Restructuring the employment relationship in Surrey County Council

Date01 August 1998
Published date01 August 1998
AuthorIan Kessler,Jackie Coyle Shapiro
Subject MatterHR & organizational behaviour
the employment
Employee Relations,
Vol. 20 No. 4, 1998, pp. 365-382.
#MCB University Press,
Restructuring the
employment relationship in
Surrey County Council
Ian Kessler
Templeton College, Said Business School,
University of Oxford, Oxford, UK, and
Jackie Coyle Shapiro
Industrial Relations Department,
London School of Economics, London, UK
The employee is an unusually central actor in the provision of local
authority services. Labour costs, on average, constitute some 70 per cent of
total costs and many of the key activities take the form of the delivery of
personal services directly by staff. It is inevitable, therefore, that any
attempt to grapple with the intensive, cumulative and extensive financial,
social and political pressures faced by the sector over recent years has
explicitly had to confront the structure and nature of the employment
relationship. Yet the very centrality of the employee presents local
authority managers with a dilemma, for while recent pressures have
dictated the need for such a confrontation, any destabilization of the
relationship may well have major consequences for organizational well-
being and performance.
The managerial dangers of any such destabilization, and the
dysfunctional consequences which may follow, are all the more
pronounced given the highly stylized and institutionalized approach
traditionally taken to the procedural and substantive regulation of the
employment relationship in local government. While care must be taken in
generalizing across very different occupational groups and service areas, it
would be fair to suggest that in procedural terms, national, standard terms
and conditions of employment have been established in local government,
predominantly through the process of collective bargaining and using
established criteria such as comparability in the area of pay determination.
In substantive terms, there has been a strong undercurrent of paternalism
with local authorities acting as ``good employers'', providing secure
employment, generous pension arrangements, clear career and promotion
paths and opportunities, stable living standards, well defined job
structures and an adherence to ``progressive'' equal opportunities policies
(Beaumont, 1992).
The assault on this model in the wake of the huge array of pressures for
change already alluded to has certainly challenged and to an extent
undermined some of the old certainties of employment in the local
government sector. Procedurally, national mac hinery h as remai ned
remarkably durable (Bach and Winchester, 1994) but only through
rationalization and the negotia tion of mo re flexi ble agre ements a llowin g
authorities much greater discretion to develop their own employment
packages to meet their own particular circumstanc es and needs.
Substantively, the search for eff icienc y and effe ctiveness in response to
financial restraint and competitive forces has placed do wnward pressur e
on labour costs, leading to a tightening of working practices, job losses and
a slowing down in pay increases which are now given on the basis of
affordability rather than comparability (Walsh, 1995) . This stricter
employment regime, often linked to fixed term servi ce contr acts mig ht in
turn have been expected to le ad to work i ntensi ficati on and increasing job
insecurity (Allen and Hen ry, 1996 ).
These challenges to the tradition al emplo yment re lationship might
equally be presented within a conc eptual f ramework which revolves
around the notion of the psychological contract. Th is notio n has been o f
increasing interest to a cademi cs, prac titioners and po licyma kers as
fundamental organizational changes such as res tructu ring and
downsizing have shaken established assumptions underpinning
employment. The psychol ogical c ontrac t is defin ed by reference to
employee perceptions of the employment relationship. More specifically,
it has recently been defined as an individual's beliefs regar ding the t erms
and conditions of a recipro cal exch ange agreement b etween t hat pers on
and another party; employee perceptions of their ob ligati ons to the ir
employer and emp loyers o bligation to the m (Rouss eau, 198 9). The concept
has attracted attention not least b ecause research has shown that contract
violations can have a negat ive impa ct on employee attitudes and
behaviour. Previous empirical work has demonst rated a re lation ship
between such vio lations and trus t, job and organizational satisfaction,
intentions to remain with the organization and organizational cit izenship
behaviour (Coyle-Shapiro and Ke ssler, 1998a; 19 98b; Mor rison an d
Robinson, 1997; Robinson, 1996; Robinson et al.,1994; Rousseau, 1990).
Just how far developments in the local government sec tor have d amaged
the fabric of the psy cholog ical contract is op en to conj ecture in the absence
of much firm evidence on how st aff have b een trea ted in rec ent year s in
local government. What evidence is available, however, su ggests t hat the
fabric is fraying. A recent s urvey of e mployees from the across economy
(Kessler and Undy,1996a), for example, found that w ell over t wo-thi rds (69
per cent) of local au thorit y employ ees felt t hey were working harder now
than when they started in the organization. This compares wit h an avera ge
figure of just over 6 0 per cent . Indeed, the fragile state o f the employment
relationship is perhaps best ref lected i n the fact t hat the sa me surve y
revealed that only just over one-fifth (21 per cent) of local authority
employees ``trust their organiz ation a lo t to keep it s promises'' to
employees. This compares to an all sa mple average of 26 per cent.

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