128 Part II Paradigm Shift
methods used in formulating and implementing policies affect the industrial-relations cli-
mate. Furthermore, the involvement of trade unions in the formulation of policies also plays
an important role in tilting the balance towards the working class. However, if these parties
find themselves to be dependent on financial support from the corporate entities, the politi-
cal equation then would be completely different.
In countries where State capitalism is the main ideology, collective bargaining would not
be encouraged, trade unions would just be tolerated and labour-management relations would
be regulated with a fair degree of strictness.
In countries like the former USSR, where the prevailing political ideology is State social-
ism, trade unions are assigned well-defined roles and they function within the parameters of
the overall political system.
India having adopted a mixed economy, conciliation, arbitration, workers’ participation
in management, collective-bargaining are parts of labour-management relations.
Social and Cultural Factors: These factors refer to prevalent social norms, values and
beliefs. In countries like the USA, where a stable socio-political order exists, the govern-
ment promotes a common ideology of free enterprise, or democratic capitalism. In such
countries, “collective bargaining” is facilitated by legislation and government interven-
tion. In places such as the Scandinavian countries and the UK, where democratic social-
ism prevails, collective bargaining is the standard norm with almost no government
intervention.
T H E FACTO RS I NF LUE NCI NG E M P LOYE E R E LAT I O NS
M A NAG EM ENT
Economic Factors: The pressure to compete in the global market with cost-effective qual-
ity products has put pressure on the employers’ organizations to extract performance and
ensure that the employees deliver. The focus has shifted from regulating terms and conditions
of employment to regulating performances. This has, at times, necessitated “downsizing”
according to the employees and “rightsizing” according to the employers. Subcontracting,
outsourcing and contractual forms of employment have replaced tenure employments. The
humanistic welfare concern of the employer is based on labour reciprocity through perfor-
mance and results. The employee–employer relationship is more unilateral than a collective
one. From dealing with groups of workers defined by craft, unit, or level, the employers now
talk of teams—self-managed or self-directed by the employees.
Further, the new wave of consumerism in the Indian society, a consequence of lib-
eralization and the opening up of the economy, has led to changing values among the
workforce, now more individualistic than collective. The emergence of MNCs has led to
new workplace arrangements. The price war in compensation is not based on equity but on
individual competencies and deliverance. The market forces have created a new employ-
ment arrangement and a new relationship between the employer and the employees—one
of mutual delivery on performance. This relationship is, thus, clearly distinct from the
“industrial relations” concept that had previously served to determine the work culture of
an organization.
Institutional/Governmental Factors: The new economic policy brought changes in legis-
lation relating to trade, finance and industrial policy while leaving the labour laws as they
were.
Indian labour laws are perceived to be pro-labour. Many labour laws and court judg-
ments are impediments to India’s competitive status in the global economy.
Labour unions in India are laden with problems of funds, external leadership, politi-
cal affiliations and multiplicity of unions with low membership and inter-union rivalry.
In the present market-driven economy, the trade unions have been moved from the cen-
tre to the periphery. In an environment where competitive advantage is gained through
cost-leadership, trade unions are viewed as excess baggage and a drain on resources. The
focus, therefore, is on building a relationship with the employee rather than with trade
unions.
From Industrial Relations to Employee Relations 129
Social and Cultural Factors: In the post liberalization phase of economic growth, India has
promoted individualism, consumerism and a driving ambition among the working classes to
motivate its workforce to strive and move up the hierarchical ladder through performance
and the development of individual competencies. With greater opportunities, the possibili-
ties of labour mobility are far greater; attrition, too, is higher, which prefers a one-to-one
employee relations management more than a relationship favouring collective herding.
Commitment has become a unitary concept and has become of core essence to HR strate-
gies. This has made it difficult for workers to offer dual commitment to both the employer
and the trade union. The employers have broadened their roles to include and fulfil the roles
earlier performed by the unions. The employees, therefore, prefer to offer their commitment
to employers rather than to trade unions.
Technological Factors: New techniques and methods of work have changed work patterns
and descriptions of jobs. A new creed of skilled workers following new patterns of moti-
vation and aspiration levels has changed the character, scope and coverage of relationship
management.
Political Factors: These factors include the political system in support of the new economic
policy and its consequences. The communist parties have been repeatedly expressing their
concern over diversifications, mergers, acquisitions and the entry of foreign players in key
sectors of the economy. The resistance is manifested in trade unions affiliated to the commu-
nist ideology staging demonstrations against such government initiatives. In such a scenario,
dealing with the fears and insecurities of individual employees, rather than a participative
collective body such as a trade union, can play a more important role.
The factors influencing
Organizational Factors: The competitive environment has brought about a visible change employee relations
in the employment arrangement and new staffing practices. Flextime, outsourcing, con- management include:
tractual jobs are the order of the day. Staffing has become a profession rather than a func-
Economic
tion. Electronic processing has made personnel administration far easier, quicker and more
Institutional/govern-
responsive through e-HR. Even the one-to-one contact has become “virtual”. The focus once mental
again has shifted to the employee rather than employee groups. Social and cultural
Global Factors: The success stories of global corporations and Fortune 500 companies Technological
and their unique people-management programmes show a process of centralization of the Political
employee in the workspace. Diversity and individual differences are accepted and dealt with Organizational
carefully. This has greatly influenced the shift to employee relations management from a Global
strictly industrial-relations-management approach. Psychological
Psychological Factors: Especially in the present performance-driven culture that promises
no outstanding job security, psychological factors have a far greater role to play in ERM.
The role of coaching, counselling and mentoring has a greater role to play in ERM than they
ever did in industrial relations. HR strategies aim at motivating employees for excellence,
innovation and customer satisfaction. Psychological tools are more useful as they deal with
individual needs and aspirations and, hence, the focus shifts to the employee rather than to
any employee organization that claims representative roles.
7.3.2 Principles
TH E P RIN CIP LES O F I ND UST RI AL R E LAT I O NS M ANAG E M E NT
Rights and Obligations Under the Constitution of India: It is important that every employer
organization and its designated representative(s) recognize the individual employee’s right to
personal freedom and equal opportunity. Article 14 of the Constitution of India guarantees
certain fundamental rights to all Indian citizens. Further, the provisions in Articles 39, 41,
42 and 43 incorporate the elements of labour legislation and social security to the working
class. The judiciary, through its judgements, also ensures “social justice” ultimately aiming for
socio-economic equality.
The Acceptance of Mutual Responsibilities and Obligations: Accepting responsibility for
one’s action as an employee or an employer and its impact on the operations of the orga-
nization is the key to smooth industrial relations. The labour legislations, being in favour
