Breaking the Mold- A Paradigm in Industrial Relations

The November month meeting of NHRD Hosur Chapter discussed a topic that has always been important for those working in HR, particularly for practitioners in the manufacturing sector.  From the time HR was known as 'Personnel Management', industrial relations (IR ) was held the key focus area of the function. Over the years, the focus on IR reduced on account of changes in the economic, social and political environment in the country. In HR conferences the focus and discussion  shifted to matters such as 'Talent Management', 'Leadership Development', 'Strategic HR management' and ' HR as a business partner'.

I drove down from Bangalore to Hosur to listen to the speaker of the day Mr Pramod Mahatme, Vice president Employee relations, Wipro Consumer Care and Lighting. Pramod accepts invitations to speak only on the core area of Industrial relations. He said that of late, the invitations to speak have increased.Thus,while on the one hand some would believe that the focus and interest in IR has declined, on the other hand, it appears that sooner than later the IR focus will come back in a big way. Often times, it is seen that those working in IR tend to frequently change jobs. This could be because of things becoming too ‘hot’ and difficult to handle after a few years in the same company. The speaker, however has worked in only three companies since he passed out of Symbiosis Pune which includes long stints of 14-16 years in two companies viz Hindustan Lever and Wipro where he is presently working.  

IR practitioners have been generally reluctant to share their insights and the “How’ of handling tough labour situations. Therefore, it was a pleasure listening to the speaker whose thoughts were a shift from the traditional paradigm that has guided the theory and practice of IR. As for example, he says that employees form unions not because they have gained the courage to revolt but because they see and feel themselves as ‘weak’. The paradigm we hold is significant as it shapes the way we act and respond to situations. “Breaking the mold” in IR is the need of the hour.

  

There has been a gradual up-gradation over the years from labour relations to talent management. It is all to do with the demand and supply which also determines whether the management would resort to individual bargaining or collective bargaining. When the demand for people is more than the supply, they are held as 'talent'  and individual bargaining is done with them wherein the aim is to attract and retain talent at the most competitive price with a willingness to offer benefits of highest common factor. On the other hand if the supply is more than the demand for a particular skill, the people are deemed 'labour' and the organization engages in collective bargaining with their union. The aim is to achieve productivity, quality, reliability and flexibility at the best possible bargain. Lowest common denominator is attempted in collective bargaining.

Employees are attracted to unions when job security is threatened and when individual bargaining strength is reduced. It is weakness that drives unity. When the employee has a high salary and a lower market value, he tends to gravitate towards the union to offset his weakness. When a corporation has a number of units and less dependent on an individual factory, it results in weak local unions and they tend to strengthen themselves through a central federation. In the new economic scenario where organizations resort to global sourcing, the federation at national level becomes weak leading to emergence of international federation. 

Managements become strong when they are engaged in the manufacture of multiple products with multiple  factories for each product. While the strength of the management lies in its ability to sustain disruptions, for the union, the strength comes from its ability to inflict pressure through coercion. In an ideal IR scenario there would be a strong management and a strong union. This climate is possible when the management is able to say "No" to the union to unjustified demands and not succumb . In this connection, the strength of the union can be determined by its ability to say "Yes" when an offer is reasonable and acceptable. It is only a strong union  that can say "Yes" and convince its cadre. The weak  ones would be unsure and would want to frequently consult the rank and file meaning they are unable to take decisions as leaders. I have seen this happen in the first company I worked for; after  the death of a charismatic leader, the successors were weak and were scared and unable to take decisions

  

A strong union alone can agree to implement reforms in terms of improving standards, cost reduction, flexibility and stability. Whether a union leader makes an impact or not would depend on charisma, the trust that he enjoys, muscle power and ability to say "Yes". When we have weak unions on a strong wicket the result would be 'Ad-hoc decisions'. Strong union on a strong wicket results in ' 'Tough settlements'. Strong union on a weak wicket leads to 'Settlement with reforms' and weak union on a weak wicket leads to dependency on 'Court awards'. It is not the chemistry that the leaders of the management and union share that determines IR but the relative forces of interdependence that drive the relationship.   

Strike is a genuine tool in the collective bargaining process and should not be viewed as a 'misconduct'. At the same time, collective indiscipline should be dealt with firmly and not diluted as 'individual indiscipline'. Collective behaviour is not just the summation of individual behaviour. The rigid provisions in Industrial Disputes Act have come in the way of effective working of the industry. These include not being able to make changes in conditions of service/ work content without notice/consent under S9a (speaker related an instance in Hindustan Lever when changing the bottle of shampoo met with resistance), separation of employees permitted only on the grounds of misconduct, lay off/retrenchment/closure only with permission of appropriate Government and right to strike being available without notice (Non public utility services).  Although everyone agrees in principle that these are a deterrent to industrial effectiveness, no Government has been able to change these provisions due to the electoral politics. 

The speaker then went on to discuss the subject of dealing with militancy of trade unions. He said that the trade unions can be broadly divided into the following based on the nature and expertise of its leaders 

1) The trade union generalist : whose expertise is on negotiation skills

2) Labour lawyer: who starts out guiding unions but ends up taking over the leadership

3) Extortionists :  who use muscle power and militancy to get their way  

The best is the generalist; the worst the lawyers and the easiest to handle are the militant 'gundas'. To the question as to why he holds the militants as the easiest to handle, Pramod clarified that the 'Gunda' type leaders do not know the law most of the time and they are also reluctant to go to the court. He shared his own experience of how he refused discussions with a union whose member had resorted to violent methods . Later, the onus was literally on the union to get the management to resume talks with them. Militancy for whatever reasons that was seen in the 70s and 80s is not pardonable. It is liberalization that paved the way for reversing such trends. The speaker then made an interesting and provocative comment "It is the management which is the cause of militancy when it uses undue influence and coercion for collective settlements. This takes the form of misusing the standing orders and suspending workmen pending inquiry. In turn, unions resort to violence. 

The traditional aversion and antipathy to the union has to change. We have seen instances of strikes happening particularly in the auto sector on account of managements resisting the formation of union. There is even a willingness to accept all demands of employees in order to avoid union formation. An attitude of sympathy and acceptance will go a long way in having good industrial relations. After all, as discussed earlier employees look to unionize when they feel inadequate to engage in individual bargaining. With changes in the demand-supply ratio, it may not be long before the job security of IT employees comes under focus and more people in services opting for collective bargaining. 

It is to be noted that although we have many labour laws, they are not 'labour friendly' and  can at best be described as 'union friendly'. The restrictions on the separation of employees discussed earlier in this post, inhibits the employment of more people. Unions are happy that with restrictions on closure etc they continue to have people on their member list even if the industry itself has become sick and inefficient. The speaker reiterated in the end that IR would be magnanimous and operating from a position of strength when unions are accepted and encouraged as a natural phenomenon of the  IR process. He signed off by remarking "Fear of attrition will bring more attrition. Fear of strike will bring more strike." 

The biggest take away from the session, to my mind was that it underscores the importance of operating from a position of strength rather than fear - The strength of the management is in the ability to  say 'No' and that of the union is the ability to say 'Yes'.