ABSTRACT
This chapter focuses on the employee relations subsystem, a rather broad collection of frameworks, policies, and practices that together play a key role in the definition and maintenance of core organizational values and philosophies. Most definitions of employee relations in the literature revolve around a particular set of Human Resources (HR) activities aimed at eliciting employee compliance with organizational policies and norms. Rousseau and Wade-Benzoni defined work-related psychological contracts as the beliefs people hold regarding the terms of their employment relationships which affect employee's behavior toward fellow employees and also affect their commitment to the organization. Although work-based psychological contracts are clearly shaped by choices associated with the people flow, performance management, and reward subsystems also play a critical role in shaping the nature of an organizations psychological contract with its employees. Nevertheless, at the macro level, as Pencavel noted, empirical evidence on unionization and market productivity is mixed.
