Blog: Responsive Industrial Relations: Where HR Meets IR - Part II

Employee Relations

Responsive Industrial Relations: Where HR Meets IR - Part II

The excessive and indiscriminate use of contract labour in the industry is the result of a demand for flexibility
Responsive Industrial Relations: Where HR Meets IR - Part II

Continued from ‘Responsive Industrial Relations: Where HR Meets IR – Part I’

Let me now talk of some developments and some innovative work in this area.

The settlements at Pune in recent times have given a pay rise of Rs 8 thousand plus to workers. There is a greater recognition that variable pay will play important part of a worker’s CTC.

And here is the gem: A company called Polyhydron has done wonders. I wish to quote Polyhydron. I will read out the statement made on their website.

“A transparent system of wealth generation and a link of compensation to employees ensure that the employees earn their wages and need not be paid. [My note: That’s a deep statement:” employees earn their wages and need not be paid”]. This system makes the employees responsible for their returns and in turn improves wealth generated per employee. It promotes multiple skill, reduces total manpower requirement. Polyhydron has established wealth-sharing scheme. It ensures 30% of the wealth generated gets distributed.”

On the other hand, organisations insist that workmen and unions have to be sensitive to the changes in the economic scenario because there is now fierce competition. The competition is also with International players. This means changes will have to be implemented fast and quick, without much fuss. The employers have been demanding ‘flexibility’ from workers and unions. If you see the settlements, we see long clauses not just of multi-skilling but also of authority of deploying workers on any job. Permit me to read out this clause from the settlement of Bajaj Auto in Pantnagar. It will convey not just my point well, but it will also convey the anxiety of the organisations in ensuring flexibility.

“The Representative of the employees recognizes the following rights of the Management:

(a) The Management has the right to set and revises the standards for jobs (time standards), production and quality, to effect technological development, to introduce new or improve products, production, methods and systems, rationalization, standardization, or improvement of plant or techniques, which may lead to increase / reduction of manpower including covenanted employee or to be employed in any occupation / trade / department or shift. It also has a right to decide upon production, quality and cost target, recruitment, promotion, deployment, allotments of shifts, working hours, timing of shifts, holidays, weekly offs, over times (following the statutory norms) and permanent / temporary transfer of employee from one job / section /department /division to another as the case may be and from one plant to another plant situated anywhere in country.


The power is unbridled, but this long all inclusive clause only goes to show the anxiety of the organisation in ensuring flexibility.

My understanding is that this is partly the response to India’s archaic labour laws which inhibit introduction of changes. No organisation can survive today without making quick changes to various aspects of production.

The excessive and indiscriminate use of contract labour in the industry is the result of this drive for flexibility. In Pune belt, there is indiscriminate use of trainees as well. Take a look at some statistics.

At Pune, Fiat reportedly employs 330 permanent workers, 700 trainees, 700 temporary workers, and 800 contract workers. Bosch employs 235 permanent workers, 400 trainees and 150 contract workers. Mahindras employ 1800 permanent workers, 700 trainees, 250 temporary workers and 1200 contract workers. These details are already put on my HR blog. See my blog post ‘Training to Exploit.’

I am not making any judgement at this stage; I am just placing facts for your consideration.

The point I was making is that expectations and responses of parties in Employee Relations is shaped by social and economic changes. And in healthy relations you take a note of these expectations, and strike a compromise.

We now move to our next point.

How can we create responsive industrial relations?

The opportunity today is creating a seamless organisation where all employees are integrated well. This will create higher quality of life both at work as well at home and a vibrant organisation sensitive and willing to adopt itself to challenges of times. That is the challenge and opportunity. Is this happening? What are the signs and what should be done?

Yes, it is happening. And here are the signs.

The workers, who were more or less regarded as a pair of hands a few decades ago, are now participating in certain activities that go to improve not just products but also their experience of working in an organisation. These activities are common everywhere now – like TPM, TQM, Quality circles, Small group activity, Kaizen, 5S and so on. The employees are being managed with HRM practices. The HRM policies and practices are essentially individualistic, and they focus on integration, worker commitment, efficiency, innovation and quality.

Do you notice that the nature of ER is changing? The point I am making is that workers are being managed increasingly as individuals and not as a part of a collective.

Now they say that HRM provides governance standards to ER. And this trend is everywhere.

But ER is not entirely individualistic. There is a role for the Government to play but it is atrophied. So organisations are substituting. They are declaring policies. You must tell people what you stand for. And also what you do not stand for.

Volkswagen has come out with ‘Declaration of social rights and industrial relations.’ The declaration of Volkswagen spells out their IR philosophy clearly. SKF, Nestle have a very well spelt out ER policy. But nothing beats Toyota [as seen in the book Toyota Culture] and Southwest Airlines. These are exceptionally mature approaches to employee relations.

This is what Toyota says:

Managing Toyota Way and establishing a Toyota culture is not negotiable.

The local management should establish a stance toward labour unions, taking into consideration local culture, laws, labour movements and so on.

If the management of the company does have a union, both should recognise that the prosperity of the company is the common objective and both must use thorough communication in order to resolve any differences of opinions and build a healthy relationship of mutual trust.

The relationship of mutual trust can ensure the long term prosperity of the company and thereby stabilise employee lives by maintaining and improving working conditions.

The trend is to take Human Rights approach. That is what Volkswagen has done. Recently HUL declared that they will take the Human Rights approach to employee relations. ITC’s policies are similar but they are part of a bigger statement.

Needless to say, that when you make a policy statement you declare your own governance standards to the world. You can be held accountable for it. Volkswagen does not employ contract labour in their manufacturing process unlike so many others in the auto industry; it does not come as a surprise. Values and vision which were sorely missing from the ER scene are returning. That is a healthy trend.

British Petroleum’s step in ER is the transformational step in every way. The BP Union and BP created a shared vision of ER and signed a joint statement. That was way back in 1999!

In other words, organisations are telling what rules they will abide by – and that is a big commitment. If we focus on organisations which are trying to foster responsive industrial relations, we see that they are increasingly listening to employees, having dialogue about issues; these organisations are sensitive about economic and social changes. And against this background they are articulating their policies and vision. The next step can only be to practice greater democratic way of managing people. This is essential for creating responsive industrial relations.

For a visionary leader it is an open canvas today. That is the big opportunity.

Vivek S Patwardhan

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Topics: Employee Relations, #IndustrialRelations, #BestPractices

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