CONVERGENCE OF CULTURES

Culture can be defined as "acquired knowledge the people use to interpret

experience and generate social behaviour. In turn this knowledge is used to form
beliefs and values, create attitudes and influence behaviour." In fact, people learn a
lot from the environment, viz., social environment, technological environment,
economic environment, political environment, international environment and
natural environment. Thus, culture is:

 Learnt from the environment and interaction at workplace and social spheres.

 Shared and exchanged between two people or among several people.

 Trans-generational, in the sense that it is transferred from one generation to

other generation.

 Adaptive as individuals adapt the cultures of other persons or societies.

 Descriptive as it defines boundaries between groups.

Convergence of cultures happen when different cultures become similar or even

come together. This mostly happens with countries that are in constant interaction
with one another. Convergence of culture can have an extremely positive impact on
world as it brings countries more closely than ever. But it can also cause washing
away of unique characteristics of different cultures.

CULTURE CHANGE
Society strives its continuity and existence according to the environmental
conditions of its surrounding. People have been descending down from generation
to generation with the addition of new ideas and objects. This dynamic process of
society enhances culture with refreshment and for every generation a new culture
than for the previous.

Culture change is the change that occurs over time to the shared way of life of a
group. This emerges with the experiences of a society, traditional culture,
organization, super culture, or subculture. Sociologists use cultural change to
denote the manner and extent of change in society. As the society experiences
cultural change, new behavioural patterns, social traits, norms, and values emerge
 and create new social structures. Innovation, invention, and contact with other
societies can trigger cultural change.

SOURCES OF CULTURAL CHANGE

 Discovery.
Discovery is a new perception of an aspect of reality that already exists. In other
words, it is the noticing of something to which no attention was previously paid,
although it existed.

 Invention.
Invention is the combination or new use of existing knowledge to produce
something that did not exist before.

 Diffusion.
Diffusion is the spreading of cultural traits from group to another group. Elements
of culture are taken up first, by societies, which are close to their points of origin
and later by the societies which are more remote or which have less direct contract.

 Acculturation.
This process connotes the transmission of traits from one culture to another over a
sufficient time and sufficient traits as to regulate signs of similarity between the two
cultures. In this process, two or more cultures come into contact. The intermixture
of shared and learned behaviour patterns is called acculturation.

 Assimilation.
It is the process of combination of two cultures in to one culture with comprising
cultural traits. In this process, one larger and more powerful culture may engulf
small culture. Usually it happens to a minority in a culture. Hence assimilation is the
fusion or blending of two previously distinct groups into one.

DETERMINANTS OF CULTURE
Knowledge: People gain knowledge from the influence of environmental factors as
well as interaction with the environment. In addition, people gain knowledge from
the readings of various books, journals, magazines and news papers and interaction
with the people at work as well as social spheres.

Beliefs: Belief is a cognitive representation of one's relevant environment may be

right or wrong, good or bad and cause and effect relationships.
Value: Value is an "enduring belief that a specific mode of conduct or end state of
existence is personally or socially preferable to an opposite or converse model of
conduct or end-state of existence.” Some studies have categorized values in the
following hierarchy:

Level - 1: Reactive: These people react only to basic physiological needs. Therefore,
they are not really aware of themselves or others as human beings.

Level - 2:Tribalistic: These people are strongly influenced by tradition and are
dependent upon others.

Level - 3: Egocentrism: These people are aggressive, selfish and power- responsive.

Level - 4: Conformity: These people can't tolerate ambiguity and are uncomfortable
with people possessing values that are different those of them.

Level - 5: Manipulative: These people prefer materialistic gains, seek status and
manipulate others.

Level - 6: Socio-metric: These people prefer to go along with others rather than
differently from others.

Level - 7: Existential: These people tolerate ambiguity and also people with
different values than those they possess to a greater extent. They prefer flexible
policies. They don't emphasise on status symbols and use of power.

Attitude: Attitude is defined as, "a learned predisposition to respond in a

consistently favourable or unfavourable manner with respect to a given object."
Attitudes are evaluative statements – either favourable or unfavourable –
concerning objects, people or events. They reflect how one feels about something.
Thus, components of attitudes include:

 Cognitive: Cognitive component of an attitude is the opinion or belief segment.

 Affective: Affective component of an attitude is the emotional or feeling

segment.

 Behavioural: Behavioural component of an attitude is an intention to behave

in a certain way towards someone or something.
Behaviour: Knowledge provides inputs to beliefs, values and attitude. In turn, belief
influences values and values influence attitudes. These three factors together form
culture and which turn result in behaviour.

People differ in values, belief and attitudes. Therefore, they also differ in culture
which in turn results in cultural diversity of people at the work place as well as in
social spheres.

IMPORTANCE OF CULTURAL SENSITIVITY AND ITS EFFECT ON

MANAGEMENT APPROACHES.
International human resource managers have to take care to avoid
misunderstandings by understanding cultural differences as one has to be sensitive
to the culture of the host country. In fact, all cultures are good as they are evolved
over a period of time based on the then local conditions. However, culture can be
changed when such conditions tend to change or disappear.

Cultural sensitivity is to have the empathy to accept cultural differences without

allowing one’s own values to surface in unproductive or confrontational ways.
Therefore, individuals have to understand cultural differences and follow them
rather than openly judgemental of the culture of the land.

It is important because it allows the individual to effectively function in other

cultures, allows him to respect and value other cultures, and can reduce cultural
barriers between professionals and their clients, supervisor, colleagues etc which in
turn improve productivity and let employees engage fully in the workplace
environment.

The effect of cultural sensitivity on management approaches are:

 It has helped in creating more diverse management team

 Better understanding on product placement in different cultures

 Having empathic relationship when meeting people with different culture then
there's
 HOFSTEDE’S CULTURAL DIMENSIONS
Hofstede’s Cultural Dimensions Theory (1980), developed by Dutch management
researcher Geert Hofstede, is a framework used to understand the differences in
culture across countries and to discern the ways that business is done across
different cultures. In other words, the framework is used to distinguish between
different national cultures, the dimensions of culture, and assess their impact on a
business setting.

Hofstede identified six categories that define culture:

 Power Distance Index

 Collectivism vs. Individualism

 Uncertainty Avoidance Index

 Femininity vs. Masculinity

 Short-Term vs. Long-Term Orientation

 Restraint vs. Indulgence

 Power Distance Index

The power distance index considers the extent to which inequality and power are
tolerated. In this dimension, inequality and power are viewed from the viewpoint of
the followers – the lower level.

High power distance index indicates that a culture accepts inequity and power
differences, encourages bureaucracy, and shows high respect for rank and
authority.

Low power distance index indicates that a culture encourages organizational

structures that are flat and feature decentralized decision-making responsibility,
participative style of management, and place emphasis on power distribution.

 Individualism vs. Collectivism

 The individualism vs. collectivism dimension considers the degree to which societies
are integrated into groups and their perceived obligations and dependence on
groups.

Individualism indicates that there is a greater importance placed on attaining

personal goals. A person’s self-image in this category is defined as “I.”

Collectivism indicates that there is a greater importance placed on the goals and
well-being of the group. A person’s self-image in this category is defined as “We.”

 Uncertainty Avoidance Index

The uncertainty avoidance index considers the extent to which uncertainty and
ambiguity are tolerated. This dimension considers how unknown situations and
unexpected events are dealt with.

A high uncertainty avoidance index indicates a low tolerance for uncertainty,

ambiguity, and risk-taking. The unknown is minimized through strict rules,
regulations, etc.

A low uncertainty avoidance index indicates a high tolerance for uncertainty,

ambiguity, and risk-taking. The unknown is more openly accepted, and there are lax
rules, regulations, etc.

 Masculinity vs. Femininity

The masculinity vs. femininity dimension is also referred to as “tough vs. tender,”
and considers the preference of society for achievement, attitude towards sexuality
equality, behaviour, etc.

Masculinity comes with the following characteristics: distinct gender roles,

assertive, and concentrated on material achievements and wealth-building.

Femininity comes with the following characteristics: fluid gender roles, modest,
nurturing, and concerned with the quality of life.

 Long-Term Orientation vs. Short-Term Orientation

The long-term orientation vs. short-term orientation dimension considers the
extent to which society views its time horizon.
 Long-term orientation shows focus on the future and involves delaying short-term
success or gratification in order to achieve long-term success. Long-term orientation
emphasizes persistence, perseverance, and long-term growth.

Short-term orientation shows focus on the near future, involves delivering short-
term success or gratification, and places a stronger emphasis on the present than
the future. Short-term orientation emphasizes quick results and respect for
tradition.

 Indulgence vs. Restraint

The indulgence vs. restraint dimension considers the extent and tendency for a
society to fulfil its desires. In other words, this dimension revolves around how
societies can control their impulses and desires.

Indulgence indicates that a society allows relatively free gratification related to

enjoying life and having fun.

Restraint indicates that a society suppresses gratification of needs and regulates it

through social norms.

BRIDGING CULTURAL GAP

More and more businesses across the globe, irrespective of their size, are warming
up to the idea of working with global teams and using the offshore development
model to cut costs, improve performance, and increase profits. However, while in
theory, this globalisation helps organisations scale up their business, the cultural
and societal differences, and the ethical implications of offshoring can throw a
major spanner in the works.

A culture gap is any systematic difference between two cultures which hinders
mutual understanding or relations. Such differences include the values, behaviour,
education, and customs of the respective cultures. This can distress in the
workplace if not bridged carefully

The cultural gap can be effectively build by few simple steps like

 Acknowledging and appreciating the cultural differences

 Over-communicate until everyone is comfortable

  Conduct alignment meetings to standardise everything

 Apply processes and training across the company

CULTURE EXCELLENCE APPROACH

Culture of excellence approach can be defined as doing the right thing even when
no one is watching. Provide high quality service with everyone who engages with
the business, regardless of their position in the hierarchy. Also share your vision,
mission and values with employees at all levels in order to align their drivers and
speak a common language of excellence.

Culture of excellence approach requires a willingness to invent future by involving

everyone, not just part of the organization. Culture of excellence approach supports
teams to function together as business champions of change & excellence. The
culture of excellence approach is people oriented. It is focusing on employees and
is highlighting the importance of empowering and actively engaging all the
people from an organization in order to face the challenges induced by changes.

Key Characteristics of a Culture of Excellence approach are:

 A Compelling Organizational Vision that is well Communicated and Understood

It’s not enough to simply have a stated organizational vision. To achieve a Culture of
Excellence, every employee must understand not only the company’s vision, but
also know their own roles, responsibilities and the specific actions they need to take
in order to help achieve this vision.

 Clear Purpose and Meaning

In a Culture of Excellence, employees feel that what they are working on is
meaningful, significant, and purpose-based. Everyone concerned is highly inspired
by the common purpose, which becomes the driving force behind everything that
they do.

 Mastery of Roles and Focus on High Performers

Companies with a Culture of Excellence set an expectation of high performance
organization-wide. Every employee is supported and encouraged to become a
master in their role and area of expertise. High performers are nurtured, rewarded,
mentored and recognized, and average performers are coached to move into the
 high performance category. In these cultures, there is no place for low performers,
and they either move up or leave the organization.

 Resilience to Change and Challenges

In a Culture of Excellence approach, employees develop the flexibility and resilience
to deal with change, challenge and uncertainty. Even when there are obstacles and
challenges that may seem impossible to overcome,

 Highly Collaborative Teams

Culture of Excellence approach is highly collaborative teams—both internal and
external. Because every employee and all teams are working together toward a
common organizational vision, they feel they are on the same side. And because
this collaboration is encouraged and rewarded from the top down, there is no more
reason to protect individual roles, projects or expertise.

 Pioneer Mentality
In Culture of Excellence approach, company do not settle for mediocre. Instead,
they are focused on creating something that has never been created before,
breaking records and achieving unprecedented results. From the outside, it may
seem as if they are achieving the impossible.

MANAGING DIVERSITY
Diversity refers to the variety of differences between individuals in an organization.
Diversity not only includes how individuals identify themselves but also how others
perceive them. Diversity within a workplace encompasses race, gender, ethnic
groups, age, religion, sexual orientation, citizenship status, military service and
mental and physical conditions, as well as other distinct differences between
people.

BENEFITS TO HAVING DIVERSITY IN THE WORKPLACE:

 Employees from diverse backgrounds imbue organizations with creative new

ideas and perspectives informed by their cultural experiences

 A diverse workplace will help organizations better understand target

demographics and what moves them

 A diverse workplace can better align an organization’s culture with the

demographic make-up of the country
  Increased customer satisfaction by improving how employees interact with a
more diverse clientele and public

Tips for managing workplace diversity are:

 PRIORITIZE COMMUNICATION
To manage a diverse workplace, organizations need to ensure that they effectively
communicate with employees. Policies, procedures, safety rules and other
important information should be designed to overcome language and cultural
barriers by translating materials and using pictures and symbols whenever
applicable.

 TREAT EACH EMPLOYEE AS AN INDIVIDUAL

Avoid making assumptions about employees from different backgrounds. Instead,
look at each employee as an individual and judge successes and failures on the
individual’s merit rather than attributing actions to their background.

 ENCOURAGE EMPLOYEES TO WORK IN DIVERSE GROUPS

Diverse work teams let employees get to know and value one another on an
individual basis and can help break down preconceived notions and cultural
misunderstandings.

 BASE STANDARDS ON OBJECTIVE CRITERIA

Set one standard of rules for all groups of employees regardless of background.
Ensure that all employment actions, including discipline, follow this standardized
criteria to make sure each employee is treated the same.

 BE OPEN-MINDED
Recognize, and encourage employees to recognize, that one’s own experience,
background, and culture are not the only with value to the organization. Look for
ways to incorporate a diverse range of perspectives and talents into efforts to
achieve organizational goals.

 HIRING
To build a diverse workplace, it is crucial to recruit and hire talent from a variety of
backgrounds. This requires leadership and others who make hiring decisions to
overcome bias in interviewing and assessing talent. If organizations can break
through bias and hire the most qualified people, those with the right education,
credentials, experience and skill sets, a diverse workplace should be the natural
result. Tips for hiring a diverse workforce:
  Incorporate a diverse interview panel to ensure candidates are chosen solely
based on suitability for the position.

 Managers should be trained on what can and cannot be asked in an interview.

For example, questions about an applicant’s personal life, such as which
church they attend, their romantic life and political beliefs, are off-limits.

 Get creative when recruiting. For example, if an organization would like to hire
more women in the engineering department, they could reach out to
professional groups that cater to women in engineering and ask to advertise
open positions in their newsletter or member communications.

INDUSTRIAL RELATIONS
Industrial relations may be defined as the relations and interactions in the industry
particularly between the labour and management as a result of their composite
attitudes and approaches in regard to the management of the affairs of the
industry, for the betterment of not only the management and the workers but also
of the industry and the economy as a whole. The scope of industrial relations
includes:

 Relationship among employees, between employees and their superiors or

managers.

 Collective relations between trade unions and management. It is called union-

management relations.

 Collective relations among trade unions, employers’ associations and

government.

The objectives of industrial relations are:

 To safeguard the interest of labour and management by securing high level of

mutual understanding and goodwill between all sections in the industry
which are associated with the process of production.

 To raise productivity to a higher level by arresting the tendency of higher

labour turnover and frequent absenteeism.
  To avoid industrial conflicts and develop harmonious relations between labour
and management for the industrial progress in a country.

 To establish and maintain Industrial Democracy, based on labour partnership,

not only by sharing the gains of the organisation, but also by associating the
labour in the process of decision making so that individual personality is fully
recognized and developed into a civilized citizen of the country.

 To bridge about government control over such units which are running at
losses or where production has to be regulated in the public interest.

 To bring down strikes, lockouts, gheraos and other pressure tactics by

providing better wages and improved working conditions and fringe benefits
to the workers.

 To bring the gap, by the state, between the imbalanced, disordered and
maladjusted social order (which has been the result of industrial
development) and the need for reshaping the complex social relationships
adaptable to the technological advances by controlling and disciplining its
members, and adjusting their conflicting interests.

Industrial relations include four types of relations:

 Labour relations i.e., relations between union- management (also known as

labour management relations);

 Group relations i.e., relations between various groups of workmen i.e.,

workmen, supervisors, technical persons, etc.

 Employer-employee relations i.e., relations between the management and

employees. It denotes all management employer relations except the union-
management relations;

 Community or Public relations i.e., relations between the industry and the
society.

Actors in the IR system:

Three main parties are directly involved in industrial relations:

 Employers: Employers possess certain rights vis-à-vis labors. They have the right to
hire and fire them. Management can also affect workers’ interests by exercising
their right to relocate, close or merge the factory or to introduce technological
changes.

 Employees: Workers seek to improve the terms and conditions of their

employment. They exchange views with management and voice their grievances.
They also want to share decision making powers of management. Workers generally
unite to form unions against the management and get support from these unions.

 Government: The central and state government influences and regulates industrial
relations through laws, rules, agreements, awards of court ad the like. It also
includes third parties and labour and tribunal courts.

The main aspects of industrial relations are:

 Promotion and development of healthy labour management relations;

 Maintenance of industrial peace and avoidance of industrial strife; and

 Development of industrial democracy.

The scope or industrial relation is quite vast. The main issues involved here include
the following:

 Collective bargaining

 Machinery for settlement of industrial disputes

 Standing orders

 Workers participation in management

 Unfair labour practices

Importance of Industrial Relations

Uninterrupted production – The most important benefit of industrial relations is
that this ensures continuity of production. This means, continuous employment for
all from manager to workers. The resources are fully utilized, resulting in the
maximum possible production. There is uninterrupted flow of income for all.
Smooth running of an industry is of vital importance for several other industries; to
other industries if the products are intermediaries or inputs; to exporters if these
are export goods; to consumers and workers, if these are goods of mass
consumption.

Reduction in Industrial Disputes – Good industrial relations reduce the industrial

disputes. Disputes are reflections of the failure of basic human urges or motivations
to secure adequate satisfaction or expression which are fully cured by good
industrial relations. Strikes, lockouts, go-slow tactics, gherao and grievances are
some of the reflections of industrial unrest which do not spring up in an atmosphere
of industrial peace. It helps promoting co-operation and increasing production.

High morale – Good industrial relations improve the morale of the employees.
Employees work with great zeal with the feeling in mind that the interest of
employer and employees is one and the same, i.e. to increase production. Every
worker feels that he is a co-owner of the gains of industry. The employer in his turn
must realize that the gains of industry are not for him along but they should be
shared equally and generously with his workers. In other words, complete unity of
thought and action is the main achievement of industrial peace. It increases the
place of workers in the society and their ego is satisfied. It naturally affects
production because mighty co-operative efforts alone can produce great results.

Mental Revolution – The main object of industrial relation is a complete mental

revolution of workers and employees. The industrial peace lies ultimately in a
transformed outlook on the part of both. It is the business of leadership in the ranks
of workers, employees and Government to work out a new relationship in
consonance with a spirit of true democracy. Both should think themselves as
partners of the industry and the role of workers in such a partnership should be
recognized. On the other hand, workers must recognize employer’s authority. It will
naturally have impact on production because they recognize the interest of each
other.

Reduced Wastage – Good industrial relations are maintained on the basis of

cooperation and recognition of each other. It will help increase production.
Wastages of man, material and machines are reduced to the minimum and thus
national interest is protected.
COLLECTIVE BARGAINING
When employees of an organization vote to unionize, the process for collective
bargaining begins. Collective bargaining is the process of negotiations between the
company and representatives of the union. The goal is for management and the
union to reach a contract agreement, which is put into place for a specified period
of time. Collective Bargaining Involves:

 Negotiations

 Drafting

 Administration

 Interpretation of documents written by employers, employees and the union

representatives

 Organizational Trade Unions with open mind.

Objectives of Collective Bargaining

 To foster a pleasant and cordial relationship between employer and

employees.

 To equally safeguard the interests of both employer and employees.

 To ensure that the government intervention is maintained at a minimum level.

 To encourage the maintenance of a democratic environment at the workplace.

Forms of Collective Bargaining:

The working of collective bargaining assumes various forms. In the first place,
bargaining may be between the single employer and the single union, this is known
as single plant bargaining.

Secondly, the bargaining may be between a single firm having several plants and
workers employed in all those plants. This form is called multiple plants bargaining
where workers bargain with the common employer through different unions.
 Thirdly, instead of a separate union bargaining with separate employer, all the
unions belonging to the same industry bargain through their federation with the
employer’s federation of that industry. This is known as multiple employer
bargaining which is possible both at the local and regional levels.

Types of Collective Bargaining

It can be classified into five major types –

 Distributive Bargaining: In this type of negotiation process, one party benefits at

the expense of others. It discusses redistribution of profit sharing to increase wages,
bonuses, or financial benefits.

 Integrative Bargaining: In this type of bargaining, the agreement is reached so that

both the participating sides tend to benefit – a win-win situation. In other words,
both parties consider each other’s needs and concerns.

 Productivity Bargaining: In this type of bargaining, the negotiations revolve around

productivity and pay. The two parties agree to certain changes that promise to
boost productivity in exchange for higher wages.

 Composite Bargaining: This type of negotiation emphasizes various factors not

directly related to pay but rather focused on employee welfare and job security. It
ensures the long-term relationship between employer and employee that is
mutually beneficial.

 Concessionary Bargaining: In this type of bargaining, the union sacrifices some

benefits to bail out the employer during the stressed economic situation, which
benefits the employees in the long run.

Essential Pre-Requisites for Collective Bargaining:

 Existence of a strong representative trade union in the industry that believes in

constitutional means for settling the disputes.

 Existence of a fact-finding approach and willingness to use new methods and

tools for the solution of industrial problems. The negotiation should be based
on facts and figures and both the parties should adopt constructive approach.

 Existence of strong and enlightened management which can integrate the

different parties, i.e., employees, owners, consumers and society or
Government.
  Agreement on basic objectives of the organisation between the employer and
the employees and on mutual rights and liabilities should be there.

 In order that collective bargaining functions properly, unfair labour practices

must be avoided by both the parties.

 Proper records for the problem should be maintained.

 Collective bargaining should be best conducted at plant level. It means if there

are more than one plant of the firm, the local management should be
delegated proper authority to negotiate with the local trade union.

 There must be change in the attitude of employers and employees. They

should realise that differences can be resolved peacefully on negotiating table
without the assistance of third party.

 No party should take rigid attitude. They should enter into negotiation with a
view to reaching an agreement.

 When agreement is reached after negotiations, it must be in writing

incorporating all term of the contract.

Main Features of Collective Bargaining:

 It is a Group Action:
Collective bargaining is a group action as opposed to individual action. Both the
parties of settlement are represented by their groups.

 It is a Continuous Process:
Collective bargaining is a continuous process and does not end with one agreement.
It provides a mechanism for continuing and organised relationship between
management and trade union.

 It is a Bipartite Process:
Collective bargaining is a two party process. Both the parties—employers and
employees— collectively take some action. There is no intervention of any third
party.
 It is a Process:
Collective bargaining is a process in the sense that it consists of a number of steps.

 It is Flexible and Mobile and not Fixed or Static:

It has fluidity. There is no hard and fast rule for reaching an agreement. There is
ample scope for compromise.

 It is Industrial Democracy at Work:

Collective bargaining is based on the principle of industrial democracy where the
labour union represents the workers in negotiations with the employer or
employers.

 It is Dynamic:
It is relatively a new concept, and is growing, expanding and changing.

 It is a Complementary and not a Competitive Process:

Collective bargaining is not a competitive process i.e., labour and management do
not co-opt while negotiating for the same object. It is essentially a complementary
process i.e., each party needs something which the other party has, namely, labour
can put greater productive effort and management has the capacity to pay for that
effort and to organise and guide it for achieving the enterprise’s objectives.

 It is an Art:
Collective bargaining is an art, an advanced form of human relations.

Means of Collective Bargaining:

 Negotiation: In this process, two conflicting parties or their representatives discuss

among themselves, without the involvement of a third party, to settle themselves.
However, most involved parties hire seasoned lawyers themselves to settle such
matters.

 Mediation: In this process, a neutral third party acts as the mediator between the
conflicting parties to settle. The mediator aids communication between the two
parties and ensures that it occurs fairly, honestly, and impartial. They help identify
and clarify the underlying issues of the dispute.

 Arbitration: In this process, the third party, known as the arbitrator, decides on the
settlement. The arbitrator listens to the arguments of the conflicting parties and
then makes an informed decision, similar to what a Judge does in the court.
 Constituents of Collective Bargaining:

There are three distinct steps in the process of collective bargaining:

 The Creation of the Trade Agreement:

In negotiating the contract, a union and management present their demands to
each other, compromise their differences, and agree on the conditions under which
the workers are to be employed for the duration of the contract.

 The Interpretation of the Agreement:

The administrative process is the day-to-day application of the provisions of the
contract to the work situation. At the time of writing the contract, it is impossible to
foresee all the special problems which will arise in applying its provisions.

 Enforcement of the Agreement:

Proper and timely enforcement of the contract is very essential for the success of
collective bargaining. If a contract is enforced in such way that it reduces or nullifies
the benefits expected by the parties, it will defeat basic purpose of collective
bargaining. It may give rise to fresh industrial disputes.

Theories of Collective Bargaining:

 The Marketing Concept and the Agreement as a Contract:

The marketing concept views collective bargaining as a contract for the sale of
labour. It is a market or exchange relationship and is justified on the ground that it
gives assurance of voice on the part of the organised workers in the matter of sale.

 The Governmental Concept and the Agreement as Law:

The Governmental Concept views collective bargaining as a constitutional system in
industry. It is a political relationship. The union shares sovereignty with
management over the workers and, as their representative, uses that power in their
interests.

 The Industrial Relations (Managerial) Concept as Jointly Decided Directives:

The industrial relations concept views collective bargaining as a system of industrial
governance. It is a functional relationship. Group Government substitutes the State
Government. The union representative gets a hand in the managerial role.
Discussions take place in good faith and agreements are arrived at. The union joins
with company officials in reaching decisions on matters in which both have vital
 interests. Thus, union representatives and the management meet each other to
arrive at a mutual agreement which they cannot do alone.

Importance of Collective Bargaining

 Management: The primary objective of the management is to make maximum

utilization of the workforce and earn higher profits. It can only be achieved if the
workforce co-operates, where collective bargaining comes into play.

 Trade Union: Each labour at the individual level has poor bargaining power against
the management. Hence, the working class united to form a powerful union and
protect their interests through collective bargaining.

 Government: Typically, collective bargaining keeps the Government at bay, and

they are not required to employ force to resolve disputes.

Advantages

 Both parties get to understand what to expect from each other.

 Employees are safeguarded from exploitation by employers.

 The management has to deal with a small number of people (trade union
leaders).

Disadvantages

 Only a few people decide on the settlement.

 It is costly, both in terms of money and time, as representatives have to discuss

the same thing multiple times.