Mr Vineet Kaul, CHRO of Hindalco spoke at EFI Seminar last week. He makes, as always, important points to think about. Here is his speech:
Over the last few months, interest has built up on the ‘Employee Relations’ Scenario. Whether it has to do with reporting in the National Press, Debates and Conferences – after nearly 2 decades the subject has been receiving a lot of attention. ‘Employee Relations’ has been the burning platform during the 80’s and early 90’s in this city too. The landscape has changed and industries which are in and around Mumbai can now be easily counted on the finger tips. Over the last 3 decades, we have witnessed massive changes – both in physical form and in the thought processes too. The sweeping reforms of early 90’s brought about an avalanche of restructuring across many of the factories and the market demand and costs pressures compelled companies to Innovate and re-design their products & services.
The subject matter of ‘Industrial Relations’ / ‘Employee Relations’ has had its challenges over the years. The normal reasons for the current state of IR put forth are Government, Unions and at times the workmen (as if they are not our own). Let me attempt to examine the issues raised against each one of them :-
1. Government : All along we have been experiencing that the Labour Laws are inflexible, and not aligned in today’s competitive scenario. The role and contribution of the Government Machinery in IR has always been questioned by Management and Unions. A proactive mediation is very rare and seldom do solutions emerge hence adding to the existing issues.
2. Unions : Multiplicity of Union causes havoc to Operations and the Managements ultimately have to bear the losses. In some factories having upto 5/6 Unions is common. In addition, the Union Leaders have their own Agenda which is not always restricted to the Company and its Employees.
3. Workers : They do not behave maturely and take responsibility. Their demands are always sky high and the moment a new Union promises something better – they change sides.
If as professionals we were to dispassionately review the above, its time to think differently now – start accepting few realities in life. Can IR / ER situations be very different from the current environment prevailing in the country. Can it be very different in Employee Relations ?
1) Government : Which Government has even moved the needle in as much as “Labour Reforms” are concerned ? Except for raising the eligibility limit in few Social Security Acts – has anything changed ? We all have excellent firsthand experience of how the Labour Department operates : just take a small case – Contract labour system abolition is ordered for the Canteen of one company whereas in another 300 other Canteens in the neighbourhood Contract labour working continues ? Why the discrimination ?
2) Unions – We always quote the Trade Unions Act that any 7 workers can form a Union and hence there is an issue. In Maharashtra, we have MRTU Act Recognition which provides recognition of a single Union. In States like Andhra Pradesh and Orissa too there is a proper system of one bargaining Agent. Does it solve the problems ? No, perhaps it provides newer challenges. Let me give you an example – in many Units, we sign the Settlement with Union ‘A’. Subsequently, Union takes over – do they take responsibility of Implementation ? By the way in Korea 2 workers can form a Union.
3) Workmen – Whilst their attrition is very rare – the Union allegiances and the nature of demands keep changing. They are always putting the pressure on Management. They would like to pick up the best market practices example 50% hike in wages in one LTS or a VRS for 40 lacs. Can we really blame the workers ?
Let us appreciate that ‘Employee Relations’ is a Management Function and we have to accept full responsibility for managing it in its entirety. What do I mean by this ? Please do not look to the Government for a solution – it has too many issues both National and local to handle. This subject is not top on the Agenda. A leading company last year publicly declared that 60% of their workmen, in manufacturing were Contract labour. Did the Government act ?
Unions have their own compulsions and many of them have a larger Agenda than just truly representing the Employees. We have to accept them as they are and deal with them. The same applies to workmen – being part of the ‘family’ – our ownership has to be all pervading in the real sense.
As professionals in the ER & HR functions, it is therefore imperative on us to prepare our Organisations and ourselves to manage ER well. Indeed, whilst there are learnings available, all across, it is also well known that each Company’s situation is unique. Employee Relations is dynamic in ever changing situations. We cannot take a harmonious IR situation for granted. Companies who have all along had no ER issues are indeed lucky and fortunate. In view of the recent developments across the country, it has become necessary to equip ourselves with adequate learnings and knowledge of the subject. We need to continuously look at the relevance of our own ER practices given the changing Employee demographics, rising expectations and Business scenarios that we operate in. Things will be getting even more challenging to say the least.
In a way, what we have witnessed in the last few months has quite some reminisces of the 80’s. The Economic scenario has brought enough pressure on the Companies to deliver. All sectors and businesses have gone through Restructuring and Change. Over the last 2 decades – newer Sectors like Telecom, Insurance& Retail have opened and also provided excellent opportunities both to Business & Employment. The recent announcement on Reforms signals even greater competitiveness in the market. These are excellent signals for the Consumers, but they bring their own set of challenges to the Companies. Quality, Cost & Delivery will reign supreme. In the endeavour of Cost Competitiveness & Innovation – the nature of workforce will undergo a change. About 10 years back, Outsourcing and Temporary Staffing were Jargon; today it is uncommon to see a Company which does not have Outsourcing and Temporary Staffing.
The demographic advantage that we are proud of is indeed posing its challenges too. The aspirations and expectations of the workforce is different from what we have witnessed in the past. The pressures of change are not to be seen only amongst Professionals but also in the ‘Blue-coloured’ as we call them. It is very common to hear of a ‘New’ and youthful Leadership taking over the helm. Rather than being taken by surprise – shouldn’t we be preparing to deal with a changing scenario ? I recall some years back a colleague telling me the ‘Blue-collar’ would show their fists, but the Professionals would speak with their ‘Feet’ (leave).
There have been reported cases of extreme violence that have caused tense moments. We have all read about the unfortunate incidents of violence and everyone has denounced the same. The unfortunate death of a fellow professional is sad – however we should really see this as a rare exception. In my early days, a worker told me “I joined as an Apprentice alongwith many of the other Workers. We eagerly work for building a career in this Company. What drives us today to throw stones and vent our anger at their very place and the Managers ?” This is a profound question if we keep our immediate emotions away. Do we have all the facts and answers ? Why do such situations come up ?
A major subject of debate has been around the use of Contract labour. It is a fact that there is Contract labour working all across. The Government is the largest user of Contract labour – in all its activities now. One of the major reasons for use of Contract labour is the flexibility of manpower it provides in business cycles as well as the cost advantage. However, as we all know anything done in excess is bad. Whilst companies have gained due to the use of Contract and Temporary labour, they are expected to follow the statutory requirements. We cannot flout the norms laid down and be exploitative in our approach. Whilst legal experts will advise arms length be maintained in dealing with Contract labour – atleast let us have appropriate mechanisms for Contractors to follow. This is in our own interest. The discontent in Contract labour is ultimately going to impact our Operations and profitability. So we cannot continue to ignore the subject. Moreover, as the Principal Employer, ultimate responsibility rests with us. The organized sector in our country is reported at 7% of the total workforce. In a way, this is where we focus all the time. The recent incidents have brought the spotlight on Contract labour and we can expect developments taken place in this area.
Given the prevailing scenario – as Professionals, we will have to increasingly engage with all our Employees. Dealing with the Unions alone will not be enough. A greater onus in communicating with each Employee is the imperative. We often forget that the Worker first becomes our Employee and only then a member of the Union. Extensive training, Communication and involvement is the key. No longer can the HR initiatives be restricted only to the Managers, Career development is a much felt need even at Worker level. Regular and continuous communication with Workmen will make them also appreciate the Management viewpoint. Or else, in a crisis when we make attempts – there is disbelief and lack of trust. These thoughts I put forward for your consideration.