[Address at the IR Conference of Bosch India Ltd. At Goa on Sept 30, 2016]
At the outset I thank you for inviting me to deliver this talk at your IR Conference. They made my task difficult by not suggesting any specific subject. So I had to decide what to speak today.
I joined the corporate world in 1973 when the Industrial Relations scenario was a matter of grave concern. Mumbai had witnessed one of the most violent battle between Shiv Sena and Dr Samant at the Godrej factory. And the city was also about to witness a nationwide railway strike next year. A decade later the city also witnessed one of the biggest strike which impacted everybody’s life in the city – the textile strike. The pendulum has swung to the other extreme from this violent past to the docile present. The unions have lost their teeth, and the managements of organisations run their writ unrestrained.
Yet there is more to the story. There are companies which are asking me to help them develop industrial relations capability. Why so? I am still trying to find and answer. One conclusion is obvious: The industry is facing challenges on the Industrial Relations scenario. It calls for some introspection to discover what they are.
Ladies and Gentlemen, I have decided to do an open introspection. Call it loud thinking if you wish. Since my retirement in 2009, I have met many HR Honchos and also Union leaders. I have met many workers. My views are based on what I have seen and heard.
In this talk, I would argue that the time is ripe for building positive and harmonious industrial relations, although who owns the industrial relations function is a big issue in every organisation. If we see every labour problem as management problem, then building relationship proactively, and not reactively, is the only Industrial Relations strategy.
Let me begin by making some observations:
- The Government is Oblivious to the Issues in Industrial Relations
Loss of jobs is a regular feature of industrial scenario
The reports carried in newspapers recently will cause anxiety. The Economic Times Magazine in their Sept 11-17 edition carried a three page long report titled ‘Stranded.’. It covered the stories of scores of employees at startups who had lost their jobs, and were jobless for several months. The stories of their hardship are very disturbing. The case of AskMe is well known, when it closed down 4000 persons lost jobs. The Eco Times report notes that 753 startups have closed down in the last five years.
Raymond has announced that they will use Robots which will displace 10000 workers in the next three years.
This might be the inevitable fall out of economic policies. The point is that an extreme sense of insecurity has gripped people. And they can only look to the Government for protection.
Labour Laws Not Implemented Rigorously Gives License for Exploitation
There are good employers and there are those who are otherwise. The extent of misuse of contract labour is to be seen to be believed. Similar is the case of indiscriminate employment of trainees.
We now see indiscriminate employment of contract labour and trainees. There is no connect with them and they form a very large section of work force in a company. In many cases all the unskilled workers are employed through contractors. Here is a quote from the story in the Frontline Magazine titled ‘Laws for Automatons’: [I quote] ‘In many automobile companies in Tamil Nadu, there is not a single permanent worker,” Virjesh Upadhyay, BMS general secretary, told Frontline.’ [Unquote]
In the service industry like hospitals, hotels many departments are now ‘outsourced.’ In some industries the entire customer service centres are manned by contract labour. In the service industry there is exceptionally high share of persons who are engaged as consultants or retainers – they are regular employees in disguise.
I was speaking to a group of union office bearers in Pune. They pointed out that the Government’s Scheme NEEM is encouraging exploitation. They said NEEM which stands for National Employability Enhancement Mission, is better described as National Exploitation Enhancement Mission. I am told that the Union is about to file a PIL petition in the Court against NEEM.
The strike at Reliance Patalganga is another example of the State machinery not helping the dispute resolution. The strike is, I am told, over 20 months old, and the machinery has not yet referred the demands for adjudication.The audacious manner in which the Haryana Government helped Maruti Suzuki when violence gripped their factory is shocking. Investigators have published a lot of material on the Haryana Government’s objectionable role in that episode.
All this is neither lost on employers not the workers. The point that The Government has not understood the insecurity its actions, and of course, inactions, are creating. In a way this can be seen as a backlash against the arrogance of power and obstinate stances the unions took in the earlier days. But one would expect the Government act with contemplation and prudence.
- Who owns Industrial Relations?
The fact is that IR is orphaned today. Those who remember the IR scenario in the seventies and eighties will remember violence and also some difficult negotiations. They will remember how the IR managers opened law books ten times a day to judge if an action was justified in law. Unions were a formidable force in those days and one had to be cautious and circumspect in all matters involving people decisions. This situation had its negative side: managers felt shackled by the fetters placed on them by law which were grudgingly accepted, and fetters placed by unions which were resented to the core. Introducing a small change was difficult due to intransigent attitude of unions.
The situation is different today. Globalisation has weakened unions in manufacturing sector. They are making efforts to organise labour in all new age industries, but have not met with any success – we may even say that they have failed. For instance, TCS got away with removing a few thousand employees. Some cases went to the court, but the employees in IT industry have stayed away from unions.
This has emboldened employers. The law books are no longer seen on the book rack of HR managers. The terminology is influenced by American law rather than Indian law, and has changed. They use the word ‘lay-off’ where ‘retrenchment’ should have been the right word.
The American influence is not just on the language. Today the unions which look like toothless tigers are seen as illegitimate organisations. I was addressing HR Conference of a well-known company. A manager in the audience asked me “How can we keep the unions out of our organisation?” Keeping unions out has become the brief of the IR managers today.
I responded to the question by pointing out that if we framed a problem wrongly, we get a wrong answer. The problem was not how to keep the unions out. They exist legitimately in our country. The problem was how to retain our influence on our employees in spite of unions. Defined that way we get an answer which leads to dialogues.
The point is that the ‘relations’ word in Industrial Relations is getting redefined. Relations with whom? Relations with organisation’s direct employees who form 10% or negligible chunk of the workforce at the organisation? Or relations with those employed through contractors who are not owned by the organisation?
Since Industrial Relations no longer remained a challenge, the responsibility for it was pushed down the hierarchy, and in the process the position of IR specialist has lost its importance and aspiration value. Along with the permanent employees, the person holding IR responsibility has also vanished. We had seen IR managers occupying very high level positions in the industry, now those positions do not exist. Gone are the days when even CEOs had good understanding of labour laws. Along with these changes the IR capabilities are lost which the industry is now mourning about.
- Labour Problem or Management Problem?
We react to the words. Words convey thoughts and ideas. They also convey images. When you say ‘Labour Problem’ we think of vociferous slogan shouting at the gate of a factory.
It takes the Management Guru Peter Drucker to tell us that every problem in the organisation is a management problem! The stark truth of this however gets lost when we talk of ‘labour problem.’
Yet when we talk of ‘labour problem’, we unknowingly shift the focus of discussion on how difficult it is to manage labour. It keeps managements in reactive mode and not proactive one which is essential to build any relationship. We talk of labour’s intransigence, low productivity, indiscipline and violence. We talk of workers as if they belong to a different species. [A learned friend once observed that managers have anthropological curiosity about workers.]
If we talk of management problem of managing labour, a very different conversation will ensue. We will then talk of our HR policies, we will talk of the way we have managed conflicts, we will talk of training supervisors, and we will talk of creating a good work ethic.
It is not as if the labour and their leaders are free of any blemish at all. The point here is that when we characterise a problem as ‘labour problem’ and it surely deprives more meaningful conversations. It also prevents us from comprehending the complete picture.
- You can create harmonious relations and you can also repair toxic relations
I have often talked about the proactive approach taken by Tata Steel as well as ITC to build work culture conducive to harmonious industrial relations. I will talk about the exceptional effort of Hy-Tech Plast where they turned an adversity in opportunity.
Just in case we are under the impression that once the industrial relations grow toxic we can’t repair it, I would like to present the case of Automotive Stampings and Assemblies Ltd., Pune. We begin with ASAL case first.
Automotive Stampings and Assemblies Ltd. has a factory at Bhosari, Pune. They employ 95 workers who have organised an employees union. When they negotiated the wage agreement four years ago, everything went wrong. The settlement was reached after very-forgettable-incidents or violence.
The old settlement ended in September last. The Union decided to take a radical step. Why radical? Because the company had been making losses for the last three years, and had accumulated losses of about Rs 48 Cr. Revenue declined from Rs 571 Cr to almost 50% of it, at Rs 291 Cr in the last four years. Do you woo an ailing person? Not unless you think that the person has indomitable will to come out of it.
Radical because the union did not put a charter of demands, but instead made a suo moto offer to buttress the intangibles in indsutrial relationship. Unconditional! They wrote a letter to the ASAL management. I have a copy of the letter and here is I quote:
Before moving forward we expect few words of wisdom and inspiration from you. We would like to place on record that we will create appropriate atmosphere which is conducive to investment and growth.
Sir, we have decided to adopt totally new path which will not create distress, jealousy, enmity, division between management and union, etc. We are in the process of detailing on the above aspects and present to you in due course of time. This time we have decided not to demand wage rise, but to earn wage rise and without your cooperation and support it will not be possible.
We are serious…… and we will show it through our behaviour and attitude. We will submit our detailed proposal in terms of productivity improvements not only in labour but also material, energy, capital. We will also propose wastage reduction plan in all these areas so that our Company shall be competitive and sustainable.
The first lesson in building any relationship is that it must be built proactively, not reactively. The step taken by ASAL union is based on this sound understanding and belief.
Result? Some hesitation initially, but it was quickly overcome and the management responded positively. There was no charter of demands, but there were productivity improvement proposals tabled for discussion by the union. If a loss making unit has to grant wage increase and yet survive, productivity improvement becomes imperative. To a great extent, if not fully, the productivity improvement must finance the wage increase.
The management responded positively. The spirit of give and take guided the parties. The final result – Productivity is set to increase by 60 to 70%. Wage rise of Rs. 7000 over four year period is agreed to. Add to that incentive scheme. And a signing bonus of Rs 2500/-.
And now let us talk about Hy-Tech Engineers. They faced tough business situation. But they chose to implement the Toyota Production System in true spirit. The workers asked ‘what’s in it for them?’ The MD then announced that he will share ‘value added’ with them. He has declared a wealth sharing formula so that all the employees can calculate their gains. This has gone a long way in creating work culture. [You can watch the video on my YouTube channel].
I invite this audience to note an important point. The situation in Hy-Tech Engineers improved mainly because a structure was put in place. Later I will discuss the importance of systems and processes in building relationships.
- Conversations Create Commitment, and Resolve Conflicts.
The Maruti story is well known, the workers struck work seven times in sixteen years. But the frequency in 2011 was shocking; they struck work three times in five months. The Economic Times carried a story titled “Workers strike thrice in five months: How Maruti Suzuki lost connect with them” on October 17, 2011. This was a well-researched story. It mentions the production chief of Maruti asking himself ‘How did we lose the connect with our workers? What went wrong?’
The long and short of the story is that they focused on increasing production, but ignored the people dimension. This is a familiar lesson. Almost all of us have experienced it in our work life. Managing people and production [or services] simultaneously is like rope balancing.
The solution which people recommend is also familiar. Visit workers’ homes. Maintain personal touch. In short be mother to the worker. This message is repeated so many times that it almost amounts to brain-washing.
Influencing employees, or anybody for that matter, is not so easy. We have to understand that each person experiences an organisation differently. Moreover he comes with his needs and concerns. In what way he perceives the organisation differently is a question we rarely explore. When we make efforts to understand it, it is ‘perspective taking.’ Having thus understood his needs and concerns, we have to think how and to what extent we can meet them.
I was called by an entrepreneur to help him with a difficult situation. He was running a service industry and the staff there assembled in the parking lot to go on strike. The staff respected the entrepreneur but not so his managers. He pacified them, assured that he will look in to the issues promptly. It was at this stage that he called me.
We arranged a meeting with the staff in group of thirty persons. We listed problems they were facing, and decided many issues on the spot. The decisions were not all ‘yes.’ There were some ‘no’s too. The overall scenario improved substantially after the third meeting. We called it ‘Conversations for Togetherness.’ Essentially it was ‘Open House’ in which the communication flow was bottoms up, not top down. We did not organise the conversations to tell them anything, it was essentially to ask them about their issues and concerns.
My learning is that we react to a difficult conversation either by violence or by silence. But there is a third way – by understanding the other person’s reality. It opens up a conversation which is deep and meaningful. Engaging in ‘adult to adult’ conversation is important. It is in such meetings that setting boundaries, that is to say, making certain stances which are non-negotiable is accepted without much problem.
That takes us to another issue. We overemphasise personal touch. No doubt personal influence is important. But we have to devise systems to consciously listen to the other person’s reality. And one of the ways is to engage in conversations for togetherness.
When we regularly engage in conversations as mentioned earlier we create a process of reaching out to our own people. The result is that the organisation gets sensitised to the issues of people who work for it. Not only the speed but the quality of ‘people related decisions’ also improve. This, you will appreciate, is a great improvement over mothering employees.
- Let us think of building IR capabilities.
We know that individual skills of relating are important, we also know that we have to build some systems and processes to manage Industrial Relations. We know that in the Industrial Relations scenario we must have skills to build relationships and we must have skills to manage conflicts.
Let us put this in a 2 X 2 matrix.
|Building Relationships||Managing Conflicts|
|1. Accepting Differences
2. Empathetic Listening
6. Facilitation in groups
4. Putting Fish on the Table
5. Understanding different perspectives
6. Knowledge of law: Rights and Obligations of parties.
|Systems and Processes
|1. Hold Conversations for Togetherness [for empathetic listening, and gauging collective mood and concerns]
2. Give and Take Feedback
|1. Holding Collective Reflections for Improvements
2. Clarify Responsibilities
3. Clarify expectations
Permit me to stay on the conversations aspect for a while. There was a six-month strike in the Company where I worked. The workers finally gave in and came back without gaining anything, and on the terms of the Management. For the workers it was a humiliating entry in the organisation. Then there was a concern about rebuilding relationship with workmen. Interesting ways were suggested, mostly focusing on personal touch. So my boss called for a meeting.
He said, “We have faced a bitter struggle, a strike for six months. It was a conflict which has cost heavily to both the parties. Let us discuss how we contributed to making of that conflict. Let us discuss if we could have avoided the strike – we are paid to run a factory and not close it. So this introspection is essential.” [I have put this aspect in the quadrant at the intersection of Managing Conflicts and Systems & Processes.]
Accepting that we also contribute to a conflict is a big leap of development. If conflicts are inevitable, introspections are a necessity. They must be mandated. Introspections create heightened awareness of our role, the impact of our actions and help us provide a mature response to a difficult situation. Such introspections develop managers for building relations.
Employee Relations policy is an offshoot of such introspection. A typical ER policy informs us an organisation’s approved way of relating to people individually and in groups.
What happens when there is no introspection on people issues? I recently wrote two blog posts. One on LG Electronics and the other on Abbott. Both the organisations have well-articulated ER policies. The policies are published on their websites. And yet the action of the local managers appear almost in complete disregard to the policies. This I guess is the fall out of lack of review and introspection. Framing an ER policy is a small job, introspecting on our actions in the light of the policy and implementing it to bring about harmonious relations is where the hard work is. It often forces us to choose the difficult path. Volkswagen is not engaging in the malpractice of using contract labour or trainee although it can save them some cost and their competitors seem to be engaging in it with impunity. But it also creates an organisation which recognises that they may have asked for workers, but they have got people!
There is no other option but to create an organisation which strikes a great relationship with individuals and their collective entities. After all an organisation is made of people. Employers want production, productivity and flexibility. They ask for workers. People want a living wage, individual growth, bright future and a positive workplace. Employers get people instead!
Remember what Swiss writer Max Frisch said, “We asked for workers, and we got people instead.”
Vivek S Patwardhan
 A character in a play by Swiss writer Max Frisch says “We Asked For Workers. We Got People Instead.” It captures reality in a few and simple words!
 ‘Stranded’ http://economictimes.indiatimes.com/small-biz/startups/layoffs-in-startups-whats-the-other-side-of-indias-entrepreneurship-story/articleshow/54268511.cms
 Raymond to replace 10,000 jobs with robots in next 3 years http://economictimes.indiatimes.com/jobs/raymond-to-replace-10000-jobs-with-robots-in-next-3-years/articleshow/54358700.cms?from=mdr
 Workers strike thrice in five months: How Maruti Suzuki lost connect with them http://articles.economictimes.indiatimes.com/2011-10-17/news/30290122_1_manesar-plant-maruti-suzuki-s-manesar-maruti-s-manesar