UNDERSTANDING

EMPLOYMENT RELATIONS
AND ITS EMERGING TRENDS
By:
B.D Singh
Prof. HRM & Dean MDP &
Consultancy
IMT, Ghaziabad
• 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.
– 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 –

7. Interpersonal – employer & employee
8. Inter group/ inter organizational

• Interpersonal conflict arises out of terms of

employment between employer & employees
(Workmen) – Regulated by laws.
• Govt. employees,
• Industrial workmen –
• Managers in industries (i.e. conflict also among
Managers)
• 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
organization
– Economic, Social, Psychological, Political, Technological and
Market: local and global
– Network of Relationship – non linear/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
• Changing role of Govt.: Controller  Facilitator (GOI has
not done much under political pulls and pushes)

Some states are waking up to the need for wooing

investment, foreign and domestic, and creating jobs. In the
process they are resorting to competitive labour policies that
are ‘investor friendly’.

The components of the industrial relations policy of Kerala, the

relaxations and exemptions to labour inspections in Rajasthan
and Uttar Pradesh, the liberal response of the Tamil Nadu
Government to requests from employers for notice of change,
lay-off, etc., and the cancellation of the registration of an
unusually large number of unions in West Bengal, have had
far reaching implications for industrial relations.
Central laws being the same, their interpretation by the
judiciary is changing. In 2005 alone, in five different cases, the
Supreme Court held that sleeping on duty, using abusive
language against superiors. Strikes have to be not only legal
(refer to the strike by government employees in Tamil Nadu,)
but also justified. Where trade union action is lacking, non-
governmental organizations are rushing to fill the vacuum,
particularly in matters concerning minimum wages and living
conditions in the unorganized sector, and occupational safety,
environment, etc. in both the organized and the unorganized
sectors.
• The core conventions of ILO and dictates of WTO, IMF
and
SWB

International pressure is mounting to link labour

standards with international trade either through
sanctions through bi-,tri-, or multi-lateral institutions
(governments and international agencies, such as

New Actors on the Horizon – The consumers and

community have emerged as the new actors on the
horizon. Since they represent the larger aggregations
of population and wider societal interests, when their
rights are impinged upon by the action or inaction of
either employees or employers the court – consumer
courts to the Supreme Court – rule that the interests of
workers and managements should take a back seat.
Changing nature of work practices

• Contracting – outsourcing in place of self-sourcing

• Casualisation of work places
• Hiring work facilities
• Use of electronic gadgets
• PCs, SMSs, E-Mailing, Internet, Fax, Video
Conferencing
• Changing 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 defect
• 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
 Collective Bargaining – in collective bargaining, some
of the shifts include:

4. Centralization to decentralization;
5. Collective to individual contracts;
6. Parity to disparity;
7. Increased wages/incomes and benefits accompanied
by erosion of job control;
8. Concession bargaining
9. Assertion of managerial rights than the rights of
workers;
10.Skill-up gradation
Social security – the shift from welfare to ‘money fare’
through the conversion of several of the welfare benefits
into cash is, however, a worrisome development. The other
trend is a shift in retirement benefits from defined benefits
to defined contributions. This puts the real value of
retirement benefits at serious risk.

• Employers directly reaching the work men and negotiating

with them
• Disinvestment / Privatization and VRS are almost accepted
facts of Industrial Relations.

Shifting roles of traditional actors – Over the years, a

number of changes have taken place in the industrial
relations scenario. Not only have the players changed (the
inclusion of consumers and community), techniques,
technology, and power structures have been re-examined
and altered time and again.
 Burning problems at ER front
• Volatile labour market
• Attrition rate very high
• Work life balance disturbed
• Union free organizations
• Gender related problems
• 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 are increasingly impinging on emerging E.R.s.
This trend is going to be accelerated, in future.

Employee Relation has to address to all the issue

Towards new Management of ER

Managerial Beliefs/Practices and Structural Contradictions

• The company is viewed as the property of the management.
Workers have no say/stake.
• Mainly the management is interested in the organization, not
the union/workers.
• Organizations expect commitment, while viewing people as
‘dependable and disposable’.
• There is conflict of interest and little concern for mutuality in
rights and obligations.
• Workers can be punished, but not managers for wrong
personnel decisions/abuse of authority.
• Continued emphasis on direction and control
• In the name of responsible unionism, organizations expect
unions to manage (maintain) discipline, but later on grudge
that unions have become the de facto management.
• Management responsibility is permanent and that of unions is
transient (or quasi permanent).
• Third party dominance invited willy-nilly which causes a shift in
the locus of control.
Typology of the Effect of old Beliefs and New Values
Old Beliefs
Aims:
Capital and labour pursue different
aims
Mode of Operation:
Win-lose, hard nosed management
decides and adjust if necessary
Outcomes:
Procedures, rules, agreement
Information:
Hold information close to one’s chest
Style of Management: controlling
Feelings Generated: Negative
New Values
Both can have many things in
common, despite some legitimate
differences
Facing realities, creating space
within which self-control is possible,
and contracting around agreements
which take account of differences:
boundary and inter dependence
management, situational
Realistic plans, sharing in gains,
management
genuine increases in
productivity/competitiveness, trust,
harmonization
Openness, transparency
Mature, situational, and varied, but
consistently so
Positive, mutual confidence and
trust
Current and Suggested Role of HRM
Current Role
1. Strategic Orientation:
• Independent goals, not
clearly linked to that of the
organization, leading to
activity trap
• Standardization of HRM
policies, etc
2. Management Philosophy:
• Emphasis on direction &
control
• Employees as a cost
• Hire and fire
Suggested Role
• Strategic linkage with the
goals of the organization
• Flexibility. Human resource
policies to be tailored to fit the
targeted market niche view of
rapid changes in environment
and growing emphasis on
competition
• Seek to achieve consensus and
commitment of people through
peoples’ participation
• People as a resource
• Attract and retain motivate
people
• Maintain discipline and seek • Build positive work ethos and
compliance with organizational organization culture for
needs employee motivation
• Emphasis on horizontal
• Hierarchical personnel policies personnel practices with a view
and practices to harmonize employee pay,
benefits, and working conditions
3. Performance Management:
• Emphasis on feelings and • Develop database for objective
reliance on subjective appraisal measurement of facts for
systems with an eye on harmony analysis with an eye on the
bottom line – developmental
4. Relationships:
• Master and servant • Emphasize reciprocity and
relationship reinforcing the mutuality in relations
negative, apartheid features of
the social system in workplace
5. Change in Approach:
• Power centre • Service centre
• Fire-fighting role • Proactive approach
• Building organizational • Restructuring the organization
pyramids to take care of to make them flat/horizontal
employee aspirations • People and business
• Employee orientation orientation (to include care of
customers and other
constituents)
• Employee training • People training (includes not
only employees but also vendors,
dealers, customers, 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.
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.