UNDERSTANDING UNDERSTANDING EMPLOYMENT RELATIONS EMPLOYMENT RELATIONS

AND ITS EMERGING TRENDSAND ITS EMERGING TRENDS

By:By:B.D SinghB.D Singh

Prof. HRM & Dean MDP & ConsultancyProf. HRM & Dean MDP & ConsultancyIMT, GhaziabadIMT, Ghaziabad

• Understanding IRUnderstanding IR

– IR is most misunderstood & even maligned subjectIR is most misunderstood & even maligned subject– People have written its obituaryPeople have written its obituary– IR is basically a relationship management & IR is basically a relationship management &

relation will continue till humanity/ industries exists.relation will continue till humanity/ industries exists.– Relationship can be co-operative or adversial (conflicting)Relationship can be co-operative or adversial (conflicting)– In our life personal or organizational, we have relate ourselves In our life personal or organizational, we have relate ourselves

to others - relationships gets builtto others - relationships gets built– I R is a culture of working together in industry – I R is a culture of working together in industry – a network of a network of

relationsrelations– Cooperation Cooperation can not be regulated /boughtcan not be regulated /bought– Co-operation requires positive approach of manage people – it Co-operation requires positive approach of manage people – it

requires building, nurturing & developing relationship on requires building, nurturing & developing relationship on continuous basiscontinuous basis – bringing in transparency & fairness in our – bringing in transparency & fairness in our dealings, communicating , motivating & leading etc. – dealings, communicating , motivating & leading etc. – inculcating ownership & we – feeling – introducing devices for inculcating ownership & we – feeling – introducing devices for lasting bondage – building bridges of trust – developing healthy lasting bondage – building bridges of trust – developing healthy relationships relationships

• Conflict in inevitable.Conflict in inevitable. It is generally harmful. It is generally harmful. Requires immediate Requires immediate resolutionresolution..

Two( broadly) types Two( broadly) types of conflict – of conflict – 1.1. Interpersonal – employer & employee Interpersonal – employer & employee 2.2. Inter group/ inter organizational Inter group/ inter organizational

• Interpersonal conflict arises out of terms of employment between Interpersonal conflict arises out of terms of employment between employer & employees (Workmen) – Regulated by laws.employer & employees (Workmen) – Regulated by laws.

• Govt. employees,Govt. employees,• Industrial workmen – Industrial workmen – • Managers in industries (i.e. conflict also among Managers)Managers in industries (i.e. conflict also among Managers)

• Inter group/ Inter organizational – individual employee is not able to deal Inter group/ Inter organizational – individual employee is not able to deal with mighty employer, they form with mighty employer, they form unionsunions / association on the principles of / association on the principles of individual dispensability and collective indispensability individual dispensability and collective indispensability – survival instinct – survival instinct fundamental right / ILO convention fundamental right / ILO convention

• Collective disputes/ industrial disputes – wage settlement, service condition, Collective disputes/ industrial disputes – wage settlement, service condition, retrenchment etc. retrenchment etc.

• Instrument like Instrument like collective bargaining & strike & lockoutcollective bargaining & strike & lockout

• Actors in Actors in the game of ER the game of ER act & interact - managing human resource means act & interact - managing human resource means directing, controlling, motivating & in the process reciprocating to their directing, controlling, motivating & in the process reciprocating to their responses, most of the times bitter ones, resulting in conflicts. responses, most of the times bitter ones, resulting in conflicts.

• All these actions & interactions are regulated by laws/ & judiciaryAll these actions & interactions are regulated by laws/ & judiciary

• Industrial employment (standing orders) act, industrial dispute act, trade Industrial employment (standing orders) act, industrial dispute act, trade union act, High Court, Supreme Court judgments. union act, High Court, Supreme Court judgments.

• ER isER is a complex subject a complex subject• Highly susceptible to forces within and outside the organizationHighly susceptible to forces within and outside the organization

– Economic, Social, Psychological, Political, Technological and Market: local and Economic, Social, Psychological, Political, Technological and Market: local and global global

– Network of Relationship – non linear/Criss - CrossedNetwork of Relationship – non linear/Criss - Crossed– Social relation at workplaceSocial relation at workplace

• Does not have a fixed profile Does not have a fixed profile • Changes as per the pulls and pushes of the market Changes as per the pulls and pushes of the market • Started as reaction to exploitation by mighty employers Started as reaction to exploitation by mighty employers • Post independentPost independent IRIR : CRP : CRP• Post liberalizationPost liberalization ERER : LPG : LPG- Global competition - Global competition - Global networking - Global networking - Global mindset- Global mindset- Global standardsGlobal standards- Survival and excellenceSurvival and excellence

- Change both in context & contents Change both in context & contents

Changing Business Skylines / Changing Business Skylines / Environment and Employee RelationsEnvironment and Employee Relations

Post industrial societies- the third wave- (toffler)Post industrial societies- the third wave- (toffler)• Sunrise industries – IT, ITES, Telecom, Hotel, Health services, Sunrise industries – IT, ITES, Telecom, Hotel, Health services,

Insurance, Pvt. Banking, Pharmaceuticals, Retails, etc. more of Insurance, Pvt. Banking, Pharmaceuticals, Retails, etc. more of employment in these sectors employment in these sectors

– – Employee Based OrganizationsEmployee Based Organizations– Require: Service oriented work forceRequire: Service oriented work force– E-industries (BPOs, KPOs) mushroomingE-industries (BPOs, KPOs) mushrooming

• Knowledge workersKnowledge workers

• Shrinking organized sector:Shrinking organized sector:• Traditional Manufacturing sectorTraditional Manufacturing sector

– Technological upgradation, restructuring, retrenchment, Technological upgradation, restructuring, retrenchment, Disinvestment, Mergers & acquisitionsDisinvestment, Mergers & acquisitions

• Entirely Entirely different organisation structuredifferent organisation structure: Flatter, leaner-virtual : Flatter, leaner-virtual organizationsorganizations

• EmployersEmployers: mostly : mostly MNCs, professionally driven, competitive mindset MNCs, professionally driven, competitive mindset – In – In the new context, the new context, heavier responsibilitiesheavier responsibilities fall on employers and their fall on employers and their organizations. Some need to give greater attention to empowerment, organizations. Some need to give greater attention to empowerment, rather than exploitation of human resources. rather than exploitation of human resources. Building skills and giving the Building skills and giving the workforce greater say and stake in the enterprise becomes imperative.workforce greater say and stake in the enterprise becomes imperative.

• EmployeesEmployees: : Diverse Diverse in character, white collar, pink collar, female workers, in character, white collar, pink collar, female workers, multi-ethnic/multi-cultural workforce, migrant labour, contract labour etc. multi-ethnic/multi-cultural workforce, migrant labour, contract labour etc. – The colour of the collar of the worker in the organized sector is changing. – The colour of the collar of the worker in the organized sector is changing. There is a There is a gradual reversal in the ratio of executives to non-executivesgradual reversal in the ratio of executives to non-executives . Over . Over the years, in most companies, executives outnumbered non executives. the years, in most companies, executives outnumbered non executives. Technological changes eliminating the 3D jobs – dirty, dangerous, and Technological changes eliminating the 3D jobs – dirty, dangerous, and drudgerousdrudgerous – and lower and middle level information gathering and – and lower and middle level information gathering and processing tasks warranting different kinds of age, contracting out and processing tasks warranting different kinds of age, contracting out and outsourcing whereby the permanent employee strength shrinks to outsourcing whereby the permanent employee strength shrinks to accommodate those with core and critical skills, while banishing the rest to accommodate those with core and critical skills, while banishing the rest to the periphery of the organization in casual, contract, and contingent the periphery of the organization in casual, contract, and contingent employment. employment.

• Changing role of GovtChanging role of Govt.: Controller .: Controller Facilitator Facilitator (GOI has not done much (GOI has not done much under political pulls and pushes)under political pulls and pushes)

Some states are waking up to the need for wooing investment, foreign and Some states are waking up to the need for wooing investment, foreign and domestic, and creating jobs. In the process they are resorting to domestic, and creating jobs. In the process they are resorting to competitive competitive labour policies that are ‘investor friendlylabour policies that are ‘investor friendly’. ’.

The components of the industrial relations policy of The components of the industrial relations policy of KeralaKerala, the relaxations , the relaxations and exemptions to labour inspections in and exemptions to labour inspections in RajasthanRajasthan and and Uttar PradeshUttar Pradesh, the , the liberal response of the liberal response of the Tamil Nadu Tamil Nadu Government to requests from employers Government to requests from employers for notice of change, lay-off, etc., and the cancellation of the registration of for notice of change, lay-off, etc., and the cancellation of the registration of an unusually large number of unions in an unusually large number of unions in West BengalWest Bengal, have had far reaching , have had far reaching implications for industrial relations.implications for industrial relations.

Central laws being the same, their interpretation by the judiciary is changing. Central laws being the same, their interpretation by the judiciary is changing. In 2005 alone, in five different cases, the Supreme Court held that sleeping on In 2005 alone, in five different cases, the Supreme Court held that sleeping on duty, using abusive language against superiors. Strikes have to be not only duty, using abusive language against superiors. Strikes have to be not only legal (refer to the strike by government employees in legal (refer to the strike by government employees in Tamil NaduTamil Nadu,) but also ,) but also justified. Where trade union action is lacking, non-governmental justified. Where trade union action is lacking, non-governmental organizations are rushing to fill the vacuum, particularly in matters organizations are rushing to fill the vacuum, particularly in matters concerning minimum wages and living conditions in the unorganized sector, concerning minimum wages and living conditions in the unorganized sector, and occupational safety, environment, etc. in both the organized and the and occupational safety, environment, etc. in both the organized and the unorganized sectors.unorganized sectors.

• The core conventions of ILO and dictates of WTO, IMF and The core conventions of ILO and dictates of WTO, IMF and SWBSWB

International pressure is mounting International pressure is mounting to link labour standards with to link labour standards with international trade international trade either through sanctions through bi-,tri-, or either through sanctions through bi-,tri-, or multi-lateral institutions (governments and international agencies, multi-lateral institutions (governments and international agencies, such assuch as

New Actors on the Horizon New Actors on the Horizon – The – The consumers and community consumers and community have have emerged as the new actors on the horizon. Since they represent the emerged as the new actors on the horizon. Since they represent the larger aggregations of population and wider societal interests, when larger aggregations of population and wider societal interests, when their rights are impinged upon by the action or inaction of either their rights are impinged upon by the action or inaction of either employees or employers the court – consumer courts to the employees or employers the court – consumer courts to the Supreme Court – rule that the interests of workers and Supreme Court – rule that the interests of workers and managements should take a back seat.managements should take a back seat.

Changing nature of work practicesChanging nature of work practices

• Contracting – outsourcing in place of self-sourcingContracting – outsourcing in place of self-sourcing• Casualisation of work placesCasualisation of work places• Hiring work facilitiesHiring work facilities• Use of electronic gadgetsUse of electronic gadgets• PCs, SMSs, E-Mailing, Internet, Fax, Video ConferencingPCs, SMSs, E-Mailing, Internet, Fax, Video Conferencing• Changing work System: TQM, JIT, CAM, CIMChanging work System: TQM, JIT, CAM, CIM

Contd…Contd…

• Changing look of the offices-transparent, smart Changing look of the offices-transparent, smart • 24x7x365 Work culture24x7x365 Work culture• Paperless or less paper at leastPaperless or less paper at least• Offices software Offices software • E-Documentation/ office software E-Documentation/ office software • Intelligent officesIntelligent offices• Flexibility: Flexi timing, Flexi paymentFlexibility: Flexi timing, Flexi payment• Changing Employment patternChanging Employment pattern

– Life long employmentLife long employment– Part time, Home working, Tele working, Share workingPart time, Home working, Tele working, Share working

Contd…Contd…

• Changing reward/ compensation systemChanging reward/ compensation system• Variable pay in place of guaranteed payVariable pay in place of guaranteed pay• Employee’s ownership: ESOPEmployee’s ownership: ESOP• Gain sharing/Profit sharingGain sharing/Profit sharing• Cafeteria benefit systemCafeteria benefit system• Emphasis on insurance and social securityEmphasis on insurance and social security• New crop workers want to share power, responsibility and New crop workers want to share power, responsibility and

gaingain

Emerging Trends and IssuesEmerging Trends and Issues

• IR at cross road- unprecedented pressure- Meant for CRP IR at cross road- unprecedented pressure- Meant for CRP economyeconomy– Slow, Ad hoc, Reactive, Passive: Strike, Gherao, Slow, Ad hoc, Reactive, Passive: Strike, Gherao,

Collective bargaining, LitigationCollective bargaining, Litigation• You cannot play the modern game of cricket with old You cannot play the modern game of cricket with old

rules/dispensation of gulli-dandarules/dispensation of gulli-danda• Forces of inertia (Status Quo)Forces of inertia (Status Quo)• Emerging market requires: Speed, Quick Responsiveness, Emerging market requires: Speed, Quick Responsiveness,

Customer focus, zero defect Customer focus, zero defect • No nonsense, trade union taken as nuisance , non No nonsense, trade union taken as nuisance , non

unionism individual bargaining unionism individual bargaining

• Changing Pattern of C & R Management – Fixed / Changing Pattern of C & R Management – Fixed / Assured Time Wages are replaced by Assured Time Wages are replaced by variable / variable / performance – based wages.performance – based wages.

• Job security Job security to employability.to employability.• Pro-labour Pro-labour stance of government stance of government is getting reduced.is getting reduced.• The The attitude of judiciary attitude of judiciary is also changing.is also changing.• New players New players in the game of employee relationsin the game of employee relations

• The aggressive approaches of Indian employers in the service The aggressive approaches of Indian employers in the service sector to trade unionism;sector to trade unionism;

• The two extreme styles and strategies – The two extreme styles and strategies – ‘bleak house’ and ‘bleak house’ and ‘happy house’.‘happy house’.

• The declining membership of trade unions, The decline in the The declining membership of trade unions, The decline in the number of ‘skill’ workers and their replacement by number of ‘skill’ workers and their replacement by ‘knowledge’ ‘knowledge’ workersworkers; and; and

• Trade unions should focus on managing the expectations of the successive new generations of workers rather than being content with their role in situations of discontent.

• Initiatives such as the recently formed Trade Unions Partnership for Environmental Protection (TUPEP) are welcome in the wake of mounting concern about the health, safety, and environment in and around work. TUPEP may, in association with other social partners, address itself to new problems arising out of closure of units due to environmental considerations, etc.

Collective Bargaining – in collective bargaining, some of the shifts Collective Bargaining – in collective bargaining, some of the shifts include: include:

1.1. Centralization to decentralization;Centralization to decentralization;2.2. Collective to individual contracts;Collective to individual contracts;3.3. Parity to disparity;Parity to disparity;4.4. Increased wages/incomes and benefits accompanied by erosion of Increased wages/incomes and benefits accompanied by erosion of

job control;job control;5.5. Concession bargainingConcession bargaining6.6. Assertion of managerial rights than the rights of workers;Assertion of managerial rights than the rights of workers;7.7. Skill-up gradationSkill-up gradation

Social security – the – the shift from welfare to ‘money fare’shift from welfare to ‘money fare’ through the through the conversion of several of the welfare benefits into cash is, however, a conversion of several of the welfare benefits into cash is, however, a worrisome developmentworrisome development. . The other trend is a shift in retirement benefits The other trend is a shift in retirement benefits from defined benefits to defined contributionsfrom defined benefits to defined contributions. This puts the real value of . This puts the real value of retirement benefits at serious risk.retirement benefits at serious risk.

• Employers directly reaching the work men and negotiating with themEmployers directly reaching the work men and negotiating with them• Disinvestment / Privatization and VRS are almost accepted facts of Disinvestment / Privatization and VRS are almost accepted facts of Industrial Relations.Industrial Relations.

Shifting roles of traditional actors – Over the years, a number of changes Shifting roles of traditional actors – Over the years, a number of changes have taken place in the industrial relations scenario. Not only have the have taken place in the industrial relations scenario. Not only have the players changed (the inclusion of consumers and community), techniques, players changed (the inclusion of consumers and community), techniques, technology, and power structures have been re-examined and altered time technology, and power structures have been re-examined and altered time and again.and again.

Burning problems at ER front 1. Volatile labour market2. Attrition rate very high3. Work life balance disturbed4. Union free organizations5. Gender related problems6. Issues regarding multi cultural & multi ethnic workers7. Almost law free atmosphere- SEZ8. Government as facilitator & not as regulator

• All these activities have become regular features and are All these activities have become regular features and are increasingly impinging on emerging E.R.s. This trend is going to increasingly impinging on emerging E.R.s. This trend is going to be accelerated, in future.be accelerated, in future.

Employee Relation has to address to all the issue

Towards new Management of ERTowards new Management of ER

Managerial Beliefs/Practices and Structural ContradictionsManagerial Beliefs/Practices and Structural Contradictions1.1. The company is viewed as the property of the management. Workers have no The company is viewed as the property of the management. Workers have no

say/stake.say/stake.2.2. Mainly the management is interested in the organization, not the Mainly the management is interested in the organization, not the

union/workers.union/workers.3.3. Organizations expect commitment, while viewing people as ‘dependable and Organizations expect commitment, while viewing people as ‘dependable and

disposable’disposable’..4.4. There is conflict of interest and little concern for mutuality in rights and There is conflict of interest and little concern for mutuality in rights and

obligations.obligations.5.5. Workers can be Workers can be punishedpunished, but not managers for wrong personnel , but not managers for wrong personnel

decisions/abuse of authority.decisions/abuse of authority.6.6. Continued emphasis on direction and control Continued emphasis on direction and control 7.7. In the name of responsible unionism, organizations expect unions to manage In the name of responsible unionism, organizations expect unions to manage

(maintain) discipline, but later on grudge that unions have become the de (maintain) discipline, but later on grudge that unions have become the de facto management.facto management.

8.8. Management responsibility is permanent and that of unions is transient (or Management responsibility is permanent and that of unions is transient (or quasi permanent).quasi permanent).

9.9. Third party dominance invited willy-nilly which causes a shift in the locus of Third party dominance invited willy-nilly which causes a shift in the locus of control.control.

Typology of the Effect of old Beliefs and New ValuesTypology of the Effect of old Beliefs and New Values

Old BeliefsOld Beliefs New ValuesNew ValuesAims:Aims:Capital and labour pursue different aimsCapital and labour pursue different aims

Both can have many things in common, Both can have many things in common, despite some legitimate differencesdespite some legitimate differences

Mode of Operation:Mode of Operation:Win-lose, hard nosed management decides and Win-lose, hard nosed management decides and adjust if necessaryadjust if necessary

Facing realities, creating space within which Facing realities, creating space within which self-control is possible, and contracting self-control is possible, and contracting around agreements which take account of around agreements which take account of differences: boundary and inter dependence differences: boundary and inter dependence management, situational managementmanagement, situational management

Outcomes: Outcomes: Procedures, rules, agreementProcedures, rules, agreement

Realistic plans, sharing in gains, genuine Realistic plans, sharing in gains, genuine increases in productivity/competitiveness, increases in productivity/competitiveness, trust, harmonizationtrust, harmonization

Information:Information:Hold information close to one’s chestHold information close to one’s chest

Openness, transparencyOpenness, transparency

Style of Management: controllingStyle of Management: controlling Mature, situational, and varied, but Mature, situational, and varied, but consistently soconsistently so

Feelings Generated: NegativeFeelings Generated: Negative Positive, mutual confidence and trustPositive, mutual confidence and trust

Current and Suggested Role of HRMCurrent and Suggested Role of HRM

Current RoleCurrent Role Suggested RoleSuggested Role1.1. Strategic Orientation:Strategic Orientation:• Independent goals, not clearly Independent goals, not clearly

linked to that of the organization, linked to that of the organization, leading to activity trapleading to activity trap

• Standardization of HRM policies, Standardization of HRM policies, etcetc

• Strategic linkage with the goals of the Strategic linkage with the goals of the organizationorganization• Flexibility. Human resource policies to Flexibility. Human resource policies to be tailored to fit the targeted market be tailored to fit the targeted market niche view of rapid changes in niche view of rapid changes in environment and growing emphasis on environment and growing emphasis on competitioncompetition

2. Management Philosophy:2. Management Philosophy:• Emphasis on direction & controlEmphasis on direction & control

• Employees as a costEmployees as a cost• Hire and fireHire and fire

• Seek to achieve consensus and Seek to achieve consensus and commitment of people through peoples’ commitment of people through peoples’ participationparticipation• People as a resourcePeople as a resource• Attract and retain motivate peopleAttract and retain motivate people

• Maintain discipline and seek Maintain discipline and seek compliance with organizational needscompliance with organizational needs

• Hierarchical personnel policies and Hierarchical personnel policies and practicespractices

• Build positive work ethos and Build positive work ethos and organization culture for employee organization culture for employee motivationmotivation• Emphasis on horizontal personnel Emphasis on horizontal personnel practices with a view to harmonize practices with a view to harmonize employee pay, benefits, and working employee pay, benefits, and working conditionsconditions

3. Performance Management:3. Performance Management:• Emphasis on feelings and reliance on Emphasis on feelings and reliance on subjective appraisal systems with an eye subjective appraisal systems with an eye on harmonyon harmony

• Develop database for objective Develop database for objective measurement of facts for analysis with measurement of facts for analysis with an eye on the bottom line – an eye on the bottom line – developmentaldevelopmental

4. Relationships:4. Relationships:• Master and servant relationship Master and servant relationship reinforcing the negative, apartheid reinforcing the negative, apartheid features of the social system in features of the social system in workplaceworkplace

• Emphasize reciprocity and mutuality in Emphasize reciprocity and mutuality in relationsrelations

5. Change in Approach:5. Change in Approach:• Power centrePower centre• Fire-fighting roleFire-fighting role• Building organizational pyramids to Building organizational pyramids to take care of employee aspirationstake care of employee aspirations• Employee orientationEmployee orientation

• Employee trainingEmployee training

• Service centreService centre• Proactive approachProactive approach• Restructuring the organization to make Restructuring the organization to make them flat/horizontalthem flat/horizontal• People and business orientation (to People and business orientation (to include care of customers and other include care of customers and other constituents)constituents)• People training (includes not only People training (includes not only employees but also vendors, dealers, employees but also vendors, dealers, customers, etc. and retainingcustomers, etc. and retaining

Handling the interface between Human Resource Management and Industrial Relations

The management can establish a good industrial relations interface with HRM in the following ways:

• Develop sensitivity to human needs and human problems at work and beyond work.• Evolve a value system based on trust, transparency, fairness, and equity. Pay attention and practice the core values professed by the organization: walk the talk and talk the walk. In all areas of decision-making - specifically transfer, promotion, and reward systems – there is a need for objectivity and concern for balancing the aspirations of the people with that of the organization.• Institutionalize openness in subordinate – superior relationships. Allow the subordinates to speak hard facts and ventilate their grievances even though they appear to be initially, unpalatable and fictitious assumptions respectively.• Deal with employee grievances promptly and explain the logic and rationale of decisions to convince the aggrieved.

People cooperate when they understand.• Tell the human resource management department and professionals to operate through the line of departments/professionals• Consciously provide exposure and understanding to line managers on human resource management aspects.• Let line managers handle the day-to-day human resource management activities and issues/problems.• Information sharing and consultation are prerequisites for shared understanding and co-operation.• Review HR/IR policies and practices from time to time. Rules and procedures should unleash and facilitate, not block and hinder human potential in the organization.

Case-let

A few decades ago, Rusi Mody was invited by J.R.D. Tata, the then Chairman of Tata Iron and Steel Company, and Abdul Bari, veteran trade union leader in the same company and a renowned politician, to require why the workers in the company, where young Rusi Mody was Personnel Officer, were not joining unions even though workers in all the other firms in similar lines of business in the same neighborhood in Calcutta were forming into trade unions. Rusi Mody replied that the management was doing what the union could have done – taking good care of the employees – and that if ever the management were to shirk back in its responsibilities to the employees they would need the shoulder of a trade union. In other words, if employees are regarded as people and taken good care of, they would not need a trade union.

Do you agree with this viewpoint? Discuss this in today’s context.