EFFECTS OF INDUSTRIAL RELATION PRACTICES ON ORGANIZATION’S PRODUCTIVITY IN AN ORGANIZATION; A CASE STUDY OF KENYA PIPELINE COMPANY (KPC)
Chapter one
1.1 Introduction
This report analyses the effects of industrial relation practices in organization’s productivity in an organization, and the factors within the organization that influences the resolution of such occurrences. A set of objectives have been formulated for the study, and from the research study, specific questions drawn. The chapter will also cover the background, scope, significance, and the limitations of the study.
1.2 Background of the Study
The current study of industrial relations is dominated by attempts of scholars to explain the prevalence of industrial conflict in sectors and countries. For example, a prominent question in the industrial relations literature is: ‘why do some countries exhibit more strikes than other countries? Ideally, the term ‘Industrial Relations’ encompasses two terms: ‘Industry’ and ‘Relations.’ ‘Industry’ refers to any productive activity in which an individual (or a group of individuals) is (are) engaged. ‘Relations’ means the relationships that exist within the industry between the employer and his/her workers. The term industrial relations explain the relationship between employees and management, which stem directly or indirectly from union-employer relationship. Industrial relations are the relationships between employees and employers within the organizational settings.
Anugwom (2000) defines industrial relation as the network of social relationship between the employees and their union, employers and the association, and the government and the numerous agencies in their attempts to regulate terms and conditions of employment. Additionally, it involves the initiation and substance of peaceful and purposeful labour management relation, which involve applying machinery dealing with complaint, grievance and disputes in an organization.
Yesufu (1984) defined ‘Industrial Relations as a whole web of human interactions at work, which is predicated upon the matters that arise out of the employment contract.’
Armstrong (1980) sees Industrial Relation as the intertwining activities of the worker, managing, and government for better working conditions.
Hence, the scope of industrial relations embraces relations and interaction between one trade union management and the state (i.e. government) are all important issues, which fall within the purview of industrial relations.
The field of industrial relations looks at the relationship between management and workers, particularly groups of workers represented by a union. At its inception, the labour market was dominated by the classical economics view, which espoused free and unregulated labour markets. Apparently, this laissez-faire capitalism led to social injustices and inequalities since labour did not have the power to bargain with employers on terms that even approached a degree of equality in the bargaining strength. Therefore, industrial relations came to espouse a degree of labour market regulation to correct such an equal bargaining power.
In the organizational context, productivity is a direct result of combined employee skills and abilities. Human resources managers are developed and trained to perform two major functions: identifying the apti- tudes displayed by employees and developing them into abilities and skills. Cully et al. (1999) conducted research on HRM practices influence on productivity. Study selected HRM practices such as working in teams; autonomy, pay schemes, employee participation, and greater discretion in the place are contributing for high rate of productivity. Husield (1995) noticed that Recruitment & Selection and training impact on productivity. Baker et al. (1996) established from his research that Job rotation, cross-functional teams, integration of functions and quality circles contribute positively for the productivity.
Overall, industrial relation is also primarily concerned with an intricacy of power relationship and power sharing between management, the employee or trade union and the state (i.e. government). Furthermore, with the realization of the vital importance of work to the entire life of a worker, industrial relations is becoming increasingly concerned with how the employee can be fully identified with the purpose of the organization and how employees, by effective participation both in the work effort and decision making, can find greater self fulfillment in the work situation. Numerous companies in worldwide are bedeviled by a myriad of problem and ailments caused strained industrial relations. However, the storage and transportation sector is growing at a significant level in Kenya. Growth in the transportation industry enables the usage of industrial relation practices to gain a competitive advantage. As a result, large private companies have entered into the transportation of petroleum products to compete with the public organizations.
1.2.1 Kenya Pipeline Company Organizational Profile
Kenya Pipeline Company Limited is the leading company in Kenya, which offers storage, transportation, loading, and distribution services for petroleum products. The company provides unleaded motor gasoline, automotive gas oil, and aviation turbine fuel. In addition, it proffers petroleum laboratory testing and aircraft fuelling services. Kenya Pipeline Company Ltd. was founded in 1973 and is based in Nairobi, Kenya. As of October 2013, the KPC is subdivided into eleven departments, which are each headed by a manager. The departments are, namely: Engineering, Operations, Business Development, Corporate Planning, Finance, Human Resources, Internal Audit, Information Communication Technology, Secretarial, Administration, and Procurement. A manager heads each of the departments.
The company is administered by a Board of Directors, which is headed by a non-executive Chairman, and a Management Team, which is headed by a Managing Director supported by three Chief Managers (Technical, Finance and Strategy and Human Resource & Administration).
As of October 2013, board of directors holds the leading positions namely:
‘ Chairman: Samuel M. Maluki, MBS
‘ Principal Secretary: Eng. Joseph Njoroge, MBS
‘ Principal Secretary: Dr. Kamau Thugge (from National Treasury)
‘ Director: Felicity N. Biriri, Habon Billow Farah, Nuru Bwanakombo, Waithaka Kioni, Faith Jepkemboi Bett, Austin Kapere
The company also operates a number of pumping stations and a storage system with a total capacity of 612,233 m3 distributed at the depots located at Kipevu, Moi Airport, Jomo Kenyatta International Airport, Nairobi Terminal, Nakuru, Eldoret and Kisumu. Having beaten the trends and managed to favorably compete with the Dalbit Petroleum, Engen (K) Ltd, EPPIC Oil (K) Ltd, Fossil Fuel Ltd, Gapco Kenya Ltd, Global Petroleum Pro, Oil City Services, and Millenium Dealers, the KPC may be successfully be graded as an organization that has stood the test of time. Moreover, the company has managed to remain in one piece with few cases of external drama or unresolved industrial relation practices. Hence, the decision to use it as a case study as they have an administration and management regime that established and even upcoming organizations can borrow a leaf.
Figure 1.0 Kenya Pipeline Company, source: Internet
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1.3 Statement of the Problem
The concept of industrial relations practice on organizational productivity aims at creating public value and improvements within an organization. However, the attempts to streamline industrial relation practices usually hits dead walls. The attention has been devoted to examine the cause or factors, which have been largely responsible for unproductively in the industrial relation practice. Some of the problems examined in this study that influence organizational productivity include job security, remuneration, social security and employee development, health and welfare of the employee, and safety facilities in the organization. A criterion of measures should be developed through participatory processes involving new governance arrangements in respect of relationships between organizations and citizens and service users, and workplace partnership processes in respect of internal relationships. Various variables used in the research topic help link these processes without undermining the democratic precedence of the citizens in the determination of public value. One of the driving factors in the research is employee development that if carefully addressed could lead to improved productivity.
1.4 Objective of the Study
1.4.1General Objective
The general objective of the study is establishing the industrial relation practices that derail the productivity of an organization.
1.4.2 Specific Objectives
i) To determine how safety facilities influences productivity in Kenya Pipeline Company.
ii) To establish how job/employment security influences productivity in Kenya Pipeline Company
iii) To ascertain how social security and employee development impacts productivity Kenya Pipeline Company
iv) To find out how remuneration determines productivity Kenya Pipeline Company
v) To determine how health and welfare of the employees influences productivity Kenya Pipeline Company
1.5 Research Questions
The following are the guiding questions, which are expected to be answered whilst carrying out the research or at the end of the compilation.
i. How do safety facilities influence productivity in Kenya Pipeline Company?
ii. How does job/employment security influence productivity in Kenya Pipeline Company?
iii. How do social security and employee development impacts productivity Kenya Pipeline Company?
iv. How does remuneration determine productivity Kenya Pipeline Company?
v. How do health and welfare of the employees influence productivity Kenya Pipeline Company?
1.6 Significance of the study
1.6.1 Useful to public sector
The study will hold high benefits to corporate organizations since it might be that such devolution of authority would also lower one of the key obstacles to the development of genuine workplace partnerships in the public sector. Apparently, the risks associated with the different timescales of organizational transformation and the national political cycle would be reduced. Most importantly, organizations will be able to fully identify the various possible factors that influence industrial relation practices and understand the major variables that in the corporate world that influence productivity. It will help those who may wish to undertake a similar research.
1.6.2 Enhance the Relationship between the Employer and Employee
The study will also contribute to peaceful co-existence between employers and workers and between colleagues, which in turn will positively influence sales, enhancement of labor, and overall growth of the organization. It will help create the capacity to respond to the needs of citizens in an economically efficient way.
1.7 Limitations of the Study
1.7.1 Lack of Enough Information
On an assumption basis, the results from other organizations would not yield the same results. If the study had a scope of several organizations, the final product would be more concrete and probable.
1.7.2 Non-Responsive Respondents
Another problem experienced is that some respondents were unwilling to part with information concerning some of the desired research questions. Their non- challant attitude affected the outcome of the study, and their final responses.
1.7.3 Sensitivity and Confidentiality
Accessing some of the information from the company was a problem. Employees might withhold very sensitive information that can help during the research study.
1.8 Scope of the Study
The study covers the factors that influence industrial relation practices that influence productivity in an organization. The case variables include job security, remuneration, social security and employee development, health and welfare of the employee, and safety facilities in the organization .These variables would enable the research to have a specific achievement of the objectives. The study will discuss in detail the above variables, and also list and analyze the other factors influencing productivity in any organization. The study will restrict its research to the Kenya Pipeline Company (KPC), to have a detailed and comprehensive finding. The study will make maximum utility of interviews, questionnaires, and direct observations in data collection, analysis of data, and final representation of the data in the form of a proposal report. The sample size obtained from the organization totals to 88, who assisted in filling the required data for the research.