UNDERSTANDING EMPLOYMENT RELATIONS AND ITS EMERGING TRENDS

KULDEEP MATHURM.B.A. JIWAJI UNIVERSITY GWALIOR

• Understanding IR

▫IR is most misunderstood & even maligned subject

▫People have written its obituary

▫ /IR is basically a relationship management &

relation will continue till humanity/ industries exists.- Employees works in groups/ team - They have to relate with one another in order to transact business- Work teams consists of specific nos. of employees with complementary skill committed to a common purpose & are jointly accountable for the result. - Teams are formed in various stages

• Forming – During the forming stage, a work team focuses on orientation to its goals and procedures.

• Storming – The storming stage begins when competitive or strained behaviours emerge

• Norming – In the norming stage, team members become increasingly positive about the team as a whole, the other members as individuals, and what the team is doing.

• Performing – By the performing stage, members usually have come to trust and accept each other and are focused on accomplishing their goals.

• Adjourning – the adjourning stage involves terminating task behaviors and disengaging from relationships.

• Feelings – ▫ Trust – Members have confidence in each other.▫ Openness – Members are really interested in what others have

to say.▫ Freedom – Members do what they do out of a sense of

responsibility to the group, not because of pressure from others.

▫ Interdependence – Members coordinate and work together to achieve common goals.

▫ Relationship can be co-operative or adversial (conflicting)

▫ In our life personal or organizational, we have relate ourselves to others - relationships gets built

▫ I R is a culture of working together in industry – a network of relations

▫ Cooperation can not be regulated /bought▫ Co-operation requires positive approach of manage

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

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

Two( broadly) types of conflict – 1. Interpersonal – employer & employee 2. 2. Inter group/ inter organizational –

employees collective or unions & management

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

• Govt. employees,• Industrial workmen – • Managers in industries• Two types of conflict

▫ Conflict raised by individual employee/ grievances & their management

▫ Unhappiness shown by the employer – management of discipline

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

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

• Instrument like collective bargaining & strike & lockout• Actors in the game of ER act & interact - managing human

resource means directing, controlling, motivating & in the process reciprocating to their responses, most of the times bitter ones. ,resulting in conflicts.

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

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

• ER is a complex subject• Highly susceptible to forces within and outside the organisation

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

▫ Network of Relationship – non leaner/Criss - Crossed▫ Social relation at workplace

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

- Change both in context & contents

Changing Business Skylines / Environment and Employee Relations

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

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

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

Knowledge workers• Shrinking organized sector:• Traditional Manufacturing sector

▫ Technological upgradation, restructuring, retrenchment, Disinvestment, Mergers & acquisitions

• Entirely different organisation structure: Flatter, leaner-virtual organizations

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

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

• Changing role of Govt.: Controller Changing role of Govt.: Controller Facilitator Facilitator (GOI (GOI has not done much under political pulls and pushes)has not done much under political pulls and pushes) Some states are waking up to the need for wooing Some states are waking up to the need for wooing investment, foreign and domestic, and creating jobs. In the investment, foreign and domestic, and creating jobs. In the process they are resorting to competitive labour policies that process they are resorting to competitive labour policies that are ‘investor friendly’. The components of the industrial are ‘investor friendly’. The components of the industrial relations policy of Kerala, the relaxations and exemptions to relations policy of Kerala, the relaxations and exemptions to labour inspections in Rajasthan and Uttar Pradesh, the liberal labour inspections in Rajasthan and Uttar Pradesh, the liberal response of the Tamil Nadu Government to requests from response of the Tamil Nadu Government to requests from employers for notice of change, lay-off, etc., and the employers for notice of change, lay-off, etc., and the cancellation of the registration of an unusually large number cancellation of the registration of an unusually large number of unions in West Bengal, have had far reaching implications of unions in West Bengal, have had far reaching implications for industrial relations.for industrial relations.Central laws being the same, their interpretation by the Central laws being the same, their interpretation by the judiciary is changing. In 2005 alone, in five different cases, the judiciary is changing. In 2005 alone, in five different cases, the Supreme Court held that sleeping on duty, using abusive Supreme Court held that sleeping on duty, using abusive language against superiors. Strikes have to be not only legal language against superiors. Strikes have to be not only legal (refer to the strike by government employees in Tamil Nadu,) (refer to the strike by government employees in Tamil Nadu,) but also justified. Where trade union action is lacking, non-but also justified. Where trade union action is lacking, non-governmental organizations are rushing to fill the vacuum, governmental organizations are rushing to fill the vacuum, particularly in matters concerning minimum wages and living particularly in matters concerning minimum wages and living conditions in the unorganized sector, and occupational safety, conditions in the unorganized sector, and occupational safety, environment, etc. in both the organized and the unorganized environment, etc. in both the organized and the unorganized sectors.sectors.

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

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

New Actors on the Horizon – The consumers and New Actors on the Horizon – The consumers and community have emerged as the new actors on the community have emerged as the new actors on the horizon. Since they represent the larger aggregations horizon. Since they represent the larger aggregations of population and wider societal interests, when their of population and wider societal interests, when their rights are impinged upon by the action or inaction of rights are impinged upon by the action or inaction of either employees or employers the court – consumer either employees or employers the court – consumer courts to the Supreme Court – rule that the interests of courts to the Supreme Court – rule that the interests of workers and managements should take a back seat.workers and 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 PCs, SMSs, E-Mailing, Internet, Fax, Video ConferencingConferencing• Changing work System: TQM, JIT, CAM, CIMChanging work System: TQM, JIT, CAM, CIM

Contd…•Changing look of the offices-transparent,

smart •24x7x365 Work culture•Paperless or less paper at least•Offices software •E-Documentation/ office software • Intelligent offices•Flexibility: Flexi timing, Flexi payment•Changing Employment pattern

▫ Life long employment▫ Part time, Home working, Tele working, Share

working

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

responsibility and gain

Emerging Trends and Issues• IR at cross road- unprecedented pressure-

Meant for CRP economy▫Slow, Ad hoc, Reactive, Passive: Strike,

Gherao, Collective bargaining, Litigation• You cannot play the modern game of cricket

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

Responsiveness, Customer focus, zero effect • No nonsense, trade union taken as nuisance ,

non unionism individual bargaining

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

•Job security to employability.•Pro-labour stance of government is

getting reduced.•The attitude of judiciary is also changing.•New players in the game of employee

relations

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

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

• The declining membership of trade unions, The decline in the number of ‘skill’ workers and their replacement by ‘knowledge’ workers; 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 Collective Bargaining – in collective bargaining, some of the shifts include: of the shifts 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 Increased wages/incomes and benefits accompanied

by erosion of job control;by erosion of job control;5.5. Concession bargainingConcession bargaining6.6. Assertion of managerial rights than the rights of Assertion of managerial rights than the rights of

workers;workers;7.7. Skill-up gradationSkill-up gradation

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

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

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

Burning problems at ER front 1. Volatile labour market2. Attrition rate very high3. Work life balance disturbed4. Union free organisations5. 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 All these activities have become regular features and are increasingly impinging on emerging E.R.s. and are increasingly impinging on emerging E.R.s. This trend is going to be accelerated, in future.This trend is going to 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 Contradictions

1.1. The company is viewed as the property of the management. The company is viewed as the property of the management. Workers have no say/stake.Workers have no 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 Organizations expect commitment, while viewing people as ‘dependable and disposable’.‘dependable and disposable’.

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

5.5. Workers can be punished, but not managers for wrong personnel Workers can be punished, 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 In the name of responsible unionism, organizations expect unions

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

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

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

Typology of the Effect of old Beliefs and New ValuesTypology of the Effect of old Beliefs and New ValuesOld BeliefsOld Beliefs New ValuesNew Values

Aims: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 Win-lose, hard nosed management decides and adjust if necessaryand adjust if necessary

Facing realities, creating space within Facing realities, creating space within which self-control is possible, and which self-control is possible, and contracting around agreements which contracting around agreements which take account of differences: boundary and take account of differences: boundary and inter dependence management, inter dependence management, situational managementsituational 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 trapStandardization of HRM policies, Standardization of HRM policies, etcetc

Strategic linkage with the goals of Strategic linkage with the goals of the organizationthe organization

Flexibility. Human resource policies Flexibility. Human resource policies to be tailored to fit the targeted to be tailored to fit the targeted market niche view of rapid changes in market niche view of rapid changes in environment and growing emphasis environment and growing emphasis on competitionon competition

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 commitment of people through peoples’ participationpeoples’ participation

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 Emphasis on feelings and reliance

on subjective appraisal systems with on subjective appraisal systems with an eye on harmonyan eye on harmony

Develop database for objective Develop database for objective measurement of facts for analysis measurement of facts for analysis with an eye on the bottom line – with 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 Emphasize reciprocity and mutuality in relationsmutuality in relations

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 Restructuring the organization to

make them flat/horizontalmake them 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.