Corporate Strategy and the Management of Employee Relations in the Multi‐divisional Company
| DOI | http://doi.org/10.1111/j.1467-8543.1989.tb00347.x |
| Published date | 01 November 1989 |
| Date | 01 November 1989 |
| Author | John Purcell,Bruce Ahlstrand |
British Joitrnal
of
Industrial Relations
27:3
November
1989 0007-1080
$3.00
Corporate Strategy and the
Management
of
Employee Relations
in the Multi-divisional Company
John Purcell* and Bruce Ahlstrand**
This paper explores the relationship between corporate strategies and the
management of employee relations in the multi-divisional company. Both
the influence of employee relations strategies on corporate strategies and
the influence of corporate strategies on employee relations strategies are
considered. Special emphasis is placed on diversification strategies. The
paper argues that such strategies tend to lead to specific patterns of
employee relations practice. An idealised three-level strategy model
is
developed in order to explore these strategy linkages.
1.
INTRODUCTION
In recent years considerable emphasis has been placed on the three levels of
organisational analysis in industrial relations: the strategic, the narrower
policy level, and the work-place level (Kochan, Katz and McKersie
1986).
At
the strategic
level
the debate has, for the most part, been restricted to the
corporate response to shifts in product market conditions (Kochan and
Chalykoff
1987),
the effect of human resource management, and the
development of specific strategies towards the management of industrial
relations such as, in the
USA,
avoiding unionisation. In Britain the focus has
tended
to
be on strategic choices in the structure and location
of
collective
bargaining and innovative methods
of
segmenting the labour force and
gaining employee compliance
to
management initiatives. The purpose
of
this paper is to provide an extra dimension to the study of the management
of
employee relations by concentrating on the development of corporate
strategies in large multi-divisional companies and to trace the effect of these
strategies on employee relations management. The paper examines the
relationship between corporate strategy and employee relations strategy (in
both directions) using a variety
of
data sources but primarily through
*University Lecturer in Management Studies (Industrial Relations), Oxford University,
and
Senior Tutor
of
Templeton College.
**Assistant Professor
in
Organisational Behaviour, Trent University, Peterborough, Canada.
Corporate Strategy
397
reference to our case-study analysis from nine multi-divisional companies in
the period 1983-7’ (Ahlstrand and Purcell 1988; Purcell and Ahlstrand
1988) and the results
of
the 1985 Workplace Industrial Relations Company
Level Survey’ (Marginson
et
al.
1988a). These data sources are re-
interpreted
in
order to address our own research question.
The paper begins with a general discussion of corporate strategy as it
relates to the multi-divisional firm by suggesting that strategy is best seen as a
flow of important decisions, from overall strategy
or
mission to questions
of
structure and internal control mechanisms and then to functional strategies
including employee relations. We then proceed to work out the linkages
between corporate and employee relations strategies within the context of
the diversified firm. This is done first by assessing the evidence on the extent
to which corporate strategy is influenced by employee relations questions
and on whether personnel and industrial relations matters are taken into
account in corporate strategy formulation. The position is reversed in
Section
4,
where we seek to trace the extent
to
which corporate strategies
influence the management of employee relations and the way such influence
is exerted.
2.
CORPORATE STRATEGIES
‘Corporate strategy’
is
a well used yet imprecise term, particularly in its
reference with respect to multi-divisional companies. Hill and Pickering
(1986) and Hill and Hoskisson (1987) have shown that there is a wide variety
of
structures within the generic form of the multi-divisional company. These
are, in part, related
to
the type
of
economies the firm is seeking to maximise
and the extent to which corporate management consciously seeks
to
structure the firm to maximise these economies. This implies that it
is
an
oversimplification
to
suggest that strategy
is
restricted to decisions about
long-range goals and the mix of activities. Questions on the way the firm
is
structured do not flow automatically and must therefore fall within a broader
categorisation
of
strategic choice.
We prefer to distinguish between first-order corporate strategy (mission,
goals, mix
of
activities) and second-order business strategies (internal
operating procedures, structures
of
divisions, control mechanisms). Deci-
sions in both first- and second-order strategy are significant in that they
‘shape what happens
for
a long while after’ (Hickson
et
al.
1986: 27).
Strategic decisions are usually taken in conditions
of
uncertainty (in that the
effects of the decision are unlikely to be known
for
a reasonable period);
they are likely to have major resource implications, and they tend to involve
more than one functional area
of
management (Johnson 1987). This
‘significance’ definition suggests that the term ‘strategy’ can be applied
generally to long-range goals (first-order), to questions
of
structure and
internal control (second-order), and to functional decisions in production,
marketing, employee relations, etc. (third-order).
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