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1-2. Nature ofIndustrial Relations:

Traditional & ChangingPerspectives

Debi S. SainiProfessor & Chairperson—HRM Area

Management Development Institute, Gurgaon

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The issues discussed in this presentation are:

1. Conflict dynamics & different approaches of IR Mgt.

2. Working of an IR system: Dunlop’s System Model

3. IR & related terms: IR—LR—ER

4. Has Globalizations changed IR scene? How?

5. IR: Actors—Issues—Institutions—Procedures

6. Traditional issues in IR

7. Frames of reference of IR: Unitarist––Pluralist––Marxist

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Two Main Components of this Course:

Management of Personnel/People(Systems, effectiveness, engagement, productivity)

Management of Industrial Relations (Conflict, interests, rights, peace)

Lately, the two perspectives are gettingmerged into an integrated HRM framework

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The Roots ofIndustrial Conflict

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Peace Requires: Balancing of Business Needs & People Needs

• High Earnings

• Speed to Marketplace

• Market Share

• Product Quality

• Customer Service

• Customer Responsiveness

• Low Costs

• Efficiency/Productivity

• Flexibility

• Benchmarking

• Responsive/Innovative

• Future Oriented

• Customer Satisfaction

• Reward & gain sharing

• Reasonable job security

• Work-life balance

• Flexibility

• Empowerment

• Welfare facilities

• Social security

• Learning Atmosphere

• Respect for their Diversity

• Growth opportunities

• Recognition/ belonging

• Participation/ Involvement

• Management style

People Needs are Managed differently in

Different Orgs.

IBMTata Steel

Ballarpur IndustriesHero MotoCorp

NDPL

Business Needs People Needs

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First know: Why Labour-Mgt. Conflict Occurs

Conflict is at the centre in organizational working

Why:

Industrial Conflict: a Complex & difficult issue

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Difference in interests, values, goals, attitudes

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Mgts. differently handle conflict:

Positive or Negative Meaning of Work

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• Work is interesting

• Reflects good quality of life

• Gives us meaning of life(WM feels: meditating/ bldg. a temple)

What does work mean to People: Two extremesPositive (win-win) Negative (lose–lose)

Sheer Drudgery/unpleasant

A way to kill time

Just a means to living

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Can we think ofsome basic approaches to

managing employer-employee relations?

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• Graziano: CEO killed • Maruti-Suzuki HR Chief burnt

• HMSI Violence 2005• Tata Steel (35 K workers; no strike since 1958)

• Classic Stripes: 3-6 best employer co.

How do we go about understanding these issues?

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500 WM including contract WM—Most are blue-collared

4 WM 25 yrs. ago (in 10’ x 10’): Built 44 acre campus in Vasai3 plants now: Mumbai; Vasai; Hardwar— No Union

Kishore Musale Charitable Trust:

Main motto: “dignity at work.”—Believes in: “valuing every individual, giving people their due,

freedom, respect, opportunity backed by lots of training.”

Classic Stripes (Mfg.): Come Out of Control Mindsethttp://classicstripes.com/manufacturing_plants.html

Won Safety & Environt. 2003 award (SIGA given to 5 cos. worldwide)

— Kaizen Training: 2½ hrs per month

A relationship committee: Meets twice in a month

Has a library with trade journals, magazines & books

DM: 1/3 Women workers; also physically-challenged

Shares with employees a %age of its annual profits

Classic Stripes: Some HR Initiatives contd…

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Tata Steel Ltd.: HRM Model

• Sr. Mgt. work at less than 60% of market worth; don’t leave

• Meets need for dignity, stability, security: No strike since 1958

• Participation, paternalism (kin employment), family focus

• Ethical working

• CSR creates a sense of pride in employees

Comparing two US Cos.: South West Comparing two US Cos.: South West && American AirlinesAmerican Airlines

• On same day (May 2010): AG meeting of airlines: SWA & AA

--AA meeting was picketed by AA Pilots Assn.--Southwest celebrated 37 yrs. of service by founder, Herb Kellehar

• Paper carried picketing news; same paper carried an ad: “Kellehar knew, knows & will always know that

the secret to bus. success, small or large, is to put people first.”

• Kellehar sees “employees as my principal customer.”

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UnderstandingEmployee Relations& related Terms?

Employees as Individual (Market operates here)

Employees as collective(Class solidarity operates here i.e. Unions)

Org. needs: Employee retention & engagement, indl. peace in both situations

2 Sets of Concerns for Employer & Employee

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ER & IR both deal with all aspects of employment relationsi.e. unionized & non-unionized [Today, Global focus: cooperation—decent work]

—But IR’s key focus is unionized workers, & —ER’s key focus is individualized workers

ER: is ongoing relations-building process with employees

through HR practices & orgl. culture-bldg. efforts

for securing employee commitment/engagement

• LR (labour Relations) focuses exclusively onemployment relations in a unionized environment (i.e. Unions & mgt.)

Employee Relations, IR & LR

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What does good ER Involve: Research?

1. Dialogue & communication for trust & culture

2. Partnership through involvement & feeling valued

3. Proactive, not reactive efforts (Hero MotoCorp)

4. Employee rights, fairness, just grievance mgt.

5. Employee discipline (Tata Steel; Classic Stripes)

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Employee Relations

Employee Communication

for Trust bldg.

Partnership& Employee Involvement

Employee Rights/fairness/Grievance mgt.

EmployeeDiscipline

Fig.: Key Dimensions of Employee Relations

ProactiveEfforts

Manifestations of Poor Employee Relations

Unionization

Poor Performance

Employee Absenteeism

Employee dissatisfaction & Turnover

Litigation

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What do youthink is meant by

Industrial Relations?

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Industrial Relations: Simply Speaking:

Industrial relations (IR)

is the process of rule making

that mediates between divergent interests

of capital and labour

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How can we view Industrial Relations

J. H. Richardson (Leeds University)

• “Industrial relations is

the art of living together

for purposes of production”

ImportantSome

regulation is needed

inall relations;

State determines

the regulatory framework

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How can we view Industrial Relations contd…

Hugh Clegg (Clegg & Flanders pioneers of Classical Oxford School of IR)

“Industrial relations is a study of

workers and their unions,

employers and their associations,

and State & its institutions/agencies

concerned with regulation of employment.”

Imp.: Different powers, roles, interests, duties of Actors

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Is Globalization Syndromelinked to

Industrial Relations: How?

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What Does Globalization mean?

• Global movement of capital

• Global movement of businesses

• Driven by principles of free market economy

• & less obstructed people movement

• Across borders within companies

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Globalization & Other Causes of Changes in Business1. GLOBALIZATION Syndrome

2. Information Revolution/Internet

3. New Technology

4. Emergence of Service Industry

5. HR Philosophy:

M. Thatcher has been named UK’s most effective prime minister of the 20th centuryby BBC History Magazine 30 Aug, 2006, TOI

Globalization has led to:• Internl integration of economies• PSU reforms & privatization• Collaborations & jt. ventures• Dominance of market

rationality• Decline of welfare state

Psychological Contract &Focus on: Employee Relations

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What is meant by:•IR Actors

•IR Institutions•IR Procedures

•IR Issues

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Focus of the Discipline of IRA. Characters (or actors) in IR

––Union leaders

––HR Managers

––Conciliation Officers/ Mediators

—Arbitrators/judges

––Labour Courts/

––Labour Lawyers/Management Consultants

––Others

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Focus of the Discipline of IRB. IR Institutions

(permanent form of custom or law)

––Unions––Employer associations ––State/Labour Bureaucracy

––ILC––ILO––Tribunal/Labour Court ––Labour law––Higher judiciary

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Focus of the Discipline of IR cond…

C. IR procedures (aim at: Procedural justice)

––Bargaining/Negotiation

––Conciliation —Arbitration—Adjudication––Reference––Procedure for going on strikes/ lockouts––Inquiries/Disciplinary procedure

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IR is studied by many academic disciplines• Economics

• History

• Law

• Sociology

• Political Science

• Management

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What do you thinkare some of the key issues

in IR?

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Traditional Problems/Issues in IR

1. Job satisfaction: Job design––Working conditions––supervision

2. Negotiating Wage/salary/VRS/bonus/benefits

3. Alienation & discontent

4. Grievance management

5. Trade union, strikes, lockouts

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Traditional Problems in IR6. Industrial dispute settlement

7. Indiscipline, absenteeism & mobility

8. Labour Laws

9. Labour welfare/QWL

10. Communication

11. Joint consultation, participation, involvement

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Three Basic Approachesto looking at IR:

Pluralism, Unitarism, RadicalismWhat are these?

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Frames of Referencein Industrial Relations

& New Issues in IR

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Frames of Reference: Unitarism & PluralismUnitarism

1. Assumptions about Interests—Common interest/objectives

2. Assumptions about conflict—Inevitable, destructive: Be avoided —Caused by: Poor mgt/communication

3. Assumptions about trade unions—Unwanted intrusion

4. Assumptions about collective bargaining—CB generates workplace conflictrather than resolve it

Pluralism1. Assumptions about Interests

—Mgrs. & employees have: different objectives

2. Assumptions about conflict—Inevitable—Be negotiated—Caused by difference of opinions/values

3. Assumptions about trade unions—Not the cause of conflict: Conflict inherent—Legitimate part of workplace relations

4. Assumptions about Collective bargaining—CB ensures fairer outcomes —Balances employee & mgt. power

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III. Marxist (Radical/ Critical) Perspective

• Market economies are social arrangements created by historical forces

• Private property is a social construct, not created by nature

• Owners of capital accumulate capital; take all or most of it

• Power of ownership & control cause WM’s impoverishment

• Classes struggle: for control of industry, economy & state

• Differential access to education, media, government jobs

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III. Marxist (Radical) Perspective contd…

• View of society based on post-capitalism is wrong––Capitalist profit is key influence on co. policy

•Control enforced downwards by capital’s agents––Surplus value generation by capitalist

• Employees socialized into accepting status quo

•Class conflict is the source of societal change––Without conflict society will stagnate

•Capitalism will collapse due to its inherent contradictions

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III. Marxist Perspective contd…

• CB: limited accommodation of fundamental divisions––Unions/IR instts. deal with marginal issues

• Law not independent referee

• Industrial Justice: only if revolution

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How do we Conceptualizethe Different Workings of

IR System?

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I. Traditional Pluralism(German Pharma)

II. Paternalistic Pluralism(Tata Steel/NDPL)

III. Ambivalent Pluralism(Most unionized cos.Maruti-Suzuki Ltd.)

IV. Repressive Pluralism(Simran Foods Ltd.)

V. Coercive Unitarism(Glaziano before the violence; SMEs)

VI. Ambivalent Unitarism(Or manoeuvredunitarism through law, shenanigans, paternalism, collusion with bureaucracy)

VII. Paternalistic Unitarism

(Most Indian SMEs, Flaxo Exports)

VIII. IBM type Unitarism(New Unitarism)

(Hero-Honda, Air Tel)

Eight Broad Typologies of IR Models

© Debi Saini 2010

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What can be Learnt from these two Sessions:• Conflict in industry is inevitable, given different interests

• Variegated models of IR are practiced by different organizations

• IR is a system of rule-making about gains of & power in industry

• IR concept is changing into employee relations in new era

• IR focuses on actors, institutions, procedures

• Unitarism & Pluralism are 2 broad approaches to IR

• IR can be divided into 8 broad typologies