The Value of Good Working Relations (AQA A Level Business): Revision Note

Why do good employer–employee relations matter?

• Maintaining positive relationships with employees is not just about avoiding conflict — it also brings measurable business benefits

Benefits of good relations

• Higher motivation and productivity

  • Engaged employees are more committed and likely to work harder

  • This will improve the labour productivity - see how to calculate it on the Operations Data page

• Lower staff turnover

  • Employees who feel respected and heard are less likely to leave

  • This lowers the labour turnover rate, which will reduce recruitment and training costs

  • See how to calculate the labour turnover on the Human Resources Data page

• Fewer disputes

  • Open communication helps address concerns early and avoid escalation

  • This helps employees maintain productivity levels and helps to keep the labour cost per unit lower

  • See how to calculate the labour cost per unit on the Human Resources Data page

• Improved reputation

  • A strong internal culture makes it easier to recruit and retain talent

• Better change management

  • Employees who trust the business are more likely to support new initiatives

Influences on the extent of employee involvement in decision-making

• Employee involvement refers to how much say staff have in how the business is run — from informal feedback to formal representation through mechanisms such as trade unions or work councils

Key Influences

• Leadership style

  • Democratic leaders are more likely to involve staff than autocratic leaders

• Size and structure of the business

  • Smaller firms may use informal communication; larger firms may require works councils or structured consultation

• Presence of trade unions

  • In unionised workplaces, employee involvement is often formalised through negotiations and collective agreements

• Nature of the workforce

  • Skilled, experienced workers may be trusted with more influence; junior staff may be less involved.

• Legal requirements

  • UK employment law requires consultation in key situations (e.g. redundancies, or health and safety)

How to manage and improve work communications and relations

• Effective communication is essential for

  • Building trust

  • Resolving conflict

  • Maintaining positive working relationships between staff and management

• A combination of formal and informal channels helps ensure all voices are heard

Methods to improve communication