In today’s competitive scenario, adapting to the change process of transformation has become vital for organizations to survive, says DL Sharma, Managing Director, Vardhman Textiles Ltd.

Recently, many companies have started looking at undertaking major internal transformations in terms or organization, systems and processes. What is your advice when it comes to executing a successful organizational transformation?

Organizational transformation is a continuous imperative and not just a requirement of today’s scenario. Transformation and change is a comprehensive and integrated process and it should be a continuous journey for an organization. There are always external motivators for change, either economic, technological or social that requires the organization to transform and adapt to them. Organizational transformation occurs when there is a pressure to survive. Ultimately, survival is the core responsibility of the management. Of course, in these current times, economic pressures are very high and this has been the motivator for many innovations and transformations in Indian organizations.

What is the role of unions in change management processes?

Involvement of people in the process of transformation is crucial. Mature organizations are able to align people with the philosophy of the organization and when change is required, they bring people on board for successful transformation. Unions play a positive role in transformation process in industries where they represent employees as they can support the change, drive positive attitude towards change and bring the employees along. And employees may listen more to the social boss than the organizational boss, and unions play this role of social boss. In the industrial sector, when HR is able to play the role of the ‘social’ boss and create a linkage of communication with the employees then the unions become obsolete.

What are the legal implications of change when it comes to deploying new organization structures, new performance management practices, new compensation structures, et al?

The legal implications of change are enormous. There are 45 Central Acts, along with Central rules, State rules, et al. There are more than couple of thousands of rules and orders that apply to employees, their status and the implications of change. Any change that has an implication of change in terms and condition of employment has a formal and structured procedure to be followed. There are many examples of the legal implications of change. For instance, implementation of a new technology can have several implications as it involves changes in the skill set required, in the roles that employees play and sometimes even change of location. Another example is the transfer of people to a new establishment. As per the Bonus Act, a new establishment is exempted from payment of bonus for the first five years. The change of establishment might have an implication on employee’s compensation in this case.

Are those legal implications different for different industries?

Most employment legislations were created in the early independent days of India and those Acts were aligned to those times and for those industries. Today, there are industries that did not exist before. The requirements for knowledge based and labour intensive industries are very different. To sum up, the legal implications in terms of the Acts that apply are the same, but the requirements of each industry is very different and the legislation is failing to adapt to the new circumstances.

What steps should an HR professional take to minimize these legal risks?

The role of HR is very crucial in transformation. The role of HR is again the role of the ‘social’ boss. HR should gain authority among employees with trust, honesty and transparency so that employees follow their ‘social’ leader. The HR team should align the organization’s goals and the employee’s aspirations and ensure that there is a clear communication and alignment between the company’s ethos and the people practices and policies.

What is the most successful organization transformation you have experienced? What where the key elements for its success?

For our organization transformation is a continuous journey. But I can share with you many examples of transformations. One of them was in early 2000, when we went into real time working with ERP system. This project was seen as threat by employees in all levels as they feared losing their jobs because less people would be required for the same job. They also feared failing to adapt to the new technology. It took us more than six months to prepare employees for the change through communication and training. The leadership team took a very active role in meeting with people and communicating with them directly on what will be the training calendar and how the implementation will bring an opportunity for all to learn new skills and enhance their capabilities and ultimately their employability. Today, those people have doubled or tripled their salaries in the market due to the upgradation in their skills.
We never retrench people due to upgradation of technology but train them and create opportunities for them. This creates an opportunity for our people to leave and eventually balances the requirements of our organization.

How does the current legislation constraint transformation in organizations that have strong blue collar workforce? How can those organizations be agile and adapt to changing requirements of demand and supply?

The current legislation constrains organizational transformation and also constrains new investments in the country especially for those industries that are people intensive. If you look at the Chinese textile industry, the average number of sewing machines a factory has is between 2000-5000 as compared to India where the number is 200-500. This is all due to the labour legislation constrains. Indian companies cannot achieve the economies of scale and the efficiencies in overheads in this situation. There are many examples on how the current Indian legislation is a constrain for transformation and growth in labour intensive organizations.

What are the key ingredients for a leader to plan and execute a successful organization transformation? What is the role that the HR professional should play in this process?

Leadership and HR play a crucial role in the success of any organization. They work as a team to create successful transformations. The leadership team plays the role of the initiator and the HR team creates the linkage and engagement of the organization by creating channels of communications and engagement.