Employee Relations:
Importance of Employee Relations

 Carol Corcoran, who manages a deli, was heard complaining one day, "What am I going to do about help these days? I hire two young ladies to work behind the counter, and less than one week after they begin working, Lori starts asking for time off so she can go to the shore with her boy friend. How can I give her time off, without being unfair to the other girl? I certainly can't afford to give both girls time off."

In another town, George Zimmerman who manages a small asphalt plant was having more serious problems. "The last time Joe and Bill came they complained about the shop conditions - too sloppy and dirty - I had everybody clean up and we have kept the place cleaner since then. Now they want the walls painted. I can't do that; the next thing they'll want is air-conditioning. You can't satisfy people nowadays."

Both these situations involve personnel policies and the types of decisions which every owner/manager has to make.

This section should help you to improve your personnel policies so that you will have a more effective work force. Specifically it should help you:

  • Improve your personnel administration procedures
  • Improve the human relations practices, including the way projects are delegated
  • Assure positive and effective discipline
  • Enhance your ability to prevent employee grievances and to handle those that do arise
  • Establish improved lines of communication as a foundation for higher employee morale

There are many ways to manage people. The manager can be strict or rigidly enforce rules. Communications can be one-way from boss to employee. The job might get done, but with fairly high turnover, absenteeism and low morale.

Or the owner can make an extra effort to be a "nice guy" to everyone on the payroll. This may lead to reduced adherence to the rules, and employees may argue when they are asked to do work they do not like. Controlling the daily operation of the business may become more and more difficult. The business may survive, but only with much lower profit than if the owner followed more competent personnel policies.

But there is another way. A way where employees can feel a part of your business, where manager and employee can communicate effectively with each other, where rules are fair and flexible, yet enforced with positive discipline. The job gets done efficiently and profitably, and the business does well.

People are your most important asset. What is the dollar-and-cents value of good working relations with your staff? Have you calculated what percentage your payroll is of total operating expenses? What are the costs of selecting, training, and replacing your employees? What labor turnover is the result of employee dissatisfaction? In terms of the output and the growth of your business, what is the real money value to you of a highly motivated and loyal work force?

Looking carefully at the answers to questions like these can help you develop a sound employee relations program.

Large companies have a separate personnel department. Most managers of a small business view this "personnel function" as just part of the general job of running a business. It is good practice, though, to think of your personnel function as a distinct and separate part of your responsibilities - only then will you give your personnel responsibilities the priorities they deserve.

The personnel function is generally considered to include all those policies and administrative procedures necessary to satisfy the needs of employees. Not necessarily in priority order, these include:

1. Administrative personnel procedures.

2. Supervisory practices based on human relations and competent delegation.

3. Positive discipline.

4. Grievance prevention and grievance handling.

5. A system of communications.