My Initiation in Employee Relations

I will be speaking on ‘The Missing Conversations in Employment Relations.’ (This is the full text of my talk arranged by Tata Management Training Centre, and delivered before Tata Group Managers on Aug 04, 2023). My initiation in employee relations began at a very early age. I spoke to you about the Tata Colony at Khopoli. It is located on the old Mumbai – Pune Road and the staff or managers’ bungalows are on one side of the highway while the labour camp as it used to be called – the then name for the part of the colony where workers stayed – was on the other side of the highway. The highway literally divided the managers and workers residences. This imagery stayed in my mind always, it depicted the divide between two groups of employees so picturesquely!

Even a seven-year-old boy understands the divide, may not be at a conscious level, but he surely understands how it works.

The Theme

The theme today is ‘The Missing Conversations in Employment Relations.’ Working in any organisation makes us aware of the missing conversations. And why talk about working in organisations? Missing conversations is quite common in families. Our world is full of missing conversations.

During my career spanning 37 years, I handled Employee Relations responsibilities for the first 25 years. I will be discussing a lot of stories of industrial relations. Today I am using the term Employee Relations broadly, to include all employees irrespective of status.

The Central Argument

The central argument of my talk is this: Unions have lost power. They are unable to represent employees for various reasons. This situation presents a unique opportunity to create a monolithic organisation. This requires engaging in conversations completely different from what we have seen traditionally in the organisations.

Unions Have Lost Power

That the unions have lost power was brought home clearly once again by the Air India case. Air India had struggled for decades to upgrade its services, and unions created big hurdles. When Tatas took over Air India, they wanted the pilots to accept the revised employment terms. Pilots have accepted the revised terms in spite of resistance of the unions.

This glaring example brings home the point that the unions have lost power. In the manufacturing sector it became long visible. The number of trainees and contract workers far exceed the number of permanent workers. That was an unimaginable situation in the eighties and early nineties.

What are the implications of unions losing power? The jury is divided when it comes to its the impact on the financial performance. But at a different level it matters and it is not getting noticed. I am referring to the voice of the employees which is not getting heard.

When unions become weak or can’t represent employees’ voice well, Organizations will have to find alternate means to listen to employees’ voice. If this is not done, some conversations, and critical conversations, will be missing.

I Became Aware of Missing Conversations

I became sharply aware of ‘missing conversations’ when I was invited to help out an entrepreneur in a near-strike situation. It was a service organization and the employees felt that their grievances were not heard. They assembled in the car park and requested the entrepreneur to meet. He heard them and promised to redress their grievances immediately. It is at this stage I was called in.

We met a group of 25 employees and started listening to their issues. The issues were listed first and thereafter addressed. They listed 76 issues. Actions were promised to be taken in a fortnight, and indeed they were taken. This exercise was then repeated for all employees.

The strike was averted, and stress went out of the relationship, and much better atmosphere prevailed. We decided to regularly hold such meetings.

Except one, there was no grievance about policy. This experience brought home a point for me sharply – there are so many missing conversations in an organisation.

And that set me thinking about ‘Missing Conversations in Employment Relations’ which I present to you today.

I see that in the life-cycle of an organisation there are three phases. And those three phases offer different situations and demand different conversations.

The First Phase: Setting Up an Establishment

Let us focus on what happens in the first phase. What happens when you open an establishment? The project team works hard to ensure that they establish processes which give them higher productivity. They make sure that the manning is lean. They establish metrics to measure productivity. If you had a plant elsewhere, then you study what is not okay there and try to avoid it in the new plant. So right manning, right work practices and learn from past experience to avoid certain things. You train people extensively because you want the right work practices and productivity.

I saw this happening at Tata Steel’s Kalingnagar Plant. Marico and Asian Paints consciously do something new in every new plant they set up, it is never a replica of the previous one. The effort is always to create a better plant, or establishment.

The project team is usually a small team and they bond well. There is good communication between them and also with the employees in general. There is willingness to try out something new. They do try out new ideas. A few years ago, at the ITC’s new plant in Nepal we organised a world café to lay down fundamentals of creating work culture. Tata Steel also did it at Kalinganagar Plant. Several organisations have made such efforts.

The effort in this phase is to develop a good work ethic. They set up elaborate communication mechanisms.

But this has another fall out. Elaborate training is organised for employees, and the focus is on not having a union. But developing a comprehensive approach to people management is missed out.

There is an underlying belief that if we are good to them, they will not form a union.

Overall, this phase sees good conversations. But I repeat, developing a comprehensive approach to people management is missed out. Somehow, we presume we already have a comprehensive people management approach.

The Second Phase: When Conversations Are Put to Test

The ‘Second Phase’ is full of drama. This begins when the plant or establishment becomes operational fully. This is the longest phase. And this second phase is all about managing change. Lot of things happen in this phase. The establishment grows, the expansion plans are carried out, new units are acquired, new technologies are acquired which necessitates change in the way of working.

The organisations have two choices here: Create a monolithic organisation, or play a power game of Management and Union. Let me explain the word ‘monolithic’: the dictionary meaning is ‘formed of a single large block of stone, and in the context of an organization or system it means a large, powerful, indivisible.

I have used the word monolithic only to describe an organisation where all people are clear about how to work, what their roles are. Their alignment is total. People in the monolithic organisations are clear about what kind of organisation they are creating. I am not referring here only to success in business but also in developing healthy relationships and meaningful jobs.

When we say monolithic organization, we take a ‘Unitarist’ view of the organisation. I will first explain the concept then then discuss some examples which will communicate the meaning well.

We are discussing employment relationship. What kind of employment relationship we visualise in our establishment is the most critical question.

We should take a note of the “frame of reference” introduced by Alan Fox. He argued that it is always possible to conceive the employment relationship in either one of two incompatible ways. [I quote:] “Either it is a relationship of social membership which exists to satisfy common interests (the Unitarist frame of reference), Or it is a negotiated, contractual relationship which exists to satisfy the interests of separate but interdependent groups (the Pluralist frame of reference). He later introduced a third frame of reference, the Radical frame of reference, from the perspective of which the employment relationship is an entirely illegitimate relationship which exists solely to satisfy the interests of the dominant party.” [Unquote].

If this appears too theoretical, let me explain with some examples.

The first example is of Marico. It is a classic example of the unitarist view in practice. When Marico set up their Kanjikode plant in Kerala, they experimented with employment relations. Believe it or not, they did not have a union for the first seven years of their operations. Unbelievable in the 1991-92, right?

You will recall that the beginning of the nineties was the beginning of globalization and the unions in Kerala were strong and everywhere. In fact, they had effectively dissuaded entrepreneurs from setting up establishments in Kerala. Asian Paints had 9 workers in their godown and they went on strike for 9 months. That should give us the extent of unionisation and its extreme anti-management stance.

The Secret of Marico’s Success: The Unitarist Way

Marico looked at the employment relations in the Unitarist way. It manifested in many ways. Nobody was required to punch card or mark attendance. You were considered present unless you applied for leave. The workers were empowered to take many production and shop floor decisions. If an inquiry was held against an employee, the inquiry committee had representation of managers, supervisors and workers. These are only the visible signs of their approach.

This was the industrial democracy at its best.

Marico practised Inverted Leadership Pyramid. One of the hallmarks of Inverted Leadership Pyramid is excellent communication. Not just top down, but upward too. This is because ILP (Inverted Leadership Pyramid) requires CEO and his team of managers to play a supportive role, and they have to empower the frontline workers. The inverted leadership pyramid places the frontline workers in touch with the customers directly.

When you implement ILP, you spend more time discussing the roles of managers at various levels than the workers roles.

ILP requires building a culture of trust and responsibility. We see many companies have mentioned Trust and Responsibility as the values. But in ILP it must be practiced.

The Unitarist way adopted by Marico was unique, and in sharp departure from what prevailed in the nineties.

HyTech Engineers

A similar case of implementation of ILP is in HyTech Engineers Ltd. Moreover, they have implemented Lean practices. This makes a very productive and interesting combination.

HyTech Engineers decided to implement Lean Manufacturing practices. Several changes had to be done while implementing Lean practices besides training employees. They asked ‘What is in it for us?’ A discussion ensued and they were told that on successful implementation of lean manufacturing, a part of value added will be shared with them. The promise has been kept. I have a video of how this is done. Interestingly, even contract workers with three months service also get the valued added share.

When you bring fairness in the pay, people take their minds off it. Dr Jeffrey Pfeffer says pay people well and do everything to take their mind off money. 

Lean practices require identifying and removing non-value adding activities. The discussions are very different. They are about problem solving. There are two guiding messages to every employee which are repeatedly spoken in HyTech Engineers.

Message 1: Monitor and Support, NOT Monitor and Control. Managers adopting the style of Monitor and Control are coached repeatedly because the old habits die hard. The conversations change completely.

Message 2: People, Process and Results. That is the order of focus of managing.

This brings in radically different conversations. You do not find them in organisations managed in a traditional command and control way. It takes a long time for a newcomer to unlearn focusing on results first, and shift focus on people. Lean practices bring good focus on processes.

At this organisation, I witnessed interesting conversations. In a performance conversation they analysed how his time was spent and concluded that it was largely on ‘Quadrant 1’ activities. It denotes spending time on ‘urgent and important’ activities or in other words on fire-fighting activities. They wanted him to spend time on Quadrant 2 activities which are ‘Important but not urgent’. Those activities include Planning, Training, Building Relationships etc. You are able to focus on Q 2 activities when you get the process right. Coaching was offered to make working style change.

Yes, coaching was needed, not scolding. Yet, his wrong practices were clearly identified. I learnt a wonderful word – Carefrontation. A portmanteau of Care and Confrontation.

I would like to mention another case of people focus and carefrontation.

I have blogged about how five workers, all of whom had joined as unskilled workers, are running a small factory of Rs 15 Cr turnover. They meet every Saturday and work out a ‘rolling plan’ for the coming weeks! And they plan the work right up to the dispatch stage, also deciding on the sanctioning of leave and related administrative matters. This quintet has been well trained to manage cost, they understand how to remove ‘non-value adding activities’ and speak the language of ‘Lean manufacturing.’ They are aware of the sales their factory achieves and also the profits it makes. I have recorded a video on this matter.

What produced this magic? That they were trained well is obvious but that is not the full story. Initially, this factory did not make much profit. There were two options – first the obvious one is to close the factory down, and the second one was to have ‘Carefrontation’ talk. The second choice was selected. The factory must give at least 10% return the workers were told. And this small group of workers are consistently giving it, often exceeding the target.

I read another message in this story. We have to think about our roles. The entrepreneur saw that his role involved making decisions which will lead to creation of wealth for the organisation. Simultaneously he owed much to the employees who had worked with him for a long time. It was necessary for him to find a way which could integrate both the objectives which at that situation seemed conflicting. The easiest solution was closing down the factory. The difficult solution was to train employees in Lean practices and get them to remove non-value adding activities to make profit.

My learning is that it is not enough to have empathy. It must be complemented by openness. The open part of the conversation was about the support the workers could expect from the organisation, and also about their own role in the situation.

Discussion of one’s role may not be uncommon. It is of what organisation expects from a certain position. But a role is also defined as a set of expectations. These are not just the expectations from one’s boss bit also from peers and juniors and even customers. This aspect of role is not much worked upon.

In the instant case the entrepreneur was thinking about his role to mean the expectations of his lowest level of employees. Some conversations involve deep thinking about one’s role. That role is to be thought in the context of his personal philosophy. At this stage he must decide what is in his personal interest, and what is in the interest of the Society.

At this juncture I wonder what kind of conversations preceded Ratan Tata’s response to the aftermath of the terrorist attack. Ratan Tata realized that there had to be a system to help and rehabilitate the victims of such tragedies. He launched a trust within two weeks of the attack on Taj Hotel. It is not only for the employees of Taj Hotel who suffered due to the attack, but anyone affected by it could ask for help.

These are undoubtedly leadership conversations which we may never be privy to. In that sense they are missing for us.

I would like to discuss some interesting cases with you. And we will discuss what to learn from it. But we should be clear about one aspect: Both Mr Tata and Mr Mondkar, the entrepreneur at HyTech Engineers asked themselves the same question ‘What kind of organisation I wish to create’.

I repeat that question ‘What kind of organization I wish to create.’ The answer is not really in the vision of the company. The answer to such a question comes after soul searching. Lying deep below the Carefrontation talk with workers is the answer to this question ‘‘What kind of organization I wish to create.’

Thermax Gets It Right and Wrong

I will now talk about Thermax which got the conversations right in one case and wrong in the other case. I will begin with the wrong one first.

Thermax Kamgar Sanghatana is the union of employees at the Chinchwad plant and they took steps which were very unusual. It is a trade union which has ISO 9000 certification. Its office bearers are trained in Kaizen and they claim to have saved Rs 52 Cr for the Company. Even the company officials admitted that they had done a substantial cost saving. They talk the language of RFT, TPM, Kaizen; on an average each committee member has done 30 Kaizen projects. The union conducted surveys to understand how well they are satisfying the expectations of their members. And Thermax Union even had a declared Quality Policy. I have a copy. Thermax union representative once dialled an officer in Tata Steel. ‘Your supplies are not regular; our workers sit idle. Please send supplies regularly,’ he said. And I have heard this from that Tata Steel officer.

But something happened and the conflict between the Management and the Union led to complete destruction of the union. Thermax revised wages without signing any settlement ignoring the union.

This was a radical step. What prompted them we do not know fully. But one thing is clear. Thermax did not take a ‘unitarist’ view of employment relationship. Had they taken it their approach to the conflict would have been different. With a progressive union representing the workers, all stage was set for taking a unitary stance. But unfortunately, they missed it.

Unions can be a big hurdle in creating an organization of your dreams. Here was a positive and progressive union. One would have expected that the job was easier for Thermax.

This takes us to the conversations they did not have. We can look at employment relations in a different way. A management can be progressive or conservative. A union also can be progressive, as it was in the Thermax Union case, or it can be conservative. Now we have a two by two here for our analysis. That raises four questions for us.

a/ How does a progressive management would deal with a progressive union? b/ How would a conservative management deal with a progressive union? c/ How would a conservative management deal with a conservative union? And, d/ how would a progressive management deal with a conservative union?

In the instant case, Thermax lost a golden opportunity in my opinion. It seems to be a case of a conservative management dealing with a progressive union. Conservatives play a power game and that’s what happened there, it almost finished the union.

Looked at it from another angle, it appears that both management and union – did not think of their role in the context of the situation, or they possibly did not see the benefits which could be derived through collaboration. And I feel that they also did not think of ‘What kind of organization they wanted to create.’

This is the story of the Chichwad plant.

A Twist in The Tale

But at another location the Thermax story has a twist in the tale. Let me tell you because it is very interesting and positive.

Thermax set up a new factory at Savli near Baroda. The factory employed only contract workers. A dispute took bad turn in 2010. There was violence at the gate and even gun shots were fired. The employee relations were at an all-time low.

Following this Thermax rebuilt the relationship. They did it proactively. I spent one full day at the plant meeting people and recording their videos which you will find on my YouTube channel. You will also find a full account of how they transformed the toxic work culture to one very collaborative one. They have taken several innovative steps. Thermax now has permanent employees and an objective process for making them permanent. They are practising inclusion. Their HR policy is now an open book.

Sharad Gangal, their Head of HR said, “Trust alone is not enough to rebuild culture. Employees come here with a hope; we must help them fulfil it. Hope and Trust are twin pillars of building any rewarding relationship”, he said.

This is interesting, isn’t it? It is insightful. Thermax has at one plant a progressive union, but the employment relations take nose dive. And at the other plant, toxic work culture is transformed into a very progressive one. Please see my blog which covers this in detail with videos “Welding Hope and Trust To Transform Culture”  

How to explain this? This happens because there was no collective conversation on what kind of organisation they wanted to create. Contrast this with Unitarist stance with Inverted Leadership Pyramid in practice at Marico as well as at HyTech Engineers. Marico worked in a business scenario which was highly antagonistic to employers. HyTech Engineers’ practised ILP with their people philosophy of People, Process and Results.

When you have not spelt out people philosophy, it is easy to be paternalistic, as well as make a quick shift to play a power game.

When you adopt the Unitarist way, each conflict forces you to reflect what changes need to be made to some processes. You ask yourself ‘Where did we go wrong?’ and search answer in our misunderstanding of roles and the processes. When you play power games, you do not have to ask that troubling question to yourself.

At Asian Paints Bhandup factory, there was a violent strike resulting in two murders. There was no dispute between management and workers at that juncture; the strike was the result of interunion rivalry. The strike ended after six months. Our director called for a meeting in which he asked, “We are paid to run a factory. Where did we fail?” It was impossible to answer his question because the emotions run high in a prolonged dispute. But I have not forgotten the question; it formed everyone to think about our role, and our way of communicating with employees.

One of the principles behind the Agile manifesto is ‘At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behaviour accordingly.’

The missing conversations are often about developing a people philosophy.  There was confrontation at Chinchwad, it lacked caring. There was no Carefrontation. At Savli plant they introspected on their role in the disastrous situation and worked out a solution.

But whether the organisation as a whole learnt something is not known. It is introspection which leads to creating a people philosophy.

The ASAL Case

I will now talk about the ASAL Case. This case is important because here the union had taken the initiative to take a progressive step. This is a case where a progressive union confronted a conservative management.

Automatic Stampings and Assemblies Ltd or ASAL for short, had two distinct features: It was a loss-making unit for several years. It had huge accumulated loss in 2015. Three years earlier in 2012 their industrial relations took a bitter turn and there was violence. Finally, the parties arrived at agreement. Three years later when they were about to negotiate a new agreement, the union committee did some soul searching and decided that they will not take the violence route at all, instead will offer collaboration, and wrote accordingly to the Company. Let me read out this para from their letter –

‘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. And 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.

[Letter of ASAL Kamgar Sanghatana, Pune]

This worked. The workers would have got pittance from a loss-making company, but they increased productivity substantially and got a fair deal.

I spoke to some of the workers later who felt that the experiment was not capitalised on by the management. Why did this situation develop? In my analysis, ASAL was not proactive in developing relationship. They had a golden opportunity served on a platter by the union, but they could not seize it. They neither created a forum to engage in conversations essential for transforming relations, nor did they seize initiative in developing relationship in any other way.

A few years later the industrial relations are back to hostile, and I am told that they have even a case in the Court now pertaining to wages.

When the union made the effort to collaborate, it was a golden opportunity to move to unitarist stance, giving up ‘we and they’ stance, and work their way to develop people philosophy. But it did not happen.

Why did it not happen? Because we fail to understand that relationships must be developed proactively.  

There was a golden opportunity for ASAL to achieve ‘excellence’ in industrial relations by ‘alignment’ of all employees. Unfortunately, it was wasted. If we want to achieve excellence alignment is essential. Those conversations were missed out completely. ASAL wasted an opportunity to have conversations about ‘what kind of organisation I wish to create’.

And Finally ……

We are discussing “Missing Conversations.” Some conversations are explicit. Some conversations are otherwise. And some conversations are arising out of heightened awareness and they raise the awareness, some are carried out routinely, and they are like sleepwalking.

The question is what kind of conversations we miss at the workplace. We may flip this question and ask what kind of conversations we remember for a long time. My answer is that we remember those conversations which ‘add meaning to our life.’ Osho says that life is meaningless and we have to give it a meaning.

How do we give our lives a meaning? The answer is ‘by creating a sense of belonging’.

At Marico’s Kanjikode plant, the jobs were rich, with workers empowered to decide everything that matters on the shop floor. Inverted Leadership Pyramid was practised. They participated even in the decisions of disciplinary nature. In short, the ownership was high, the sense of belonging was high. That reflected in their not seeking a union even in Kerala where unionisation is exceptionally high.

We can only imagine the conversations between the managers and the employees.

At HyTech Engineers, they are practising Lean Manufacturing with ILP. Their Thane Factory is being run by five workers and they are running it profitably. This is interesting on two factors – first, it is run by a team and not by a single Factory Manager. You will appreciate that it brings in very different conversations, those are of collaboration and not competition. Second, the workers whose education is only up to 10^th standard, are finding a meaning in their work, their sense of belonging is high.

What happened at the Chinchwad plant of Thermax is tragic. The Thermax union was probably the most progressive and advanced union with ISO certification. But somehow a conflict between the management and them destroyed them.

We will never know what happened there; a conflict story can never be fully written. I have handled many strikes and lock outs and I know that there are many sub-stories in every conflict. Mahabharat has hundreds of them. In a conflict both the parties share the blame. But one conclusion can be drawn with certainty – the management has to accept greater share of the blame in destroying potentially unique situation.

And interestingly, the same company created deep conversations at Savli Plant. Meaningful conversations. Watch the videos on my YouTube channel. Thermax has policies and processes in place which prescribe what you should do to advance in your career. They subsidise learning. They have trained tribal community girls to do welding, I guess it may be a unique achievement.

What makes this contradiction? Either people philosophy is missing or there is no adequate conversation around the people philosophy. Knowing Thermax, the latter must be true.

And that indicates another issue: We must have skill to engage in meaningful and reflective conversations.

I am not analysing ASAL case, I believe the thrust of my argument is clear.

We talked of listening to employee voice at the beginning of my talk. Organisations will have to find ways to listen to the employees’ voice.

Over the last two decades or so, there are many techniques which got developed to listen to employee voice. LSIP or Large-Scale Integrative Process has been used to create alignment of minds in many companies. World Café is used for listening to employee voice on critical issues. But the use of these techniques is limited, and unfortunately not used to create an establishment wise or enterprise level discussions. Nevertheless, they offer some hope for those who wish to ask themselves ‘What kind of organisation I wish to create?’

Vivek S Patwardhan

“What you leave behind is not what is engraved in stone monuments, but what is woven into the lives of others.”

PS: Picture Courtesy: Unsplash