Employment relations and its emerging trends

UNDERSTANDING EMPLOYMENT
RELATIONS AND ITS EMERGING
TRENDS
KULDEEP MATHUR
M.B.A. JIWAJI
UNIVERSITY GWALIOR

• Understanding IR
▫ IR is most misunderstood & even maligned subject
▫ People have written its obituary
▫ /IR is basically a relationship management &
relation will continue till humanity/
industries exists.
- Employees works in groups/ team
- They have to relate with one another in order to
transact business
- Work teams consists of specific nos. of
employees with complementary skill committed
to a common purpose & are jointly accountable
for the result.
- Teams are formed in various stages

• Forming – During the forming stage, a work team focuses on
orientation to its goals and procedures.
• Storming – The storming stage begins when competitive or strained
behaviours emerge
• Norming – In the norming stage, team members become
increasingly positive about the team as a whole, the other members
as individuals, and what the team is doing.
• Performing – By the performing stage, members usually have come
to trust and accept each other and are focused on accomplishing
their goals.
• Adjourning – the adjourning stage involves terminating task
behaviors and disengaging from relationships.
• Feelings –
▫ Trust – Members have confidence in each other.
▫ Openness – Members are really interested in what others have to say.
▫ Freedom – Members do what they do out of a sense of responsibility to
the group, not because of pressure from others.
▫ Interdependence – Members coordinate and work together to achieve
common goals.

▫ Relationship can be co-operative or adversial (conflicting)
▫ In our life personal or organizational, we have relate ourselves to
others - relationships gets built
▫ I R is a culture of working together in industry – a network of
relations
▫ Cooperation can not be regulated /bought
▫ Co-operation requires positive approach of manage people – it
requires building, nurturing & developing relationship on
continuous basis – bringing in transparency & fairness in our
dealings, communicating , motivating & leading etc. – inculcating
ownership & we – feeling – introducing devices for lasting
bondage – building bridges of trust – developing healthy
relationships

• Conflict in inevitable. It is generally harmful.
Requires immediate resolution.
Two( broadly) types of conflict –
1. Interpersonal – employer & employee
2. 2. Inter group/ inter organizational – employees
collective or unions & management
• Interpersonal conflict arises out of terms of
employment between employer & employees
(Workmen) – Regulated by laws.
• Govt. employees,
• Industrial workmen –
• Managers in industries
• Two types of conflict
▫ Conflict raised by individual employee/ grievances & their
management
▫ Unhappiness shown by the employer – management of
discipline

• Inter group/ Inter organizational – individual employee is not able
to deal with mighty employer, they form unions / association on the
principles of individual dispensability and collective indispensability
– survival instinct fundamental right / ILO convention
• Collective disputes/ industrial disputes – wage settlement, service
condition, retrenchment etc.
• Instrument like collective bargaining & strike & lockout
• Actors in the game of ER act & interact - managing human resource
means directing, controlling, motivating & in the process
reciprocating to their responses, most of the times bitter ones.
,resulting in conflicts.
• All these actions & interactions are regulated by laws/ & judiciary
• Industrial employment (standing orders) act, industrial dispute act,
trade union act, High Court, Supreme Court judgments.

• ER is a complex subject
• Highly susceptible to forces within and outside the organisation
▫ Economic, Social, Psychological,Political, Technological and Market: local and
global
▫ Network of Relationship – non leaner/Criss - Crossed
▫ Social relation at workplace
• Does not have a fixed profile
• Changes as per the pulls and pushes of the market
• Started as reaction to exploitation by mighty employers
• Post independent IR : CRP
• Post liberalization ER : LPG
- Global competition
- Global networking
- Global mindset
- Global standards
- Survival and excellence
- Change both in context & contents

Changing Business Skylines / Environment and
Employee Relations
Post industrial societies- the third wave- (toffler)
• Sunrise industries – IT, ITES, Telecom, Hotel, Health
services, Insurance, Pvt. Banking, Pharmaceuticals,
Retails, etc. more of employment in these sectors
– Employee Based Organizations
▫ Require: Service oriented work force
▫ E-industries (BPOs, KPOs) mushrooming
 Knowledge workers
• Shrinking organized sector:
• Traditional Manufacturing sector
▫ Technological upgradation, restructuring, retrenchment,
Disinvestment, Mergers & acquisitions

• Entirely different organisation structure: Flatter, leaner-virtual
organizations
• Employers: mostly MNCs, professionally driven, competitive
mindset – In the new context, heavier responsibilities fall on
employers and their organizations. Some need to give greater
attention to empowerment, rather than exploitation of human
resources. Building skills and giving the workforce greater say and
stake in the enterprise becomes imperative.
• Employees: Diverse in character, white collar, pink collar, female
workers, multi-ethnic/multi-cultural workforce, migrant labour,
contract labour etc. – The colour of the collar of the worker in the
organized sector is changing. There is a gradual reversal in the ratio
of executives to non-executives. Over the years, in most companies,
executives outnumbered non executives. Technological changes
eliminating the 3D jobs – dirty, dangerous, and drudgerous – and
lower and middle level information gathering and processing tasks
warranting different kinds of age, contracting out and outsourcing
whereby the permanent employee strength shrinks to accommodate
those with core and critical skills, while banishing the rest to the
periphery of the organization in casual, contract, and contingent
employment.

• Changing role of Govt.: ControllerChanging role of Govt.: Controller  FacilitatorFacilitator (GOI has not(GOI has not
done much under political pulls and pushes)done much under political pulls and pushes)
Some states are waking up to the need for wooing investment, foreignSome states are waking up to the need for wooing investment, foreign
and domestic, and creating jobs. In the process they are resorting toand domestic, and creating jobs. In the process they are resorting to
competitive labour policies that are ‘investor friendly’. The componentscompetitive labour policies that are ‘investor friendly’. The components
of the industrial relations policy of Kerala, the relaxations andof the industrial relations policy of Kerala, the relaxations and
exemptions to labour inspections in Rajasthan and Uttar Pradesh, theexemptions to labour inspections in Rajasthan and Uttar Pradesh, the
liberal response of the Tamil Nadu Government to requests fromliberal response of the Tamil Nadu Government to requests from
employers for notice of change, lay-off, etc., and the cancellation of theemployers for notice of change, lay-off, etc., and the cancellation of the
registration of an unusually large number of unions in West Bengal,registration of an unusually large number of unions in West Bengal,
have had far reaching implications for industrial relations.have had far reaching implications for industrial relations.
Central laws being the same, their interpretation by the judiciary isCentral laws being the same, their interpretation by the judiciary is
changing. In 2005 alone, in five different cases, the Supreme Courtchanging. In 2005 alone, in five different cases, the Supreme Court
held that sleeping on duty, using abusive language against superiors.held that sleeping on duty, using abusive language against superiors.
Strikes have to be not only legal (refer to the strike by governmentStrikes have to be not only legal (refer to the strike by government
employees in Tamil Nadu,) but also justified. Where trade union actionemployees in Tamil Nadu,) but also justified. Where trade union action
is lacking, non-governmental organizations are rushing to fill theis lacking, non-governmental organizations are rushing to fill the
vacuum, particularly in matters concerning minimum wages and livingvacuum, particularly in matters concerning minimum wages and living
conditions in the unorganized sector, and occupational safety,conditions in the unorganized sector, and occupational safety,
environment, etc. in both the organized and the unorganized sectors.environment, etc. in both the organized and the unorganized sectors.

• The core conventions of ILO and dictates of WTO, IMF andThe core conventions of ILO and dictates of WTO, IMF and
SWBSWB
International pressure is mounting to link labour standards withInternational pressure is mounting to link labour standards with
international trade either through sanctions through bi-,tri-, orinternational trade either through sanctions through bi-,tri-, or
multi-lateral institutions (governments and internationalmulti-lateral institutions (governments and international
agencies, such asagencies, such as
New Actors on the Horizon – The consumers and communityNew Actors on the Horizon – The consumers and community
have emerged as the new actors on the horizon. Since theyhave emerged as the new actors on the horizon. Since they
represent the larger aggregations of population and widerrepresent the larger aggregations of population and wider
societal interests, when their rights are impinged upon by thesocietal interests, when their rights are impinged upon by the
action or inaction of either employees or employers the court –action or inaction of either employees or employers the court –
consumer courts to the Supreme Court – rule that the interestsconsumer courts to the Supreme Court – rule that the interests
of workers and managements should take a back seat.of workers and managements should take a back seat.

Changing nature of work practicesChanging nature of work practices
• Contracting – outsourcing in place of self-sourcingContracting – outsourcing in place of self-sourcing
• Casualisation of work placesCasualisation of work places
• Hiring work facilitiesHiring work facilities
• Use of electronic gadgetsUse of electronic gadgets
• PCs, SMSs, E-Mailing, Internet, Fax, Video ConferencingPCs, SMSs, E-Mailing, Internet, Fax, Video Conferencing
• Changing work System: TQM, JIT, CAM, CIMChanging work System: TQM, JIT, CAM, CIM

Contd…
• Changing look of the offices-transparent, smart
• 24x7x365 Work culture
• Paperless or less paper at least
• Offices software
• E-Documentation/ office software
• Intelligent offices
• Flexibility: Flexi timing, Flexi payment
• Changing Employment pattern
▫ Life long employment
▫ Part time, Home working, Tele working, Share
working

Contd…
• Changing reward/ compensation system
• Variable pay in place of guaranteed pay
• Employee’s ownership: ESOP
• Gain sharing/Profit sharing
• Cafeteria benefit system
• Emphasis on insurance and social security
• New crop workers want to share power,
responsibility and gain

Emerging Trends and Issues
• IR at cross road- unprecedented pressure- Meant for
CRP economy
▫ Slow, Ad hoc, Reactive, Passive: Strike, Gherao,
Collective bargaining, Litigation
• You cannot play the modern game of cricket with
old rules/dispensation of gulli-danda
• Forces of inertia (Status Quo)
• Emerging market requires: Speed, Quick
Responsiveness, Customer focus, zero effect
• No nonsense, trade union taken as nuisance , non
unionism individual bargaining

• Changing Pattern of C & R Management –
Fixed / Assured Time Wages are replaced by
variable / performance – based wages.
• Job security to employability.
• Pro-labour stance of government is getting
reduced.
• The attitude of judiciary is also changing.
• New players in the game of employee relations

• The aggressive approaches of Indian employers in the
service sector to trade unionism;
• The two extreme styles and strategies – ‘bleak house’ and
‘happy house’.
• The declining membership of trade unions, The decline in
the number of ‘skill’ workers and their replacement by
‘knowledge’ workers; and
• Trade unions should focus on managing the expectations
of the successive new generations of workers rather than
being content with their role in situations of discontent.
• Initiatives such as the recently formed Trade Unions
Partnership for Environmental Protection (TUPEP) are
welcome in the wake of mounting concern about the
health, safety, and environment in and around work.
TUPEP may, in association with other social partners,
address itself to new problems arising out of closure of
units due to environmental considerations, etc.

Collective Bargaining – in collective bargaining, some of theCollective Bargaining – in collective bargaining, some of the
shifts include:shifts include:
1.1. Centralization to decentralization;Centralization to decentralization;
2.2. Collective to individual contracts;Collective to individual contracts;
3.3. Parity to disparity;Parity to disparity;
4.4. Increased wages/incomes and benefits accompanied byIncreased wages/incomes and benefits accompanied by
erosion of job control;erosion of job control;
5.5. Concession bargainingConcession bargaining
6.6. Assertion of managerial rights than the rights of workers;Assertion of managerial rights than the rights of workers;
7.7. Skill-up gradationSkill-up gradation

Social security – the shift from welfare to ‘money fare’ through theSocial security – the shift from welfare to ‘money fare’ through the
conversion of several of the welfare benefits into cash is, however, aconversion of several of the welfare benefits into cash is, however, a
worrisome development. The other trend is a shift in retirementworrisome development. The other trend is a shift in retirement
benefits from defined benefits to defined contributions. This puts thebenefits from defined benefits to defined contributions. This puts the
real value of retirement benefits at serious risk.real value of retirement benefits at serious risk.
• Employers directly reaching the work men and negotiating withEmployers directly reaching the work men and negotiating with
themthem
• Disinvestment / Privatization and VRS are almost accepted facts ofDisinvestment / Privatization and VRS are almost accepted facts of
Industrial Relations.Industrial Relations.
Shifting roles of traditional actors – Over the years, a number ofShifting roles of traditional actors – Over the years, a number of
changes have taken place in the industrial relations scenario. Notchanges have taken place in the industrial relations scenario. Not
only have the players changed (the inclusion of consumers andonly have the players changed (the inclusion of consumers and
community), techniques, technology, and power structures havecommunity), techniques, technology, and power structures have
been re-examined and altered time and again.been re-examined and altered time and again.

Burning problems at ER front
1. Volatile labour market
2. Attrition rate very high
3. Work life balance disturbed
4. Union free organisations
5. Gender related problems
6. Issues regarding multi cultural & multi ethnic workers
7. Almost law free atmosphere- SEZ
8. Government as facilitator & not as regulator
• All these activities have become regular features and areAll these activities have become regular features and are
increasingly impinging on emerging E.R.s. This trend isincreasingly impinging on emerging E.R.s. This trend is
going to be accelerated, in future.going to be accelerated, in future.
Employee Relation has to address to all the issue

Towards new Management of ERTowards new Management of ER
Managerial Beliefs/Practices and Structural ContradictionsManagerial Beliefs/Practices and Structural Contradictions
1.1. The company is viewed as the property of the management. Workers haveThe company is viewed as the property of the management. Workers have
no say/stake.no say/stake.
2.2. Mainly the management is interested in the organization, not theMainly the management is interested in the organization, not the
union/workers.union/workers.
3.3. Organizations expect commitment, while viewing people as ‘dependable andOrganizations expect commitment, while viewing people as ‘dependable and
disposable’.disposable’.
4.4. There is conflict of interest and little concern for mutuality in rights andThere is conflict of interest and little concern for mutuality in rights and
obligations.obligations.
5.5. Workers can be punished, but not managers for wrong personnelWorkers can be punished, but not managers for wrong personnel
decisions/abuse of authority.decisions/abuse of authority.
6.6. Continued emphasis on direction and controlContinued emphasis on direction and control
7.7. In the name of responsible unionism, organizations expect unions toIn the name of responsible unionism, organizations expect unions to
manage (maintain) discipline, but later on grudge that unions have becomemanage (maintain) discipline, but later on grudge that unions have become
the de facto management.the de facto management.
8.8. Management responsibility is permanent and that of unions is transient (orManagement responsibility is permanent and that of unions is transient (or
quasi permanent).quasi permanent).
9.9. Third party dominance invited willy-nilly which causes a shift in the locus ofThird party dominance invited willy-nilly which causes a shift in the locus of
control.control.

Typology of the Effect of old Beliefs and New ValuesTypology of the Effect of old Beliefs and New Values
Old BeliefsOld Beliefs New ValuesNew Values
Aims:Aims:
Capital and labour pursue different aimsCapital and labour pursue different aims
Both can have many things in common,Both can have many things in common,
despite some legitimate differencesdespite some legitimate differences
Mode of Operation:Mode of Operation:
Win-lose, hard nosed management decidesWin-lose, hard nosed management decides
and adjust if necessaryand adjust if necessary
Facing realities, creating space withinFacing realities, creating space within
which self-control is possible, andwhich self-control is possible, and
contracting around agreements whichcontracting around agreements which
take account of differences: boundary andtake account of differences: boundary and
inter dependence management,inter dependence management,
situational managementsituational management
Outcomes:Outcomes:
Procedures, rules, agreementProcedures, rules, agreement
Realistic plans, sharing in gains, genuineRealistic plans, sharing in gains, genuine
increases in productivity/competitiveness,increases in productivity/competitiveness,
trust, harmonizationtrust, harmonization
Information:Information:
Hold information close to one’s chestHold information close to one’s chest
Openness, transparencyOpenness, transparency
Style of Management: controllingStyle of Management: controlling Mature, situational, and varied, butMature, situational, and varied, but
consistently soconsistently so
Feelings Generated: NegativeFeelings Generated: Negative Positive, mutual confidence and trustPositive, mutual confidence and trust

Current and Suggested Role of HRMCurrent and Suggested Role of HRM
Current RoleCurrent Role Suggested RoleSuggested Role
1.1. Strategic Orientation:Strategic Orientation:
Independent goals, not clearlyIndependent goals, not clearly
linked to that of the organization,linked to that of the organization,
leading to activity trapleading to activity trap
Standardization of HRM policies,Standardization of HRM policies,
etcetc
Strategic linkage with the goals ofStrategic linkage with the goals of
the organizationthe organization
Flexibility. Human resource policiesFlexibility. Human resource policies
to be tailored to fit the targetedto be tailored to fit the targeted
market niche view of rapid changes inmarket niche view of rapid changes in
environment and growing emphasisenvironment and growing emphasis
on competitionon competition
2. Management Philosophy:2. Management Philosophy:
Emphasis on direction & controlEmphasis on direction & control
Employees as a costEmployees as a cost
Hire and fireHire and fire
Seek to achieve consensus andSeek to achieve consensus and
commitment of people throughcommitment of people through
peoples’ participationpeoples’ participation
People as a resourcePeople as a resource
Attract and retain motivate peopleAttract and retain motivate people

Maintain discipline and seekMaintain discipline and seek
compliance with organizational needscompliance with organizational needs
Hierarchical personnel policies andHierarchical personnel policies and
practicespractices
Build positive work ethos andBuild positive work ethos and
organization culture for employeeorganization culture for employee
motivationmotivation
Emphasis on horizontal personnelEmphasis on horizontal personnel
practices with a view to harmonizepractices with a view to harmonize
employee pay, benefits, and workingemployee pay, benefits, and working
conditionsconditions
3. Performance Management:3. Performance Management:
Emphasis on feelings and relianceEmphasis on feelings and reliance
on subjective appraisal systems withon subjective appraisal systems with
an eye on harmonyan eye on harmony
Develop database for objectiveDevelop database for objective
measurement of facts for analysismeasurement of facts for analysis
with an eye on the bottom line –with an eye on the bottom line –
developmentaldevelopmental
4. Relationships:4. Relationships:
Master and servant relationshipMaster and servant relationship
reinforcing the negative, apartheidreinforcing the negative, apartheid
features of the social system infeatures of the social system in
workplaceworkplace
Emphasize reciprocity andEmphasize reciprocity and
mutuality in relationsmutuality in relations

5. Change in Approach:5. Change in Approach:
Power centrePower centre
Fire-fighting roleFire-fighting role
Building organizational pyramids toBuilding organizational pyramids to
take care of employee aspirationstake care of employee aspirations
Employee orientationEmployee orientation
Employee trainingEmployee training
Service centreService centre
Proactive approachProactive approach
Restructuring the organization toRestructuring the organization to
make them flat/horizontalmake them flat/horizontal
People and business orientation (toPeople and business orientation (to
include care of customers and otherinclude care of customers and other
constituents)constituents)
People training (includes not onlyPeople training (includes not only
employees but also vendors, dealers,employees but also vendors, dealers,
customers, etc. and retainingcustomers, etc. and retaining

Handling the interface between Human Resource
Management and Industrial Relations
The management can establish a good industrial relations interface
with HRM in the following ways:
• Develop sensitivity to human needs and human problems at work
and beyond work.
• Evolve a value system based on trust, transparency, fairness, and
equity. Pay attention and practice the core values professed by the
organization: walk the talk and talk the walk. In all areas of decision-
making - specifically transfer, promotion, and reward systems –
there is a need for objectivity and concern for balancing the
aspirations of the people with that of the organization.
• Institutionalize openness in subordinate – superior relationships.
Allow the subordinates to speak hard facts and ventilate their
grievances even though they appear to be initially, unpalatable and
fictitious assumptions respectively.
• Deal with employee grievances promptly and explain the logic and

People cooperate when they understand.
• Tell the human resource management department and
professionals to operate through the line of
departments/professionals
• Consciously provide exposure and understanding to line managers
on human resource management aspects.
• Let line managers handle the day-to-day human resource
management activities and issues/problems.
• Information sharing and consultation are prerequisites for shared
understanding and co-operation.
• Review HR/IR policies and practices from time to time. Rules and
procedures should unleash and facilitate, not block and hinder
human potential in the organization.

Case-let
A few decades ago, Rusi Mody was invited by J.R.D. Tata, the
then Chairman of Tata Iron and Steel Company, and Abdul
Bari, veteran trade union leader in the same company and a
renowned politician, to require why the workers in the
company, where young Rusi Mody was Personnel Officer,
were not joining unions even though workers in all the other
firms in similar lines of business in the same neighborhood in
Calcutta were forming into trade unions. Rusi Mody replied
that the management was doing what the union could have
done – taking good care of the employees – and that if ever
the management were to shirk back in its responsibilities to
the employees they would need the shoulder of a trade union.
In other words, if employees are regarded as people and
taken good care of, they would not need a trade union.
Do you agree with this viewpoint? Discuss this in today’s
context.

Employment relations and its emerging trends

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