Circa one-and-a-half decades ago. Location: India.
“Stop work” shouted the union leader. Suddenly a screeching sound brought all the machines to a grinding halt as if the machines had a built-in feature to stop in a jiffy. The subsequent silence was deafening and disquieting. Within minutes, slogan shouting became more raucous. Red flags fluttered all over! Today, this is no longer a familiar scene barring a few isolated instances. From being argumentative, we have progressed to being adept at negotiation and find out win-win solutions.
From 154 man-days lost in 1992 to 3 man-days lost in 2011 (according to research by Rajani Pathania, which was based on Indian Labor Statistics Data 1992-2001), the sharp decline in the number of industrial disputes in India is indeed a positive indicator that the labor environment here is conducive for ‘Make-in-India’. Yes, India is ready and our Prime Minister sees it too. Whether we should cater to the domestic or the export market is a debate that is best left to politicians and bureaucrats to dwell on. Isn’t it for the entrepreneurs to take a final call on what, where, when and how to produce and what markets they should sell their products to?
Even in a favorable environment, a robust Industrial Relation (IR) strategy is vital. Proactive, smart and easy to implement strategies should be the focus for new entrepreneurs to create an uninterrupted industrial environment.
Need for world-class technology
Manufacturing is a capital and manpower intensive affair. Modern technology can ease the pain of manifold processes involved in the delivery of the final product with high level of precision and quality, be it mass production or niche products. It enables businesses to become competitive. A perfect balance between technology and highly skilled people to manage the modern facility is a win-win for all—the entrepreneur, employees, government and the society.
It is imperative that before one opens a factory, entrepreneurs should study all geographical locations for business viability to make an informed decision. It is strategically important to identify a location away from areas where active unionism traditionally prevails. While this is not in any way undermining the contributions of the unions, do not disregard potential high risk for a few strategic advantages. However, it would be best if organizations get IR subject matter experts to develop a strategy based on past data, including instances where unions created more bottlenecks than extending their support.
It reminds me of a union who were vehemently against introducing computers for data management and speedy customer service in one of the banking companies. The management had to agree to their demand of granting Computer Allowance to implement computerization! The unions were against introducing computers in the bank as they saw it as a management ploy to deplete the union strength in the bank. They resorted to 'Stop Work' tactics when we introduced a couple of computers on a trial basis in the customer service department. To manage the situation, the bank offered special allowance to Tellers (clerical staff) to work on the computers.
Unions are unreasonable at times in many ways. Here’s a difficult situation we faced when implementing “pay for performance” culture in the organization. In a competitive market environment, it is the people who make the difference. Performance Management Programs are introduced to identify high performing and high potential employees in the organization. The unions felt that the managers have the tendency to do assessment on ‘face value (subjectivity)’ and not on ‘performance value (objectivity). They considered that the PMP was being used by the management to disintegrate the unity and comradeship of their members!
The management wanted the IR manager to make participation in Performance Management mandatory for all unionized employees. The IR manager then told the union leaders that the management would promote high performing ‘(unionized) non-exempt’ employees to management (exempt) cadre. Unfortunately, it backfired instantly. The union leaders called for an abrupt pen-down strike and subsequently served us with a notice for an indefinite strike. They suspected that this was a ploy to reduce union strength.
It was contextual to mention that this was also the time when management was slow in backfilling any ‘non-exempt’ position for the ‘inhibitions’ they created in running the business seamlessly, including no flexibility on working hours. The unionized employees strictly work as per working hours stipulated in the industry-wide settlements.
We called for an urgent bipartite meeting, where we had them to agree to participate in Performance Management but with a caveat or two. They were equal performance bonus to all members and continue with tenure-based promotion even if the performance is unsatisfactory! The purpose of agreeing to this approach was strategic as we wanted to inculcate a performance driven mindset in non-exempt employees to begin with. Secondly, it was a great way to identify training needs for non-exempts too. We ensured that they attended the training programs along with exempt employees and get positively influenced. In subsequent years, we also achieved their full participation in ‘pay for performance’, acceptance to performance bonus and promotion to exempt category based performance ratings!
Compliance to Labor Laws
Governments are already working on labor reforms in a bid to simplify conducting a business in India. More often, these start-up companies have the tendency of looking at short-term gains and evading labor laws as their main aim is to build the business before focusing on the compliance matters. It is a short-term vision and not a prudent IR strategy at all. It is important to ensure 100 per cent compliance from the beginning itself. No adherence to compliance can get the company into deep trouble, including disengaged workforce coming together to form a union. It is a ‘penny-wise pound-foolish’ approach. The right IR strategy is to ensure that employees’ interests are well protected by adhering to the law of the land from the very beginning of the company’s inception.
A robust and winning IR strategy is all-inclusive including relationship management. Call it societal obligation or care towards our society, it has been proven reasonably beyond doubt that businesses that show genuine concern for its surroundings will get protection from anti-social elements. In the larger interest of the business, its employees and other stakeholders, efforts should be made to be socially responsible for the people in and around the businesses / work location. Take care of the needy, take care of the children, contribute to the nearby school, colleges, NGOs etc. for the will extend their support when you need them the most.
IR is a not a complicated matter. There is a tendency to project it as a big problem. It needs deft and nifty approach and high level of emotional intelligence. Get your IR / ER strategy right; win the heart of your internal customers.