Grievance procedures are a means of dispute resolution that can be used to address complaints by employees against management or to settle disputes between a company and its suppliers, customers, or competitors. The best-known application of grievance procedures is as a formal process outlined in labor union contracts. "The term grievance as it appears in the written contract refers to a formal complaint by people who believe that they have been wronged by a management decision," Vida Gulbinas Scarpello, James Ledvinka, and Thomas J. Bergmann wrote in their book Human Resource Management: Environments and Functions. In fact, studies show that 95 percent of collective bargaining agreements include procedures for filing and resolving grievances between labor and management, usually through the process of arbitration.
But grievance procedures do not necessarily have to be so formal and elaborate. In small businesses, the procedures may consist of a few lines in an employee manual or the designation of a single ombudsman to deal with problems as they develop. Peer review of employee concerns is another popular way to address grievances. On the other hand, some larger companies may create an entire department dedicated to fielding complaints from employees or customers.
Whatever form they may take, grievance procedures are intended to allow companies to hear and resolve complaints in a timely and cost effective manner, before they result in litigation. Knowing that formal procedures are available often encourages employees to raise concerns or question company policies before major problems develop. It also tends to makes managers less likely to ignore problems, because they know that upper management may become involved through the grievance process. In union settings, grievance procedures help protect employees against arbitrary decisions of management regarding discipline, discharge, promotions, or benefits. They also provide labor unions and employers with a formal process for enforcing the provisions of their contracts.
Although having grievance procedures in place is important in both unionized and non-unionized settings, companies must support their written policies with consistent actions if they hope to maintain good employee relations. "To make the grievance procedure work, management and the union have to approach it with the attitude that it serves the mutual interests of management, employees, and the union," Scarpello, Ledvinka, and Bergmann wrote. "An effective grievance procedure helps management discover and correct problems in operations before they cause serious trouble. It provides a vehicle through which employees and the union can communicate their concerns to upper management."
For grievance procedures to be effective, both parties should view them as a positive force that facilitates the open discussion of issues. In some cases, the settling of grievances becomes a sort of scorecard that reinforces an "us versus them" mentality between labor and management. In other cases, employees are hesitant to use the grievance process out of fear of recrimination. Some studies have shown that employees who raise grievances tend to have lower performance evaluations, promotion rates, and work attendance afterwards. This suggests that some employers may retaliate against employees who raise complaints. It is vital that a company's grievance procedures include steps to prevent a backlash against those who choose to use them.
In a union environment, a typical grievance procedure begins with an employee presenting a problem to his or her immediate supervisor within a certain time period after the offending event has occurred. The supervisor then has a set amount of time to either respond or send the grievance on to be addressed by the head of the department. At this point, a union representative enters the negotiations on behalf of the employee. If the situation is still not resolved, the grievance continues up the chain of command to the plant manager and the president of the local union. If the labor union fails to follow the procedures at any point, the contract usually specifies that it must drop the grievance. Conversely, the company is usually obligated to resolve the grievance in the employee's favor if management fails to follow the procedures outlined in the collective bargaining agreement.
If the situation still cannot be resolved, the final step in the grievance process is for both parties to present their side to an arbitrator. The arbitrator's role is to determine the rights of both parties under the labor agreement, and his or her decision is usually final. The labor contract generally specifies the type of arbitrator used, the method of selecting the arbitrator, the scope of the arbitrator's authority, and the arrangements for the arbitrator's payment. A potential intermediate step involves presenting the grievance to a mediator, whose job is to help the parties solve their own differences before they reach the formal arbitration phase. Mediation is usually less time consuming and expensive than arbitration. In addition, the mediator may be able to teach the two parties dispute resolution skills that may be helpful in solving future problems.
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Scarpello, Vida Gulbinas, James Ledvinka, and Thomas J. Bergmann. Human Resource Management: Environments and Functions. South-Western, 1995.