Essay: Impact of Collective bargaining on employee welfare

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  • Published on: December 30, 2017
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CHAPTER TWO.

LITERATURE REVIEW.

2.0 Introduction.

This chapter reviews the literature that is related to the research. This review is focused on the Impact of Collective bargaining on employee welfare in Shansteel as a multinational company in Sierra Leone .This review is drawn from a diversity of author writings (text books), published and unpublished materials, journals, articles, publications, magazines and internet sources.

The literature was reviewed in relation to the theoretical frame work and the study objectives. The literature will review the importance/benefits of collective bargaining to employees, employers and society. It will be followed by the importance of negotiation in rewards management. Moreover the review will determine the motivational strategies used by multinational companies in the work place to retain its workers ,the benefit of collective bargaining in improving health service and the effects of working conditions in the earning of wages , The review ends with a summary or conclusion.

-Theoretical framework .

– The importance/benefits of collective bargaining to employees, employers and society

-The importance of negotiation in rewards management and the process involve in negotiation

-Assessing employee welfare in multinational companies.

-The motivational strategies used by multinational companies in the work place to retain workers/employees.

-The effects of working conditions in the earning of wages.

-Summary review or conclusion on the impact of collective bargaining on employee welfare in multi-national companies in Sierra Leone.

2.1 Theoretical frame work-The theories of collective bargaining

Three major theories of collective bargaining include:

1. Tradition theory:

This theory considers economic condition in every nation as a major determinant of who wins in a negotiation between management and workers. In other words, economic forces determine who will be favoured in the negotiation of wages and salaries between employers and unions. When the supply of labour is higher than demand, employers will win, this indicates a situation of high level of unemployment in the economy; but if demand for labour is higher than supply of labour, workers stand the chance of winning. Another perspective of this theory is based on the argument that if the procedure and rules of the game is strictly followed, it becomes easy to reach a collective agreement.

2) Power model theory:

The argument behind power model theory is that the greater the demand that is made, the less power, union or employer will have in actualizing it. In other words, this theory says that if maximum/upper limit of demand is 5 and the union is asking for it, the probability of getting it is less than if they were asking for 2 or 3. The theory concluded that if people want to win in any negotiation, they must make less power of their opponent to disagree. Consequently, if a trade union wants to embark on strike and the management is aware that the consequence of such strike is likely to be devastating to them, they may quickly agree with the union’s demand and vice versa.

3) Behavioural aspect theory:

This theory views collective bargaining as a process of jointly making decisions on matters of employment and industrial life for the attainment of their respective goals. This process leads to mutual agreement or agreements for the improvement of mutual relationship and terms and conditions of employment. This theory is based on the fact that, the more cordial the social and interpersonal relationship, co-operation and attitudinal disposition between management and workers is high, the tendency to reach collective agreement without much hassle in the firm. Under this theory, collective bargaining agreements are a means of integrating union and management interests in a way that promotes the welfare of both.

Therefore as far as the impact of collective bargaining on employee welfare is concerned the behavioural aspect theory is the basis of this research.

2.2 The importance /benefits of collective bargaining to employees, employers and society.

Akpan et al.(2016):International Journal of Emerging Research in Management &Technology: Collective bargaining is important to the employees, employers as well as to the society or state.

Importance to the Worker /Employee.

• It is the process of making rules that govern the work-place jointly by both management and the union.

• Collective bargaining develops a sense of self respect and responsibility among the employees.

• It increases the strength of the workforce, thereby, increasing their bargaining capacity as a group.

• Collective bargaining increases the morale and productivity of employees

• It restricts management’s freedom for arbitrary action against the employees. Moreover, unilateral actions by the employer are also discouraged.

• Effective collective bargaining machinery strengthens the trade unions movement.

• The workers feel motivated as they can approach the management on various matters and bargain for higher benefits.

• It helps in securing a prompt and fair settlement of grievances. It provides a flexible means for the adjustment of wages and employment conditions to economic and technological changes in the industry, as a result of which the chances for conflicts are reduced.

Importance to the employer

• It becomes easier for the management to resolve issues at the bargaining level rather than taking up complaints of individual workers.

• It leads to industrial peace and thus saves the embarrassment and costs of strike action .Collective bargaining plays a vital role in settling and preventing industrial disputes.

• Collective bargaining tends to promote a sense of job security among employees and thereby tends to reduce the cost of labour turnover to management.

• Collective bargaining opens up the channel of communication between the workers and the management and increases worker participation in decision making.

Importance to the state/society

• It prevents negative effects of visible expression of conflicts. Collective bargaining therefore leads to industrial peace in the country

• It minimizes the need for state intervention and therefore ensures industrial democracy in an organization.

• Quick resolution of conflict through collective bargaining removes political instability

• It results in establishment of a harmonious industrial climate which supports which helps the pace of a nation’s efforts towards economic and social development since the obstacles to such a development can be reduced considerably.

• The discrimination and exploitation of workers is constantly being checked.

• It provides a method or the regulation of the conditions of employment of those who are directly concerned about them are reduced.

Importance to employers

1. It becomes easier for the management to resolve issues at the bargaining level rather than taking up complaints of individual workers.

2. Collective bargaining tends to promote a sense of job security among employees and thereby tends to reduce the cost of labour turnover to management.

3. Collective bargaining opens up the channel of communication between the workers and the management and increases worker participation in decision making.

4. Collective bargaining plays a vital role in settling and preventing industrial disputes.

Akpan et al.(2016) International Journal of Emerging Research in Management &Technology) (

However, according to the International Labour Organization policy guide (2015)

Collective bargaining is a fundamental principle and right at work. It is also considered an enabling right. Collective bargaining can contribute to improvements in wages and working conditions, as well as equality. When effective, collective bargaining can help build trust and mutual respect between employers, workers and their organizations, and contribute to stable and productive labour relations.

A number of benefits or importance may arise from the effective recognition of the right to collective bargaining. These benefits or importance are set in themes namely job quality, equity, training, labour relations, enterprise performance and macroeconomic respectively.

Theme: Job quality

• Improves wages.

• Can be a tool for aligning wages and productivity .

• Enables negotiation of working time arrangements that balance workers’ interests in a work/life equilibrium, with employers’ interests in flexible working time.

• Can enhance access to social insurance.

• Can facilitate job security and employment protection.

• Creates opportunities for workplace participation (voice) .

Theme: Equity

• Compresses wage structures.

• Enhances gender equality.

• Can promote parity between workers in regular and non-standard forms of employment working in the same enterprise.

Theme: Training

• Can enhance access to continuing vocational training ü Tailors training to worker, enterprise and industry needs.

Theme: Labour relations

• Enables the acquisition of other rights.

• The process itself involves the exercise of rights and democratic principles.

• Provides a channel through which to “voice” and resolve grievances, which in turn enhances worker well-being.

• Institutionalizes the resolution of disputes and contributes to stability in labour relations.

• Allows for tailoring joint regulation to an industry or workplace.

• Legitimizes rules and increases compliance (with statutory or collective agreement provisions).

Theme: Enterprise performance

• Can facilitate the adaptability of enterprises to a temporary fall or rise in demand .

• Increases worker commitment and enhances the sharing of information (e.g. on work processes) .

• Is associated with a reduction in labour turnover, which increases the incentive to provide enterprise-specific training. This in turn contributes to improvements in productivity and product quality.

• Enhances the positive effects of workplace and technological change on enterprise performance .

• Enables the negotiation of productivity incentives or profit sharing schemes.

Theme: Macroeconomic

• Reduces inequality and allows for a fairer distribution of national income .

• Facilitates adjustment to economic shocks .

• Coordinated bargaining can have a positive effect on economic performance (inflation, employment, etc.).

• Higher coverage by collective agreements is associated with an increase in public expenditure on active labour market policies.

[COLLECTIVE BARGAINING • ILO -A policy guide 2015]

2.3 The importance of negotiation in rewards management and the process involved in negotiation.

According to the International Labour Organization policy guide (2015): Collective bargaining is a process of negotiation. Negotiation involves any form of discussion, formal or informal, with a view to reaching an agreement. For collective bargaining to be effective, it is important that these negotiations be conducted in good faith. Bargaining in good faith reflects an intention to engage in constructive negotiations and make every effort to arrive at a negotiated agreement.

However, negotiation is a process by which ‘two or more parties attempt to resolve their opposing interests’ (Lewicki et al., 2010)

Conflict has never benefitted anyone, instead it adds to one’s tensions and anxiety. It is better to discuss things and reach to an alternative agreement.. Issues must not be dragged unnecessarily and efforts must be made to come to a conclusion involving the interests of all. There is no point in being adamant and rigid. One should strive hard to negotiate with each other and consider the needs, interests and expectations of all.

Negotiation is only possible through communication. Good communication can change attitudes, prevent or overcome deadlock and misunderstandings and help to improve relationships. Moreover, good communication skills are essential to cogently relay your message, and to thoroughly understand the message of the other side (Wondwosen, 2006).Trust enhances this information sharing – both as a way to help the other understand our negotiation position and interests, and to learn more about the other party’s position and interests – and hence facilitates cooperation with the other (Irmer & Druckman, 2009).

Negotiation is essential everywhere. It is not only the corporate where negotiation is important but also in our daily life. We all must try our level best to adopt negotiation skills to avoid misunderstandings and lead a peaceful and a stress free life.

Negotiation is essential in everyone’s family to maintain peace at home. We all need to compromise with each other to some extent to avoid disagreements at home.

Negotiation also helps in effective buying. Every individual needs to save money for the rainy days. You just can’t spend money like anything. One must try his level best to negotiate with the second party to reduce the costs to the best extent possible. If you do not negotiate well you will end up spending more than required.

Negotiation reduces conflicts and improves the relation among individuals. We are human beings and unlike animals we live in societies and need people around. An individual must learn the skills to an effective negotiation to lead a happy and a peaceful life. Negotiation is essential for better bonding among individuals, lesser conflicts and a happy life.

However, the primary purposes of negotiation is the exchange of information between parties in order to persuade the other to ‘see it your way’. Trust is integral to this exchange of information

According to Watershed associates (2017), There are five collaborative stages of the negotiation process: Prepare, Information Exchange, Bargain, Conclude and Execute or Implement. Moreover, building trust in negotiations is key. Communication skills are critical during bargaining. Collaborative negotiations are an ongoing process, which build confidence, trust and strong relationships.

According to Lombardo J (2017) .Companies has to negotiate in numerous areas of organizational conflict. Negotiation is an open process for two parties to find an acceptable solution to a complicated conflict. There are five steps to the negotiation process.

1. Preparation and planning

2. Definition of ground rules

3. Clarification and justification

4. Bargaining and problem solving

5. Closure and implementation

Preparation and Planning

Preparation and planning is the first step in the negotiation process. Here, both parties will organize and accumulate the information necessary to have an effective negotiation.

Definition of Ground Rules

The second step in negotiation is the definition of ground rules. In this step, rules and procedures will be established for the planned negotiation.

Clarification and Justification

The positions of both parties are discussed at length and each side will get a chance to explain, justify and support their original request. This part of the negotiations should not be argumentative, but instead, it should provide the opportunity for each side to educate and inform each other about their position. .

Bargaining and problem Solving: The essence of the negotiations process is the actual give and take in trying to hash out an agreement. It is here where concessions will undoubtedly need to be made by both parties.

Closure and implementation: The final step in the negotiation process is formalizing the agreement that has been worked out and developing any procedures that are necessary for implementing and monitoring.

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