Q.a. What may McDonald's have considered in order to establish their approaches to collective bargaining in both Germany and the UK?
To answer the above question we first need to know about the collective bargaining in a basic method, where Collective Bargaining is defined as the process of turning disagreements into agreements in an orderly fashion. The set of rules which are mutually agreed, in regards to process of Collective bargaining which are agreed by unions and employers for matters relating to employment. The process is to regulating the regulation processes, in regards to dealing with condition of employment. The negotiation process is a Collective bargaining, which is the process of negotiation between employers and employees, unions acting as the representative of employees. The bargaining power is the main cause to depend both concerned parties.
In line with the above definition McDonald's may have considered the approach and settings of collective bargains as an important issue of employee relations.
The German setting and approach McDonald's may have considered establishing their approaches to collective bargaining in Germany:
The traditional collective approach to Employee Relations (ER) in German companies is deeply rooted in the particular configuration of the German Industrial Relations (IR) system. This is characterized by a high degree of regulation and a dense, encompassing institutional infrastructure that imposes a uniform set of institutional constraints on companies, but at the same time provides incentives for employers to accept institutional constraints. McDonalds, to establish its approaches to collective bargaining this ER and IR framework may have been considered in first instance. In addition, the institutional structure is highly integrated with strong linkages, not only within the IR system, but also to the wider German businesses system. Key elements of the German model, to which the majority of German companies subscribe, are the centrally co-ordinated sector based collective bargaining system and employee representation at domestic level via the works council system equipped with statutory participation and consultation rights. Food industry in Germany is not beyond this mechanism where McDonald's considerations regarding collective bargaining approach must have encompassed with statutory participation and employee consultation and codetermination rights.
The UK Setting and the UK Approach to Employee Relations
In contrast to Germany, the contemporary British system of collective bargaining is characterized by a weak regulatory framework and a thin, fragmented institutional infrastructure, which imposes relatively few barriers and constraints on labour relations practices. The fragmentation of the institutional structure goes hand in hand with weak linkages both within the IR system and in connection to the wider national business system which obviously includes food industry in the UK. Because of the relative permissiveness of the contemporary IR context, the UK seems to be a particularly suitable country for McDonald's, as subsidiary, to explore the country of origin effect in international operations, since home country approaches to ER can be transferred relatively unconstrained by host country institutional arrangements. However, to uncover the existence of possible ownership effects it is necessary to establish the differential space between the home and the host country ER approaches.
Factors May have been considered by McDonald's
National Legislation:
National legislation must have been considered by the McDonald's in establishing their approached towards collective bargaining within the industry both in UK and Germany. In the UK legislation there is no specific preference regarding the mode of employee or industrial relationship for MNEs like McDonald's. So McDonald's is well known as anti-union giant in the UK and their approach towards collective bargaining is strictly negative.
The highly regulated industrial relations systems in Germany, there are considerable constraints on the employee's relationship; even it is based on theory in the MNE's. The collective bargaining became statutory binding and constraints, which McDonald had to approach towards collective bargaining.
Codetermination and collective bargaining rights
The McDonald's in case of both Germany and UK has considered these rights as a different approach. The supervisory board and work council are providing dual rights for German workers, such as collective bargaining rights and co-determination rights. These both collective bargaining rights and co-determination rights provides significant power to the German employees than UK employees. It can be defined as the legally enforceable and constituted rights. Together with codetermination and collective bargaining rights, these legally enforceable and constituted rights appear to provide German employees with significant power resources compared to UK employees.
So McDonald's must have considered the issues of the both rights of the employees before establishing their bargaining approach.
Size of Franchise:
The McDonald's corporation had established in the Germany in 1971, in UK in 1974. The organization has 800 stores in Germany, amongst the stores 65% of them are franchise. On the other hand, similar number of stores in the UK but only 20% are franchise among the stores. At the moment the company is holding approximately 45,000 employees in each country. In this case being a fast-food market leader in both countries McDonald's have considered the size of franchise. The franchise aspect influence collective bargaining issues through local entity and regulations involvement. So size of franchise is also a factor that may have been considered.
Unioin Membership:
McDonald also may have considered Union membership. The unions of German are very strong, better organized compare to UK. Their positions are relatively strong and holding 5% of the membership of McDonald and overall in fast food industry in Germany. But on the other hand, the unions of the UK are holding membership less than Germany. The results are indicating that the percentages of the unions membership of Germany representing stronger than UK.
However, these low percentages are still higher than the percentage of union membership at McDonald's and the fast-food industry in the UK.
So this issue is an important consideration in establishing McDonald's collective bargaining approach.
The increasingly anti-union climate:
The increasingly anti-union climate in the 80s and early 90s has encouraged Macdonald's in the UK to withhold or withdraw union recognition, and discouraged employees from joining unions and posed difficulties for recruitment. In Germany, union membership remains at around 5 per cent at McDonald's. The findings suggest that it is only where a works council has been established where still there is better union practice than the UK.
So this consideration may have been involved in planning McDonald's approach towards collective bargaining.
Characteristics of Workforce and Nature of the industry:
McDonald's have considered both the factors in case of both countries to design its approach towards collective bargaining.
Redundancy and employee apathy:
Young workers, foreign, temporary and part-time workers are playing important role in the non-existent and low levels of union membership as well as redundancy. So therefore this all factor are important factors, which may have been considered in both Germany and the UK.
Strong corporate culture:
Strong corporate cultures are seen as instilling appropriate behaviors and. This is essentially what is argued here with regard to the non-union approach of McDonald's in both the countries.
McDonald's Anti-union belief:
McDonald's is basically a non-union company and intends to stay that way. About unionization in the UK once McDonald's stated that….. Unionization became ugly over the years but communication between employees and employers has minimized the problem which has lead to solve the problems, before its goes to Unions. The major problems in the UK about Union, they are so outspoken which has never happened in the Germany.
Public image
Macdonald's has a big public image and brand reputation which may have been considered both in the UK and Germany to establish collective bargaining approaches.
Employer Associations
Employer associations in Germany are stronger than UK. So the MsDonald'S approach in the UK is different from that of Germany.
Q.b. How may McDonald's have considered individual bargaining as an alternative or additional approach in both Germany and the UK? What benefits and/or problems may this have brought in both countries?
Answer:
Individual bargaining:
Individual bargaining is the process by which an employer and an employee negotiate an individual contract of employment, regulating the terms and conditions of employment.
According to Lewis et al (2003) Employee relationship is an economic, social, and political relationship in which employees provides manual and mental labour in exchange for rewards allotted for employees. Bennett (1997) mentions that employee relation is a far wider subject than conventional industrial relations. Industrial relation is the systems of rules, practices and conventions associated with collective bargaining and the avoidance and resolution of industrial disputes. According to Bennett employee relation deals with all the formal and informal relationships of an interpersonal nature that arise from management/employee interactions in working situations. The term industrial relations is no longer widely used by employers but summons up a set of employment relationships that no longer widely exist, except in specific sectors and, even there, in modified form. (www.cipd.co.uk).
There are some different definitions of collective and individual bargaining. Collective bargaining as the principal which influence on union behaviour; European communities shows that collective bargaining as voluntary negotiations among employers or employer's organization, with a view to the regulation of terms and conditions by collective agreement (Wailes ,2004). Collective bargaining is a rule which make process based on decisions between independent organizations; Collective bargaining consist of negotiations between an employer and a group of employees to determine the conditions of employment (comell law school, 2006). Therefore, collective bargaining consist of the process of negation between union and employers in respect of the terms and conditions of employment of employees such as wages, hours of work, working conditions and the right and responsibilities of TU.
McDonald have considered individual bargaining as an alternative in both Germany and UK, which is being successful employee relationship approach in the organizations. First in early 1960, had occurred bad relationship with the employees which was for wages, working condition but early 1980 finally things had improved through improvements of relationships. This individual bargaining have given significant
The major changes in the industrial relations in UK i.e. a shift away from collective bargaining towards individual bargaining were in the favour of McDonald's own strategy.
The turn down in the union membership in both UK and Germany also helps McDonalds to practice the individual bargaining in their organization.
Improvement in the relationship of management and workers within the organization as it is evident from the statement of John cooke McDonald's US Labour relations chief as: 'the better deal and facilities are playing strong role to minimise the problems and also communications. As a result if there is any problems between the employes and management they can bring it to the management directly'.
As employees are generally unaware of their rights they can take advantage of the situation to save their costs. As example is given cleaning of uniforms. And also regarding pay, performance related pay, probation and notice for redundancy, paid leave.
Individual workers can never be a threat for McDonalds where there may have a chance in the existence of trade union.
Loss of public image in Germany that subsequently decrease their sale & growth in German market. Large compensation need to provide for violating employee's rights in different work place.
Q. c. How may the approach to collective bargaining in Germany and the UK influence employee relations for McDonald's internationally?
Answer:
McDonald's opposition to trade unions is now well-documented; however, the extent to which it
can operate without unions or can avoid or undermine collective bargaining with unions and/or statutory works councils varies considerably in different countries and over time. Consequently the ability of national unions and their GUFs to improve pay levels and conditions of work has been limited, variable and by no means static.
McDonald's has tried to roll-back the basic terms of such agreements ever since. Nevertheless, in Sweden, Norway and Denmark, McDonald's workers do enjoy better conditions of work and higher pay than in other European countries and the USA itself. However, even in those countries it is very difficult to establish union representatives in the outlets, something which experience shows is essential if such collective agreements are to be properly enforced in.
Collective Bargaining is an important institution in all democratic societies where freedom of association is common. (Rose :2008). Collective bargaining is the main method where by unionised workforces and their management jointly determine matters such as pay and conditions of work. (Rose :2008).
Webbs regarded collective bargaining as one of three main methods use by trade unions to achieve their basic aim of improving the conditions of their members working lives. (Rose :2008). The methods are mutual insurance and legal enactment. The first involves the use of trade funds to provide out of work benefit and traveling allowances to individual workers o enable them to refuse jobs offered at below the rate agreed amongst union members. The latter is a method of creating employment rules and it involves state regulation of wages, conditions and other aspects of the employment relationship, and trade unions would lobby for legislative changes in favor of their members. According to (Foundation :2006), The National Labor Relations Act, the Labor-Management Relations Act and subsequent labour law establish the right of employees to elect representation and to bargain collectively.
Trade unions play an active role in the collective bargaining agreements, since they are the responsible of its application and the exclusive official negotiators with the employer. Any difference in the interpretation or application of the collective bargaining agreement are generally solved through arbitration procedures The mission assigned to the Germany and UK trade unions by the Germany and UK Employment Relation System is limited to negotiating and ensuring that the agreements are fulfilled.
One factor influencing differences in wage and compensation levels by McDonald is the presence of a collective bargaining agreement. Workers are covered by a collective bargaining agreement, on average, receive higher wages and are more likely to receive certain benefits than workers not covered by such an agreement.
When McDonald came in Europe in the late 1970s as they were running same practices in labour relationship which is as same as USA. But early 1980s NGG had started to criticised the McDonald over payment conditions. For example, according to article Der Spiegel (1981) stated that it is totally unacceptable about working condition. However, McDonald had to pay attention about working condition because they had to focus to the media and tried to cover up their brand image and sustainable business in the market. McDondald have sent three managers to the Germany from USA to whether to negotiate with NGG for collective agreements. There were three major concerned with the collective agreement:
Labour costs
Public Image
Sales
So therefore, McDonald have establish a new employees federation, the name was Bundesverband der Systemgastronomie (BdS) and the team have agreed negotiating with NGG.
However, it can summarized that collective bargaining power heavily influence on McDonald internationally because labour relationship was very poor in the past and many experts suggested that this had now improved. This collective bargaining have given both parties benefits in both UK and Germany. But there was a problems with the wages in the Germany as Trade Union had forced to make wages explore but the question was from the McDonald, wages should be maintain with the market growth. It has been fixed by the Germany and UK already have been done by the Government.
Despite these difficulties European unions have undoubtedly had some success in bringing McDonald's to the bargaining table, especially where sector-level bargaining is in effect compulsory and where labour law is more stringent and supportive of union rights and collective bargaining.
Q.d. What additional or alternative methods could support good employee relations for McDonald's? Consider the role an HR function could take?
Answer:
The HRM approach to employee relations can be described in terms of several prescriptions that McDonald's can use for good employee relationship. An HRM model for employee relations focuses on a drive for commitment meaning that the focus of the organization should be to win the trust, motivation and commitment to the organization, participating in its development opportunities. Emphasis is on mutuality, meaning that employees share common goals, the vision and mission of the organization. Communication within the organization follows an established set of procedures that are agreed formally or informally and may include briefings, meetings with representatives, etc. HRM emphasizes the shift from collective bargaining to individual contracts.
Employee involvement in McDonald's may be fostered and a number of techniques and approaches are followed to support their involvement. Total quality management aims at continuous improvement of quality.
Another initiative for McDonald's is flexible working arrangements and focus on the life-work balance through harmonization of conditions for all employees. Finally the support of employee communities of practice and team spirit are of high priority.
Employee relations describe as in-terms employee communication, employee involvement, employee rights and employee discipline. Armstrong has identified the elements of employee relations as follows may have been considered in designing the employee relationship:
Formal and informal policies and practices of the organisation.
The development, negotiation and application of formal systems, rules and procedures for collective bargaining, handling disputes and regulating employment.
Policies and practices for employee communications.
Informal and formal process regulating the interactions between managers and employees.
Policies of the government, management and trade unions.
A number of parties including state, management, organisations, trade unions, employees, etc.
The legal framework.
Institutions (e.g. ACAS) and the employment tribunals.
The bargaining structures, recognition and procedural agreements enabling the formal system to operate.
employee relations processes
Figure - Reconciliation of interests between employers and employees
According to the Industrial Relations Services there are four approaches to employee relations that can contribute in better relationship between McDonald's and its employees are:
Adversarial - meaning that employees are expected to follow the targets identified by McDonald's.
Traditional - meaning that employees react on management proposals and directives.
Partnership - meaning that employees are involved in assisting the organisation and consensus is
reached in decision making related to policies.
Power sharing - employees are involved also in daily management apart from policy making.
Employee relations policies act to disseminate its preferred approach with respect to the relationship it wants to have with its employees and the empowerment of employees for certain activities.
Employee relation policies cover several areas McDonald's may have used in improving employee relations including:
Trade union recognition - meaning decisions with respect to the recognition or derecognition of
certain unions and preferences of the unions the organisation prefers to deal with.
Collective bargaining - meaning the identification of those areas that should be covered from such a negotiation.
Employee relations procedures - meaning procedures such as redundancy, grievance handling
and disciplinary actions.
Participation and involvement - meaning the extent to which the organization shares power and
control with its employees.
Partnership - meaning the extent to which a partnership with employees is desirable.
The employment relationship - meaning the extent to which employment terms and conditions are controlled by collective agreements or individual contracts.
Harmonization - meaning the harmonization of terms and conditions of employment arrangements.
Working arrangements - meaning the extent to which unions are involved in the determination of
working arrangements.
Q.e. Conclude by taking the key elements of your observations in steps a-d regarding McDonald's approach to employee relations in order to make a short recommendation for similar countries or organisations with regard to developing and/or improving their employee relations
Findings & recommendations:
The process of collective bargaining is to settles down any conflicts regarding the conditions of employment such as wages, working hours and conditions, overtime payments, holidays, vacations, benefits, insurance benefits etc. and management regulations.
Individual bargaining can be used as both of alternative to collective or in parallel. But my recommendation for Macdonald's to use individual bargaining as an alternative approach specially in Europe and American territory whereas in Australia and New Zealand it could be used in addition.
Due to decline in collective bargaining in all over the world it is now strongly recommended that McDonald's should prepare to adapt with a change in the bargaining structure which is becoming more decentralised in Sweden, Australia, the former West Germany, Italy, the United Kingdom, and the United States, although in somewhat different degrees and ways from country to country.
This review examines both the formal structure of bargaining, which applies to the employees covered by a collective bargaining agreement, and informal bargaining structures (such as pattern bargaining, whereby a lead settlement is followed closely in other negotiations). In addition, since many important industrial relations matters are settled through written or oral agreements that are not necessarily included in formal written contracts, I also consider changes in the locus and intensity of informal negotiations.
Collective bargaining power heavily influence on McDonald internationally because labour relationship was very poor in the past and many experts suggested that this had now improved. This collective bargaining have given both parties benefits in both UK and Germany. But there was a problems with the wages in the Germany as Trade Union had forced to make wages explore but the question was from the McDonald, wages should be maintain with the market growth. It has been fixed by the Germany and UK already has been done by the Government. The working conditions of the employees are the main factors to rise bargaining among the employees. It can be solved by the good communication between employees and managements. Before goes to union leaders to solve the problems, it can be eliminated by the employees if management has created good atmosphere between employees.
Comparing to these two countries, collective and individual bargaining are same as agreement of wage rate, working hour and other conditions between employers and employees. Both of the UK and Germany have two levels which are national and enterprise bargaining. The density of TU is falling in both countries, trade union has no direct role in collective bargaining and do not help to solute the disputes.But it is still large in UK due to its high unemployment while the reason for Gemany is strong power of employer. However, there are some differences among them. However, it can be done by providing good atmosphere and communication between the management and employees.
In the Germany, collective bargaining is not very important, so the power of the trade union is so weak; however, CB is the most important process in the employment relations in the UK. During the process of negotiation, there is third party involved in the Germany, and finally it will make a formal arbitration. But in the UK, the employer will direct involve in the collective bargaining, so it won't be a third party involved in. In the Germany, the collective bargaining belongs to unionized sector, but it belongs to non-unionised sector in the Britain. TU involved in national level while Shop steward has been very important in Britain. The right of trade union is very low and strike funds are small in the UK (Burgess, 1996, p336). But it usually takes place at enterprise level in the Germany. Furthermore, National level of collective bargaining determines the broad levels of wages and condition while enterprise level determines top up wages and conditions. Comparing this point to the Germany, this determines only in the individual bargaining and employers have strong power to control pay and condition in the negotiation process. There is a little government intervention in the IR of the Germany; British government played a limited role in fixing legally enforceable minimum pay and conditions in the industry. But the current government gets more control in IR process, reduce role of TU power, make the IR more flexible. It can be recommended.
Conclusion
Generally speaking, both the UK and Germany are typical model of industrial relations in the world. They had their feature of the IR movement process and reason of decline for TU density. Furthermore, this essay explained the status of collective and individual bargaining in Britain and Germany which are some differences and similarities by comparing and contrasting with these two countries.
We have also come to understand that bargaining structure both influences and is influenced by the distribution of bargaining power. Yet, data that allow clear tests of the effects of changes in bargaining structure on bargaining outcomes generally have not been available.
The difficulty of assessing the effects of bargaining structure arises in part from the fact that there is no simple measure of the degree of bargaining structure centralisation, because the location of collective bargaining often differs depending on the subject of bargaining. In many countries, wages are negotiated in company or sectoral agreements, and work rules are set at a lower level, often in plant agreements. Furthermore, worker participation in decision making often occurs at still another bargaining level, or through informal mechanisms (works councils or shop floor discussions, for example) rather than through collective bargaining agreements.
McDonald's is now a biggest brand in the food industry world-wide. So it has its own responsibility to look into public image and good employee relations which are widely correlated. So McDonald's should keep very efficient employee relation practice through an efficient Human Resource Strategy and functioning properly on HR roles.
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