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Key Topics
- Requirement
- Solution
- H&M- An Overview
- Theory of Trade Union and Collective Bargaining
- Importance of good Employment Relations
- Employment Relation issues in H&M
- Issue1: Wages and working conditions
- Issue 2: Health and safety issues
- Recommendations to manage the Employment Relations Challenges
- Conclusion
- Bibliography
Requirement
EMPLOYMENT RELATION ISSUES H&M SWEDEN
Hennes & Mauritz (H&M) - Employment Relation Issues
Solution
Employment relations are the behavior and communication between the employees and their employers. It’s a legal link between the two and exists when a person performs work or services under certain conditions, in return for remuneration. The employment relation is considered to be the prime vehicle through which each employee gains the access to rights and benefits associated with their job. In the presence of such relations, the labor and social security laws could easily be applied to the working systems of any company.
Sweden has always been known for methods of resolving conflicts in the employment relations. These issues are always being dealt in a harmonious manner without any government intervention. The method adopted by this country is of Collective Bargaining, in which there’s a peaceful negotiation between an employer and the labor union, usually on issues of wages, hours and working conditions. This method has existed for decades because it has been a means to equitable resolution that satisfies both the officials of the company as well as the employees. (International Labour Office, 2003)
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H&M- An Overview
Hennes & Mauritz, rebranded as H&M to simplify worldwide perception of the brand, is a Swedish Multinational Enterprise (MNE). It is a huge retail-clothing company known for its fast-fashion clothing for all the market segments. The company’s first store, named “Hennes”, was opened in Vasteras, Sweden in 1947, as an outcome of a hilarious business idea of its founder Erling Persson. The term Hennes means “for her” in Swedish and hence was an exclusive store for women. At present the company’s 3,700 stores operating in over 61 countries all over the world. In global cloth retailer ranking, the company ranks second following Spain-based Inditex and followed by US-based Gap Inc. The company till now has employed over 132,000 people globally. (Sparks, 1992)
H&M has its presence in every major market worldwide. Its first international store, outside its domestic market, was set up in Norway in 1964. From then till now, the company has marked a huge expansion in its marketing by opening many stores in Europe, including Denmark, Switzerland, Germany and UK. The company at present owns a two-letter domain hm.com and in addition to H&M brand it has 5 more brands.
Theory of Trade Union and Collective Bargaining
As already stated, H&M is a successful Swedish retailing-cloth company. The world is quite aware of the Sweden’s long tradition of labor market regulation. This regulation is an absolute result of Collective bargaining and the cooperation between the employees, employers and the trade unions. The trade unions are nothing but a group of leaders that are elected by the employees. They represent these employees in front of the senior executives of the company and deal with the prevailing issues on behalf of them. AS the terms Collective bargaining and Trade Unions are mentioned here and will often be used in the whole report, hence there’s a need to understand the actual meaning of these terms. (ERIC, 1990)
Collective Bargaining is a process in which representatives of both the management and employees participate. This continuous process aims to establish a stable relationship between the parties involved by adopting a flexible approach of negotiations over issues like poor quality of life and low-wages with increased number of working hours. This forms the basis of the theory of Collective Bargaining. The collective agreement serves as a labor contract between the two parties involved. (Miller, et al., 2015)
Trade Union is defined as the organization of workers (employees) who come together for a common cause such as protecting the integrity of the of the employees, Increasing wages, Improving workplace environment conditions etc. The Trade Union, along with its leaders bargains with the senior executives on behalf of the other lower work staff. The main purpose of these unions is to maintain and improve the conditions of their employment and to enhance the employee-employer relationships. The leader is selected from the employees and by the employees. He is the one who possesses all the qualities of a good and efficient path-bearer.
Importance of good Employment Relations
Employment relations cover all types of interactions among employees such as cooperative efforts, interpersonal and group relationships. The prime role of such a kind of relation is to deal with the people employed by the company and the myriads of issues arising from their employment. The employment relation encompasses all the areas of acquiring, developing, maintaining and motivating the staff. (Siegle, 2012) As Human Resources are an integral part of any business, hence there’s a need to have an effective employment relations with them, as any trouble to the workforce will eventually affect the company in turn. As the skills, knowledge and creativeness of the employees are the main potential that a company has over its competitors in the market, hence, the companies like the one being discussed has always recognized their employees as the most crucial part of their business. As it is rightly said that, “A happy worker will work twice as hard and more efficient than an unhappy worker”, so it is the prime duty of the senior officials of the company to keep an eye on the health status as well as the wage structures of their employees. Once the employees have developed a sense of reliability then their skills and efficiency will lead the company to the path of success.
The staff retention is yet another benefit of the maintaining a good employment relation. The employees that are treated well by their employers tend to remain more with the company. Loss of efficient employees is a major challenge for a company in today’s booming market. To retain such a talent, the employers need to understand what high-value employees expect in terms of the benefits they seek from the employment relationships, the values they bring to the relationships, the trust they have placed in the company and the developmental opportunities they seek while remaining in the company. The leader who succeeds in satisfying such needs are the one who will eventually resolve all the conflicts related to employment relations in the company. (Lovén, 2009)
Employment Relation issues in H&M
The leading retailing-cloth company, H&M lives with an aim of having an impact on millions of people around the world with their values and their growth. The company’s strategy of working has not always been a business-oriented one, but rather a one that dreams to strengthen the underprivileged communities by providing them job opportunities. The company has tied up with community partners to drive the development where they have lacked in their influence. As already mentioned that the company has employed a lot of people all globally, hence, it also aims to maintain smooth relations among its employers and employees. (Petryni, 2015)
Issue1: Wages and working conditions
Although the company has been able to maintain its best ranking in the leading magazine, yet it faces a lot of challenges related to its employment relations segment. The prevailing issues under the head of Collective bargaining is the Issues on wages and working conditions in the subsidiary companies of H&M in countries like Bangladesh, Cambodia, Indonesia, India and Philippines. In 2003, it was reported that at least one factory in the UK that produced clothing for H&M paid its workers as little as $7 a week for up to 6 hours of work. In such an instance when the workers protested, the management decided to put a lock on the factory instead of raising the wages of the employees. Further, when the protest increased, the officials hired local thugs to threaten and intimidate them. Eventually the strike ended with a result not in the favor of the workers. Such an instance shows that although the company has given employment to lot of personnel all over the globe, but at the same time is knowingly violating the labor law. The company is treating its worker as a commodity rather than a useful resource. (Experts, 2015) Such an end to a strike reveals the incapability of the officials in managing the employment relations. In response to such an act the owner of the company urged the country’s government to increase the minimum wages of their employees. If a company cannot fulfill the demands of its employees on its own, then no governmental intervention can resolve such conflicts. As already mentioned that Collective Bargaining involves a peaceful negotiation between the trade unions and the management, yet in this case without any negotiation the company jumped to result of locking up the industry and later hiring thugs against the labors.
In other established factories of the company, sometimes the workers are forced to work over-time without a compensatory leave and wages in return for these services. Such an overtime issue has eventually led to an aversion among these employees towards their companies. And when the working staff has lost the reliability factor towards their organization, then they never deliver the best of their services for the company. (H&M Team, 2014)
Issue 2: Health and safety issues
According to the labor law, it is the duty of the company to deliberately take care of the health and safety issues of their employees. Sometimes, while working in the cloth factory, the workers are subjected to certain kind of chemicals or fire accidents, which may be hazardous to their health. It’s the ultimate responsibility of the company to strictly follow safety measures in such working areas and if by mistake any worker has come across any accident, the company is required to take care of all his medical and financial needs till he is totally cured. The company H&M has faced such health issues many a times. But the response of the officials to such issues was not acceptable and up to the mark. One such issue that has been reported in 2010, at Garib & Garib, a factory producing cardigan for H&M Company. As a result of fire around 21 were dead and 50 were injured. In earlier months, when the company audited the factory, it failed to notice the absence of safety equipments in the factory. This unacceptable behavior of the company leads to the loss of many lives which otherwise could have been saved. In the year 2006, the National Labor Committee reported that in another factory of the company in some other company, the employees were routinely forced to work overtime, without any compensation and also were subjected to unsanitary bathroom, unsafe drinking water and hot atmosphere. Some subsidiary companies working ambience revealed that the employees were even being subjected to harsh punishments for not meeting the targets in given pan of time. These issues still prevails in most of the branches of the company. (Pring, 2015)
In another related instance, in a factory the employees had been made to work on their days off to meet the targets of the month. This over-hour working has led to many serious healths related issues in these employees. Some factories have also employed children below the legal permissible age of 15. These children are made to work as hard as adults. This eventually has led to deteriorating health conditions among these children and cases of malnutrition and early-stage deaths have become quite certain.
In both above mentioned issues the management of the company has followed a tactic of signing a short term contract with the employees to get rid of them as early as possible. The government has also been a bit lethargic as there are no periodic labor inspections and also the labor law has not been enforced in an efficient manner in such factories. Although, the trade unions have been established, but those in the high authorities tactfully curbs the voice of these leaders and hence, makes it extremely impossible for the workers to assert their rights. (Claeson, 2012)
Recommendations to manage the Employment Relations Challenges
The MNEs have their business expansion globally and hence have to employ a number of employees with varying demography and working culture. The main challenge for a successful MNE is to handle such a huge number of employees while satisfying the demands and needs of each one of them. Employment relation is nothing but a mere process of training employees, addressing their needs on time, fostering a workplace culture and resolving conflicts between different employees and also between employees and management. As in case of H&M, the increased workforce diversity has led to continuous changes in HR practices and policies. The conventional working systems, although can’t be immediately replaced, but yet can be reformed a bit. As seen in the above segment of the report that the conflicts within an organization has become inevitable. Hence, if the conflicts cannot be avoided, then the officials should seek effective measures to minimize them. The prime measure here to be suggested is hiring of effective leaders with sound interpersonal skills and conflict management skills. As company has its operations globally so it needs to define and develop such policies and procedures that will go well with the diversity of the workforce. As the company has employees from all over the world, with different working and economic backgrounds, hence the policies should be drafted in such a way that they appeal maximum of the workforce at a time. (Marginson, 2015)
In today’s competitive world, it is really tough for the senior executives to deal efficiently with their employees and satisfy the needs of each one of them at a single time. The leaders leading the employees should have an improvement in their skills of active listening, effective communication, wider-acceptability, adaptability, decision-making and conflict-resolution. A leader who listens well, eventually responds well. For such an improvement, the company could arrange for training sessions for the leaders, led by the HRM experts from all over the world. Developing and enhancing such skills does not aim to curb the conflicts at the workplace, yet if incorporated in the prevailing working policies, then the relations between employees and the employers could be managed tactfully to some extent. (H&M Team, 2012)
The skill of Conflict management is the most important skill among all the others mentioned. The managers and the other leaders in the H&M Company can be trained to manage conflicts among the employees as well as among the employees and the management. The leaders are to be efficient enough to listen to the grievances of both the parties and then draw a solution that would satisfy both of them. Making hasty decisions shows incapability of a leader. Rather the conflicts could easily be avoided by an effective communication with the participants of the conflicts. (Casestudyinc Team, 2010)
As it has been mentioned that the leader of retailing-cloth has faced a challenge that revealed that in maximum countries, the company has employed people paying them even lesser than their minimum wages. This has certainly violated the labor law in a huge sense. As the law is framed to safeguard the integrity of the workers working under leading firms, the company by paying less remuneration to their employees has lost the reliability factor among the managers and its employees. It is the prime duty of the company to look over the necessities of all the participants of its company. The proper wages could be reinstalled by conducting special audits at all the branches and submitting proper reports to the senior officials. These instances are a mere outcome of ignorance of the officials due to other important issues in the company. The extra spending over the useless issues in the company could be cut down for a while to reinstall the wages of such employees. Apart from reinstalling the wages, the company could also try to provide some kind of incentives to these employees in order to reinforce the trust and reliability of these employees back in their company. (Advameg Team, 2015)
It is the prime duty of the superior officials to ensure a healthy and safe working ambience to its employees. When an employee gets an environment that is in compliance with his requirements and demand, then he automatically delivers his maximum skills in what-so-ever service he is rendering. Hence, in response to the health issues the company should arrange for periodic audits in these factories and should equip these factory workers with proper safety trainings and tactics. Talking about the under-age workers then the company should set up strict norms for the age limit while employing the workers in the factories and if carried out illegally, then the audit-team should immediately report this to senior officials of the company. (Hutt, 2007)
Conclusion
From the above case study, it has been clear that whether a company has reached to the pinnacle of the success, if the employment relations are not well managed then the company will eventually face all sorts of problems equivalent to the one’ faced by the ones at lower ranking. Human resource being the prime asset for the company is to be managed efficiently by all the senior executives of the company. (Armstrong, 2006) Employees, either at a higher or a lower rank, all imparts their selfless services to the company. Hence, it becomes an ultimate aim of the company to live up to the expectations of these participants of the company by addressing their grievances seriously and equipping them with the best possible facilities. The remuneration forms an integral part of the living of a labor. Hence the company should keep in mind that the labor at least receive the minimum wages set up by the government of any country. The proper health of the employees is yet another factor that can act as an obstacle to the success of any leading company. Hence, the companies like H&M should never compensate while dealing with the health-related issues of their employees. After all, the employees tend to deliver better services if imparted with efficient working ambience by the company.
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