ASSESSMENT ON THE EFFECT OF EMPLOYER-EMPLOYEE OFFICE RELATIONSHIP ON THE PRODUCTIVITY OF AN ORGANIZATION

CHAPTER TWO

REVIEW OF LITERATURE

INTRODUCTION

Our focus in this chapter is to critically examine relevant literatures that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.

Precisely, the chapter will be considered in three sub-headings:

• Conceptual Framework
• Theoretical Framework

2.1 CONCEPTUAL FRAMEWORK

EMPLOYER- EMPLOYEE RELATIONS

According to Gennard & Judge (2005), “employee relations is a study of the rules, regulations, and agreements by which employees are managed both as individuals and as a collective group, the priority given to the individual as opposed to the collective relationship varying from company to company depending upon the values of management. As such it is concerned with how to gain people’s commitment to the achievement of an organization’s business goals and objectives in a number of different situations...”. Appropriate employer-employee relation- ship practices in businesses are beneficial as they provide better solutions to conflicts, business process and performance issues (Vickers-Willis, 2008). It enables better working conditions for efficiency, satisfaction, participation, retention, compliance, commitment, etc., thus avoiding any unnecessary employer- employee related issues. In order to establish strong rela- tionships and achieve organizational growth, several studies have listed several drivers for business organizations. In his psychological contracts, Schein identified the existence of an implicit contractual relationship between employers and employees from a series of assumptions about the nature of their relationship. He assumed employees will be treated honestly today because they build stronger and successful relationships. Professional presentation of oneself gives him a powerful edge over the competition. Business owners must have a combination of confidence, competence, attitude, manners, and communication. These are heightened by a refined executive image; knowing what to do, how and when to do it. The ability to communicate and get your message across. Good communication skills will enable business owners to convey important information that affects the organization directly or indirectly. They should never be tongue-tied, know what to say, and say it. The ability to persuade others and influence their behaviors, attitudes, opinions, and beliefs. Business owners are encouraged to use the authority and systems they have in their organization to persuade and influence staff to work efficiently and effectively to ensure that the organizational goals are met and good relationships are maintained. The ability to use power. Business owners must use the power they have to influence staff but must not act in an intimidating manner. However, power must not be abusively used as power corrupts and absolute power corrupts absolutely Employers do not only hire workforce but also start new relationships. They often work in close relations, thus develops relationships. Managing relationships is very critical to the success or failure of the organization (Demirbag, Collings, Tatoglu, Mellahi, & Wood, 2014; Keeble-Ramsay & Armitage, 2014; Persson & Wasieleski, 2015; Sparrow & Makram, 2015; Wilkinson, Dundon, Donaghey, & Townsend, 2014). Most often, employer-employee relationships may contribute to the achieve- ment of organizational goals or otherwise (Atkinson & Sandiford, 2016; Boxall, Guthrie, & Paauwe, 2016; Caza, McCarter, & Northcraft, 2015; Dobbins & Dundon, 2015; Dundon & Dobbins, 2015; Felstead, Gallie, Green, & Inanc, 2015; Heffernan & Dundon, 2016; Pratono & Mahmood, 2015). The type of relation- ship built in an organization may affect productivity negatively or positively. Though the objective of every organization is to maximize profit, employer-employee relationship can be a hindrance to the achievement of those objectives. Strong relationships stimulate performance, lead to employees’ happi- ness and increase productivity (Valizade, Ogbonnaya, Tre- gaskis, & Forde, 2016; Xesha, Gervase Iwu, Slabbert, & Nduna, 2014). In contrast, weak relationships drive employees toward poor performance, create more tensions and conflicts, and lead to inefficiency and unproductivity. In order to increase per- formance, the dynamics of employer-employee relationships must be at the core of management practices. Also, business owners must understand the human aspect of their businesses. Employers are encouraged to act as social architects who can work across functions and levels, continuously improving business processes and fostering a favorable atmosphere for risk-taking, innovation, commitment, quality, self-improvement and self-directed teamwork (Jansen, Curseu, Vermeulen, Geurts, & Gibcus, 2013; Kooij et al., 2013). To survive and grow in today’s demanding and highly com- peting global market, employers/owners are advised to learn and employ appropriate human skills to motivate employees in their business cycles (Khoreva, Vaiman, & Van Zalk, 2017; McDermott, Conway, Rousseau, & Flood, 2013; O’Donoghue, Conway, & Bosak, 2016; Zhou, Hong, & Liu, 2013). Strong employer-employee relationship builds trust, coordination and often leads to job satisfaction. Several studies have confirmed that strong relationships inure to the success of an organization and that there is a positive correlation between strong relationships and organizational performance (Acuff & Wood, 2004; Burns, 2012; Donaldson & O’Toole, 2007; Ford & McDowell, 1999; Håkansson & Ford, 2002). It is therefore impe- rative that organizations focus on long-term employee and customer relationships, as well as relationships with other businesses, to share risks, best practices, and resources that can give them an edge. Though relationships are complex and multifaceted in nature, they can be managed (Anderson & Kerr, 2002; Boxall, 2013; Hart, 2004; Hartline & Bejou, 2004; Martin Alcázar, Miguel Romero Fernández, & Sánchez Gardey, 2013). A business relationship is similar to any other relationship; it requires much efforts to maintain and must be mutually beneficial to the stakeholders involved. In any business relationship, owners should be willing to support, share and give, not just receive.

LABOR LAWS

Labor laws were designed to protect workers against unfair treatment by their employers (Cazes, Khatiwada, & Malo, 2012; Siekpe & Greene, 2006). Every employee eventually becomes aware of these (Xesha et al., 2014). However, there are indi- cations where labor laws are not followed or its implementation or compliance is delayed (Martinson, 2012). This mostly affects relationships. Employers are advised to comply with these laws or face penalties and this breaks the relations they have with their workers (Siekpe & Greene, 2006). Daft & Marcic (2013) advise business owners to prevent negative relationships as this decreases the productivity levels of businesses. Since employees have direct contact with the customers, a good or bad relationship may be created and maintained as they mostly direct their happiness or unhappiness at the customers.

LACK OF TRUST AND RESPECT

In most recent years, trust and respect have increasingly been used to boost staff participation, job retention, satisfaction, among others. Nevertheless, trust and respect are earned by an employer through open communication, regular feedback and assignment of responsibilities to the staff (Hunt, Lara, & Hughey, 2009; Xesha et al., 2014). In any business organization, the establishment and maintenance of trust are vital for both long- term and short-term efficacy. The consequences of losing organizational trust are devastating and employers who fail to abide by the elements of trust and respect eventually create a negative tension on the relationship. To improve trust, strategies such as behavioral integrity, behavioral consistency, effective communication, sharing of control and demonstration of concern for employees are vital (Hunt et al., 2009). In confirmation of some of these concerns and the im- portance of the employer-employee relationship in the Ghanaian business sectors, a survey was carried out to understand the drivers and challenges of employer-employee relationships and their impact on job satisfaction, customer service, and organizational performance.

THE HIGH RATE OF INFLATION

An increase in an inflation rate of an economy results in an increase in standards of living of that economy (Berument, Ceylan, & Dogan, 2010; Xesha et al., 2014). When this ha- ppens, workers start to demand higher salaries to complement the increased cost of living. This situation possesses the potential for the breakdown of the employer-employee rela- tionship as such situations often lead to labor strikes (Martinson, 2012; Nimoh, 2015).

. Interpersonal Skills Generally, interpersonal skills serve as the basis for managing and maintaining relationships. There is the need for business owners to develop their interpersonal skills in order to build strong relationships in the workplace. Interpersonal skills make it easier for business owners to manage relationships and succeed in business. According to Xesha et al. (2014), some of the features of interpersonal skills include: The ability to understand other people’s behaviors and interpret them correctly. Business owners must have the objective of recognizing and correctly interpreting the fee- lings, reasoning, and psychological behavior of another person. This is done in an effort to discern their suc- cesses, failures, fears, and actions. The ability to manage impressions and present oneself competently to others. Most businesses are successful today because they build stronger and successful relationships. Professional presentation of oneself gives him a powerful edge over the competition. Business owners must have a combination of confidence, com- petence, attitude, manners, and communication. These are heightened by a refined executive image; knowing what to do, how and when to do it. The ability to communicate and get your message across. Good communication skills will enable business owners to convey important information that affects the organization directly or indirectly. They should never be tongue-tied, know what to say, and say it. The ability to persuade others and influence their behaviors, attitudes, opinions, and beliefs. Business owners are encouraged to use the authority and systems they have in their organization to persuade and influence staff to work efficiently and effectively to ensure that the organizational goals are met and good relationships are maintained. The ability to use power. Business owners must use the power they have to influence staff but must not act in an intimidating manner. However, power must not be abusively used as power corrupts and absolute power corrupts absolutely.

PRODUCTIVITY OF AN ORGANIZATION

Productivity is a ratio to measure how well an organization converts input resources (labor,materials, machines, money) into goods and services (Tokarčíková, 2013). Dorgan (1994) defines productivity as “the increased functional and organizational performance, including quality”, and Rolloos (1997) claims that “productivity is that which people can produce with the least effort”. Nda & Fard (2013) describe

employee productivity as the measure of output per unit of input economically. Rohan and Madhumita(2012) adopt a different view and see employee productivity as the log of net sales over total employees. Pritchard (1995) illustrates three definitions which relate to productivity:

1. is output/input, in other words, is a measure of efficiency;

2. is a composition of effectiveness and efficiency; and

3. whatever makes the organization function better.

It is worth noting and of particular interest in this study, whereby the context of the research isgrounded in the public sector, and that researchers argue the differences in performance and productivity in the public sector versus the private sector (see Parker, Waller & Hu, 2013).

PRODUCTIVITY IN THE PUBLIC AND PRIVATE SECTOR.

Productivity in the public sector is viewed differently compared to productivity in the privatesector as this is largely due to measurable outputs. The study conducted by Parker, Waller & Xu (2013) begins by distinguishing three differences in productivity, i.e., manufacturing products; private commercial services; and public and notfor-profit services. The study reveals that the unit of measure and outputs of manufacturing

operations are tangible and output can be measured while its quality characteristics can be objectivelyassessed. Conversely, in services, the output is intangible in nature (Green, 2006) making it difficult to quantify as the consumer also has emotional and psychological perceptions (Verma, 2012). Fee-paying customers are the determinants of value of private commercial services. Parker et al. (2013) state that the public and not-for-profit sector provide services that have no market price. These services are provided free of charge at point of use, e.g., library services. Contemporaryliterature shows that identifying the output of these types of services can be complex and problematic. This finding is supported by Sherwood (1994) who states that the key challenge in productivitymeasurement of all services relates to defining the basic unit of measuring the quantity of the services performed.

FACTORS INFLUENCING PRODUCTIVITY IN THE PUBLIC SECTOR.

Despite the various recent studies conducted on public worker motivation (Egberi, 2015; Abbass,2012; Re’em, 2010) and productivity (Emerole, 2015; Haenisch, 2012; Ananti & Umeifekwem, 2012), few, if any, have investigated the perception of public employees on organizational policies,employee benefit, performance appraisal, workplace relationships, leadership and work life balance as a combination of factors influencing productivity. It isnoteworthy that these six factors are, by no means,

exhaustive, but desktop research provides significant information that these factors are

somewhat influential. Tinofirei (2011) conducted a study on the unique factors affecting employee performance in nonprofit organizations. The study addressed external

and internal factors affecting employee performance, and the results of the study illustrate three important findings. Employees were demotivated, firstly, due to the absence of automaticpromotions for high performance, secondly, the lack of opportunities for the advancement of employees through a policy of competitive recruitment, and, thirdly, the absence of growth opportunities for localstaff who can apply for international positions. In another study, Emerole (2015) looked at the

effect of non-monetary rewards on productivity of employees from a government parastatal in Nigeria.From a total of 78 civil servants selected across the parastatal, and using a multiple regression and a Pearson correlation coefficient, the study indicated

the following: gender, age, monthly income, days of work in a month and type of non-monetary rewards received revealed negative significant contribution to the productivity of the sampled government parastatal; and  educational qualifications, position/rank, andnumber of non-monetary rewards receivedrevealed positive significant contribution to the productivity of the employees sampled.

ORGANIZATIONAL POLICIES:

Mazerolle and Eason (2013) argue that some policies established by organizations are

somewhat unsupportive of employees. Katou & Budhwar (2010) are of the opinion that

organizational policies impact on employees’ job performance, particularly, Human Resource Management (HRM) policies.

EMPLOYEE BENEFIT:

According to Ekere & Amah (2014), employee benefit constitutes an integral part of the remuneration package. This benefit is seen to provide economic security for employees and, as a consequence, improve staff retention rates. A study conducted by Kwak and Lee (2009) reveal that

some employee benefit is significantly associated with performance.

PERFORMANCE APPRAISAL:

Performance appraisal has been used to improve performance and build both

job satisfaction and organizational commitment (DeCarlo & Leigh, 1996; Jaworksi & Kholi, 1991).A study conducted by Cardy & Dobbins (1994) found that, for performance appraisal to positively influence employee behavior and future development, employees must experience positive appraisal reactions.

WORKPLACE INTERACTIONS:

Wu, Turban & Cheung (2012) describe social exchange as ‘an individual’s voluntary actions towards another person that aremotivated by an expected return from another

person’. Social skills among employees allow them to effectively communicate with each other toenable a concerted effort towards accomplishing organizational goals. Schein (2006) asserts that a shared value is a set of social norms that define the rules or framework for social interaction and communication behaviors of society’s members.

EFFECTIVE LEADERSHIP:

Armstrong & Murlis (2004) and Cronje, du Toit & Motlatla (2001) affirm that leadership style within an organization has a strongbearing on encouraging or inhibiting an employee’s performance.

WORK-LIFE BALANCE:

Nauert (2013) claims that employees are subjected to numerous challenges relating to balancing their lives and work commitments. Chittenden & Ritchie (2011) state that most organizations are striving to formulatepolicies that are inclusive in nature. However, on the opposite end, Nauert (2013) argues that the support services offered by organizations are not sufficient as this may require a shift in organizational culture.EMPLOYEE PRODUCTIVITY:

Battu (2008), as cited in Anyim, Chidi & Badejo (2012), states that employee productivity is the result of a combined employee ability, motivation and workplace

environment. Okereke & Daniel (2010) also suggest that employee productivity is a consequence ofeffectiveness and efficiency of the employees, while Chaudhary and Sharma (2012) posit that productivity is that which people can produce with the least amount of effort.

2.2 THEORETICAL FRAMEWORK

MARS MODEL theory

Singular behaviour is an outcome of any interior and exterior elements, and it is clarified by MARS model (Devito et al., 2016 ) There are four central points affecting the performance of the employees in an organisation, and the acronym of those points used to build the name of the model namely Motivation, Abilities, Role Discernment and Situational Factors (MARS) (Devito et al., 2016). The factors like individual values, identity, recognition, states of mind and stretch shape a premise where the elements are associated (Lăzăroiu, 2015) In any organisation, these factors are exceptionally interrelated. The behaviour of the employees will be influenced and affected unless the majority of the needs pointed out by MARS model (Devito et al., 2016) is not fulfilled. For example, in the absence of satisfactory and adequate as-sets, even the highly energetic and highly motivated employee who is highly skilled and can comprehend the employment obligation well, won’t have the capacity to perform their job well (Hackman & Oldham, 1976).

MASLOW’S HIERARCHY OF NEEDS THEORY:

Inside each person, there are five needs in the pecking order and before any individual seeks the next larger level of needs there exists a pecking order of five needs to be fulfilled inside each person (Maslow, 2001). The five exclusive needs which motivate an individual as pointed out by Maslow (Maslow, 2001) are as follows:

Physiological Needs:

These are related to basic needs of a person. It comprises the driving force. This need causes a physiological tension that is shown by any behaviour of the body. Maslow stated that when an individual fulfils physiological needs, it moves up towards next level (Maslow, 2001).

Safety Needs:

These are the needs for protection and shelter. Here, an individual needs focus on stability, de-pendency, and security. This need is also known as security needs. Nowadays, the organization provides a plan of health and safety, emergency fund, as well as benefits of accident cover.

Belonging Needs:

It is also called social needs. It encompasses belongings and love. Such needs could be fulfilled through interaction with colleagues and co-workers to illustrate, friendship, feelings, caring of relative and family, etc.

Esteem Needs:

It is called as egoistic needs. Here, a person needs self-respect. An individual needs prestige, reputation, fame, status, glory, etc. The needs of esteem are hard to satisfy in a certain organisation.

Self-actualisation Needs:

This is regarded as the highest need. An individual wants a state of self-development along with self-realisation, and he/she also desires to be capable of doing something individually. Fact acceptance, creativity, morality, lack of prejudice, spontaneity, etc. are examples of the self-actualisation needs.

The ERG model

In Maslow’s model, individuals remain at a fixed level of need until they have satisfied it. This would mean that individuals at work should work towards satisfying their current stage of need, and that leaders and managers should focus on helping the members of their teams achieve one specific level of needs at a time. Alderfer’s ERG Theory of Motivation, though, upends this thinking. Under Alderfer’s model individuals can be motivated by different levels at the same time, and have their motivational priorities change in relation to their sense of progress. Given this, individuals should not focus on one level of need at a time. Instead, they may wish to balance their motivations across levels. Similarly, leaders should not focus on helping the members of their team satisfy one level of need at a time. Instead, they should be aware of the blend of needs that humans can have and help their team members progress in relation to a blend of needs, which will change over time.

Herzberg Two Factor Theory

The Two Factor Theory was advanced by Frederick Herzberg in 1959. This study is grounded on this theory that has been explored by various scholars to explain the relation between workplace environment and employee performance. Herzberg defined two sets of factors in deciding employees’ working attitudes and levels of performance, named motivation and hygiene factors (Robbins and Judge, 2007). He stated that motivation factors are intrinsic factors that will increase employees’ job satisfaction; wile hygiene factors are extrinsic factors to prevent any employees’ dissatisfaction. The theory pointed out that improving the environment in which the job is performed motivates employees to perform better.

Herzberg’s theory concentrates on the importance of internal job factors as motivating forces for employees. He wanted to create the opportunity for employees to take part in planning, performing and evaluating their work (Schultz et al., 2010). The content of the theory has been widely accepted as relevant in motivating employees to give their best in organizations. Further research has proved that the employee is more motivated by intrinsic factors as captured by Herzberg’s motivator needs than anything else. There are however other schools of thought that share a different opinion from Herzberg’s. One such scholar is King (2005) who sought to eradicate and evaluate five distinct versions of the Two Factor theory. He concluded that two versions are invalid as they are not supported by any empirical studies. However, the two factor theory can be said to be a truly outstanding specimen 7 for it to last a long period of time without disapproval. It has been a great influence on the body knowledge about workplace motivation and performance. It has generated a great amount of further research by many scholars. It draws its thought from Maslow’s famous hierarchy of needs theory and human behaviour. However due to changes in organizational environment and the advancement in technology, it is necessary to develop new methods of analysis. This will provide new ways of conducting research and revaluating the results of existing findings. 2.2.2 Affective Events Theory The theory was advanced by Howard M. Weiss and Russel Cropanzano in 1996 (Phua, 2012).

The Affective Events Theory

explains the link between employees’ internal influences and their reactions to incidents that occur in their work environment that affect their performance, organizational commitment and job satisfaction. It proposes that positive-inducing as well as negative emotional incidents at work have significant psychological impact on employees’ job satisfaction. The impact results into lasting reactions exhibited through job satisfaction, organizational commitment and job performance. According to Ashton-James and Ashkanasy (2005) research to date has supported the central tenets of AET that workplace events trigger affective responses in employees and that these affective responses influence workplace cognition and behavior. They assert that AET is both empirically and theoretically, restricted to events that are internal to the organization. The theory also considers how specific events at work other than job characteristics lead to specific emotional and behavioral responses (Briner, 2000). He posits that these events or things that actually happen at work affect the well-being of employees thus affecting their performance.

McGregor’s Theories X and Y

Douglas McGregor, one of Maslow’s students, influenced the study of motivation with his formulation of two contrasting sets of assumptions about human nature—Theory X and Theory Y.

The Theory X management style is based on a pessimistic view of human nature and assumes the following:

The average person dislikes work and will avoid it if possible. Because people don’t like to work, they must be controlled, directed, or threatened with punishment to get them to make an effort. The average person prefers to be directed, avoids responsibility, is relatively unambitious, and wants security above all else. This view of people suggests that managers must constantly prod workers to perform and must closely control their on-the-job behavior. Theory X managers tell people what to do, are very directive, like to be in control, and show little confidence in employees. They often foster dependent, passive, and resentful subordinates.

In contrast, a Theory Y management style is based on a more optimistic view of human nature and assumes the following: Work is as natural as play or rest. People want to and can be self-directed and self-controlled and will try to achieve organizational goals they believe in.Workers can be motivated using positive incentives and will try hard to accomplish organizational goals if they believe they will be rewarded for doing so.

Under proper conditions, the average person not only accepts responsibility but seeks it out. Most workers have a relatively high degree of imagination and creativity and are willing to help solve problems.

Managers who operate on Theory Y assumptions recognize individual differences and encourage workers to learn and develop their skills. An administrative assistant might be given the responsibility for generating a monthly report. The reward for doing so might be recognition at a meeting, a special training class to enhance computer skills, or a pay increase. In short, the Theory Y approach builds on the idea that worker and organizational interests are the same. It is not difficult to find companies that have created successful corporate cultures based on Theory Y assumptions. In fact, Fortune’s list of “100 Best Companies to Work For” and the Society for Human Resource Management’s list of “Great Places to Work” are full of companies that operate using a Theory Y management style. Starbucks, J. M. Smucker, SAS Institute, Whole Foods Market, and Wegmans are all examples of companies that encourage and support their workers. Genencor, a biotechnology firm listed on America’s Best Places to Work five times, has a culture that celebrates success in all aspects of its business. Employees can reward colleagues with on-the-spot awards for extraordinary effort. According to the company’s former CEO, Robert Mayer, “Genencor is truly unique among U.S. companies of any size. It is a model for innovation, teamwork, and productivity—and a direct result of our ‘work hard, play hard, change the world’ philosophy. Investing in our employees has always been good business

Theory Z

William Ouchi (pronounced O Chee), a management scholar at the University of California, Los Angeles, has proposed a theory that combines U.S. and Japanese business practices. He calls it Theory Z. compares the traditional U.S. and Japanese management styles with the Theory Z approach. Theory Z emphasizes long-term employment, slow career development, moderate specialization, group decision-making, individual responsibility, relatively informal control over the employee, and concern for workers. Theory Z has many Japanese elements. But it reflects U.S. cultural values. In the past decade, admiration for Japanese management philosophy that centers on creating long-term relationships has declined. The cultural beliefs of group think, not taking risks, and employees not thinking for themselves are passé. Such conformity has limited Japanese competitiveness in the global marketplace. Today there is a realization that Japanese firms need to be more proactive and nimble in order to prosper. It was that realization that led Japanese icon Sony to name a foreigner as the CEO of Japan’s most famous company. Over the years, Sony’s performance has declined, until in April 2005, the company posted its biggest loss ever. Nobuki Idei, the former CEO who inherited Sony’s massive debts and stagnant product lines, realized his strategy wasn’t working, so he became determined to appoint a successor who would be able to transform Sony from the lumbering giant it had become back into the forward-thinking company it had been. Idei tapped Sir Howard Stringer, a Welsh-born American who had been running Sony’s U.S. operations. In doing so, Idei hoped to shock company insiders and industry analysts alike. “It’s funny, 100 percent of the people around here agree we need to change, but 90 percent of them don’t really want to change themselves,” he says. “So I finally concluded that we needed our top management to quite literally speak another language.” After seven years as CEO, Stringer assumed the position of Chairman and appointed Kazuro Hirai as President and Chief Executive Officer.