Employee Relations: Impact on Organizational Performance and Success

This essay examines the critical relationship between employee relations and organizational performance in the 21st century. It defines employee relations as the management of effective communication to build employee confidence, loyalty, and trust, ultimately improving organizational outcomes. The essay explores how organizations develop employee relations through various means, such as equal opportunities, diversity initiatives, and advanced technology, to boost employee engagement and productivity. It emphasizes the importance of trust, performance management, and reward systems in fostering a positive workplace environment. The essay references studies and real-world examples, like BMW Group and IKEA, to illustrate the positive effects of employee relations on corporate communication, organizational culture, and overall business success. It concludes by highlighting the necessity of fair and positive employee relations practices for organizations to thrive and achieve their missions.

Student Name
INSTITUTIONAL AFFILIATION(S)
EMPLOYEE RELATION AND ITS
EFFECT ON ORGANIZATIONAL
PERFORMANCE

P a g e | 1
Employee relation and its effect on organizational performance
Introduction
Organizations of the 21st century use the term employee relations to demonstrate the
relationship that exists between both, employers and the employees. Employers seek to
manage their employee relations effectively with every individual working for the
organization and thus adopts several means to motivate them. It can be said that employee
relations are all about managing effective organizational communication that can develop
employee confidence, loyalty and trust, enable management to identify sills and potential of
employees and acknowledge their participation in management ( Rahman & Taniya, 2017).
At an organizational level, the outcomes of such strategies or managing employee relation
processes can be assumed as an important mechanism which helps firms achieve core
objectives, decrease conflicts and increase organizational performance (Nikoloski, Dimitrova,
Koleva, & Kacarski, 2014). In this light, this essay proposes to identify benefits behind
employee relations, ways organizations develop employee relations and its effect on
organizational performance.
Discussions
Every organization need high performing staff so that attainable goals can be met,
products or services are delivered appropriately and to achieve competitive advantage. Low
performing staff not only hinder goal achievement capabilities but also lead organizations
towards failure. It can be said that “Employee performance has been shown to have a
significant positive effect on organizational performance” ( Rahman & Taniya, 2017, p. 92).
Employee relations directs and gives oversight to the human resources considering staff and
non-staff employment issues such as individual performance, leave of absence and other

P a g e | 2
disciplinary matters. While evaluating individual performance management metrics,
employee relations help management in determining formal and informal complaints,
workplace misconduct allegations, harassment or workplace discrimination issues and to
settle unemployment compensations or complete termination claims ( Duah & Danso, 2017).
For example, at BMW Group, the firm provides equal opportunities and diversity holistically
to handle workforce management. Every employee uniqueness and individual needs are
regarded as important factors (BMW Group, n.d.). This helps the firm’s management and
employees along with supervisors to interpret, interact and implement policies required for
employee welfare and increased organizational productivity.
The use of advanced technology, best human resource practices, skilled labour and
training have made many organizations successful. Nonetheless, disengaged employees who
show low productivity hampers organizational performance. It can be said that longevity of a
firm is highly affected by employee engagement practices which in turn becomes an
important factor contributing to the financial performance. Research made by Osborne &
Hammoud (2017) shows that effective employee productivity has positive effects on firm’
financial performance. Autonomy, competence and psychological needs motivate employee’s
behaviour that is essential for healthy workplace atmosphere and if employees are satisfied,
they tend to perform optimally. Hence, the basic needs of employee satisfaction can be
directly associated with employee dedication and firm's growth. Trust is regarded as one of
the most influential factors which impact organizational performance, efficiency and
productivity (Al-Khozondar, 2015). This is the reason most of the researchers claim that trust
establishes reliability and integrity between employer and employee. In employee
relationship, the level of trust between employer and employee determines confidence upon
each other and if it does not work, communication between them impacts workplace
performance negatively.

P a g e | 3
Maintaining peaceful and healthy relations is very significant for the growth,
prosperity and survival of every organization. To manage unbiased and uniform relationships,
many organizations adopt performance management techniques and procedures which
ensures that every employee effort made towards organizational performance is taken care of.
Performance management along with regard management contributes as a systematic process
which helps in improving organizational performance and employee relationship by
developing individuals and team capabilities. It is one of the means human resources
undertake to get best results alongside understanding training needs and skills of present
employees. Organizations maintain a shared process which helps both employers and
employees comprehend what needs to be achieved and how people can be developed or
trained to increased profitability (Al-Khozondar, 2015). For example, to ensure that employee
performance is managed in an appropriate way, IKEA uses a 360-degree performance
evaluation which includes self-evaluation of its management, employees, customers as well
as its subordinates. This process assists employees comprehend the broader perspective of the
management and how they can contribute towards it (Kats, 2014). Both management and
employees identify current issues and strategies combinedly.
Organizations need people who can perform effectively and peacefully towards the
accomplishment of the organization's mission and vision. This can be achieved only if
management can maintain an effective relationship between themselves and employees and
avoid conflict practices completely. Samwel (2018) documents various positive effects of
employee relationship on organizational performance like strengthening of corporate
communication, enhanced organizational culture, developed products and services and
establishments of real-time access to organization’s resources and training to employees as
per their requirements. This is the reason performance management and reward management
systems are well connected with employee training and development plans in McDonald's.

P a g e | 4
This helps the firm to increase its productivity, boost underperformers and motivate
employees to perform effectively (Qureshi & Hassan, 2013). Samwel (2018) states that
employee relations encompass relationships and communication that ends in providing
satisfactory results, employee motivation, job satisfaction and employee morale. Employers
right on employee's relationship include managing work performance, integrate management
system and organization structure with employees and establish mutual trust, confidence and
development of reasonable work environment.
Conclusion
Effective employee relations not only lead organizations to better performance but
also helps them in developing good organizational culture. The above paper finds that today,
organizations are aware that maintaining employee relations is very essential and therefore,
human resources strive to undertake various measure that like performance management and
empowerment to increase organizational productivity. To minimise conflicts between
employer and employee, management undertakes people management policies that can build
trust and confidence between them which in turn proves highly beneficial for effective
organizational performance. The paper also finds that many contemporary successful firms
utilise several employee relations practices to bring positive effects in their organizational
performance. Overall, the paper finds that there is a positive effect of employee relationship
on organizational performance and therefore, every organization must implement fair and
positive employee relation practices throughout their business operations.

P a g e | 5
References
Al-Khozondar, N. O. (2015). Employee Relationship Management and its Effect on
Employees Performance at Telecommunication and Banking Sectors. Retrieved from
https://library.iugaza.edu.ps/thesis/116745.pdf
BMW Group. (n.d.). Employees. Retrieved from
https://www.bmwgroup.com/en/responsibility/employees.html
Duah, P., & Danso, B. A. (2017). Employee relations and their effect on organisational
performance. International Journal of Multidisciplinary Research and Development,
4(10), 27-32.
Kats, C. (2014). What Management Lessons IKEA’s HR Strategy can teach us. Retrieved
from https://medium.com/@ChrisKats/what-management-lessons-ikeas-hr-strategy-
can-teach-us-d48e89c0e19e
Nikoloski, K., Dimitrova, J., Koleva, B., & Kacarski, E. M. (2014). From Industrial Relations
to Employment Relations with Focus on Employee Relations. International Journal
of Sciences: Basic and Applied Research, 18(2), 117-124.
Osborne, S., & Hammoud, M. S. (2017). Effective Employee Engagement in the Workplace.
International Journal of Applied Management and Technology, 16(1), 50-67.
Qureshi, A., & Hassan, M. (2013). Impact of performance management on the organisational
performance: An analytical investigation of the business model of McDonald's.
International Journal of Academic Research in Economics and Management
Sciences, 2(5), 54-76.
Rahman, M. S., & Taniya, R. K. (2017). Effect of Employee Relationship Management
(ERM) on Employee Performance: A Study on Private Commercial Banks in

P a g e | 6
Bangladesh. Human Resource Management Research, 7(2), 90-96.
Samwel, J. O. (2018). Effect of Employee Relations on Employee Performance and
Organizational Performance Study of Small Organizations in Tanzania. Global
Journal of Management and Business Research, 18(8), 31-39.