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Nature ofIndustrial Relations:

Traditional & ChangingPerspectives

Debi S. SainiProfessor of HRM

Management Development Institute, Gurgaon

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The issues discussed in the presentation are:• Importance of theory for managers for diagnosing the problems

• Nature of industrial conflict & industrial relations

• Focus of the discipline of IR

• Traditional issues in IR

• Frames of reference of IR: Unitarist––Pluralist––Marxist

• New World of Work & emergence of neo-unitarism in IR

• Some cos. that practice neo-unitarist or neo-pluralist strategies

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Two Main Components of this Course:

Management of Personnel/People(Systems, policies, controls, skills, productivity, efficiency)

Management of Industrial Relations (conflict, Interests, rights, democracy, discipline)

Lately, the two perspectives are gettingmerged into an integrated HRM framework

Saliency of HR’s Strategic Contribution

University of Michigan Study:

HR Deptt’s Impact on Business

--Accounts for as much as 43% of

total impact on bus. performance

Role of Inter-personal mgt. in Managerial Success

HBS Study—89: 11

Stanford Business School Study--88: 12

On Intertwining Theoryand Practice:

Understand IR Issues in Context

HR’s Role in Building the 4+2 OrgWiliam Joyce, Nitin Nohria, & Bruce Robertson

1. Limited resources2. Separating theory from practice3. Relying on pre-conceived truth about success4. Underestimating the difficulty of the problem

They developed a book to avoid these problems: — Analyzed 60,000 pages of info. from 200 firms in multiple industries

Mgt./IR Practice need to be linked to Mgt. Theory

“CK Prahlad, a world renowned professor of strategy, meets frequently with groups of HR executives. He claims that one reason HR has not become pivotal to business as it should be is that HR often lacks knowledge of theory. Theory explains why events happen. Theory provides explanations based on logic for how events relate to each other. Theory weaves individual events into predictable and generalizablepatterns.”

To make HR practices more than isolated acts ,

managers and HR professionals must master

the theory behind HR work;

they need to be able to explain conceptually

how and why HR practices lead to their

outcomes.”

Dave Ulrich, Human Resource champions, (Harvard University Press), p. 237

Emergence of Heathrow Management Theory

in People Management in mid-1980s:

Attempt to relate Practice with Causality

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On Understanding the Roots of

Industrial Conflict

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Today, Labour-Mgt. Conflict is Pervasive: Why?

• Conflict is endemic in society/orgs./IR

• Industry is a microcosm of society: Grs./Individuals

• Why conflict: Divergence of interests, values, goals

• Societal/indl. conflicts: Complex phenomenon

––Difficult to fully understand/describe: HMSI case shows that

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Natureof

Industrial Relations

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Industrial Relations: Simply Speaking:

“Industrial relations (IR) is the process

through which employers & employees interact,

and, through which they regulate conflict

at the workplace”

§ Includes all employment relationships: Unionized or not

§ IR is an interdisciplinary field of study

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How can we view Industrial Relations

J. H. Richardson (Leeds University)

• “Industrial relations is

the art of living together

for purposes of production”

Important

Someregulation is needed

inall relations;

State determines

the regulation framework

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How can we view Industrial Relations contd…

Hugh Clegg (Clegg & Flanders pioneers of Classical Oxford School of IR)

“Industrial relations is a study of

workers and their unions,

employers and their associations,

and State & its institutions/agencies

concerned with regulation of employment.”

Imp.: Different powers, roles, interests, duties of Actors

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Dynamics of Industrial Conflict: Factors at Macro Level

• Industrial conflict dimensions in a country depend on:

––Acceptance of Market or democratic socialism as values

––Distribution of power in society––Societal Ideology

––State of the economy

––Nature/composition of labour market

––Use & acceptability of strike/collective bargaining

• Globalization diluting welfare state: Focus on market economics15

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Q 1. What broad environmental Factors contributed

to the Conflictin the HMSI case?

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Two Extreme Models of Industrial Relations

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Perfectly Pluralist IR Model

• Presence of trade union/s; union rights respected

• Recognition of the trade union by the employer

• Presence of adversarialism in relations

• Negotiated settlement guides IR

• Freedom to strike/lockout to parties

Reflected in: Classical Oxford School of IR (by Allan Flanders & Hugh Clegg)

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Perfectly Neo-Unitarist Industrial Relations

• Employer strives for Decent Work, Cooperative IR

• Commonality of interests is projected

• Union undesirable; so union-substitution strategies

• Efforts to satisfy employee needs: Psychological contract

• Reflected in HRM Approach to IR 19

Leading Companiesare investing in

Building Cooperation through

Psychological Contract

1.

Google has become a magnetfor like-minded geniuses:

Google: $200 billion market cap.

The only U.S. companies with larger market caps:

Exxon Mobil, at $328.4 billion Microsoft, at $276 billion

Wal-Mart, at $207.6 billion.

Google Creating Joy by Giving Employeeswhat they need: casualness, diversity, fun

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Focus of the Discipline of IR

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Focus of the Discipline of IR

A. IR Institutions (permanent form of custom or law)

––Unions––Employer associations ––State/ Labour Bureaucracy

––ILC––ILO––Tribunal/Labour Court ––Labour law––Judiciary

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Focus of the Discipline of IRB. Characters (or actors) in IR e.g.

––Union leaders

––HRM Managers

––Conciliation Officers/ Mediators

—Arbitrators/labour judges

––Labour Courts/tribunals

––Labour Lawyers/Consultants

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Focus of the Discipline of IR cond…

C. IR procedures (aim at: Procedural justice)

––Bargaining/Negotiation

––Conciliation

—Arbitration

—Adjudication

––Procedure for going on strikes/ lockouts

––Inquiries/Disciplinary procedure

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Q 2. Who you thinkwere Actors in IR in the HMSI Case:

Directly or Indirectly

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Traditional issuesin

Industrial Relations

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Q 3. In view of HMSI case,state the issuesthat are in focus

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Traditional Problems in IR

1. Job satisfaction: Job design––reward

2. Negotiating Wage/salary/VRS

3. Alienation & discontent: Social & psychological problems

4. Grievance management: Boss––Environment––Rule-centricity

5. Communication

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Traditional Problems in IR

6. Industrial dispute settlement––Dealing with Impasse

7. Tackling Indiscipline, absenteeism & mobility

8. Managing Labour Laws

9. Designing Labour welfare/QWL

10. Joint consultation, participation, involvement

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The IR actorstry to derive Power

from Various Sources

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Q 4. What do you think have workers gained in HMSI case?

What are their sourcesof strength?

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Q 5. It is said that IR is a game of power.

In your view, how much power was enjoyed by the three main actors in IR?

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Frames of Referencein Industrial Relations

& New Issues in IR

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Frames of Reference: Unitarism & PluralismUnitarism

1. Assumptions: about Interests—Common interest/objectives

2. Assumptions: about conflict—Inevitable, destructive: Be avoided —Caused by: Poor mgt/communication

3. Assumptions about trade unions:—Unwanted intrusion

4. Assumptions: collective bargaining—Generates conflict; doesn’t resolve it

Pluralism1. Assumptions about Interests

—Mgrs. & employees have: different objectives

2. Assumptions about conflict—Inevitable—Be negotiated—Caused by difference of power/interests/values

3. Assumptions about Union—Not the cause of conflict: Conflict is inherent—Legitimate part of workplace relations

4. Assumptions about Collective bargaining—Fairer outcomes —Balances employee & mgt. power

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III. Marxist (Radical) Perspective• Pluralist view of society that conflict can be negotiated is wrong

––Capitalist profit is key influence on co. policy

• Control enforced downwards by capital’s agents––Surplus value generation by capitalist

• The Marxist general theory of society argues:

––Class conflict in capitalism is inevitable; it is the source of societal change

––Without conflict society will stagnate

––Class conflict is caused by disparity in power

––Differential access to education, media, govt. jobs

––Employees socialized into accepting the status quo

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Marxist Perspective contd…

• CB: limited accommodation of fundamental divisions––Unions/IR instts. are concerned only with marginal issues

• Law not independent referee

• Industrial Justice: only if revolution

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Q 6. Do you think that workers have an unqualified right to form union in India;

if so what is the logic of such a law?

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Q 7. What role was played by the AITUC leader,

Gurudas Dasguptain the IR system of HMSI?

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Q 8. What role was played by the media?

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Q 9. What were the major concerns

of the three main actors in IRincluding Central & State Govts.?

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Q 10. On the basis of this case, in what way you think

are the government’s needof more foreign direct investment (FDI)

and its concern for social justicethrough unionism related?

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Changing World of Work & Emergence

of Neo-unitarism in IR

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Neo-Unitarism through Union Substitution

UnionSubstitution attemptsThrough Progressive

HR

Emp Involvement,empowerment

AttractiveReward strategy

CultureBuilding, flexibilityIndividual diversity

Maximize opportunities

Designsatisfying jobs

Strategic Selection

Investment in HRD for WM & managers

Make workplace funful & implement

Fair standards

Special focus on Balancing Reward & Culture

Reward Culture of respect & dignity

The latter requires meeting employee expectations

Culture Built through Individual diversity, empowerment, leaders hip

In Search of Excellence revealed their Importance

People Emotion

Engagement Empowerment

Caring & Enjoyment

The new Paradigm emphasizesCreativity, HRD, excitement, fun, trust, involvement

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Communication & Relationship-building/care are Key to Employee Engagement & Cooperative IR

Sustained interactions

that mutually benefitthe parties concerned

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Q 11. Are there some newIssues that HMSI must focus on

so as to pursue a viable HRM strategy

to realize its Vision?

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New Issues in IR: Dominance of HRM Approach

1. Developing Cooperative IR/de-adversarialism

2. De-unionizationthrough state support

3. Promoting EI, not WPM

4. Continuous Communication

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New Issues in IR: HRM Approach contd…

5. Managing IR through HRM strategy

6. Flexibilty management: ––Core & periphery WM

7. VRS (Voluntary Retirement Scheme) and lay offs

8. Open approach to grievance redressal

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Examples of Some Leading Companies

that Practice Neo-unitarism or Neo-pluralism

in People Management

Classic StripsThrough

CelebratingEmployee Dignity

(a very small company)

• 500 WM including contract WM—Most are blue-collared--Manufactures automobile graphics— established by Kishore Mushale

• 4 WM 25 yrs. ago (in 10’ x 10’): Built 44 acre campus in Vasai--Three plants now: Mumbai—Vasai--Hardwar

• Main motto was: “dignity at work.”--Believes in: “valuing every individual, giving people their due,

freedom, respect, opportunity backed by lots of training.”

Classic Stripes (Mfg.): Come Out of Control Mindsethttp://classicstripes.com/manufacturing_plants.html

• Won Safety & Environt 2003 award (SIGA given to 5 cos. worldwide.)

• Employee spends 2 ½ hrs every month on training (kaizen)

• A relationship committee: Meets twice in a month--Comprises of employees across levels

• Has a library with trade journals, magazines and books

• DM Policy: Women make 1/3rd of the workforce--Proactive DM policy: Even for handicapped WM

• Shares with employees a %age of its annual profits

Classic Strips: Some HR Initiatives contd…

Professionalism &Out-of-Box Thinking

always helpsEmployee Engagement: The case

of Class Stripes

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Southwest AirlinesOnly major airline to earn profit every yr. for nearly 3 decades

Southwest has won the Triple Crown for 5 yrs in a row(best on time performance, fewest complaints, fewest lost bags)No other airline has won this award

Southwest’s operating costs are 20% below the industry average

--The company is 84% unionized

Serves over 64 cities; 35,,000 employees

528 aircrafts on April 2, 2008

Large no. of job applicants every year (Emp. branding)

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Every company I have ever gone in, they say people are number one,

but they’re just not.

They don’t live up to that, and we do.”

Gary Kelly, CFO, Southwest Airline

Many companies are trying to live their faith in people

Vitas Inc. USA

• Employees highly cared; wear the 4 Co. values on Shirts

1. Patients and families come first2. We take care of each other3. I’ll do my best today & do even better tomorrow4. I am proud to make a difference

• Live a sense of pride: Great excitement in working for vitas

• HR-VP received: “HR Leadership of the Year 2006” award of SHRM

• One nurse said: “Sometimes we wonder why we came here so late.”

Vitas Inc. USA

Tata Steel Ltd.:Care through

Paternalism & Involvement

Tata Steel Ltd.: People Model

•People work at less than 50% of market worth; don’t leave

• See fulfillment of their need for dignity, stability, security

• It used paternalism (kin employment) & family invitation

• CSR creates a sense of pride in employees

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Q 12. What do you think were the principal causes of the trouble

that HSMI faced?

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Q 13. What are thekey challenges before HMSIin the post-July 25 scenario?

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Q 14. What HRM strategy was followed by HMSI

consciously or subconsciously; do you think that this was different

from the global HR strategy of HONDA?Why, if at all, are there differences

in the pursuit of the global and the local strategies?

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Q 15. What led to failure of the HRM strategy of HMSI,

and what are the causal roots of the breakdown of IR in the company?

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Q 16. What people-management strategyshould HMSI adopt

so as to march towards its vision?

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Q 17. What lessons in people management and IRdo you learn from this case?

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The presentation has focused on following learning

• Mgrs need to know theory to diagnose problems appropriately

• It is Utopian to wish away industrial conflict completely

• IR shifting from adversarialism to neo-pluralism/neo-unitarism

• Along with traditional issues, new issues have emerged in IR

• Governments’ new eco. agenda is moving from social justice to growth

• New world of work has led to union-substitution strategies

• HRM strategy is used to promote cooperative IR