Address delivered at the Tata Group HR Technical Forum on Employee Relations
The subject of my talk is ‘Changing
Paradigm of Employee Relations.’ As I thought about the subject, I realised four
aspects, let me begin by sharing those with you.
See the video of my speech here
1. Firstly ‘Employee Relations’ [ER] is
about the relationship between employer and his employee, both individually and
collectively. This relationship begins with the contract of employment or what
we call the ‘Appointment Letter,’ and usually ends with his resignation letter,
or what HR Managers call the ‘Disappointment letter’ in lighter vein. Between
the exchanges of these two letters we witness high drama, as in any
2. The second aspect is about the word
‘paradigm.’ We know that a paradigm is a mental map or a pattern of something
as the Oxford Dictionary defines it. We are going to discuss changes in
paradigm. It does not take great
intelligence to understand how difficult it is to identify a change in the
paradigm, because it is usually very slow. It is so slow that occasional
anomalies are not even noticed. I am reminded of an experiment which Collin
Wilson has described. A psychologist asked people to watch as he held a pack of
cards and quickly started dropping cards one by one. The interesting aspect was
that in his pack of cards there were some red clubs and black diamonds. As
dropped cards rapidly nobody noticed the anomaly. As he started dropping them
again, but a bit slowly, in the second round people realised that something was
wrong but could not say what it was. Then he dropped the pack again even more
slowly, many observers realised what was wrong.
3. We as observers of ER are in the same
position. I am going to discuss what, in my opinion, are black diamonds and red
clubs – whether they make paradigm change or not is for all of us to discuss
4. Now the third aspect – I would like
to pick up here the word ‘relations’ as in Employee Relations. The definition
of the verb ‘to relate’ has not changed in the last several decades. So what do
we really mean by ‘changing paradigm of ER?’ I believe we are really referring
to changing paradigm of building healthy employee relations.
5. And now I come to the fourth and the
last aspect: If the paradigm, which is a pattern, of employee relations is
changing, it is because we are behaving differently, and it must be obviously
because we see our role differently. So I am going to discuss with you
whether the parties to the employee relations think that their roles have
changed, and if so, what are the tell-tale signs. Needless to say these
are all my impressions.
6. Let me begin with the broad picture
first. I already mentioned earlier that we are really referring to building
healthy employee relations. So the next question is ‘What would be the
manifestation of healthy employee relations?’ Needless to say that all employees
should feel that this is a great place to work, and they should feel a sense of
belonging. Let us ask ‘how do we fare as a nation? Where does India stand
today?’ This question is relevant because we are trumpeting ‘Make in India.’
7. Every year The International Trade
Union Confederation (ITUC) publishes Global Rights Index. It demonstrates the
worst countries in the world for working people, with the erosion of rights and
increases in insecure, unsafe and informal work. The protection of fundamental
rights of working people, they say, has become more critical than ever. India
ranks as one of the worst countries to work, it is placed at level 5 which
means that there is ‘no guarantee of rights.’ This is on a six point scale. ‘One’
indicates Irregular violation of rights, ‘Five’ indicates No guarantee of
rights. Even in 2014 India was placed at level 5. We have here China and Korea
8. This brings us to the next question –
if we are one of the worst countries to work for in this world, what was the
Government doing? Let me share my experience and some thoughts:
a. We are aware of the extreme partisan
stance taken by the Haryana Government in the case of Maruti. Several people
have openly criticised the role the Government has played in suppressing the
workers’ voice. PUDR [Peoples Union for Democratic Rights] published a report [Driving
Force] after investigating the violence at Maruti plant. I would like to read
out a short paragraph.
“This report….. reveals how the unrelenting and seamless
nature of the nexus between police, the administration, the management and the
judiciary is blatantly serving the interests of capital. The absence of any
semblance of protection for workers of the automobile industry, the most advanced
industrial sector, which is heralded by the neoliberal regime as its hallmark,
brings to light the grave challenges before the working class today. The
possibilities for justice in this scenario appear very bleak.”
b. In Toyota Kirloskar’s case, the
Government of Karnataka was more an onlooker than a party whose role was to
keep the wheels of industry running.
c. I can cite many instances but I will
quote from the report ‘Captured by Cotton.’ It is a report on ‘Sumangali
“This report highlights several labour rights violations
faced by girls and young women employed under the Sumangali Scheme in the Tamil
Nadu garment industry. The Sumangali Scheme equals bonded labour, on the basis
of the fact that employers are unilaterally holding back part of the workers’
wages until three or more years of work have been completed. In addition,
workers are severely restricted in their freedom of movement and privacy.”
You have to read the report to understand how draconian the
ways of textile industry is in Tamil Nadu.
d. So we once again ask ourselves ‘What
was the Government doing? What is its role?’ HR Managers of my generation will
recall that the labour Commissioner’s office used to call the Employers
representatives to attend PMS or Personnel Management Services which was a
precursor to conciliation proceedings. Those HR Managers will also recall
settlements being signed with the intervention of Labour Commissioner at
unearthly hours. Mico in Nashik once signed their settlement at 3 am. It was
facilitated by the Labour Commissioner. We see no such efforts now, no more
9. The Labour Ministry is supposed to
intervene in disputes and facilitate a settlement. They have given up this
role. They also have another role which is of law making. I will not elaborate
on this because we are all witnessing not-so-happy situation on this front.
10. The problem with the Government’s
confused response is that it has made them an onlooker on employee relations
scenario, which allows the unscrupulous to get away with murders. How else will
you explain the indiscriminate use of contract labour and trainees?
11. Let us return to paradigm shift: The
Government has given up its role to intervene in disputes where they exist or
even apprehended. It used to think that they have to protect the weaker party,
namely labour, in employee relations. It is now working with a different
mind-set. Now the Government seems to think that industry must be promoted by
allowing the industry to have its way at any cost.
12. Let us now examine if the Employers
have also changed their paradigms of employee relations.
13. Let us first examine the context in
which Organisations are placed. There is cut-throat competition. It has led to
mergers and acquisitions. It has also led many organisation to rethink
strategies. So Pfizer has closed down their Thane unit, but is getting the
products made somewhere else. Kotak Mahindra and ING Vysya have merged. I
mention these examples only to underscore the fact that the strategies adopted
for business have brought forth different sets of concerns on employee
relations front for them.
14. There are two more factors which
require our attention. Firstly many Indian organisations have now grown as
Indian MNCs. These include giants like Tata Steel, Tata Motors, and also
include Godrej, Asian Paints and Marico. I have named just a few.
Automate, Do Not Employ
15. The second factor is articulated very
well by a report in The Economist.
“The effect of technological change on trade is also changing
the basis of tried-and-true methods of economic development in poorer
economies. More manufacturing work can be automated, and skilled design work
accounts for a larger share of the value of trade, leading to what economists
call “premature deindustrialisation” in developing countries.”
Let me also read out a very short conclusion of a research
study. This is titled “Where Have All the Workers Gone? Puzzle of Declining
Labour Intensity in Organised Indian Manufacturing” and authored by Kunal Sen
and Deb Kusum Das. They conclude:
“With declining protection for capital goods over time, the prices
of machines fell steadily relative to the price of labour, and increasingly
made ﬁrms in the organised sector substitute machines for labour. While the
fall in the relative price of capital may have led to an increase in the rate
of private ﬁxed investment in machines, and consequently, economic growth, it
changed the incentive structures of ﬁrms to hire labour, and enabled them to
quickly adopt machines in their workplaces.”
Employ Indirectly or On
16. There is a lot of uncertainty about
future due to competition and the employers also do not wish to add to their
manpower. This has resulted indiscriminate employment of contract labour and
trainees. Not just trainees and contract labour, but there is a huge number of
employees who are called retainers and consultants. Add to that fixed term
contracts, which are not really so. Their number is shocking, believe me it can
be as high as 40% of the workforce. I wrote a blog titled ‘Training to Exploit’
and presented this statistics which has gone unchallenged so far.
Promote Culture sans ER
17. An organisation which employed rather large
number of retainers had ‘experienced a threat’ of unionisation. I asked a question
to their HR manager: ‘If a union representative asks you ‘Sir, what is your ER
policy?’ what would be your answer?’
18. And that precisely brings us to the
next important question. Do we have a policy on union recognition? Do we have a
policy on where we will employ and where we will not employ contract labour? Do
we have a clear policy on where to employ trainees, retainers? These are the
questions which are preventing us from building healthy employee relations. Add
to this the fact that most of the unions have either no power to question or
they are conniving with the employers in engaging such people as we see rampant
in the Auto industry.
19. I would like to invite you to see the
‘Declaration of social rights and industrial relationships at Volkswagen’ which
they signed in 2002 and revised in 2012. Volkswagen stands out in Pune belt
mainly because they have refrained from malpractices of engaging contract
labour and trainees. What made them different? The answer to my mind is that
the Volkswagen managers are accountable for the ER practices to somebody
within. The question is if we wish to be an MNC, are we going to adopt
practices which help us build healthy employee relationship in every country?
This is an area where paradigm shift has not happened but is desirable.
20. There is an increasing trend to work
on the organisation’s culture to promote the right work ethic. ITC has done
great job of this, and I have done some work with Tata Steel at two of their
plants. Both Tata Steel at Kalinganagar and ITC in Nepal have taken initiative
to work on work ethic at the inception stage. This is really laudable. I do not
know if they have written ER Policies, but in both these companies a lot of
collective thinking has happened. There are many organisations which want to
work on work ethic without declaring their ER policies and that is why they are
unlikely to succeed. Trying to build culture without declaring to the world
what we stand for does not work.
SMEs show the way:
21. I will refer to the settlement of
Bajaj Auto with their Pantnagar workmen. The
settlement gives a ‘Performance based’ increase. In a nutshell this works as
follows: [a] All workmen get uniform increase in allowances, [b] But they get differing
increases in Basic salary. Those rated A will get 100% of the agreed
increase, B rated will get 80% and C rated will get 50%.
22. My hope is stands on the experiments
in some of the SMEs. Polyhydron sets the example. They have done pioneering
work in this area in my opinion. But is it spreading? I searched for answer and
I discovered it which I have captured in my latest blog post called ‘When
HyTech meets HiTouch.’ HyTech is owned by Mr Mondkar and he implemented Toyota
Production System. After achieving great results, he shared the generated
wealth with workers. So he shared 25% of the value added
with the workers. What Mondkar did is a sure recipe to promote healthy employee
relations with a strong sense of belonging.
23. So we see two paradigms here: One of
increasing salary but with a strong sense of control, and the other of sharing
wealth with a strong sense of participation. I leave it to
you to decide your choice.
24. I recently read Dan Pink’s
outstanding book ‘DRIVE: The surprising truth about what motivates us’ He
argues with lot of evidence that three factors play greatest role in motivation
of employees. They are Autonomy, Mastery and Purpose. Has anybody tried to
redesign jobs of employees employing this approach? I do not know. Some good
work was done in this area by Marico and Asian Paints, but it is dated. I have
not heard of any other example. Should this be the approach for the future?
25. The adversarial role of trade unions is what
we are accustomed to. I have however seen some very positive changes.
26. I arranged a program for Tata Steel
union representatives and managers to witness changes first hand. I have also
blogged about it [Trade Unions as Business Partners Emerging Trend] and it has been
republished on many sites like Peoplematters and Businessmanager.
TU Leader Profile has
27. There are many changes taking place
on the ER scene. This of course is true of the Pune belt which I have studied
extensively. I met Pradeep Thakare of Bosch who searched my profile on the
internet before meeting me. Thakare has not only launched very imaginative
schemes for workers, but he also proposed that the union will own a production
line. They carried out several changes systematically to reduce rejection.
Prakash Dhavale challenged the Minister Mr Sachin Ahir when M&M wanted to
close down Amforge, fought with the management and got workers a benefit higher
than what the Minister gave. The young union leaders are tech savvy, full of
confidence and assertive too.
Unions are Proactively
28. Here are some proactive changes:
Bajaj Auto has defined their policy towards the Company. They have made clear
statements like: The union will adhere to quality standards, no short cuts.
They will practice transparency in dealings. They will champion multi-skilling.
Many representatives are themselves ‘multi-skilled.’ They will practise data
based management. The union has data pertaining to all employees, and they
often talk with facts and figures.
29. The Thermax union has a quality
policy and is perhaps the first union to be certified under ISO 9000.
30. But they are under tremendous pressure.
Because the profile of workers has also changed. Gone are the days when union
leaders decided what was good for workers, now it is the other way round. We
have insistent workers who tell the leaders what they want.
me read out a letter sent in July recently by the Union to Automotive Stampings
& Assemblies Ltd. I am told that Tatas hold 75% stake in this company. I
Before moving forward
we expect few words of wisdom and inspiration from you. We would like to place
on record that we will create appropriate atmosphere which is conducive to
investment and growth.
Sir, we have decided
to adopt totally new path which will not create distress, jealousy, enmity,
division between management and union, etc. We are in the process of detailing
on the above aspects and present to you in due course of time. This time we
have decided not to demand wage rise, but to earn wage rise and without your
cooperation and support it will not be possible.
We are serious…… and
we will show it through our behavior and attitude. We will submit our detailed
proposal in terms of productivity improvements not only in labour but also
material, energy, capital. We will also propose wastage reduction plan in all
these areas so that our Company shall be competitive and sustainable.
[Letter of ASAL Kamgar
in Indian ER scene
32. When Maruti had the infamous
violence, a small document was published – called ‘Merchants of Menace.’ Maruti
refused to meet the International Commission for Labor Rights so they went
ahead with their investigation and published the monograph. They have
subsequently also published one more called ‘Shiny Cars, Shattered Dreams.’
This is about precarious working conditions of workers in Auto industry in
Chennai belt. ICLR is doing its bit to raise awareness about the labour issues
33. IndustryAll Union has set up a base
in Pune where many big organisations in auto industry are present. IndustryAll
has a very high affiliation by local unions. Local unions interestingly are
‘employees union’ but we will now understand that they now have a solid
34. The international watchdogs are here
to stay – whether we like it or not. It is time to upgrade our practices.
35. Looking back there is enough evidence
that paradigms of employee relations are changing. The real question not
whether the paradigms of employee relations are changing, the real question is
how can we channel them to build healthy employee relations. There are two
factors which come in the way – the first is the extremely hierarchical attitude
of the managers and the other is the fear of opening out, the fear of
disclosure. Unless we act with hope and practise transparency and openness we
will not be able to build strong relations.
36. Finally, what matters in the
relationship is the conversation, the depth and openness of it. Conversations
where we talk to others as our equal, status has no place there. What matters
in developing relationship is how we resolve our conflicts. Unfortunately these
skills are not taught in any management school, they are learnt by trial and
error, by practice. Collective reflections do not seem to have a place in
building relations in our corporate world. My organisation faced a six month
long strike, and later employees came back to work totally defeated. I learnt a
big lesson when we reflected in a meeting on where we had possibly gone wrong,
and if could we have averted the strike.
37. One concern which is being voiced
frequently is that the ER or IR skill is lost. For the last two decades we seem
to be doing without it and we have not done particularly badly. Perhaps
Darwin’s law is at work. One message from current situation could be that the
old adversarial stance is now extinct, it is like the appendix in our body – it
is there but it is useless and can be removed. Look at the positive
developments we have discussed. The message could be that the organisations of
today and tomorrow must be built on ‘unitary’ stance, in other words we have to
be demonstrably inclusive. This situation is like reading the Tarot cards, and
we are the readers.
38. Let us understand one critical thing
– Relationship is a thing of past, it is history. What matters is ‘Relating’
which is the present, it is the moment which we are living. We need to be
shackled by the history of relationship, what matters is the spontaneity and
authenticity of response to the situation on hand.
39. It is my personal view that the last
two decades, and the influence of IT industry has made working population more
algorithmic. Everything must have SOP, even building relations! Relating is not
algorithmic, it is heuristic. We must explore concerns of others first and then
explore possibilities of evolving a solution. This is what Steven Covey says,
this precisely what Edgar Schein says.
40. Paradigm is a pattern. Our
language discloses the paradigm. Please recall your discussion with a
marketing or finance manager. He uses words which indicate conflicting values –
like market share and higher profits. He wants both, so the learning is that
values are best served in pair.
What are the words which we are
associating or listen frequently when we say 'employee relations?' We say 'Control,
Indiscipline, Non-compliance, Performance, Welfare, Conflicts, Dispute.' What
are the words which we are associating when we say just 'relations'? We say
'empathy, care, togetherness, conversations, reaching out, doing things
together.' To summarise, when we talk employee relations we talk words which
are either paternalistic or which indicate control, adversarial stances; when
we say relations we say words which introduce warmth, greater transparency and
openness. Just introduction of the word 'employee' can change the scenario so
much is simply shocking! It moves us from interdependence to control.
So as ER manages we must learn to
manage both the values – Control and Interdependence. We have to do away with
our obsession for control. We have to recognise that every manager is dependent
on his junior for success. This is where Edgar Schein’s ‘humble inquiry’ comes
If we wish to change paradigm of
employee relations, we must change the language and we must practise humble
inquiry – that is the formula for changing the language.
Vivek S Patwardhan
Labels: Changing Paradigm of Employee Relations, Conversations, Humble Inquiry, Industrial relations