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Overview of the Labour Dispute in Honda China

Question:

Discuss about the Event that took place in China Concerning Labour Dispute in Honda.

The report analyses an event that took place in China concerning labour dispute in Honda. The situation related to the case study depicts the issues that arise in managing human resources and employee relations. Employee relations are important in order to understand the relations that exist between employees and employers (Tansel & Gazîo?lu, 2014). The case study provides an analysis of lessons from the strike that took place in China and the understanding of the issues that caused these issues. The report sheds light on two values that are related to the application of strategic management and the impact it has on the employee relations in the market of China.

On 17th May 2010, a strike at the Honda automobile factory suspended operations in four of the bases of Honda production in China. The managers raised the pay if the employees by 24% that resulted in halting the action of a strike as early as June. Due to the strike, it was reported that Honda had suffered a great loss in the business. About 3 billion yuan worth of sales was lost due to the results of the strike. The main reason behind the strike was the fact that workers in China demanded a greater pay due to the rise in the economy of the country. Hence, the Japanese company was forced to increase the payment of the staffs. However, in certain areas in China, the factories remained closed due to the lack of presence of important components required for manufacturing the vehicle. Reports suggest that Honda produces about 650,000 vehicles per year in China. Due to the loss of these factories the company suffered huge loss (Routerlogin.com, 2017). Nearly a quarter of the Chinese employees did not receive any pay raise for the last five years. The strike was also the result of the fact that Japanese people working in Honda received 50 times more salary than the Chinese workers. For about three days, the labour problem existed that saw two factories and two assembly plants being shut down. The strike resulted in the loss of supply of labour as most of the employees refused to work in an environment conditions that required more manual labour at a less pay (Washingtonpost.com, 2017).

The strike which lasted for a couple of weeks ultimately ended after the managers of Honda agreed to raise the wages of the Chinese people. About 1900 Chinese workers were offered a raise from 24% to 32%. However, the lockdown that took place in Honda resulted in the rise of other strikes around the country due to low salary and minimum wages. Hence, the Government of China passed a law demanding the rise of minimum wage standards and to treat the employees with dignity (Nytimes.com, 2017). It has been seen that the strikes that occurred due to low pay and mistreatment of employees working in Honda, had a bad influence in the other sectors of the country. This was particularly seen among the foreign countries that have set up base in China. The labour unrest that the country witnessed due to the coverage of the Honda incident became national news in the country. Zhao (2012) stated that the most of the labour issues remain unreported due to the poor reputation of the company or due to political interference. The introduction of labour law that helps in addressing the grievances of the employees saw the grievance rate being doubled. The rate, at which the low-wage and migrant workers revolted against the policies adopted in Honda, is indicative of the level of unrest of labours that was prevalent in the country (World.time.com, 2017).

Impact of the Labour Dispute on Honda China

Application of unitarist value

The unitarist theory states organisations to be considered as one member. The employees working in an organisation are related to each other and at towards the objective of the organisation by forming a team. Bray, Waring & Cooper (2014) stated that the cooperation between the members helps in the growth of organisational harmony and the united effort help an organisation to attain its goals. It also demands the loyalty of the employees and the managers in terms of achieving organisational success. Hence, in order to keep an organisation united, unitarist theories propose the idea of managers and leaders becoming the main source that binds an organisation together. Fox (1966) stated that it is the duty of the leaders to promote loyalty and responsibility among the people working in an organisation. The fact that organisations can be divided into groups and subgroups cannot be considered by the unitarist theorists. The unitarist embrace a united view of an organisation in terms of an employment relationship. The fact that employees and employers can be rivals to one another and that any rift can be caused between them is rejected by the unitarist philosophy. The fact that conflicts of interest exist among different members in an organisation is not entertained by the unitarist approach (Ross & Bamber, 2009). This is because conflicts are seen to cause negativity among the members of an organisation. In order to mitigate the effect of labour reform in China, Honda can follow the unitarist approach in order to attain sustainability in the organisation.


In the case of the Honda situation in China, the main reason for the cause of the conflict was due to disputes over payment. It has been seen that the local people of the country were paid a very low wage and asked to work more than the payment structure. This caused dissatisfaction among the employees as a perception prevailed that the organisation is improving the financial stability without by ignoring the needs of the employees (Ft.com, 2017). Hence, measures such as raising the salary were taken by the managers of Honda. The application of the unitarist practice could have helped Honda to remain united during the labour revolution. This could have been with the help of the leaders. According to Lyddon et al., (2015), it is the duty of the leaders to communicate with the employees and ensure that any grievances of the employees are brought forward to the attention of the managers. The unitarist approach does not support the interference of trade unions in the matters between managers and employees. The trade unions are not considered legal and consequently, the opinion provided by the union members are not taken into consideration by the unitarist theorists. Hence, the manager of Honda needed to ensure that the company does not face problems regarding the labour laws. In this regard, the advantages, as well as the disadvantages of the application of unitarist approach, can be considered.

Unitarist Approach in Managing Employee Relations in Honda China

Benefits of the issue

The advantages of unitarist approach include integrating the interests of the employees and employer (Waltman, 2008). The integration of interests enhances the commitment of the employees and the loyalty. Wailes et al., (2016) stated that this is important as a committed employee can contribute more to the success of an organisation. The loyalty and commitment also employees to bond with one another thereby, making a successful team. This can also lead to managing stakeholders of the company in an effective manner as employees are perceived to be the important stakeholder in an organisation. Hence, the welfare of the employees is considered as important as the organisations. Apart from this, the managers attain an all win situation while leading the employees. According to Fiorito & Jarley (2008), proper management and leadership styles are developed in order to align the interests of the managers with the employees. This is important in order to ensure that the organisational objectives are maintained keeping in mind the interests of the employees as well as the employers. In the case of Honda Company situated in China, the integration between the employees and employers were absent. This resulted in the rise of misunderstanding between the employees and the employers (Black, 2005). Apart from this, the objective of the managers of the organisation was not inclined with that of the employees. The aim of the organisation is to make profits by paying minimum wages to the workers. Hence, the employees were denied fair payment. Unfair means of treating employees led to the strikes in the organisation. In this regard, it can be said that the unitarist approach was not applied by Honda while operating in China. Keeping the advantages of the theory in mind, the disadvantages can also be analysed.

Risk of the issue

The fact that unitarist theory does not separate the power and designation of managers with that of the employees can act as a disadvantage. This is because the employees may take certain decisions that may not involve the consent of the managers. Conflict of interests that arise between the employees and employers are also perceived negatively. According to Blanpain (2010), conflicts are a part of the organisation that helps to understand the interests and demands of the employees and the employers. Conflicts may generate different opinions of the employees but the changes suggested during conflict situations can help in the development of an organisation. Unitarist approach also integrates common interests of the employees and shares it with the organisation. This is another disadvantage as the personal individuals of the employees do not matter to the organisational success. It does not provide any guidelines for the managers to follow. Thus, in the case of the conflict of China, the presence of the conflict of interest was seen among the employees. Hence, following unitarist approach could have helped the company as the conflict resulted in the lockdown of the facilities of the company (Boxall, 2008). The main conflict of interest that arose in the company was that of task management. In this regard, it can be said that the management of Honda had adopted a pluralist approach in regard to the practices adopted by the company. Hence, the limitations of unitarist approach lead managers to ignore the possibility of adopting this practice.

Advantages of Unitarist Approach

Application of pluralistic value

According to Thunnissen, Boselie & Fruytier (2013), pluralistic perspective considered organisations that consisted of powerful and divergent sub-groups. The people within these sub-groups prove to be loyal towards the objective of the organisation and the leaders. This is mainly because of the fact people in the organisation have diverse thoughts and beliefs. Such diversity in organisations exists due to the existence of different cultural people in the organisations. Employees are of diverse backgrounds that possess different values and beliefs. These beliefs are mainly based on the cultural background of the countries (Schregle, 1981). Apart from this opposing leadership and attachments exist in organisations. The leadership styles of people are different from one another and as a result, there exists the difference of loyalty in the organisations. This also leads to a conflict of interest among the employees. Hence, managers, as well as employees, need to play multiple roles in order to achieve organisational success. Unlike unitarist approach, pluralists believe that conflict can be helpful for organisations if it is dealt with the industry. Conflict and stability of the employee relation can be maintained providing concession and negotiations between employee and employers. Processes can be used in order to come to a conclusion about the conflict in the organisation by collective bargaining. In this regard, the situation faced in China can be attributed to the pluralist approach. This is mainly because the managers need to mediate among the conflicting interests of the employees.

In the case of Honda, the approach of some of the employees of China was mainly based on the pluralistic approach. This is because of the fact that the some of the Chinese employees felt that they are being paid less than the Japanese counterparts. The workload done by both employees varies as well. Reports state that the Chinese employees are made to work more in the automobile company than the Japanese employees (Whitfield, Delbridge & Brown, 1999). Hence, the organisations had practised pluralist approach. However, the negativity of the approach is the fact that the conflict of interest among the employees and employers did not contribute to the success of the organisation. Instead, most of the organisations were under lockdown due to the existence of labour issues. As stated by Khoreva et al., (2017) the managers of the company had created opposing leadership in the organisation. The fact that the Japanese employees were differentiated with the Chinese employees provided the source of opposing leadership. This also led to the loss of commitment and loyalty towards the organisation. Due to the existence of such pluralistic approach, the organisation had to suffer. The fact that Honda is an internationally famous company, the diversity among the employees results in varying interests among the employees. This is also indicative of the fact that the reason for the conflict of interest is due to the existence of such diverse employees. Despite trying to divide the organisation into various departments and ensuring that conflicts exist, a pluralistic approach has certain advantages.

Disadvantages of Unitarist Approach

Benefit of the issue

One such advantage includes the effectiveness of the intervention of Industrial Relations. According to Armstrong & Taylor (2014), pluralists believe that intervention techniques related to Industrial Relations can help in resolving conflicts. Managers can use a consultative approach that can help in negotiating conflicts in the organisation. The consultation needs to be done between the employees as well as the employers in order to understand any prospects of conflict. Apart from this, the alternate decision-making process can also be used in the case of resolving conflicts. Unlike the unitarist approach, pluralists do not overlook conflict. Instead, it is managed by the stakeholders in an effective manner. It can be used to understand the demands of employees as well as the employers and come to a mutual conclusion about the policies that need to be followed. In this regard, such conflict management technique can be used by Honda in order to manage the conflict within the organisation. The use of the groups that are involved in conflicting among one another can be used in order to help Honda deliver proper services in the market of China (Purce, 2014). However, this was not to be as the managers had not paid heed to the initial demands of the employees. After the lockdown of a couple of manufacturing firms, the managers agreed to raise the wages of the employees. In this regard, it can be said that the conflict started by the employees of Honda instigated more regional conflicts in China.

Risk of the issue

In this regard, certain disadvantages of pluralist approach can also be considered. One such disadvantage is the fact that the pluralist theory follows the process and rules that help in the success of an organisation. It disregards other processes that also contribute to the success of an organisation. These processes include a survey of the people, recognising talents of the employees and rewarding each employee for their performances. With the application of pluralists theories, laws can be formulated that help in the effective analysis conflict. These laws include ignoring the presence of a negotiator. Greenwood & Van Buren (2017) pointed out that such an approach helps in an open conversation between employees and employers. However, these rules cannot be applicable in organisations that undergo frequent changes in the policies that abide by the legal rules. In this regard, it can be said that the problem related to Honda Company in China, may not have been solved with the application of pluralist theory. This is mainly because of the rate at which the Chinese laws keep on changing in relation to industries. Poole (2013) stated that with the rise of conflict of interest among payment of wages, the Government of China increased the wage rate of the employees. Another disadvantage of a pluralist theory is the fact that it fails to undertake the interest of the state in the commercial sector. The fact that any conflict can be resolved without involving the state is a misconception among pluralists (Whitfield, Delbridge & Brown, 1999). Thus, the intervention of the Government of China proved that organisations do not have a pluralistic view of managing conflicts.

Pluralist Approach in Managing Employee Relations in Honda China

Possible benefits for the application of the value

Based on the analysis of the sustainable values it can be said that Honda Company in China needs to embrace the unitarist approach. This is mainly because of the fact that the unitarist approach helps in uniting an organisation. The fact that the Chinese Government plays an important role in the commercial sector of the country proves that the use of pluralistic approach cannot help in improving the condition of the Honda Companies. Despite its disadvantages, the application of unitarist approach is important in order to ensure that the conflict in the Honda Companies does not get repeated. The unity brought about in the organisations is such that, the labours can approach the managers regarding any issues that arise in the organisations. As stated by Siebert et al., (2015) the production prowess of Honda in China helped in the exceptional growth of revenue of the company. The application of a united effort of the employees and managers can help in the effective growth of revenue in the organisation. However, it can be said that the united effort in the organisation may cease the rise of conflict. This can also be harmful to the employees as lack of conflict of interest may lead to the absence of opinion among the people about improvement in organisations (Fiebich & Coltheart, 2015). Hence, it can be said that the unitarist approach is one of the best policies that can be applied in order to maintain the productivity of Honda as well as reduce chances of any further serious conflicts in the organisation.

Conclusion

Thus, it can be concluded that the application of unitarist and pluralist approach can help in managing organisations in different manners. The different approach and perspective regarding managing organisations result in the adoption of these approaches based on the type of organisation. In the case of Honda, the conflict management technique of the company resulted in the rise of serious issues in the management of the company. Hence, the application of unitarist approach can help Honda to avoid such events that occurred in the year 2010.  

References

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Black, B (2005). Comparative industrial relations theory: the role of national culture, The International Journal of Human Resource Management, 16:7, 1137-1158

Blanpain, R. (2010) Comparativism in labour law and industrial relations. In R. Blanpain (ed), Comparative Labour Law and Industrial Relations in Industrialised Market Economies, Kluwer Law International, The Netherlands, 10th Edition, pp. 3-24.

Benefits of Pluralist Approach

Boxall, P. (2008) Trade Union Strategy. Chapter 11 in P. Blyton et al. (eds), The SAGE Handbook of Industrial Relations.Los Angeles & London: Sage.

Bray, M., Waring, P. & Cooper, R. (2014) ‘Studying Employment Relations: Values’ in Employment Relations: Theory and Practice, Sydney: McGraw-Hill, Chapter 3. 

Fiebich, A., & Coltheart, M. (2015). Various ways to understand other minds: Towards a pluralistic approach to the explanation of social understanding. Mind & Language, 30(3), 235-258.

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Greenwood, M., & Van Buren, H. J. (2017). Ideology in HRM scholarship: Interrogating the ideological performativity of ‘New Unitarism’. Journal of Business Ethics, 142(4), 663-678.

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