuses on unitarism characteristics where all groups have common organizational goals. This contradicts the hierarchal structure of organization since employees belong to diverse groups with different beliefs and interests but untarism leads them to focus on common goals. Such conflicts have led the company to bear periodic losses due to employees’ strike calls and protests.
Since Indian organizations are supporting the pluralist, unitarism and radicalism form of employment relationship, the researcher has discussed the strengths and weaknesses of employment relationships in support of these three forms, considering the two major companies of India, that are TATA Group and Maruti Suzuki.
2.3.1. The Strengths of Employment Relationships:
The main quality of pluralist type of employment relationship indicates that bargaining power of different parties relevant to organization are less influential on others as parties have less or almost no control over different parties in India (Bray, Waring, & Cooper, 2011). Pluralism work relationship includes persons with assorted desires, aims and intrigues, which distinguish them from each other. On the other hand, in companies like TATA Group, the parties have equivalent power and supremacy to a degree that no any particular party can command to any other person anymore (Srivastava, Negi, Mishra & Pandey, 2012). Subsequently, this manifestation of relationship exempted workers from disguise by their bosses. Superintendents or the organization, however, should not expect to oppress any workers’ ideas or opinions which may bring conflictions with the organizational aim. This type of job relation basically determines to combine opposing suppositions, opinions and aims; subsequently, it keeps oppositions within significant and adequate confines (Edwards, 2003). From such perspective, the contention or clashes cannot devastate the endeavour or intervene with organizational objective accomplishment of TATA Group.
Another benefit of pluralism sort of worker relationship is the point that it perceives unions as suitable workforce interest agents (Rose, 2008). Such unions can interrogate the upper level managers and supervisors. Equally, the unions are obliged to undertake transactions and appropriate negotiations (Lewis, Thornhill, & Saunders, 2003). This guarantees that disputes and clashes arising in TATA Group can be settled and can help to develop good relationships (Srivastava, Negi, Mishra & Pandey, 2012).
Unitarist employment relation is a business relationship….
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