Changes in social values accompanying economic development have led to the questioning of these prerogatives. Typical problems are the inability to attract and retain qualified employees, grievances, strikes, covert resistance and collective action, low psychological involvement in work, and a myriad of so-called problems of “motivation”—with implicit and explicit costs. Traditional authority must be complemented by procedures to establish equitable employment relationships and by attention to human relations.
Specifically, this implies three types of response, the first two representing procedures for determining work equity while the latter focuses on improving employee welfare: i) The development offortnal systems for establishing equality, for example, the development of personnel rules and procedures, symbolized by the statutes of a civil service; job evaluation systems such as the Hay System (adopted by many major firms for evaluating the worth of a job relative to others, leading to job ranking on a point system, and the setting of salaries according to wage norms in that industry).
In certain countries, the problems of establishing equity continue to become more complex—for example, in the United States, with Equal Employment Opportunity legislation and the current debate on the Comparable Worth of traditionally male and female jobs. ii) The negotiation of collective labor agreements with unions or collective employee representatives, determining what are equitable in the way of salary and working conditions for a particular period of time.
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One might point out that the foundations for stable economic growth in several countries with very different sociopolitical systems were established in the shape of enduring labor-management negotiation procedures: Sweden with the 1936 Saltsjobaden Agreement, Switzerland with the 1937 Peace Agreement in the engineering and metalworking industries (adopted by other Swiss industries), and Japan with the establishment of the Japan Productivity Center supporting enterprise unionism in 1955. Some managers argued that the recent recession heralded the end of unionism, and the United States has seen a wave of “union busting.
” While we may indeed see a decline in wage agreements that are not backed by productivity gains, one major European multinational is concerned about the unintended consequences of the decline of union membership. If there is weak collective representation of employees, they fear the administrative cost and turmoil of having to negotiate equity with multiple small constituencies of employees. Consequently, management itself is considering the feasibility of establishing Japanese-style enterprise unions. iii) Improved human relations and the quality of working life.
Sophisticated human relations and human resource policies have been found to be a common denominator in successful non-unionized firms (Foulkes, 1980). On the one hand, this implies training in the exercise of authority in a humane way that respects the integrity of the employee—supervisory training in human relations and managerial/ style. On the other hand, there is the progressive humanization of the work place through improvements in the quality of working life and employee welfare, in the development of semi-autonomous working arrangements, open door policies, and single status systems.
The extent to which the internal challenges of equity and human relations have been tackled varies greatly from country to country and from company to company. Some firms recognized the importance of equity in human resource management early, typically because of the values of far-sighted founders or presidents (Marks & Spencer is a symbol on one side of the Atlantic, Procter & Camble on the other).
While the record of companies in the free-market economy of the United States varies greatly, political events and ensuing legislation led some Northern European countries to tackle these internal challenges in the pre- or post-War years. Since 1955, equity and improvements in the quality of working life have been a paramount concern of Japanese firms (Takezewa et al. , 1982). Latin Europe, on the other hand, has started to confront these challenges more recently, as has Latin America (Brazil, for example, is seeing a wave of social unrest and unionization accompanying democratic liberalization).
A traditional notion of authority is still embedded in minds of many senior executives in Latin cultures, sometimes leading to deep adversary relations between management and labor. However, a firm where human resource management is evaluated only by the criteria of equity and human relations, where attention is focused inwardly alone, becomes what in both economic theory and popular jargon is called a BUREAUCRACY (Evans, 1984). The second and currently more topical criterion for HRM is competitive performance.