Innovative Practices in Employee Relations - Part 1


A few thoughts are placed for your consideration. And then, at the end, I will place a summary for your deliberation.

Is our idea of relationship moored in avoidance of dispute?

Let us go back and reflect on our motives with respect to Industrial Relations. We often hear HR Managers say that ‘we have a very good relationship with our union – we have not had a strike since so many years.’ Some even say ‘we solve our issues across the table – we do not have a single case in the labour court.’ So our idea of industrial relations is rooted in avoidance of dispute.

But is this true of relationships otherwise? When we get married we create a relationship. And it is not based on avoidance of disputes. It is instead based on acceptance of the other party. Similarly, when we accept friendship, it is not based on avoidance of disputes. It is also based on acceptance of the other party

So my understanding is that we must declare inclusion first, right at the beginning of any relationship. That is the game changer!

Here are two stories:
Soon after we set up a factory near Hyderabad in the eighties, we came to know that our employees have met one Mr. Basi Reddy who was considered a naxalite and who usually stayed underground, but was leading unions in many companies and was known for not hesitating to resort to violence. We then took an unusual step. We invited Basi Reddy to our factory. This unusual step actually surprised him as he was expecting resistance from us. We explained our people management policies to him and also told him that we practised productivity bargaining. The result was creation of an atmosphere of trust and confidence!

At ITC’s Ranjangaon factory they started all practices with the intention of keeping a close interaction with employees. But a union was formed. ITC then decided that if a union was formed they must do everything to foster good relations with the union. So a series of workshops were organised. This approach resulted in a healthy relationship between the union and the management. If you go to this factory today, you will see two boards or standees like you see those at the petrol pumps. One tells you that you are at the gate of ITC Factory. The other was also built by ITC in identical way – it tells you that “ITC Kamgar Sanghatana” leads employees. This signboard tells you of the inclusive approach of ITC without overtly saying so.

It is not as if in both the cases there were no differences with the unions. What distinguished these situations was that despite differences, the trust was not shaken.

The next question, which comes to our mind is, what happens to old factories which may not have practised such inclusive approach? Can’t they repair the situation?

I would like to tell you the story of Sandvik Asia:
Sandvik Asia Pune Factory was known for very disturbed industrial relations. The situation continued till about 1995 and there were also talks of closing down the factory. This factory was rated among the worst in the Sandvik stable. Then the new CEO, a Mexican arrived. He sat across the table and asked the union to list all issues they wished to resolve. The union gave a list of 78 issues, later revised to 120 issues!. The CEO cleared all the issues one by one. The discussions were recorded and as the CEO cleared one he struck it off the list in the meeting.

There was initial scepticism but gradually industrial relations changed for the better. The productivity and pay both increased. The Sandvik Pune factory is now rated as one of the best and managers from other factories of Sandvik visit it to study the operations. You can see a general sense of pride and prosperity - many workers own cars today. The union says without hesitation that after initial skirmishes with the CEO, they developed a strong faith in his way of working!

This example illustrates that ‘inclusion’ can be practised anytime, healthy employee relations can be built, although it will be undoubtedly an uphill task.
But I am not talking just about inclusion. It is about how inclusion can be practised spontaneously, properly and innovatively.

Why are we comfortable dealing with an individual and uncomfortable with a group?
Another interesting aspect, I have noticed, is that we are comfortable talking to an individual, a single person. But when we are talking to a group of people, we are more restrained, we are on our guard. There is something in groups that ignites fear in our mind. My understanding is that we have low fear of evaluation in a one-on-one meeting; and we have more pronounced fear of evaluation when facing a group.

There is another factor which might be at work – we know and we have experienced that people behave differently as individuals and when they are in a group. Groups seem to wield power and use power often to influence the other side.

Add to that the complexity brought in by people’s exit and entry in a group. Each entry and exit changes the character of the group, however small the impact may be. Members of the other group are very alive and sensitive to these changes. So when the CEO changes or a new HR Manager arrives, the union raises its guard. And when the employees choose a new leader, external or internal, the managers do the same.

Let us look at the relationship from an employee’s angle. They know that they are dealing with a hierarchy. And a hierarchy has a unity of command and certain discipline. In a sense it is like a military organisation. And an employee’s organisation or a union is diametrically opposite. It is a loosely knit organisation which is held together by the sheer strength of emotions.

So what is the problem? The problem is one of continuity of approach. And hidden in it is the issue of accountability for continuing policies of approach towards building relations. Is there a solution?

In my opinion the solution lies in declaring the IR policy. Before I discuss policies of various organisations, I would like to ask how many Indian companies have a declared policy on Industrial Relations. Very few! Why?

What issues should an IR Policy cover? In my opinion three aspects are important. Firstly, who is accountable for IR, secondly, what is the organisation’s stance on the union, and thirdly what is sought to be promoted through the policy statement and how.

Apply these criteria and examine IR policies. Some of the best policy statements are made by SKF, Nestle, Volkswagen, Toyota, Southwest Airlines and BP. Does Aditya Birla Group have a declared policy? They have declared a global compact which covers most of the issues of policy. What about ITC? Yes they have a detailed policy which is worth a good look. Take a look at M&M. You do not find an IR policy of Tatas on their website. Marico? Godrej? Asian Paints?

BP in Singapore has travelled the farthest distance. They have signed a joint statement of Industrial Relations vision and policy. This is a very detailed one and could serve as a guideline for many others.

The time has come for Indian industries also to make a statement of policy as many are now becoming MNCs. They will have to stand a different test on the international arena and will be well advised to follow ILO guidance.
Why then, are they not declaring policies? In my opinion there are three prime reasons: firstly the unions are weak in most industries; secondly, the declaration will require organisations to take a stance on the very sensitive issue of contract labour (the use of whom is indiscriminate), and thirdly, declaration means holding yourself accountable – who wants to do that suo moto? The question of managerial competence and confidence comes out here in the open!
The point I wish to make is that if we wish to strike consistently good industrial relations then declaration of IR policy is imperative.
I am not talking about how and why we should make policies. It is all about how we can march towards industrial democracy systematically and innovatively.


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