Critical Issues on Changing Dynamics in Employee Relations and Workforce Diversity

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Employee Relations as a Tool of Strategic Competitive
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DOI: 10.4018/978-1-7998-3515-8.ch003
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Critical Issues on
Changing Dynamics in
Employee Relations and
Workforce Diversity
Radha Yadav
Dayananda Sagar University, India
Priyanka Panday
Doon Business School, India
Naman Sharma
Indian Institute of Foreign Trade, India
A volume in the Advances in
Human Resources Management
and Organizational Development
(AHRMOD) Book Series

Published in the United States of America by
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Names: Yadav, Radha, 1988- editor. | Panday, Priyanka, 1989- editor. |
Sharma, Naman, 1986- editor.
Title: Critical issues on changing dynamics in employee relations and
workforce diversity / Radha Yadav, Priyanka Panday, and Naman Sharma,
editors.
Description: Hershey : Business Science Reference, 2020. | Includes
bibliographical references and index. | Summary: “This book addresses
the challenges and issues pertaining to the changing dynamics of
employee relations and provides additional support to better deal with
critical issues related to people management”-- Provided by publisher.
Identifiers: LCCN 2019054344 (print) | LCCN 2019054345 (ebook) | ISBN
9781799835158 (hardcover) | ISBN 9781799835165 (paperback) | ISBN
9781799835172 (ebook)
Subjects: LCSH: Industrial relations. | Diversity in the workplace. |
Personnel management.
Classification: LCC HD6971 .C845 2020 (print) | LCC HD6971 (ebook) | DDC
658.3--dc23
LC record available at https://lccn.loc.gov/2019054344
LC ebook record available at https://lccn.loc.gov/2019054345
This book is published in the IGI Global book series Advances in Human Resources Management
and Organizational Development (AHRMOD) (ISSN: 2327-3372; eISSN: 2327-3380)

Copyright © 2021, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited
Chapter 3
45
DOI: 10.4018/978-1-7998-3515-8.ch003
ABSTRACT
Challenging and ever-changing market scenarios made it difficult for organisat
be different and sustain in the market. While having innovative products, USP
selling proposition) and the like are on one side of the competition, attracting
retaining employees have emerged to become key concerns of the organizatio
chapter explains how employee relations help organisations in retaining emplo
and gain competitive edge. One of the major threats of competition with relati
employees is the changes it brings along with it in terms of the company’s pol
strategies, and the pressure it brings to the employees. It is important to main
employee relations so that these changes do not impact employee perfo
negatively. The authors further show how these changes will impact the work
management can overcome the aftereffects by maintaining good employee re
Employee Relations
as a Tool of Strategic
Competitive Environment
Saloni Pahuja
https://orcid.org/0000-0002-0500-0777
Amity School of Business, Amity University, Noida, India
Kadiyala Mounica Chowdary
Amity School of Business, Amity University, Noida, India
Sakshi Mittal
Amity School of Business, Amity University, Noida, India

46
Employee Relations as a Tool of Strategic Competitive Environment
INTRODUCTION
Due to the heavy competition in the market, it is becoming important to realis
value of resource of sustained competitive advantage. According to (Barney, 1
for a resource to qualify as a source of competitive advantage or to hold the p
of sustained competitive advantage, the resource should possess the foll
traits- a) it must be valuable, in the sense that it either should exploit opportun
or neutralize threats or do both in the firms environment; b) it must be rare am
the firm’s current and potential competitors; c) it must be imperfectly imitable
d) there shouldn’t be any equivalent substitutes.
Human Resource meets all criteria of being source of sustained competitive
advantage that a firm needs. Thus it is important to focus on talent manageme
healthy relations and welfare aspect. Traditionally HR was not given much imp
but after realizing their worth as true contributor in Organisational success firm
started investing in them. Many firms talk about the importance of HR but fail
to implement the HR strategies effectively. Almost all successful firms invest in
managing employees and having good employee relations. Employee relations
right from procurement. It includes transparent communication, fair policies fo
improving cooperation, having effective grievance redressal mechanism, invol
then and encouraging employee participation and thus creating High performa
and high involvement work system.
In this chapter, we will further see how these employee relations are helping
will help the firms use their human resources as sources of competitive advan
EMPLOYEE RELATIONS
Employee relation is a word that recently evolved from the word industrial rela
Even though many authors use the two words interchangeably, there is a sligh
difference between the two words. Industrial relations deal with workplace rela
between industrial workers and employers and bargaining between them rega
wages and other terms of employment. The term is now replaced by th
employee relations which covers all kinds of workplaces. Employee relations is
defined as “a study of relationships between employees, as well as the relation
between employer and employee so as to find ways of resolving conflict and to
in improving productivity of the organization by increasing motivation and mor
of the workers” (Nikoloski, Dimitrova, Koleva, Kacarski, 2004). In simple words
employee relations can be defined as the relation that the employee has with
subordinates, reporting managers, superiors and organization as a whole. Emp

47
Employee Relations as a Tool of Strategic Competitive Environment
relations concern the welfare of employees through solving their grievances an
helping them grown and develop.
In an organization, the goals of the employee and employer are different. Em
interest is regarding minimizing the labor cost whereas; the employee’s intere
in maximizing the labor cost. Objectives of employees at work are not synonym
with that of the employer (Blyton, Turnbull, 2004). Employees want high incom
security, satisfaction, work-life balance, career growth and development of sel
of belongingness etc. whereas, employer wants a good pool of talent with the
possible cost which makes the highest possible return. The organizations can a
these goals by maintaining good employee relations. While framing policies th
must be alignment between business strategy and HR strategy. The organizati
should frame Human Resource Management Policies and practices such that t
are all aligned with the growth, survival and success of the organization. With
help of these HRM policies and employee relation practices, the organization w
be able create a positive environment in the organization which pushes emplo
to work with their full potential to give maximum results and thus motivates th
to bring value to the organization, its products and services. Effective HR pract
and healthy work culture having sound employee relations attracts the talent.
employer and employee relations are not taken care of, right from the beginni
the basic goals of the organization will be compromised.
In this challenging environment where the environment keeps on changing
to various political, social, technological, cultural, economic and legal fac
organization must revise its strategies timely which will help the firm to cope u
with changes and survive in market leading to optimum utilization of resource
When there is organizational change, it will cause employees the feeling of an
stress, and insecurity and will result in impacting employee’s productivity, sati
and commitment to the organization (Ashfort, Lee, Bobko, 1989). The employe
generally resist to the changes thus organizations should try to gain the trust a
acceptance of the employees through effective leadership, transparent commu
and proper awareness. To implement any of these changes firm should mainta
good relations with the employee’s right from the start. As good relations help
creating a culture of mutual trust which will further leads to less resistance to
Handling such situations through employee relations help the organiza
maintain their competitive edge and managing such problems in a better way
the competitors help the organization stay ahead in the race.

48
Employee Relations as a Tool of Strategic Competitive Environment
COMPETITIVE ENVIRONMENT
Every business survives in a dynamic business environment (George 2012). Bu
environment refers to the surroundings and circumstances which influences bu
operations. This environment keeps on changing due to various factors and it i
important to understand these changes to survive the competition. (Scherer, 1
defines competition as a conscious striving of business firms against one anoth
for patronage. Few authors refer this competition as rivalry between sellers, w
everyone tries to gain profits and market share by offering goods and services
business competes and functions in such a dynamic external environment call
competitive environment. The profits, growth and survival of any firm depend
the way they react to the changes in this environment. If any organization is u
to adapt to the changes of the environment, they tend to get losses. (Lanisilut
Firms can avoid or minimize the impacts of negative happenings by understan
the development of competitive environment.
Firms create different strategies to survive in the competitive environm
They are made with respect to the environment and, as the environment chan
the strategies must also be modified. The firm must make critical decis
regarding their functions, strategies, products etc. to always maintain/improve
performance in the market to stay ahead in the race. So, the HR policies must
made considering these strategies and managers should identify the importan
these policies and they should act accordingly. HR should make sure that ever
in the organization, right from the top management to the smallest employee,
committed to the strategy and the HR must understand the relationship betwe
practices and performance with strategies. According to (Hemmasi, 1983) the
of formulating competitive strategy is relating a firm to its environment and a
aspect of the firm’s environment is the industry in which it competes. This mea
that the goal of making any competitive strategy is to link the organization wit
environment. It also highlights that the main component of the firm’s environm
the type of industry in which it functions. When we understand the type of indu
in which we are competing, we can understand the characteristics of the indus
that affect the type of external issues (Hemmasi, 1983). Also it helps us under
the importance attributed to strategic factors which differ from industry to ind
(Steiner’s, 1969). For example, automobile industry competes on manufacturin
technology, product features and development. Whereas, clothing industry com
on quality, price, marketing etc.
Thus, it is important for the firms to constantly analyze the changes taking p
in their competitive environment. (Eisenhardt, 1989 and Judge, Miller, 1991) a
that high performing companies scan their environments more frequently com
to low performing companies. With the high environmental pressure, organiza

49
Employee Relations as a Tool of Strategic Competitive Environment
are required to make changes to their strategies constantly which impact the e
employee relations as well as the functioning of the business. The firms
constantly use SWOT analysis, PEST analysis or other analytical tools to check
current strategies and relationships in their organizations and should make ch
accordingly to maximize organizational performance (Subramanian, 2017). Th
change in such strategies can sometimes change the structure of the competi
environment; usually by big firms. These changes can be carried out peacefull
only if there is cooperation from the employees.
(Pfeffer, Leblebici, 1973) competitive environment requires tighter coordina
and more orderly use of firm’s resources. This means that the firms should hav
more levels of organizational hierarchy, frequent reporting, oral communicatio
and advanced decision making procedure and all of these are positively relate
competition (Pfeffer, Leblebici, 1973). Many researchers also feel that firms sh
decentralize their decision making. Firms must decentralize authority and deci
making, give autonomy to be more efficient during high competition (Boseman
Simonetti, 1975). By decentralizing, the management can focus on controlling
important and critical decisions. They will have more time to design strategies
survive and excel in the competition. Also decentralizing decision-making proc
of the organizations helps the organization to secure the loyalty, commitment,
dedication of the employees (Nwokocha, Izidor, Iheriohanma, 2012). (Hemmas
1983) believes decentralization of specific types of decisions are strongly relat
to objective structural dimensions of the competitive environment.
In the competitive environment, it is difficult to attract the right staff
organizations but at the same time it is highly important to have the right emp
for the right job. To achieve this the firms should try to find the best match acc
to the job description as the employee doing a particular job can do it in the m
efficient manner only if they have proper knowledge and good experience in th
same area as they are working. This is the reason every organization should co
job analysis and should make job description and job specification which helps
organizations narrow down their applications and choose the right person for t
job. This will ensure efficiency and effectiveness in performance, job satisfactio
they are doing the job that they know), loyalty, motivation etc. These will eme
to become sources of competitive advantage.
EMPLOYEE RETENTION
Success of any organization depends on the human capital. Therefore the orga
should be conscious about their job satisfaction and retention of employee’s to
valuable and efficient human resources (Jehnzeb, Bashir, 2013). Employee rete

50
Employee Relations as a Tool of Strategic Competitive Environment
is a process which encourages the employees to remain within the organizatio
a maximum duration of time or until the completion of the project (Balamurga
Abinaya, 2016). When there is high employee turnover, it decreases the efficie
the work and increases the cost for the organization. This is the reason the org
had to maintain effective retention strategies. Effective retention strategies wi
the organizations ensure the customers are satisfied, there is increase in sales
is satisfied and there is deeply embedded organizational knowledge and learni
(Mathimaran, Kumar, 2017). It also reduces the cost of recruitment and select
new employees. It is not possible to measure the exact cost associated with em
turnover for an organization but when an employee leaves an organization, the
with them their relation with the clients, knowledge regarding company and th
projects (Balamurgan, Abinaya, 2016).
(Das, Baruah, 2013) mentioned in their study that organizations use various
techniques like rewards and recognition, participation in decision making, work
life balance and employee retention to make employees satisfied and de
employee turnover. One of the main disadvantages of employee turnover is cu
client service interruption (Ghansah, 2011). Retaining employees will create m
committed and satisfied workforce which will give the company competit
advantage (Pahuja, Dalal, 2016). (Sharma, 2016) employees usually prefer car
development opportunities followed by compensation, type of work, comp
culture, overseas assignment, family circumstances and so on. Employees mu
provided with proper training and development programs from time to time ba
the requirement of the organization. They should try to develop the employees
increase their skills. Skill development will increase the satisfaction of employe
they are developing themselves and this will stop them from leaving the organ
Skill development will directly impact on better personnel and performance as
new skills will increase their capabilities. To maintain competitive advantage t
companies must focus on enhancing the performance of employees through c
learning. Also having effective leadership at all levels can motivate individuals
and human networks to achieve peak performance (Jassim, 1998). This is beca
employees lookup to their superiors for support and feel that they are respons
for communicating information (Cole, 2006). Since there are many ways to ret
the employees, the organization should focus on brining a positive change in a
factors rather than one or two factors (Sanevirathna, Yapa, 2017). This will hel
create positive relationships and environment in the organization.
According to (Singh, 2019) the new generations of employees are finding so
initiatives by the companies more attractive. This is the reason many compani
using corporate social initiative as a tool for employee retention. Also the com
should continuously do performance reviews and appraisal from time to time a
decreases the confusion and resentment in the employees. Rewards must be g

51
Employee Relations as a Tool of Strategic Competitive Environment
based on the performance so that the employees will create a perception that
performance will lead to better rewards. This will ultimately drive the employe
work more efficiently. These rewards should not only be monetary, there shou
be non-monetary rewards because different employees have different requirem
and expectations: like hike, promotion, recognition, on-site etc. So the employ
motivation to perform better can be by providing various rewards like a
promotion, on-site opportunities etc. Such activities help management reach t
expectation of the employees and maintain good employee relations in such a
that employee needs are satisfied and they don’t leave the organization. Also,
particular cultural activities help create obstacles in retaining most produ
employees of the organization (Sheridon, 1992). So the organizations carry ou
such vide range of activities to maintain positive employee relations and to cre
a sense of belongingness to the employees so that they don’t leave the organi
(Sheridon, 1992).
BENEFITS TO THE ORGANIZATION
One of the main parts of employee relations is communication. It involv
communicating the concerned information to the employees in a right way so
trust is built among the employees. Proper communication ensures that the ob
of the organization are clear and fastens decision making process. (Rahman, T
2017) explained employee relations as the management of communication be
enterprise and staff. They expressed that this kind of communication adopts fl
improves employee satisfaction and inspires organization to realize its goal. W
the employees are properly communicated about everything, they start trustin
organization, their decisions and will show more loyalty towards the organizati
Many authors believe that employee relations is all about effective communica
which helps build confidence, trust and loyalty among employees enablin
management to realize the potential skills and knowledge that is available in t
organization.
There are many advantages of maintaining good employee relations. (
2013) observed that employee relations promote commitment, facilitates emp
to achieve organizational objectives, increases trust and reduces conflicts. Wh
employee relations are good it helps organizations maintain harmony by reduc
conflicts. The employees will tend to be more understanding and this pe
environment will help employees concentrate and increase their producti
When there is no peace in the workplace, the employees will get disturbed and
their efficiency will decrease. Even if the organization has competent, qualified
and motivated employees, their performance will be in danger as long as there

52
Employee Relations as a Tool of Strategic Competitive Environment
peace and harmony (Samwel, 2018). When there is harmony in the organizatio
is easier for the management to promote team spirit among the employees. (S
Hisam, 2018) team spirit / team work has the ability to increase the level of em
stability; self-confidence and the like among the members and it creates a hea
environment and increases the creativity and efficiency. The organization bene
a lot through this as team structures have proven to have higher labor product
flatter management structures and reduced employee turnover. It also in
the quality of products and services, reduces the level of absenteeism, increas
learning and development with increased industrial harmony which will all lead
towards improved workplace performance (Glassop, 2002). It also creates a se
of belongingness among the employees. All these advantages not only h
attracting and retaining the employees but they also increase the attractivene
the organization as an employer (Urbancova, Saydrova, 2017). It means that t
organization will now have a bigger pool of talented employees to choose from
This also improves the image of the organization.
Employee relations focus on performance, growth and development of emp
This will ensure that the employees are satisfied. (Samwel, 2018) through his s
proved that there is a positive significant relationship between employee relat
and employee performance as well as between employee relations and organi
performance. As when the employee performance increases, it automatically i
the organization’s performance. The stronger the relations, the stronger
the satisfaction of the employees. As long as the employees are not satisfied t
cannot produce the results that satisfy the customer/clients. (Sequeira, Dhriti,
concluded from their study that the employees with high level of job satisfactio
were more productive, were able to complete their tasks on time and were mo
to give their opinions which contributes towards organization’s development a
improvement of performance. So it is understood that the profit of the organiz
and their image depends upon the satisfaction of their employees and it can b
achieved through maintaining good employee relations. They drive the organiz
towards achieving their goals and objectives and help them function at their fu
potential which helps them survive and stay ahead in the competition.
GLOBALIZATION
Economic globalization is one of the most powerful forces to have shaped the
world (Frankel, 2000). Globalization refers to the growing integration of econom
and societies around the world. Globalization led to advances in communicatio
transportation and technology combined with free- marketed ideology and has
rise of free mobility of goods, services and capital (Irani, Nouru, Nouzi, 2011).

53
Employee Relations as a Tool of Strategic Competitive Environment
Globalization led to an increase in employment opportunities and the inc
in competition benefitted the consumers by providing large variety of pr
and brands and also made sure procedures maintained their quality. Although
increase in competition had increased the competitive pressure, it also made s
there is large market base for good quality products. (Jha, Varkker, 2017) com
followed by globalization has given rise to the introduction of the ‘Human’ aspe
to employee relations practices. Globalization made sure that there is increase
level of connectivity and integration. It made it possible and easier for employ
to look for job in other countries and made it easier for organizations to find po
talented workforces. High skilled labors who invest in education and research
entering and taking jobs in high technology sectors of different parts of the wo
It is believed that globalization is resulting in the whole world becoming a gl
village. It is believed by few researchers that globalization would lead to the m
of employee relation practices globally (Jha, Varkker, 2011). It is also believed
the post-globalization world is/will witness new trade union structures, new pa
of behavior and increased HRM orientation of managing employees. Globalizat
sets conditions for managerial decision making which constraints the choices t
make. It also leads to the firms changing their structures, strategies, practices
which leads to organizational change and the management should deal
through proper employee relation practices like effective leadership, communi
etc. Globalization also forces the companies to constantly change their produc
services, increase quality, reduce cost etc. The nature of the jobs would consta
change due to the introduction of new technologies, change in products and se
innovation etc. So the management should prepare its employees for such situ
by providing them with training and development programs as it would make i
for the management to cope up with the changes and will let them be prepare
face the competitive environment and maintain competitive advantage.
There is increase in the level of competition due to globalization, liberalizati
and privatization and market had now become a competitive one which means
the sellers no longer have the power over the market and prices (Swaminatha
Rajkumar, 2013). They have to now compete with other similar products
increased the complexity of each job due to which the employees feel certain
stress in their job. (Du, Zhang, Tekhleah, 2018) Globalization intensifies compe
in the market and employees of organization face increasing levels of job stres
the organizations constantly try searching for an alternative which can reduce
negative consequences of stress. It is proved that stress can drain out the phy
and mental ability of an employee to perform their job. (Du, Zhang, Tekhleah,
2018) Moreover stress also weakens the motivation and drains the energy of t
employees and does not allow them to perform at their full potential. In such t
having job control will help employees reduce the negative consequences pos

54
Employee Relations as a Tool of Strategic Competitive Environment
job stress. Job control is a person’s ability to influence what happens at his/her
environment especially the matters of personal interest. (Shutherland, 2017) d
job control as autonomy and effective total control over the job. To reduce suc
negative consequences, the organization should concentrate on providing wor
balance to the employees. (Tiwari, Tyagi, 2014) feel that in the era of globaliza
the word ‘work-life balance’ became an important and inseparable part
organization. They also mentioned that there are 3 main factors of work-life ba
for any organization; they are- global, competition, personal lives/family value
organizations should try to balance these three for the employees.
The importance of the relationship between globalization and employees es
in developing countries is increasing. (Dogan, 2016) feels there are many way
which globalization effects labor. It is affected through increased sales, Foreign
Direct Investment (FDI) and technological transfer. Increased sales will slowly
the number of jobs and the employment will increase. FDI also creates new job
Employment creation is regarded as an important potential contribution from F
the economy (Tenkins, 2006). The technology transfer will ensure new technol
available in all parts of the world. It will create requirement for people with new
It will impose stress on employees to constantly learn new skills but the organ
can reduce this stress and at the same time create loyalty by providing trainin
development programs from time to time. The changes caused due to globaliz
lead to increase in number of tasks of each job which result in job redesigning.
1992) Job redesigning is perceived by the employees as the improvement of th
old job content. They look into it as job enrichment and empowerment becaus
which they tend to get satisfied and motivated. Management also sees flexibil
a way to become a global player (Porter, 1986). They maximize the use of flex
labor practices at all levels as it helps reduce the pressure and is an active res
to a pattern of constrained behavior.
Globalization is leading to an increase in competition and is adding pressure
on to the organizations to survive and grow in this ever changing envir
which has high levels of uncertainty. If there are no proper employee relations
the organizations it would be difficult for the organizations to cope up with this
change and survive in the competitive environment as the success of the orga
depends on the employees (Jenzeb, Bashir, 2013).
EMPLOYEE PERCEPTION
Perception is a process by which an employee interprets their impressions and
them to give a proper explanation to their workplace behaviors (Langton, Robb
2006). Employees, just like anyone, have their perception towards everything

55
Employee Relations as a Tool of Strategic Competitive Environment
happens around them. Different groups of employees (departments, teams, di
etc) have different types of perceptions which might be influenced by the disc
of the group. When they feel they are not receiving the monetary and non-mon
benefits that they deserve, it would lead to de motivation (Ullah, Khan, Siddiqu
2017). They want to get compensated for their work in a fair manner. They als
expect the organization to constantly support them and such support could lea
increase in motivation level and will develop a sense of belongingness. (Zhong
Wayne, Liden, 2016) also agreed that if the organizations provide support thei
employees on a regular basis, it will increase their motivation level which wou
lead to the improvement of individual and organizational performance in terms
profitability and growth. (Ullah, Khan, Siddique, 2017) also proved through the
study that high perception of workplace support leads to high levels of employ
motivation. Top management, HR managers and immediate supervisors s
realize and understand the importance of workplace support and motivation. W
management provides such kind of support to the employees they try to put th
best efforts to the job and when these efforts are noticed and rewarded they w
to maintain the efficiency and will try to improve. (Tiwari, Lenka, 2016) Consta
motivational support from the management would encourage the employ
put in their best efforts and when management provides clear value propositio
recognize and reward such employees, it motivates them to work enthusiastic
(Rahman, Taniya, 2017) through their study revealed that if employee relat
components like leadership, training, communication, rewards etc. are pr
implemented in organizations and if managers give it high priority, it will help
employees achieve tasks and targets that are set for their job positions and wi
them in developing effective communication. Developing proper communicatio
channels and systems help the employees fulfill their information needs. Empl
look up to supervisors to be responsible for providing information and s
(Tiwari, Lenka, 2016). They blame their supervisors if the information is not be
communicated to them (Cole, 2006). Over a period of time they would develop
negative relations with their superiors for not communicating properly. Employ
also want to be heard, they want the management to listen to their concerns a
problems. When management listens to their issues, especially when they pro
support for personal issues, it creates greater sense of loyalty from the employ
and that will increase their interest in work. Also when the problems of employ
are solved, their stress level will reduce which will improve their concentration
work. In the same way when employees are involved in decision making, it hel
creating a sense of belongingness among the employees, which helps in creat
congenial working environment and contributes towards building good employ
employee relationship (Das, Baruah, 2013).

56
Employee Relations as a Tool of Strategic Competitive Environment
The continual change in the competitive environment is making it importan
organization to adapt to the changing environment. The organizations constan
have to change their structures, technology, manpower, managers etc. as per
requirements. When such changes are taking place, employees usually tend to
and panic about their roles, career, new tasks and they experience fear and an
But, if the employees have good perception of the organization and there are g
relations between them, they trust the organization and their decisions and wi
try not to panic or worry in such situations. When employee has good impressi
the same is reciprocated to the external environment. Such organizations not
perform well and attract prospective employees but they also retain their pote
workforce which helps them achieve sustainable competitive advantage.
A study by (Blyton, 2008) revealed that employees do not give their
performance when they are not satisfied or when they are un-happy wit
management, superiors, government or even their colleagues. Sometimes
employees are not satisfied with the policies or/and when there is bad relation
between employees and management, it can lead to strikes, lockout or such d
actions. Employees sometimes take such drastic actions to express their griev
or when they feel management is doing nothing to solve their grievance
after having knowledge about it. Such problems can be avoided by manageme
by maintaining relations and incorporating loyalty and trust on the organizatio
and their decisions. (Murali, Poddar, Seema, 2017) through their research prov
that there is positive relationship between loyalty and performance. Loyalty al
ensures that the employees stick to the organization for long. Whereas, when
satisfied with their job, it is reflected in their performance. It not only increase
productivity but also satisfies the customers and clients. It does not only make
organization attractive for prospective employees but also increases the custo
According to Fortune magazine, 40% of companies listed under top 100 “Amer
Best Companies to Work For” also appeared on Fortune top 500 companies. Al
these factors clearly show the importance of maintaining employee relations a
these benefits help the organizations maintain their competitive advantage ev
during tough situations.
EMPLOYEE RELATIONS AND COMPETITIVE ADVANTAGE
Companies make strategies and policies to survive in the competition and they
try to be innovative so that no other firm can copy their strategies. Making suc
strategies will give competitive advantage to the firm. (Barney, 1991) A firm is
to have competitive advantage when it is implementing a value creating strate
simultaneously being implemented by any current or potential competitor. Ear

57
Employee Relations as a Tool of Strategic Competitive Environment
these strategies were limited to technology and financial resources. Companie
focus on technological and financial resources as a source for competitive adv
but, the source of competitive advantage has shifted from financial resources
technological resources to human capital. This means that the emphasis is now
human capital and the firm’s actual success and prosperity lie on the employe
efficiencies, motivation, loyalty, satisfaction etc. (Jassim, 1998) Even though th
widely accepted, many firms still do not give utmost importance to human res
They might talk about the importance of HR but they do not show it through th
actions. But big companies like Google, Wipro and the like have realized the w
of Human Resource and thus started treating them as strategic partner and so
sustained competitive Advantage. As performance, productivity, quality and se
all depend on the human resources. A firm is said to have sustained competitiv
advantage when it is implementing a value creating strategy not simultaneous
being implemented by any current or potential competitors and when these ot
firms are unable to duplicate the benefits of the strategy (Barney, 1991). Susta
competitive advantage exists only when other organizations are unable to dup
the benefits of the firm’s competitive advantage (Jassim, 1998). A company m
imitate the HR policies used by a successful firm, but during cases of difficulty
they wouldn’t know what to actually do. This is because the problem faced by
organization is different in many ways, the internal and external environment
from organization to organization and the way the environment reacts to the a
taken by the organization also changes. (Hemmasi, 1983) different comp
environments and various strategies beget different organizational responses.
Many authors feel that the resources responsible for having competitive adv
changes from organization to organization and it is not really easy to find the m
resource responsible for gaining the sustained competitive advantage. Each m
in the firm believes in different possibilities. Everyone might have different the
but it is almost not possible to prove them. According to (Barney, 1991) as lon
the link between resources controlled by a firm and competitive advantage rem
ambiguous, it is not possible for other firms to imitate the successful firm’s str
Employee relations help in creating a culture of mutual respect and trust wh
is very difficult to imitate. No other firm can be able perfectly imitate the cultu
and create same level of understanding and trust. Employee relations help gai
establishing confidence and loyalty of employees towards the organization. (B
2013) observed that employee relations promote commitment, facilitates emp
to achieve organizational objectives, increases trust and reduces conflicts. All
will lead to smooth functioning of the firm and will help in creating an environm
which will result in better performance and satisfied workforce. When the emp
are satisfied, their efficiency increases which further increases the organizatio
performance. Positive and healthy environment will enhance the organiza

58
Employee Relations as a Tool of Strategic Competitive Environment
reputation leading to the success. Thus, maintaining positive employee relatio
very crucial to have competitive advantage and be successful.
CONCLUSION
From this chapter we can understand the importance of employee relati
an organization. It is crucial for an organization to consider both employer and
employee’s goals. The survival, growth and prosperity of the organization depe
on maintaining harmonious employee relations (Samwel, 2018). It is high time
organizations realize that their success depends on its employees and importa
of maintaining good employee relations as it can lead to better performance, l
employees, satisfied workforce and clients. Many successful organizations
constantly trying to understand the needs of the employees for the very same
Satisfied, competent and committed employees give extraordinary perform
Organizations can use many techniques like fair rewards and recognition; enco
employee participation in decision making, taking care of work-life balance an
employee relations to ensure higher retention and decrease in employee turno
(Das, Baruah, 2013). It is important for the organizations to focus on bringing a
positive change in the organization instead of focusing on one or two factors s
the needs of each employee varies.
In the era of globalization it would be difficult for organizations to survive th
competition and the changes it brings along with it if there aren’t good employ
relations. Globalization is leading to the merging of employee relations practic
globally (Jha, Varkker, 2011). It is paving way towards new problems like incre
complexity of jobs, increase in stress level; constant change in strategies and
etc. and such problems requires new solutions and better relationship manage
This is the reason many companies are creating new role of employee relation
retention specialist (Singh, 2019). It is understandable that every organization
realize the benefits of employee relations and should invest in it to maintain th
competitive edge since it helps organizations to convert employees into sourc
competitive advantage in such a way that no other firm can perfectly imitate t
resources of the organization. It is important for every to focus on maintaining
proper employee relation practices to leverage best out of its employees and t
gain competitive edge.

59
Employee Relations as a Tool of Strategic Competitive Environment
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