What Is Employee Relations? Small Business Guide

Key Takeaways:

Employee relations is a sub-department of human resources that focuses on the relationships of your employees.
Open communication is the number one way to enhance employee relations.
Putting your employees first creates a desirable company culture that helps you attract and retain top talent.

Overview of Employee Relations

As a subset of human resources, employee relations are the interactions between employers and employees. They are not merely transactional, but reflect the company’s values, commitment to its workforce, and capacity for an inclusive environment. Employee relations professionals work to ensure employees feel heard and valued, resolve grievances, and improve overall company communication.

An effective employee relations strategy goes beyond grievance handling to encompass transparent communication, trust, and collaborative problem-solving practices. Nurturing relationships requires understanding individual motivations and aspirations.

With many companies hosting a remote-first environment, it’s more important than ever to promote strong virtual engagement strategies to maintain connection and morale. You can leverage technology to personalize initiatives in professional development. When employees perceive genuine investment in their growth, loyalty is strengthened, leading to reduced turnover rates.

Read more about the tools and tips for employee management, which encompasses every aspect of managing, developing, and interacting with your employees.

Examples

Click through the tabs below to learn more about companies that excel in employee relations.

Bain & Company, a management consulting firm, achieved the top spot on Glassdoor’s Best Places to Work 2024 report. It scored 4.3 out of 5 stars with over 7,000 company reviews. It is known for its supportive, fun, and inclusive culture, based on mentorship where employees are encouraged to excel and support each other.

With a collaborative team focus, Bain & Company understands that in order to have an engaged and productive workforce, it must focus on the individual employee while working as a cohesive team. At its Tokyo office, collaboration is at the forefront of the design of its workspaces, showcasing an open atmosphere where team members can work together and creating enhanced relationships between employees.

Google, a multi-national search engine and technology company, is known to top the most desirable places to work lists. It believes that happy employees produce better results—and this is clear in its employee relations efforts for promoting employee well-being and professional growth. It fosters a culture of open communication, provides generous benefits and perks, and prioritizes well-being with on-site health services.

Google’s diversity, equity, and inclusion (DEI) efforts are prominent in its recruiting efforts, transparent reporting, and co-creation of its products. Chief Diversity Officer Melonie Parker says, “Building belonging for everyone means ensuring no one is left out and each person can thrive.”

Netflix, a popular streaming service, follows a “People over Process model” to enhance its employee relations. Its managers practice context over control, which gives teams the information they need to make good decisions rather than being told what to do. However, as Netflix points out, this approach requires employees to be highly self-motivated and self-aware.

Part of trusting its employees to make good decisions is Netflix’s focus on what employees get done rather than how many hours they work. Because of this, there are no formal schedules, a No Vacation policy, and no official holiday time off. What this means for its employees is that they are free to take time off when they need it—so long as their work is completed in a timely manner.

Types of Employee Relations

Employee relations do not fit under one type, but rather fall into several buckets: vertical, horizontal, collaborative, transformational, and virtual.

A vertical relationship has an up-and-down trajectory, like those between an employee and their direct supervisor. Typically, an employee has one direct supervisor; however, for those who have more than one supervisor (known as a matrix relationship) they would have multiple vertical employee relations. An example of this are those that report to multiple managers depending on the project or function they are working on.

While vertical employee relations happen most often in larger, structured companies, it is also quite common in startups and family-owned (or mom-and-pop) businesses. This is important so that all employees’ voices are heard and are aligned with company goals.

One of the highest risks of a vertical employee relationship is the overload it causes on the supervisor. I recommend keeping direct reports between 5 to 10 employees so that the supervisor is not overwhelmed and can provide individual attention and guidance to each employee.

A horizontal relationship is a side-to-side (or equal) relationship between employees of the same level, such as team members. It refers to the interactions between employees or teams that are in the same department or similar job roles within the company.

These relationships include casual conversations among peers, formal communication during cross-departmental meetings, task collaboration, and communication through a company-wide intranet. This communication encourages teamwork and peer engagement throughout your company.

A collaborative employee relationship is one where management actively involves employees in decision-making processes. This approach not only empowers team members but also promotes a sense of ownership and accountability.

By creating platforms for open dialogue, such as town hall meetings or feedback sessions, you can build trust and open the door for diverse perspectives that lead to innovative solutions.

A transformational employee relationship focuses on change management when your company is shifting perspectives. For this type of employee relations, leaders prioritize emotional intelligence and empathetic communication to ease transitions. This ensures employees feel supported rather than threatened by changes.

A virtual employee relationship is the connection between remote employees. Companies can use technology to create online communities to help connect employees from different geographical locations. Engaging activities, like virtual coffee breaks or collaborative projects through video conferencing, can help maintain personal relationships.

Human Resources vs Employee Relations

While employee relations is a part of human resources, its role is slightly different. Explore the definition, scope, responsibilities, and job titles of each in our table below.

	Human Resources	Employee Relations
Definition	The department of a company that deals with hiring, administration, and training of employees.	A department within the Human Resources department that creates and maintains a positive relationship between employers and employees.
Scope	Manages the employee experience from application to departure, including recruitment, hiring, onboarding, training, and firing.	Manages the employee experience, including employee engagement, morale, productivity, and performance.
Responsibilities	Compensation and benefits planning Employee onboarding Safety and compliance Hiring Documentation and policy creation and maintenance Career growth Maintaining employee records Business succession planning Employee relations	Discipline and conflict resolution Employee guidance Announcements and updates Investigating employee misconduct Advising management on disciplinary procedures Establishing health and safety practices Managing events and incentives DEI initiatives Performance management Labor relations Training and development Employee engagement Workplace communication
Employee Titles	HR Coordinator Human Resources Generalist Talent Acquisition Specialist Human Resources Manager Compensation Manager Recruitment Coordinator Chief HR Officer	Employee Relations Manager Labor Relations Specialist People Operations Manager Chief Happiness Officer Chief People Officer

Benefits of Employee Relations

When employees have a positive relationship with their managers and coworkers, they are often more efficient and produce higher quality work. There are other benefits to promoting positive employee relations throughout your company.

Enhanced open communication: Creating channels where employees feel encouraged to voice their concerns, suggestions, or grievances without fear of repercussions helps create a transparent and open communication environment.
High employee morale: Employees who are appreciated and understand what is going on with your company tend to have higher overall morale.
Improved employee trust: When employees trust their employers, they are more likely to be happy and productive at work. Transparency in the workplace and communication between employers and employees increases this level of trust.
Elevated workplace culture: Your workplace culture is the heartbeat of your company. A good company culture is a place where employees enjoy working. You can elevate your workplace culture by putting your employees first.
Improved work-life balance: Offering your employees flexible schedules and ample time to take a break from work can increase their work-life balance. Employees with a good work-life balance will be more productive and speak favorably about your company.
Lower turnover rate: Engaged employees are usually content with their jobs and are likely to stay with your company longer. This reduces turnover and increases customer satisfaction and company morale.

How to Build Employee Relations

You may think that employee relations just come naturally. However, there are key areas to consider when building relationships with your employees.

1. Communicate With Employees

It’s important to be straightforward and honest with employees. Managers should share operational information and updates with their teams, informing them as soon as possible. How your leaders communicate with employees can positively influence your company’s reputation as a place where people want to work.

Additionally, a key aspect of employee relations is making sure you actively listen to your employees. This goes beyond just listening to respond. Active listening is giving your full attention to what someone is saying with the intent to understand their perspective. If you shoot down every idea or comment from your employees, they will not feel they can come to you when they have a conflict or concern.

2. Investigate Conflict

It’s important for your employee relations department to investigate all conflicts and employee concerns in a timely manner. This shows that you take every complaint seriously and are proactive in finding a solution.

To properly investigate every conflict, you should:

Gather all relevant documents and information, such as incident reports, emails, and written complaints.
Listen to the perspectives of all parties involved.
Consider any history of past incidents.
Appoint an impartial investigator to review all claims.
Document every step of the investigation.
Weigh the evidence and determine a conclusion to the incident.
Based on your findings, take corrective action to address the issues. This could mean corrective measures or disciplinary actions.

Did You Know? According to the Eighth Annual Employee Relations Benchmark Study, 42% of companies do not have formal investigation practices. This can lead to a legal risk of discrimination and cause damage to your company’s brand.

3. Provide Continuous Feedback

Encourage regular check-ins with 1:1 meetings between employees and their managers. These are outside of traditional performance reviews and should be held regularly, such as bi-weekly, monthly, or quarterly. Managers can use this time to catch up with their direct reports and follow up with any improvement plans. I also recommend using this time to offer praise to your employees for any jobs well done.

Be sure that your feedback is constructive. Just telling an employee what they are doing wrong doesn’t help them understand how to improve their performance. Make sure you clearly explain what the employee needs to improve upon and how they can accomplish those goals.

This type of feedback works well between employees and managers, but it can also work as peer-to-peer or team feedback (also known as 360 degree feedback). When implementing feedback outside of the manager-employee relationship, it’s a good idea to have varying levels of employees (e.g., senior titled employees or one those who have longevity with the company) work with those who are greener on the job.

We used a peer-to-peer recognition tool as a powerful strategy. It builds a mindset of appreciation and team spirit when employees celebrate each other’s successes. This easy, decentralized method has clearly raised mood and made workers feel more appreciated. Within a quarter of starting this program, our scores on internal involvement went up by 20%.

–Rodger Desai, CEO of Prove

4. Train Managers

You can build strong manager-employee relationships just by making sure your managers are properly trained. Provide training on topics like conflict resolution, emotional intelligence, effective communication, and active listening.

Aside from book or video training (such as role-playing, situational leadership styles, ethics training, etc.) I recommend setting up a mentorship program where managers or leaders at a higher level can help train middle managers to effectively communicate with their direct reports.

One of your employee relations specialists should conduct training sessions to help your employees understand the importance of employee relationships. Have them take a hands-on approach and keep materials short so that employees can absorb and understand the information.

5. Promote a Community of Respect

Respect in the workplace consists of valuing and recognizing the diverse ideas and perspectives your employees bring to the workplace. It’s about valuing your employees’ ideas, beliefs, and contributions, and creating an environment where each person feels safe to share their thoughts and concerns.

Additional strategies to enhance your employee relations include:

Implement DEI initiatives: Companies that actively seek to understand the diverse backgrounds and experiences of their employees boost morale and drive overall engagement.
Recognize achievements: Implementing a peer recognition program or other employee recognition ideas that encourages employees to celebrate achievements reinforces camaraderie and collaboration. In my experience, a Slack channel or mention in the company newsletter, is a great place to send shout outs to team members for jobs well done.
Conduct surveys: When you regularly conduct employee satisfaction surveys, you can gauge the level of happiness among your employees. These are a great way to anonymously see if your employee relations strategies are working.
Consider peer mediation: You can strengthen the relationships between your employees by using peer mediation to resolve simple conflicts. This allows team members to collaborate and communicate to reach a resolution.
Schedule collaborative meetings: Employees who work on projects and collaborate together get a good sense of how to interact with each other. When you schedule collaborative meetings, employees can work together for a common goal, allowing them to communicate effectively.

Creating a sense of belonging in a diverse workforce is one of the hardest things about working with other people. At SoftwareHow, we deal with this by setting up small, cross-functional project teams that help people from different areas work together and get to know each other. In addition to making team bonds stronger, this makes workers feel like they are contributing to the company’s vision and is in line with it.

–Albert Kim, VP of Talent at Checkr

Employee Relations Frequently Asked Questions (FAQs)

The main goal of employee relations is to create a positive work environment by developing relationships between managers, leaders, and employees. This can be achieved through open communication, conflict resolution, strengthening your company culture, and enhancing employee engagement.

Employee rights, communication, discipline, counseling, and employee development are the five key dimensions of employee relations.

Employee rights: Employees should have a voice within your company.
Communication: Effective communication between management and employees enhances employee relations.
Discipline: Conflicts that arise in the workplace should be handled with fairness and presented with constructive discipline.
Counseling: Handling conflicts with counseling will help your employees improve their overall relationships with other team members.
Employee development: Training and developing your employees sets them up for success in their roles.

Employee relations focuses on managing relationships and resolving conflicts. Employee experience is the employee journey from hire to exit. Employee engagement is how active the employee is in their work and your company as a whole. Employee relations sets the stage for an employee experience that ultimately results in employee engagement.

What Is Employee Relations? Small Business Guide