Shrm Labour Relations

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STRATEGIC HUMAN RESOURCE MANAGEMENT

ByGROUP III

PERSONNEL MANAGEMENT - II

A PRESENTATION ON

LABOR RELATIONS

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GROUP MEMBERS

• SNEHA• ADITI GUPTA• SUMIT EKKA• NEHA RAJ• RAVI KR. ANAND• ADHIR ALBERT LAKRA• PROMOD HEMBROM• ACHINT CHABBRA• RAVI BAA• ROHAN IGNATIUS CHARLY• POOJA RANI• PRITY KUMARI• PRIYANKA PRIYA

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Defining Labor Relations

• This discipline covers the relationship of workers with the organization and with each other. Labor relations is concerned with anticipating, addressing and diffusing workplace issues that may interfere with an organization’s business objectives, as also with resolving disputes between and among management and workers. It includes the processes of ensuring that relations with workers comply with applicable central and local laws and regulations and resolving workplace disputes.

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JOURNEY : LABOR RELATIONS TO EMPLOYEE RELATIONS

• Labor Relation in India has been shaped largely by principles and policies evolved through tripartite consultative machinery at the industry and the national levels.

• The Labor Relations system of India has its origin in the colonial past.

• The movement for independence, influenced the evolution of the Labor relations system in India

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• The Historical evolution of the Labor Relations system can be categorized under six phases:– The Protective Phase (1947-1956)– The Consolidation Phase (1957-1965)– The Conflict Ridden Interventionist Phase

(1966-1976)– The Directionless Phase (1977-1980)– The Productivity efficiency, Quality-orientation phase

(1981-1990)– The Economic Growth Competitive Phase

(1991-Onwards)

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• The Current scenario points to a shift in the relative bargaining power in Labor relations, away from the workers to the employers.

• The current standing lays emphasis on term employee encompassing a larger section of working class than labor.

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KEY DIMENSIONS OF TRADITIONAL IR AND EMPLOYEE RELATIONS

DIMENSIONLABOR RELATIONS

(I.R.)EMPLOYEE RELATIONS

(SHRM)

Psychological Contract

Compliance Commitment

Behavior ReferencesNorms, Customs, Practices Values, Mission

Relations

Low trust, pluralist, Collective

High Trust, Unitarist, Individual

Organizational Design

Formal Roles, Hierarchy, Division of labor,

Managerial Control

Flexible roles, flat structure, teamwork and

autonomy, self control

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Relevance of Labor Relations in the field of SHRM

• In many industries (public or private) unionization is the norm. Managers and business owners in these industries have no choice but to be well versed on the laws that regulate the relationship with union employees.

• Competitors maybe unionized and settlements in those organizations may impact HR practices, programs and policies needed to remain competitive in recruiting and retaining productive employees.

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• Organized labor presents a number of key strategic challenges for management – When workers unionize, the power based

within the organization is redistributed. The employers ability to mange workers at their discretion is severely curtailed.

– Unionization involves bringing in outside players whose support must be gained for any new or ongoing management initiative

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• Organized labor presents a number of key strategic challenges for management – Unionized work setting greatly impacts the

organization’s cost structure particularly payroll expenses.

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EMPLOYEE RELATIONS STRATEGY

• Like other business and HR strategies, those concerned with employee relations can, ‘emerge in response to an evolving situation’.(Mintzberg – 1987)

• Employee relations strategy define the intentions of the organization about what needs to be changed in the ways in which organization manages its relationship with the employees and their trade unions.

Eg: • 1. Strategy- achieving competitive edge through innovation• 2.Strategy- achieving competitive edge through cost

reduction

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BACKGROUND TO EMPLOYEE RELATIONS STRATEGIES

• Four approaches to employee relations have been identified by the Industrial Relations Services(1993)

AdversarialTraditionalPartnershipPower sharing

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THE SHRM APPROACH TO EMPLOYEE RELATIONS

• Build stable and cooperative relationships with the employees that minimize conflict.

• A drive for commitment through employee involvement and communication processes.

• An emphasis on mutuality in achieving the organizational goals through the development of the organizational cultures based on the shared values between management and the employees.

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THE SHRM APPROACH TO EMPLOYEE RELATIONS

• A shift from collective bargaining to individual contracts.

• Use of employee involvement teams such as –Quality Circles, SDTs.

• Continuous pressure on quality- TQM.• Emphasis on teamwork.• Harmonization of terms and conditions for all

the employees.

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STRATEGIC IMPACT OF THE LEGAL ENVIROMENT

• The legal environment is a major consideration of strategic managers because of the potential exposure to liability, plant location concerns, productivity influences, and other impacts on cost structures. In future , strategic managers may need to become more proactive in the design of legislation so that the laudable social goals can be obtained simultaneously with organizational growth and efficiency.

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Labor Legislations in IndiaLAW IMPLICATION FOR EMPLOYERS

The Minimum Wages Act, 1948 Set minimum wage standards

The Payment of Wages Act, 1936 Regulate payment of wages in the stipulated wage period.

The Equal Remuneration Act, 1976 Equal pay for equal work regardless of gender.

The Factories Act,1948 Requires employers to provide a workplace free of hazards. It also provides with provisions for health, safety and welfare.

The Industrial Disputes Act, 1947 Requires 60 days advance notice of plant closure.Compensation to workmen in case of closing down of undertaking.

The Employee State Insurance Act, 1948And Employee’s Provident Fund Act, 1952

Social Security.

The Industrial Employment (Standing Order) Act, 1946

Require employers in industrial establishments formally to define conditions of employment under them

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Labor Legislations in IndiaLAW IMPLICATION FOR EMPLOYERS

Inter State Migrant Workmen Act,1979 Regulate the employment of inter-state migrant workmen and provide for their condition of service

Payment of Bonus Act ,1965 Provides for the payment of bonus on the basis of profit

Payment of Gratuity Act, 1972 Provides for payment of gratuity

Trade Unions Act, 1926 Provides for registration of trade union

Employee’s Compensation Act,1923 Provide for payment of compensation to workmen for injury by accident.

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COMPARATIVE STUDY OF LABOR LEGISLATIONS

Recognition of trade union in USA

• The NLRB is responsible for overseeing a particular union as the official bargaining representative of a group of employees, and hearing allegations of violations of the act from employers, unions and employee groups.

Recognition of trade union in India

• In the year 1957 code of discipline was formed for recognition of trade union but it was not mandated by a law. The recognition can be had by way of mutual agreement between the employer and the office bearers of registered trade union or by the orders of the Labor Court under certain conditions.

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Establishment of union under NLRB

• Group of employees petition the NLRB through assistance of a union representative to conduct an election

• NLRB requires at least 30% of the employees to have signed authorization cards, which indicate an expressed interest in having union representation from a specific union

Registration of union Trade Union Act

• An application for registration of a trade union is made to the Registrar of Trade Unions.

• No registration unless at least 10% or 100 of the workmen (whichever is less), subject to a minimum of 7, engaged or employed in the establishment or industry with which it is connected are the members of such trade unions on the date of making such application for the registration

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• When the NLRB receives the authorization cards and determined that there is sufficient interest to conduct an election, it determines whether the organization should have a bargaining unit that cover all the employees or separate bargaining unit for different groups of employees

• Works committees are set by the establishments with equal number of representatives of workers and management for endeavouring to compose any differences of opinion in matters of common interest, and thereby promote measure for securing and preserving amity and cordial relations between the employer and workmen.

Why Employees Unionize?

Need to unionize Benefits

Historical Background

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Collective Bargaining

Collective bargaining is the process whereby workers organize collectively and bargain with employers regarding the workplace. In a broad sense, it is the coming together of workers to negotiate their employment.

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Scope of Collective Bargaining

Wages fixation, increments and bonuspayment Hours of work and overtimeTerms and conditions of work, safety,welfare and health care Grievanceprocedure labour productivity, labourstandard and modernization UnionManagement relations including workersparticipation

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PROSPECTIVE USERS

Anyone who has a paid job or who employs

other people in paid work Employers, employees and unions negotiating

benefits such as wages, working conditions and related issues

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Benefits to management

Workers have a voice and an outlet in the collective bargaining process that reduces uncertainty and instability in the workplace.

Workers are often more motivated following collective bargaining as they have participated in the process and the outcome.

Collective bargaining aids in labour market flexibility by helping workers to understand and accept the need for modernization and restructuring.

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Benefits to workersCollective bargaining provides workers with

a collective voice which may be more effective than dealing with managers one by one.

Collective bargaining helps ensure adequate wages and working conditions and helps workers to receive a fair distribution of gains that might result from the introduction of new technology.

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Process of Collective Bargaining

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Levels of Collective bargaining

DECENTRALIZATION

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Collective Bargaining Committees

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Steps in Collective Bargaining Process

1. Preparing for negotiations through collective bargaining involves assembling and consulting extensive data such as:

(i) Internal company data related to issues to be discussed (e.g. benefits, leave, work hours and overtime, grievance procedures, discipline, dismissals etc.)

(ii) Labor practices employed by other companies or factories

in the same industry or region

(iii) Relevant national legislation related to the issues to be discussed.

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2. Establishing bargaining teams composed of four to six representatives on each side of the negotiating table, including appointed chief negotiators for management and for workers. Try to have all types/level of workers/management

represented as well as all the different job categories so that that there will be good representation at all levels and types of jobs.

The chief negotiators should not be the highest-level of staff member in each team, as lower level management/supervisors and regular rank-and-file workers will have the most credibility torepresent the interest of the groups they represent.

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3. Members of the bargaining teams must consult thoroughly with all groups that they represent prior to coming to the negotiation table. This consultation process is key to building trust and buy-in to the collective bargaining process. It involves:

(i) Explaining the steps of the negotiation process (ii) Learning the major issues (iii) Asking questions to understand and note what are

the main concerns, interests and expectations regarding these issues.

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4. Conducting negotiations through collective bargaining:

(i)Open the negotiations with a first meeting devoted to establishing the bargaining authority of the representatives of each side and to determine the rules and procedures to be used during negotiations. Bargaining rights must be clearly defined for both management and for workers.

(ii) List and prioritize issues for discussion and set up a meeting schedule. (iii) Submit, analyze and resolve proposals put forward by each side. (iv) In order to reach an agreement, proposals must be resolved. They may be

withdrawn, accepted by the other side in its entirety, or accepted in some compromise form. However all decisions must be made by consensus of both sides.

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5. Communication the outcome of collective bargaining:

(i) Collective bargaining agreements must be put in writing in language that is acceptable to all parties.

(ii) Copies of the agreement should be distributed to all supervisors, managers and workers and explained at a meeting (or series of meetings).

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Failure to Reach Agreement

When the union and the employee are unable to agree, worker have the right to strike.

Economic strike Unfair labour practiceWildcat strike

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Conclusion

• Unions have a long and deep history in the world.

• Traditional approaches to negotiation usually involved the union trying to gain concessions from management and winning the negotiation.

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Conclusion

• However, to be successful in the future unions must:– Develop partnerships with employers – Seek win-win outcomes to collective bargaining– Enhance the performance of the organization

• Unions need to consider that the jobs of today and those of the future are quite different from the jobs of the past

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Conclusion

• Countries such as Japan and Germany have extensive unionization and produce some of the highest quality, most technologically advanced products.

• Although employees clearly need to consider labor relations from a strategic perspective, union representatives must do so even more if they are to keep their unions viable for tomorrow’s organizations.

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Case study

In July, 1994, United Airlines, the world’s largest airline, announced an employee stock ownership plan (ESOP) that would allow its unionized employees to acquire 55 percent of the company’s stock in exchange for reduction in pay and benefit. The plan was immediately hailed as a breakthrough in labor relations in the airlines industry and applauded among investors, customers, employees, and management. Along the union members, united pilots were the biggest beneficiaries of the plan, receiving 25 percent of the company stock despite the fact that they constituted 10 percent of the workforce. However, the pilots had made the greatest financial concessions.

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The initial result of the ESOP were overwhelmingly successful. Team were set up to analyze every aspect of the company operation, from fuel utilization to free-pass policies to employee family members. The team developed numerous cost-saving and morale-boosting measures that significantly impact probability. In following three years the price of the United stock nearly quadrupled in response to its enhanced financial performance.

CASE STUDY

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CASE STUDY

The positive result, however, were short lived. Flight attendants, whowere not included in the ESOP, became irritated at notbeing able to share in the companies success. As the employees withthe greatest amount of public contract, their dissatisfaction anddamaged morale affected customer service. In addition, the plan wasonly scheduled to operate for five year and nine months. Therefore, in2000, employees stopped receiving United stock, and pay level

return to pre-ESOP levels. Consequently, empolees no longer had as significant a personal stake in the company’s ongoing financial performance. New employees were also not able to participate in the plan. perhaps the biggest problem with the plan for employees is that they are not allowed to cash in their stock until they retired from the airlines.

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United management, seeing the ESOP as an unqualified success, reports that it allowed the company to reduce its cost structure and strengthen its competitive position. However , since United stocks hit its peak in 1997,its value has declined by close to 50 percent. Labor unrest with the pilots, who refused to fly overtime during contract negotiations, severely curtailed operations during the summer of 2000. United lost millions of dollars in revenue and the business of many loyal customers. Customers complaints about in-flight service rave skyrocketed. What initially appeared to be a strategic win-win approach to labor relations on the part of united has evolved into a longer term problem with no remedy in sight.

CASE STUDY

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What is ESOP?• Its company shares given to employees for their service to

organization.

• Employees are made owner of the company.

ITS PROCESSAccording to SEBI(securities exchange board of India) the norms

of ESOP are1. Shares issued must be from the stock already issued to

investors in share markets.2. The company should have not made losses in previous 3

years.3. It must be approved by shareholders in the AGM(Annual

general meeting) by passing special resolution.4. The shares must be given for consideration other than cash.

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Why ESOP was chosen as a strategy bythe United airlines?

• Reduction in pay and salary by making employees the owner of organization.

• Employees work for profit in organization.• To have an competitive advantage in the market.

• The United airline had cost-saving by reducing pay and salaries.

• The employees were motivated which made company have more profits.

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Limitation of the strategy

• Shares were not allotted equally. Pilots had 25% out of 55% of company stock.

• Flight attendants were not included, their dissatisfaction affected customer services.

• New employees were not included in plan.

• The employees were not allowed to cash in their stock until they retired from the airline.

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Failure of strategy

•The shares were not allotted equally.•It focus on the major player(pilots)of the organization.•Organization politics.•The strategy was implemented without any research.•Non-flexibility of ESOP.•Focus was made on short-term goal rather than long-term goal.•Labor relations

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Shrm Labour Relations

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