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IB Syllabus 2.7
IB Syllabus 2.7
The learning outcomes (or assessment objectives) for this section of the IB Business Management syllabus are:
Sources of conflict in the workplace (AO2)
Approaches to conflict in the workplace by: (AO3)
employees—collective bargaining, work-to-rule and strike action
employers—collective bargaining, threats of redundancies, changes of contract, closure and lockouts.
The following approaches to conflict resolution. (AO3)
Conciliation and arbitration
Employee participation and industrial democracy
No-strike agreement
Single-union agreement
Inclass activities
Inclass activities
Day 1 - Sources of Conflict, Employee & Employer Conflict
Day 1 - Sources of Conflict, Employee & Employer Conflict
Choose a business
What might cause conflict in the workplace?
3. Make a list of as many potential conflicts you can think of
(Discuss with a partner)
Is there a change that happened to you that you didn't like?
How can we best respond to changes? If we have to change something that affects other people, how can we help them through the change?
Please Read: Hong Kong Foodpanda delivery workers strike over cuts to their earnings
What was the issue?
What approach to conflict in the workplace was used by employees?
What approaches to conflict resolution could be used?
Group Jigsaw: Conflict Methods (Employee and Employers)
Find an example of a conflict in the workplace that involves your assigned approach to conflict method
Explain your approach to conflict method
When does it work and when does it not work?
Employees— (1) collective bargaining, (2) work-to-rule and (3) strike action
Employers—(4) threats of redundancies, (5) changes of contract, (6) closure and lockouts.
Complete the following table:
https://docs.google.com/document/d/1DFl8MHdDK19hZhKbnPaX0y3St9vW_u6lpftaL-Rg8sw/edit?usp=sharing
Day 2 - Conflict Resolution
Day 2 - Conflict Resolution
Acting Activity: Conflict Resolution
Step 1: You are assigned a conflict resolution
Find a real life conflict involving your assigned conflict resolution
Act out the conflict, including the source of the conflict
Explain your conflict resolution
Include a discussion of the strengths and weaknesses of the conflict resolution chosen
Create a skit and act it out for the class
Complete the following table after watching
Conflict Resolution
Employee participation and industrial democracy
No-strike agreement
Single union agreement
Conciliation
Arbitration
Step 2: Skit Performances
At the end of the skit guess which conflict resolution it is by holding up the number with your fingers
Try to keep in mind what the conflict resolution was and why it was successful or unsuccessful
Step 3: Solidify your Learning with... Notes!
Complete the following table after watching the skits:
https://docs.google.com/document/d/1DFl8MHdDK19hZhKbnPaX0y3St9vW_u6lpftaL-Rg8sw/edit?usp=sharing
Day 3: Case Study Practice
Day 3: Case Study Practice
What you should know
By the end of this subtopic, you should be able to:
define the following terms: (AO1)
conflict
collective bargaining
work-to-rule
strike action
redundancies
lock-outs
conflict resolution
conciliation
arbitration
employee participation
industrial democracy
no strike agreement
single union agreement
explain the importance of employee–employer relations (AO2)
analyse the sources of conflict in the workplace (AO2)
examine different approaches to conflict in the workplace (AO3)
discuss different approaches to conflict resolution in the workplace (AO3)
https://quizlet.com/_covmhv?x=1jqt&i=4jrhob
https://www.gimkit.com/view/63d27668c731540036bc8763
2.4-2.7 Vocabulary Gimkit https://www.gimkit.com/view/63e0659daa9acd00212f95d7
Arbitration
This is an extension of conciliation but involves using an independent arbitrator who decides on the most appropriate outcome after considering the demands of both parties in the conflict situation.
Change management
Refers to processes and techniques used to plan, implement, and evaluate changes in business operations.
Closure
This occurs when employers temporarily shut the business in response to extreme industrial action of its employee (such as strike action).
Collective bargaining
The process of negotiation of working conditions and pay between employer and employees, or their representatives (such as a trade union and a senior management team).
Conciliation
This is the process of using a mediator to help facilitate negotiations during the conflict resolution process.
Conflict
This is a situation of friction or mutually exclusive goals between two or more parties, because the needs and interests of workers are ignored or because the organization cannot meet the needs of all its stakeholders at the same time.
Conflict resolution
The approaches or methods taken by employers and employees to oversee and handle conflict in the workplace.
Employee participation
This means that workers are given responsibilities and autonomy to do their jobs.
Employee representatives
The individuals or groups of individuals who are elected to act on behalf of their worker members. For example, trade unions represent their members in the negotiation process with employer representatives.
Employer representatives
Refers to a group of individuals or members of an organization that represent the interests of the business in the collective bargaining process.
Industrial action
The approach or activities taken by dissatisfied workers and employee representative due to disagreements about pay and/or terms and conditions of employment.
Industrial democracy
This refers to the involvement of employees in the decision-making process, as their views are important in considering the strategic direction of the organization.
Lock-out
This occurs when, during an industrial dispute, employers shut out their employees. Locks may be changed and/or added security is used to prevent employees from entering the workplace.
No-strike agreement
This is a promise from the employee representatives that its members will not resort to strike action as a method of industrial action.
Redundancies
Also known as layoffs, this form of action taken by employers involved cutting back on its staffing, as certain job roles are no longer required
Self-interest
This occurs when employees place their own interests above those of the organization.
Single-union agreement
The arrangement whereby the employer’s representative conducts negotiations with one main trade union, rather than several subordinate ones.
Strike action
This extreme form of industrial involves an outright refusal by employees to work, for a certain time period, thereby preventing the organization from continuing to operate. The aim is to pressure the employer to meet the workers’ demands.
Threats of redundancies
An approach to conflict in the workplace by employers who pressurise workers with the fear to losing their jobs if they do not cooperate in an industrial dispute.
Trade union
Also known as a labour union, this form of employee representative is set up to serve and protect the interests of its worker members. Its primary role is to uphold and improve the welfare of its members.
Work-to-rule
The form of industrial action involves all employees being instructed by their representatives to follow all the rules, regulations and policies of the organization, word for word.
Labour Turnover
The percentage of workers leaving the business in a period of time.
Extra Notes
Extra Notes
Sources of conflict in the workplace (AO2)
Sources of conflict in the workplace (AO2)
Conflict:
defined as disagreements and opposition between employees and employers/management that arise due to differing interests and objectives.
Sources of Conflict
needs and interests of workers are ignored or the organization cannot meet the needs of all stakeholders
Disagreements around wages, working conditions, contracts, redundancies etc.
Changes implemented by management
Perceived injustices in the workplace
Conflict Results in:
Results in a lack of cooperation, communication and productivity between these groups
Problems like miscommunications, stress, grievances, power struggles which impact employee satisfaction and performance
Demoralized employees are less happy, productive and loyal to the business as a result of ongoing conflicts
Approaches to conflict in the workplace by: (AO3)
Approaches to conflict in the workplace by: (AO3)
employees—collective bargaining, work-to-rule and strike action
employers—collective bargaining, threats of redundancies, changes of contract, closure and lockouts.
Employee - Approaches to conflict
Employee - Approaches to conflict
Collective bargaining
Work-to-rule
Strike action
There are various actions that employees can take to put pressure on the business to resolve disputes. While these actions can be effective tools to resolve disputes, they share similar downsides for both the employer and the employee, including:
increased costs of production
loss of output and sales revenue (and thus profits)
damage to the reputation of the business, permanent loss of customers and difficulties with recruiting
damaged relationships with employees
job losses if profits decline or losses occur due to the industrial action
Only works if employees are unified
Some workers could undermine the action by not participating at all, or not as much as the group needs in order to pressure the business.
Workers may fear for their jobs if industrial action is not protected by law in the country where they work.
They may fear for their jobs if the business is harmed by the industrial action, and redundancies occur later.
- Collective bargaining
A situation in which employees work together with management to negotiate wages and work conditions.
What is collective bargaining?
It is the process of negotiation between employers/managers and employee representatives regarding terms of employment.
Representatives include trade unions for employees and managers/lawyers for employers.
It aims to achieve mutually beneficial outcomes regarding wages, hours, conditions, rights and responsibilities.
When is collective bargaining used?
In large organizations where negotiating with each individual is not feasible.
It helps prevent conflicts from intensifying out of control.
How does collective bargaining work?
It can occur through formal unions or informal representation, even without an official union.
Where union membership is high, bargaining is easier for workers.
Impacts and outcomes of collective bargaining
Workers have more negotiating power together than individually.
Employers negotiate with one representative group rather than many individuals.
Agreements cover all represented workers/managers.
Factors influencing collective bargaining
Membership levels and union density impact bargaining power and industrial action.
Bargaining is more difficult where union membership is lower.
External political and economic factors may also influence negotiations.
Collective bargaining Example:
in December 2022, Rolls-Royce workers managed to secure a 10% pay rise and £2,000 bonus ($2,430) through successful negotiations between their trade union and the employer.
Read more about this case from The Guardian newspaper here.
- Work-to-rule
A form of industrial action where workers follow the rules of work, but do no more than that; reduces output to put pressure on employers to negotiate.
What is work-to-rule?
Work-to-rule means employees strictly follow all organizational rules, regulations, policies and procedures to the letter, as written in contracts and manuals.
It aims to purposely reduce productivity and disrupt operations by working only at minimum required standards.
How work-to-rule is implemented
No overtime is worked and employees do not perform any tasks outside of contracted hours such as responding to emails during breaks.
Workers refer to manuals even for familiar tasks and stop work right at shift end.
The goal is to pressure employers to negotiate by demonstrating how much extra efforts normally benefit operations.
Impacts of work-to-rule
Strictly obeying contract terms reduces flexibility and forces management to negotiate to reestablish it.
It reduces productivity, output and the firm's competitiveness by adhering to minimum standards.
Management is pressured while jobs can still get done, though at a slower pace.
When work-to-rule is used
It is an approach used by employees to put pressure on management during conflicts while still securing jobs and relationships.
The impact depends on how essential extra duties normally are to the organization.
Example:
If you work in a factory, for example, you might work an extra 30 minutes at the end of a shift in order to fulfil an order. You would also not answer any work emails, messages, or have informal meetings during breaks, lunch, or other off work times. In work-to-rule, you would stop your work and go home. Again, no overtime would be worked.
- Strike action
What is a strike?
A strike is when workers refuse to work as a form of industrial action.
It is the most radical action employees can take to achieve their objectives.
Local laws may require advance warning and a union vote before striking. Otherwise it is deemed illegal.
Management can hire additional workers to continue operations during a strike.
Effects of strikes
Strikes are very disruptive to a business' output and operations.
They receive media attention and can harm public relations for both sides.
Major strikes that disrupt sectors like transportation impact daily activities of many people.
A strike in education or transport will cause major community disruptions.
When is strike action used?
Strike action is usually a last resort when other forms of industrial action fail to meet worker demands.
It is an extreme form of protest used when major disagreements exist over pay, benefits and conditions.
Impacts and constraints of strikes
Workers are not paid during strikes and risk losing jobs, so it is only used as a last option.
Governments constrain strikes through laws requiring advance warning to limit disruptions.
Example:
In March 2022, a two-day general strike occurred in India involving 50 million workers across banking, manufacturing, and public transport sectors in six states.
The workers were protesting what they claimed were anti-labour government policies.
While 50 million strikers sounds like a lot, the strike had smaller numbers than expected/previous strikes involving hundreds of millions of workers.
Some observers believe the lower numbers reflected many vulnerable Indian workers facing issues like low wages, inflation, and Covid-19 impacts.
Short strikes with less than expected participation levels may not achieve their intended goals.
General Motors Strike (2019-2020)
The 2019-2020 United Auto Workers (UAW) strike against General Motors led to a 40-day shutdown of GM's North American operations, resulting in estimated losses of $2.9 billion.
Aug-Sept 2022 Strike Royal Mail UK
115,000 workers strike
Dispute over pay and conditions of employment
Only 2% pay rise
Double digit inflation
Royal Mail declared record profit
Result: secured a 10% pay rise and $2430 bonus
Employer - Approaches to conflict
Employer - Approaches to conflict
collective bargaining
threats of redundancies
changes of contract
closure and lockouts.
The business may wish to reduce costs of production, increase productivity, and reduce labour turnover.
It is in the management’s interest to do what it can to ensure employees are happy at their jobs; however, the management may have objectives that run counter to what the employees want.
This may result in differing perspectives which may lead to conflict.
The following may lead to:
higher costs
loss of output and sales revenue
damage to reputation
permanent loss of customers
difficulties recruiting
- Threats of redundancies
Redundancy refers to when a business cuts back on personnel where their roles are no longer necessary or there is no longer any work available.
What are redundancies?
Redundancies occur when job roles are no longer required and staffing levels are cut.
It refers to laying off employees whose services are no longer needed.
When are threats of redundancies used?
Employer representatives may threaten redundancies to resolve industrial unrest.
It is a way for management to limit union power and gain leverage over employees.
Impacts of threats of redundancies
They put pressure on employees to renegotiate in order to protect their jobs.
According to change theory, it refers to coercion and manipulation techniques.
Factors to consider
Threats must not abuse power or dismiss protected employees under employment laws.
Applying to non-essential roles can still impact other employees who fear for their jobs.
It works best when laying off won't significantly impact operations.
Watch this NBC News report about Elon Musk's ultimatum to his employees at Twitter, just 3 weeks after taking over the company in November 2022. Musk had used a combination of change of contract, threat of redundancies, and a lock-out as part of a cultural shift that he wanted at the social media company.
Elon Musk says he’s cut about 80% of Twitter’s staff (April 2023)
Social media platform now has only 1,500 employees, down from under 8,000 who were employed at the time of his acquisition. The reduction equates to roughly 80% of the company’s staff.
https://edition.cnn.com/2023/04/12/tech/elon-musk-bbc-interview-twitter-intl-hnk/index.html
- Changes of contract
What are contractual changes?
These occur when an existing employee's contract ends and new terms must be negotiated.
Changes can include pay, benefits, hours but must not be coercive.
Laws regulate the extent employers can use this tactic.
Ethical considerations
Both employers and employees have ethical responsibilities to resolve conflicts and minimize harm to stakeholders.
Businesses should not exploit power imbalances or advantage workers due to weak laws.
Types of contractual changes
Changes can include altering pay structures, hours, benefits like leave from full-time to part-time roles.
Very unattractive changes may pressure workers to agree to employer demands.
Notice must be given before contract renewals and extreme disruptive workers need not be renewed.
Using contractual changes as an approach
It allows employer flexibility but may be illegal or hard to implement depending on regulation.
Laws regulate the degree and unilateral nature of changes allowed.
It works when legal and feasible for the situation.
- Closure and Lockouts
What is a closure?
It refers to permanently or indefinitely shutting down the entire business in response to extreme industrial action like strikes.
It is a last resort approach due to hostility created with employees.
Effects of a closure
Employees lose pay and risk job loss, pressuring them to renegotiate.
What is a lock-out?
It involves locking employees out of the workplace to prevent them from working.
The goal is to divide union membership and pressure some who need work into renegotiating.
Effects of a lock-out
Employees are not paid, giving management bargaining leverage.
However, no work gets done which is also detrimental.
When closures and lock-outs are used
They are last resort, highly destabilizing approaches after other methods fail.
Closures put future of whole organization at risk pressuring employees greatly.
Lock-outs work best when stoppage won't severely impact profits.
Potential issues
They damage employer-employee relations and corporate image.
Future stability of organization is threatened by closures.
Starbucks closed 23 U.S. stores to deter unionizing, agency claims
Workers at more than 360 of Starbucks’ 9,300 U.S. stores have voted to join unions since 2021, and the company is facing more than 100 complaints at the NLRB alleging a variety of unlawful union-busting activity.
https://www.cnbc.com/2023/12/14/starbucks-closed-23-us-stores-to-deter-unionizing-agency-claims.html
The following approaches to conflict resolution. (AO3)
The following approaches to conflict resolution. (AO3)
Conciliation and arbitration
Employee participation and industrial democracy
No-strike agreement
Single-union agreement
Conflict resolution involves actions taken to reduce tensions and manage conflict in the workplace. Before employees or employers take potentially damaging industrial action, they can try a number of approaches to avoid conflict.
- Conciliation and arbitration
What is conciliation?
A third party mediator helps facilitate negotiations between conflicting parties to find a solution.
The mediator encourages compromise but the solution is not legally binding.
What is arbitration?
A third party arbitrator considers both sides and makes a decision on an outcome.
The conflicting parties are legally bound by the arbitrator's decision.
Process
Mediator/arbitrator meets with representatives of the conflicting parties separately.
If conciliation fails, the conflict can move to arbitration.
Benefits
Provides objective solutions free from bias as a third party is involved.
Prevents costly court proceedings.
Potential issues
Processes are time-consuming and involve fees.
Conciliation solutions still may not resolve conflicts requiring arbitration.
Both consume time and money.
This approach is appropriate when internal conflict resolution has failed and external assistance is needed.
Strengths and weaknesses of Conflict Resolution methods
- Employee participation and industrial democracy
Employee participation is a method of working whereby employees are actively involved in decision-making and therefore have a say in their work.
Gives workers responsibilities, autonomy and empowers them with a sense of ownership.
Industrial democracy is the process of allowing workers to have a say in the decision-making of a business; could include workers sitting on the board of directors of the company.
Involves listening to employee views before decisions that affect the workforce.
What are employee participation and industrial democracy?
They involve workers making decisions, sharing responsibility and authority.
Workers may have ownership, sit on boards, own shares or work in autonomous groups.
Potential benefits
Improves staff morale and productivity as workers feel respected and valued.
Creates sense of belonging and harmony in the workplace.
Improves industrial relations through participative workforce.
Allows problems to be solved together through team working.
As an approach to conflict resolution
Involves employee involvement in decision-making.
Gives employees voting rights directly or through representation.
Prevents conflicts by empowering employees in decisions affecting them.
Factors for consideration
Motivating approach that can eliminate potential conflicts.
Not always applicable depending on cultural background.
Works best where culture allows workforce input.
Strengths
Employees may feel more motivated and empowered. (Section 2.4.) Employees may feel a greater sense of belonging and may have better job satisfaction if their input is valued and considered. This is a powerful non-financial motivator.
It is linked to a democratic leadership model and can result in greater constructive input from staff members, who may contribute effective ideas and improvements for the organisation.
Organisations with greater employee participation tend to have fewer strikes, less conflict and often see a reduction in labour turnover.
Weaknesses
Democratic systems with greater employee input could delay decision-making, which may be a competitive disadvantage in fast-moving industries.
Employees may not agree on a strategic direction or consensus, which may create issues between workers.
Management expertise may be overlooked or ignored in favour of the collective decision-making of the whole staff body.
- No-strike agreement
What is a no-strike agreement?
It involves an arrangement where employees promise not to go on strike for a contracted period.
Factors for consideration
Secures uninterrupted production but employees expect benefits in exchange.
Usually signed once an agreement is made with management on issues.
Benefits of no-strike agreements
Avoids extreme and hostile measures like strikes in resolving conflicts.
Prevents negative publicity from stoppages.
Potential issues
Employers have legal right to discipline employees who break agreement.
Requires employer to resolve issues and keep promises to maintain agreement.
Appropriateness of approach
Works when organization can offer benefits to prevent workforce strikes.
Employees sign only when agreement secures key demands.
Strengths
This reduces the risk of disruption caused by strike action. It will help to avoid any issues of production being halted by striking staff.
It also reduces the possible risks of poor public relations created as a result of strike action.
Weaknesses
This may limit the impact or bargaining power of the union. It may also reduce the union membership over time and weaken labour power.
Employers may use their power and force to coerce unions into signing a no-strike agreement in favour of certain agreements that may be less favourable than what could have been achieved if strike action was an option.
- Single-union agreement
What is a single-union agreement?
An arrangement where the employer negotiates only with one recognized labor union representing employees.
Benefits of single-union agreements
Minimizes disruptions from dealing with multiple unions with different objectives.
Simplifies and speeds up the collective bargaining process.
Process
The employer deals only with the main trade union representing all employees.
Efficiency
Streamlines decision-making by negotiating with one representative union.
Factors for consideration
Convenient for management to deal with one entity.
Less flexibility and individual interests are sacrificed for union bargaining power.
Appropriateness
Works when employees accept a "one size fits all" approach for collective strength.
Strengths
This avoids wasting time negotiating with and managing multiple unions that represent employee groups. It also avoids rivalry between unions to negotiate better pay for members.
Weaknesses
Some workers may feel the union that is doing the negotiating is ineffective in defending their interests.
It may limit the union’s power to interfere with management functions.
Review Questions
1. What is meant by conflict?
2. What are the main sources of conflict in the workplace?
3. Why does conflict become a problem if not managed properly?
4. What are labour unions (trade unions)?
5. What are the typical activities of labour unions?
6. What is collective bargaining?
7. What is work-to-rule?
8. How does a walk-out differ from strike action?
9. What are employer’s representatives?
10. What is meant by industrial action?
11. What is meant by collective bargaining?
12. How do employers use threats of redundancies as a method of conflict resolution?
13. How do employers use changes of employment contracts as a method of conflict resolution?
14. How do closures differ from lockouts?
15. What is meant by conflict resolution?
16. How does conciliation differ from arbitration?
17. What is meant by employee participation and industrial democracy?
18. Why might employee participation and industrial democracy lead to a win-win outcome?
19. What are no-strike agreements?
20. What are single-union agreements?
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