Presented By:

P. Dwarakanath Advisor – Human Capital

12th November 2013

IR challenges & practices in India

IR in India: Content

• Context Setting

– Threats & Opportunities

– India at a Glance

• Evolution of IR

• Current Landscape

• Key Stakeholders

• IR Challenges

• Changing Expectations

• Current IR Philosophy and Practices

• Paradigms

• Acknowledgements:

Sep 2008 CEO of Graziano Transmission India, an Italian auto component maker was clubbed to death by group of 200 workmen.

Sep 2009 VP HR of Pricol was beaten to death by agitating workmen.

Nov 2010 Asst. General Manager of Allied Nippon, an auto part maker was stoned to death by angry workmen.

Mar 2011 DGM – operations of Powmex steel, a unit of Graphite India Ltd., was killed after setting his vehicle on fire.

Jul 2012 Most recent is Maruti Suzuki India Ltd – GM (HR) was killed and left other 100 officials land up in hospital

Mar 2013 Hero MotoCorp workers at the Gurgaon unit go on hunger strike demanding higher wages.

April 2013 Domestic auto major M&M suffered a production loss of around 3,000 engines due to the "tools down" protest by workers .

June 2013 The workers’ at Shasun Pharmaceuticals’ Puducherry plant began strike with workers in the casual payroll demanding they be made permanent employees.

July 2013 Bajaj Auto approached the Pune industrial court to declare the on-going workers’ strike at its Chakan plant as illegal.

IR News: Headlines

India : Land of Opportunity

Industrial Disputes in India

1. Largest Democracy – 1.2 billion people, Growing Middle Class

2. 4th largest GDP (PPP) and 10th largest GDP (Nominal, USD 1.8 trillion)

3. One of the fastest growing economies in the world

India’s average GDP growth rate: 7.3% over past 10 years

4. 3rd Largest Investor base in the World

5. Robust Legal and Banking Infrastructure

6. Demographics Advantage – Youth driven economy

7. Suburbanization & Rural to Urban Migration (140 million by 2020; 700

million by 2050)

8. 2nd largest pool of Certified Professionals and highest number of qualified

Engineers in the world

9. Increasing investment in infrastructure to help growth going forward

10. Robust and active judicial review

India at a Glance

Ideology based Trade Unions ‘Vs.’ Approach between Management & Unions

Parent-Child, I am OK – You are not OK Approach

Struggle to balance ‘Productivity’ & ‘Security’

Professional language dominated by HR/HRD

Growing economy and ‘Good’ Wages

Thrust on service sector

Job security less of a concern (Gen Y)

Bargaining power of workers reduced

Management preferred to ‘avoid’ unions

Bipolar political set up

MNCs looking at standardization ; not adapting to local culture

More educated workforce; more value-adding nature of work

Work contracts becoming more ‘commercial’

Focus on ‘policies’ instead of ‘principles’

Focus on compliance and governance

Emergence of linkages with international unions

Growing influence of media / social activism

Mid-90s to 2010

The Present and the Future

Till Mid-90s

Labor Relations to Employee Relations

Do you know?

GHERAO

Current Landscape…

• Environment

• Business

• Organization Structure

• Market

• Industry

• Future

• People

• Dynamic

• Fiercely Competitive

• Fluid

• Fluctuating

• Apprehensive

• Unpredictable

• Bewildered

•Economic Growth•Industrial Harmony•Revenue Generation

•Flexibility in Operations•Low Conversion Cost•High Productivity

•Seek decision making powers of management•Complete autonomy in operations

•Job Security• Living Wage•Welfare Amenities•Voice grievances

Key Stakeholders

Government Time consuming & cost prohibitive adjudicationOutdated Labor Legislation Highly regulated, low governanceSons of Soil - philosophy

ManagementNot seen as strategicNo participation of board / Top Mgmt.Reactive rather than proactive approachLack of exp professionalsImproper hiring policies

EmployeeContract laborWage differentiationLack of articulated exit policyManaging Gen Y expectationsBooming Social media

UnionsPolitical InterferenceEmergence of radicals in few pocketsRole of international federationsFormation of unions of white collars in service sectors (Doctors, Pilots, IT /ITes etc.)Role of NGOs and Social activists

IR Challenges

Changing Expectations : Management

8 hours work Manpower

Not just output

Single product

Good quality product

Not just labour

Employee

Effective time utilization

Optimum Utilization

Speed of work

Multiple product

Zero defect…first time right

Low cost labour

resource

Shift in perception

Changing Expectations : Workforce

Basic Hygiene Food

Transport

Exploitation

Safety standards

Medical-not mere Health check

Workers’ Right

Not just Monetary increase in wage

Cleanliness/ambience

Dietary

Self mode or better luxury mode

Norms / laws / Respect

Behavioral safety, extensive use of standard PPEs

Mediclaim , better equipped Hosp.

Respect / Recognition

Now even looking for share in Co. by demanding shares (Bajaj Aut0, Pune)

Shift in perception

Current IR Philosophy and Practices

Unions can be partners, they are not a burden

Few Organizations manage employee relations without unions through robust communication, grievance handling missionary and speedy conflict resolution

Appeasement comes with a long-term price and hence not the best way

Sometimes the cause of a dispute, is at management end itself, due to style, implementation issues, etc.

Communication on a continuous basis is a must, be willing to ‘listen’ and provide ‘ psychological air’ especially to the younger workforce

Union should not become the sole vehicle of communication with employees. They can facilitate but not be responsible

Escalating matters to third party is not the best approach. It should be only by exception

Linkages with external environment is very critical

Current IR Philosophy and Practices

Collective bargaining is through “Give and Take” approach

‘Action – Reaction’ principle works - The more unfair, unjust, unethical, dominating and suppressive you are, the more violent can be the reaction

Unfair labor practices including engagement of Contract labor can be a ticking time bomb if misused

‘ Community of Interest’ perspective rather than ‘ Conflict of Interest’

‘ Culture of Conscience’

TRUST, CREDIBILITY AND TRANSPARENCY are three key requisites for successful employee relations

“ Culture Eats Strategy for Breakfast”

Practices in Collective Bargaining

FromFrom ToTo

Short Term Long Term (10 years)

Centralized Decentralized

Proposals Counter Proposals

Cost/ Burden Gain Sharing

Collective contracts Individual Contracts

Parity across sectors Increasing disparity across sectors

Honeymoon clauses Specific Commitments

Management bargains, union collects Give and take from both sides

Something for nothing Something for something, nothing for nothing

Welfare Farewell

Proactive IR : In Action

Robust Selection Process

RecruitmentRecruitment

Affirmative ActionAffirmative ActionO

NB

OA

RD

ING

ON

BO

AR

DIN

G

DEP

LO

YM

EN

TD

EP

LO

YM

EN

T

Pre

-Em

plo

ym

en

t &

Tra

de-w

ise T

rain

ingScreen

Test to Shortlist

Test to Select

Interview

Antecedent Verification

Medical

Source

Pre-employment & Dexterity Training

Inclusion & Diversity

Creating Culture of values..learning

Paradigms

• Organized Vs. Unorganized

• Employability Vs. Employment

• Permanent Vs. Contract labor

• Internal Vs. External Union

• Local Vs. Non-Local workforce

• White collar Vs. Blue collar

• Gen X Vs. Gen Y

• Innovation & Productivity Vs. Cost Arbitrage

• Low Vs. High Wages

• Global Vs. Glocal

“Survival of the fittest” Vs.“Welfare of the Weakest”

Acknowledgements:

Few slides in ppt. were contributed by my professional colleagues

namely Mr. L Prabhakar of ITC, Mr. Prince Augustin and Mr. Vijay Nair

of Mahindra’s