The literature has neglected to analyse employer associations as organizations facing potential environmental threats to their financial sustainability. We examine associations' responses to collective bargaining decentralization, a major, contemporary threat. Using a qualitative, comparative case approach, we examine eight associations — four each in Australia and Italy — to develop a model of response types. Stronger decentralization effects increase associations' exposure to new and heightened competition, which in turn produces stronger association responses. These include prioritizing commercial over associational objectives. We analyse responses using strategic choice and resource dependence theories, finding that associations use both. However, the decision how to combine them reflects environmental conditions as well as choices linking organizational purpose and financial sustainability.

Decentralisation of bargaining poses particular challenges for employer associations. It reduces the sense of collective identity among members, decreases the attraction of associations' traditional collective goods and increases the urgency and array of individual member needs while increasing the costs of servicing them. Decentralisation also threatens revenue as large companies, the financial backbone of associations, shift employment relations activities in-house. This weakens the attractions of membership with the risk that employer associations will retain only smaller, heavily dependent members. We discuss employer association attempts to meet these challenges while competing with commercial service businesses. Their strategic choices lie on a continuum between traditional membership-based organisational identity, with its roots in movement as well as organisation, and one that more closely approximates a business services firm. Associations experiment along this continuum as they develop strategy iteratively and the article identifies factors that help determine their choices.

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Employer associations currently urge further change to Australia's publicly funded vocational education and training (VET) system. An important, new focus is 'employability skills' -employers' preferences regarding employee values, attitudes, personality and other personal qualities. Critical technical skill shortages do exist, in both traditional and emerging sectors, and others loom. In part, these flow from employers' own strategies, in particular their declining commitment to employment security and employee training. The paper examines employer associations' agendas for national policy regarding VET structure and funding and explains why associations have recently intensified their efforts in this area. We find particularly unpersuasive employer associations' urgings that the VET system create employees who embody their particular understandings of 'employability skills'. In adopting the concept of employability skills, associations have signalled a further decline in employers' responsibility for VET while expecting to retain the dominant influence over its content, delivery and assessment through publicly funded schemes.The human resource management (HRM) function is both centrally concerned with, and reliant upon, the supply of skilled labour to organizations. The role of the formal, publicly funded vocational education and training (VET) system in skill formation is, therefore, a key public policy issue that impacts upon HRM, shaping its contribution to organizational effectiveness. Australia's VET system has undergone great change since the 1980s, much of it the consequence of intense employer association advocacy and policy involvement. As a result, The authors have together published extensively on employers, employer association and employment relations policy. They co-edited and largely co-wrote Employer associations and industrial relations change: Catalysts or captives? (1999) and, between 1999 and 2003, co-authored the annual 'Employer matters' article for the Journal of Industrial Relations. They also publish in the areas of work and family policy, public sector employment relations and employment relations history.