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Managing Employee Relations through Strategic Human Resource Management: Evidence fromTwo Tata CompaniesAuthor(s): Debi S. SainiReviewed work(s):Source: Indian Journal of Industrial Relations, Vol. 42, No. 2 (Oct., 2006), pp. 170-189Published by: Shri Ram Centre for Industrial Relations and Human ResourcesStable URL: http://www.jstor.org/stable/27768064 .

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IJIR, Vol 42,No. 2,October 2006

MANAGING EMPLOYEE RELATIONS THROUGHSTRATEGIC HUMAN RESOURCE MANAGEMENT:EVIDENCE FROM TWO TATA COMPANIES

Debi S. Saini

The turbulencecaused by theglobalisation syndromehas ledthe corporate sector to discover new ways of operating and

surviving t theglobal level n lmostall spheres fmanagement.This paper discusses thedynamics of changes thatare takingplace in management of employee relations and how human

resourcemanagement (HRM) strategy

isbeing used

in this

regard. In doing so, it analyses the contribution ofHRM

philosophy in building new IR or ''strategic IR. Taking note

of theglobal developments in IR, thepaperfocuses especiallyon the IR scenario in the Indian context. Two case studies of

managing employee relations through HR strategy are being

presented to draw conclusions. It is argued that building

cooperative employee relations continues to be highon corporate

priority; but paternalism is acquiring a newmeaning. While

employeewelfarestill remains

priorityor promoting mployeesatisfaction nd engagement,thefocus on employee loyaltyis

gettingdiluted togive way to performancerientation/'Both

empowerment and instrumentalist HR strategiesare being

used to realize thegoals ofHRM. The paper also hints towards

convergence of Indian and western HR practices.

Dr. Debi S. Saini is Professor ofHRM, Management Development Institute,

Gurgaon. An earlier version of this paper waspresented at a seminar on Human

Resource Management in the New Era organised by Gandhi Labour Institute,

Ahmedabad, January27-28, 2006. I thank theparticipants for theircomments ontheoriginal draft,especially Professors Promod Verma, Biju Varkkey, and VidyutJoshi. I also thank Professor Cecil Pearson, Senior Research Fellow at Curtin

University Business School, Perth,Australia forhis comments leading tochange incertain earlier positions. Of course, the usual disclaimers apply.



Managing EmployeeRelations Through StrategicHRM 171

INTRODUCTION

It is evident that substantial changes inworkplace structuringhave been taking place in thedeveloped as well thedevelopingworld for the last 15 years or so. Such changes

are being intensified

by the increasing turbulence in the business environment. In the

new economy employers arebusy guarding against thechillwindsof chaotic competition and the resultant consequences as more

and more companies find itdifficult to survive and prosper;

employees are under strain to save their jobs. For example, of theIndian companies thatwere earning profits in the pre-reform era,

a large number nowbelongs to the loss-making category (Kumar,

2003). Both manufacturing and service sectors are attempting to

achieve more with less resource to remain competitive.

In'order to be successful in today's business environment

companies are trying hard to come out of the mindsets of the

industrial economy and acclimatize themselves to the realities of

the knowledge economy (Saini, 2000). Researchers reveal that frontrunning companies are busy in building their intangibles so as to

improve their long-term market value; some of themost significantHR intangibles in this regard include: shared mindset, talent,

speed, learning, accountability, collaboration, and quality of

leadership (Ulrichand Smallwood, 2003:14; Ulrich and Brockbank,

2005). Companies focuson policies of cooperationwith employeesand unions for building these intangibles. In the architecture of

intangibles, managing talent and creation of future competencies

has assumed critical importance. In terms of Mackenzie's 7-Sframework, most strategy gurus and corporate stalwarts have been

shifting their focus from strategy, structure and systems to staff,

style, skills, and shared values. This focus has exacerbated the

importanceofdeveloping soft kills and building high performancework systems through adoption of many new themes in HR

strategy and people development. More and more global

companies now increasingly focus on talent and competencies of

individuals in their attempt to develop competitive advantage.

Ghoshal and Bartlett (1997) refer this as individualized corporation.

The long debate on HRM in theWest, and especially in the

UK, is tending to conclude and the concept of human resource



172 The Indian Journal f IndustrialRelations

management (HRM) philosophy isgetting articulated as a criticalvariable in corporate survival and growth. Ithas taken in its strides

theconcept of industrial relations (IR),which isgetting increasinglysubsumed within HRM concept (Saini, 2003b). In view of the above

mentioned changes, the basic premises that have guided the

fundamental principles of IR thus farhave got shaken vigorously;and are

being re-defined so as to be in tune with the new realities.

The adversarial approach of collective labour power as amethod

of seeking industrial justice faces serious challenges in thenew

economy.

This paper discusses thedynamics of changes thatare takingplace inmanagement ofemployee relationsand how HRM strategyisbeing used in this regard. Thus, itanalyses the contribution of

HRM philosophy inbuilding new IR or strategic IR. Takingnote of theglobal developments in IR, thepaper focuses especiallyon the IR scenario in the Indian context. Two case studies of

managing employee relations throughHR strategy are beingpresented to draw conclusions.

HRM STRATEGY: A CONCEPTUAL FRAMEWORK

The global developments inmanagement reveal that strategicHRM is becoming the single largest area ofmanagementconsultancy, which speaks of its criticality in business success. It

should be understood thatHRM strategy isnot just interventionsoriented at employee welfare and empowerment; italso has aspects

of cost control and employee discipline.While it ismainly seen asanimportant instrument of realizing company vision, it is also

oriented to impliedly dilute collective labour power. HRM asunderstood in theBritishand European contextseeks to intertwinethe perspectives of personnel management and industrial relations

and also add cultural and related interventions, thus giving wayto new industrial relations. The HRM model of Storey (1995),as can be seen in Figure 1, shows how employers

are giving

strategic response to enhanced competition by changing their

beliefs and assumptions, giving people-management initiatives toline managers, and changing the levers of people management.

As per the new strategic response, the agenda focuses on promotingattitude and behaviour changes, promoting commitment, customer




orientation, quality focus and flexible working; all these are

eventually intended to help deliver competitive performance.

Enhanced

competition

Attitude ndbehaviourchangesCommitment

Customerorientation

QualityFlexibleworking

CompetitivePerformance

Implications for Industrial Relations

Figure 1: Storey's Model ofHRM (Storey, 1995)

(Quoted with permission from the author)

HRM philosophy isnow getting largely accepted globally as a

strategic tool for implementing business strategy, thoughwithvariable dimensions, through its practice by multinational

corporations and other leading employers even in developingcountries. Strategic HRM interventions, among others, involve

focus on certain critical themes like team-building, talent

management, empowerment, involvement, communication,

diversitymanagement, employee development, flexibility, eward

strategy, performance management, competency management,and leadership development. Each organisationmay have itsown

requirement about the requisite behaviour that is sought to be

shaped through HR interventions. Strategic HR interventions can

be broadly divided into two categories: 'Instrumentalist (hard)and empowerment (soft) (Saini, 2000). Hard HR interventionare generally resisted by employees as they view employees as

any other resource and often involve enhanced managerial controlon them. They also envisage a greater degree of measurement and

seek cost-effectiveness of people. Empowerment interventions on



174 The Indian Journal fIndustrialRelations

the other hand involve trusting the employees, ensuringtransparency and fairness in the organisational working, and

involving employees in decision-making as individuals. But HR

interventions in actuality are generallyan

amalgam of hard and

softmeasures. Many high-performing organisations are going all

out to build on the empowerment mode ofHRM strategy. While a

large number of organisations have been making claims of adopting

progressive HRM strategies and practices, research especially in

theWest, however, explodes themyth of these claims (Mabey, et

al., 1998).On paper, both sets ofHRM strategieshave been foundtobeing vogue. On thewhole, itappears thatHRM isbeing usedin instrumentalist as well as empowerment senses as per the

exigencies of the business strategy.

HR has come to occupy an important place in case of

professionally-run organisations,even as the number of such

organisations is not too large. But cases of pursuit of de

unionisation policies are not few and far between. Many

organisations including leadingMNCs have been investingheavilyin it. Some even attack unionism ruthlessly often with covert state

support as happened in the recent case of Honda Motorcyclesand Scooters India Ltd. (HMSI), Gurgaon (Saini, 2005a). This case,

however, should not be seen as pursuit of a typical non-union

India model. This was more of a case of incompetent managementthat was ignorant of cross-cultural realities in India. But it is

important to ask what model ofHR strategy is being used bysuccessful firms. And, are their policies in this respect changing?

SHIFTING EMPLOYEE RELATIONS PARADIGMS IN TWOTATA COMPANIES

This section seeks to understand, through two case studies,the nature of shifts in IR that is taking place in some of the

progressively managed and successful organisations in India. These

case studies show that organisations are choosing soft HRM

strategies, but at the same time, some of the long-held values of

paternalism are getting diluted or are being redefined. The casesdiscussed also reflect the changes that are likely to findwider

acceptance in Indian organisations asthey face a higher incidence

of competition. Both these case studies are from one of the leading




industrial groups in India i.e. the Tatas. This group is respectedfor pursuit of corporate social responsibility, business ethics, and

employee welfare as strategic priorities.

A. North Delhi Power Ltd. :Dynamics of Change1

The North Delhi Power Ltd. (NDPL) tookover a portion of the

ailing Delhi-Government-owned Delhi Vidyut Board (DVB) w.e.f.

July 1, 2002 as per a privatisation arrangement devised between

theDelhi Government and Tata Power (which held 51 per centshares inNDPL and the remaining 49 per cent of its shares were

with theDelhi Government) todistribute electricity inNorth andNorth-West Delhi. The immediate concern of its chief executive

officer CEO) was tofacilitate stabilisation of themarriage betweenthe Tata Power and the Delhi Government; and eventually to see

itbecominga lasting success.

The company devised its vision of becoming the most

preferred and admired energy Company. As per the MoU withthe Delhi Government, NDPL was to reduce the aggregatetechnical and commercial (AT&C) losses from 53 per cent at the

time of acquisition to 20 per cent by 30 June 2007. The DelhiGovernment had been subsidizing DVB every year for its losses

by about Rs. 15 billion through loans thatwere never expectedtobe repaid. Some of thekey challenges thatNDPL was facingsince the acquisition included: dealing with rampant theftbyslum dwellers as well as industrial/commercial consumers;

changing theconsumer

perception of theNDPL; providing worldclass service to consumers through the use of information

technology (IT) and internalizing the company's culture to that

effect; changing the mindsets of a neglected and semi-trained

DVB-scheme workforce; and establishing Tata brand image in

termsof standards of theTata Business Excellence Model (TBEM)that the Tata Group of companies have adopted for

benchmarking performance.

So as to deal with theproblems

that thecompanyencountered, the topmanagement ofNDPL took several strategic

initiatives. Some of the performance initiatives in relation to

people issues that the company immediately took on takeover




included: payment of salary by crediting it in bank account ofthe employees rather than paying it in cash; installing 1200

computers invarious offices of the company inplace of just two

computers that the DVB had; imparting training for 18000

mandays during a period of first two years of acquisition on

quality, focus on the use of computers forbetter customer service;

provision ofmobile phones to all executives, junior engineers and

other field staff for better connectivity; improvement in the

physical infrastructure; and sponsoring executive/field staff for

training to different countries.

As per theMoU (memorandum of understanding) signed atthe timeof acquisition, NDPL inherited 5368 employees fromthe

DVB. Since the use of technology reduced the need formanpowerand the complex problem of corrupt meter readers had to be

tackled, the company devised an attractive voluntary retirement

scheme (VRS). Out of the totalDVB workforce, 1794 employeessought retirementunder theVRS, which included some 90 per

cent of themeter readers. The recognised union was involved inthe rightsizing process throughout. NDPL employed 482 new

employees to various positions with new service conditions. The

DVB-scheme employees continued tobe governed by the oldDVB

pay-structureas per the MoU, and were also entitled to pension

and retirement benefits as per the DVB structure.

Besides various initiatives in organisational restructuring,almost all designations were

changed to reflect functional rather

than hierarchical importance. Thus they were changed fromexecutive engineer, assistant engineer, etc. tomanager, assistant

manager, office associate, work attendant, and so on. Re

designation aroused considerable resistance from most DVB

scheme employees including senior officers,but the companysucceeded in overcoming that.

The company was committed to quality that could be inferred

from itsmission, which read: 'To be themost preferred and admired

energy companywe will strive to

deliver quality and cost-effectiveservices.... NDPL developed comprehensive employee welfare

schemes. Also, itwassupposedly the first company in India tohave

started an employee helpline. Under thisany company employee




could submit his/her grievance by e-mail or telephone, and this

helpline assisted ingiving a time-boundreplytohim/her and helpedin processing the grievance. A comparative view of some of the

welfare and performance measures by DVB and NDPL can be

observed in Table 1.

Inview of the facts nd events presented in the table should beunderstood the company's relationship with its union. It inherited

theDVB workforce along with its recognized INTUC (Indian

National Trade Union Congress) affiliated union and seven staffassociations. It recognized thisworkers' union but did not recognise

any of the staff associations. Except some minor disturbances, the

company had witnessed apeaceful acquisition process. The concept

ofJoint nteractionForum (JIF) as put inplace at thedistrict, ircleand corporate levels topromote employees' involvement indecision

making; monthly and quarterlymeetings ofJIFwere held regularlyat district and circle levels.

The CEO gave priority to the issue of union-managementrelations. He and HR chief took a positive stand on three of the

pending issues which were of grave concern to the common

employee: disbursement of monetary assistance to widows of

employees; employees' uniforms; time-bound promotions. This

helped inbuilding cooperation inemployee relations.The intensityof such efforts ould be gauged fromthe following incident:The

payment of retirementbenefits to employees for theperiod for

which theyhad rendered service toDVB in thepre-takeover phase

was the responsibility of theDelhi Government. When NDPLannounced the VRS scheme, the Delhi Government could not meet

its responsibilities of paying the workers' dues even after more

than two years of privatisation. This aroused deep resentment

among the retired as well as the serving employees against the

government. The HR Chief issued a circular to all the employeesthat theRaising Day would not be celebrated on July1, 2004 due

to the non-receipt of the retirement benefit by the 1,797 retired

employees. He also issued another circular suggesting that the

NDPL fraternity ould not celebrate Puja and Diwali festivalsin

2004 as a mark of protest against the Delhi Government. These

instances were quite significant in internalizing the company's

cooperation-building agenda.




Besides, two batches of union leaders were sent by the

company to theTata Steel plant inJamshedpur inSeptember, 2003for 10 days each to observe and learn how cheapest steel was

manufactured in the world in a climate of harmonious industrial

relations among 40,000 people. This helped in changing themindsets of the union leaders.

The HR department played a key role in facilitatingperformance culture. It was decided that the performance

appraisal (PA) system for the employees should be kept simple;thePA formcomprised of only two pages. From year 2004, keyresult areas (KRAs) were

developed from the level of assistant

manager to the top management with a view to assessingindividual performance. The joint interaction forum (JIF)provedan important platform for performance improvement as

representatives of union and management aired their respectiveissues of concern there. An in-house quarterly magazine named

Navodaya was launched inNovember 2003. The company set up

itsHuman Resource Information System (HRIS).

The above-mentioned initiatives, taken together with good

strategy implementation, helped inbringing radical changes inthe company performance. The company attained better level

of performance and consequently gradual reduction in AT&C

(aggregate technical and commercial) losses. The AT&C loss

stood reduced from53 in July2002 to 28 per cent on 31March,2006,which meant reduction of about 25 per cent in a period of

45 months from the takeover. A reduction of one per cent inAT&C loss roughly translated to a corresponding gain in

company's additional revenue to the tune of Rs. 220 million.

NDPL earned a 'net profit after tax' of Rs. 570 million for the

year 2004-05; in the firstyear itself itearned a profit ofRs. 220million (for theyear 2002-03). In fact, theCEO suggested to theDelhi Government in July2005 not to increase the tariffsfor theconsumers as NDPL wanted to transfer the benefits resultingfrom the reduced AT&C losses onto the consumers. In relation

to billing errors substantial reduction had taken place since thetime of takeover, but they were still believed to be an area of

concern.



Managing Employ?eRelations Through StrategicHRM 179

The company has been performing impressively incomparisonto its competitors. The number of transformer failures came down

from584 at the time of takeover to 37 in financial year 2004-05.In the same time themean time taken to repair cable faults came

down from 11 to 2 days. No-supply complaints came down from

8000 to2149, and thestreet lights inworking conditions improvedfrom50 per cent to 99 per cent. Out of the 150 companies which

competed for theposition of theTop 25Great Places toWork in

India as per a survey conducted by the Grow Talent Company

in 2003,NDPL got the27th rank.

A general manager observed: The company has been able to

acclimatize about 50 per cent employees into theNDPL ethos;about 30 per cent are fence-sitters; and about 20 per cent have not

changed at all. The CEO too endorsed somewhat similar view.

He also felt that changing the mindset of the contractors' staff

required focus on their training. A union office bearer appreciatedthe company's performance but pointed out that employees

remained fearful of losing their jobs in the new scenario, despitethe security provided to themby the tripartite oU signed at the

time of acquisition.

NDPL had been working hard since beginning topromote a

performance culture throughsagacious leadership of itsCEO and

various HR interventions. Interestingly, the company's HR

department devised its own HR model as well an HR vision. It

talked ofusual HR interventionsbut therewas nomention of the

word union in it.A major uprising tookplace from theworkers'rankwhich successfully challenged theexistingunion leadership;and charged itof theunion having an unholy alliance with the

management. This awakened themanagement. They transferred

the firstHR chief who was a fineHR strategist to another

department and brought a new HR chiefwho had better expertisein employee relations and labour laws. Overall, the company

performed competitively far better than its two competitor

companies thatwere supplying electricity to the remaining parts

ofDelhi. The media, government ministers and the publicat

largeexpressed happiness with theperformanceofNDPL. The companyhas so far been able to prevent any major IR problem

that could

stall itsmarch towards realizing its vision. Of course, the company's




sole recognised union witnesses an attempt of takeover of its

leadership by a rival group, but thatdid not cause any upheavalin the employee relations scenario (Saini, 2005), even as itcausedconsiderable worries to the NDPL top management.

B. The Tata Steel Limited2

Tata Steel Limited is a one hundred year old steel producingIndian company, which played a pioneering role in industrial

development of India. It is located in Jamshedpur in the state ofJharkhand, and is one ofmost talked-about Tata organisations in

the country. It is also believed tobe a rolemodel formany lineand HR managers as well as academicians; for they admire its

practice of adopting ethical working, a good degree of

transparency, corporate social responsibility, employee care,

proactive HRM and IR practices, and participatory managementand industrial democracy. Like other companies in the postglobalisation era, it also faced several challenges, which, among

others, include: coping with rigours of chaotic competition,upgrading technology, customer-orientation in terms of cost and

quality, need for reengineering and rightsizing, managingflexibility, change management, and effecting the company'sturnaround.

The company noted that itstechnologyhad become outmodedand needed tobe replaced bynew rolling-mill technologyofhighercapacity and greater speed. It involved not justhuge cost but a

transformational leadership that could manage the consequentialrealities. This meant changing themindsets of itsnearly 80,000employees, and

promoting internalisation of new ideas so as to

cope with the changing business environment.

The company practiced values ofpaternalism and employeeloyalty fora long time,which its founders had established andreligiouslynurtured. Itbuilt an industrial township inJamshedpurlooking afternearly all civicneeds. Itnurtured employee loyalty

by cateringto

their needs; worker's relatives were givenpreference in new recruitment as a strategic priority. It hadtrouble-free IR formore than 50 years. Russy Modi, itsCEO andchairman fora long time in thenineteen eighties,worked hard




in performing the crucial role of building and strengtheningemployee commitment through further strengthening the practiceof paternalistic values. The heritage of these values helped in a

big way in garnering support and concern of the common

employee as well as the union in agreeing to the intended reforms,

which it had to undertake so as to survive. The reforms involved,

among others, retrenchment of 35,000 employees over a periodof ten years. J.J. Irani, who took over as managing director after

the retirement of Russy Modi, was instrumental in arousing the

requisite sensitivity amongst employees to the needed reforms.For facilitating the internalization of the reform agenda, besides

the efforts of the company chairman Ratan Tata, at least two

managing directors played the role of exemplary leadership, i.e.

J. J. Irani and his successor, the present CEO, B. Muthuraman.

Thus the company shifted from its strategy of paternalism in

employee management to focus on performance-orientation. This

involved enforcing the concept of performance-related-pay and

undermining the pay hikes based on seniority. The company

considerably diluted its policy of building personalizedrelationship and employee loyalty and showed allegiance to new

values in employee relations that are being adopted in general

by the multinational companies to attract talent. It has shown

preference foryounger employees, and competitively higher pay

off (Pandey et al, 2005).

There are indications that the company's shift in focus has

resulted in arousal of a kind of insecurity and alienation amongst

the senior employees, who had all through seen the company astheirmai baap (parents) reflecting radual erosion of thepaternalistvalues that the company firmly pheld forso long.They are not

able to acclimatize themselves to the supposed environment of

performance-orientation policies. Consequently, themodernisation

process in the company has resulted in a tangible decline in the

Tata heritage of human touch. The turnaround story of Tata Steel

shows that it s difficult tosimultaneously pursue both thepoliciesat the same time. The company has been resorting to outsourcing

in a big way in a large number of new areas, which also strikes atthe long-held value of building company loyaltyby nurturing a

large corporate fraternity consisting of different departments all

runby the company itself.



182 The Indian Journal fIndustrialRelations

The changes inpeople-management philosophy at Tata Steelhave helped in improving performance, which resulted in itreceiving

many international rewards. The World Steel Dynamics rated Tata

Steel as thebest company in theworld in2000-2001 and thirdbestin 2001-2002. By the year 2003 it also became themost cost-effective

steel company in the world. Several factors can be said to be

responsible for this success. Among others, these include: the role

of theunion inbuilding cooperation; involvingfamilies inthechangeprocess; investment in new

technology; the nurturing leadership of

JRDTata and RussiMody furtheredby J.J.raniand B.Muthuraman;and the development and adoption of the Tata Business Excellence

Model (TBEM). As part of theTBEM, many initiativeswhich paidoff the transformation process included: continuous improvement

projects; quality circles; and six sigma. The changed peoplemanagement initiatives enabled employees to give their best in

ensuring higher performance. For example, the implementation of

the suggestion scheme, as per which employees' suggestions were

accepted and awarded, led to improvement in the quality of

suggestions and a saving of Rs. 1.5 billion in the year 2002. Theconcern forproduct quality has given way to process focus as well,

resulting in higher quality at competitive costs. Efforts are beingmade tomake the company leaner and more professional through

performance ethic programme (PEP). A large number of employeeswere involved in evolving Vision 2007, which was

formally launched

onMay 2, 2002 jointlyby themanaging director and thepresidentof the union.

The company is also moving from the policy ofwhat B.Muthuraman labels as ambiance HRM to consequential HRM.3

By the former he refers to a concern for employee care, satisfaction,and proactive HR policies and the latter s concernedwith dealingwith issues resulting fromapplication of company policies such asmeasurement of impact of various initiatives, implementing voluntaryretirement scheme (VRS) so as to promote cost-effectiveness, and

establishing certain controls so as to promote a kind of discipline.These two situations are analogous to softHRM and hard HRM as

have been reported in theHRM literature Saini,2000).

While someanalysts have made a case for reversal of the

policies of Tata Steel towards adoption of familial styleof caring




(Pandey et ah, 2005), it is important to note that in view of theexigencies of performance focus as warranted by the era of

competition itwould be very difficult todo so. Similarly, Indian

companies are likely to focus on employability rather than the

employment guarantee policies followed in the pre-gobalisationera.Going by therevelations of theHR literature, his issue appearsto be a case of either/or situation. The demands of the globalchaotic competition warrant that relations have to be looked into

in the context of market dynamics in the new scenario. But

empowerment HRM has two aspects: initiatives involving

monetary investment like those related with rewards and training;and those not involving monetary cost, like personal touch,

communication, practice of caring and empowering style. It

appears thatTata Steel has considerable scope fortaking initiativesin the lattercategory ofpeople empowermentmodel and shapingIR through employee care as a way of organisational life.

LESSONS FROM THE TWO CASES: A DISCUSSION

The two case studies presented above show that companiesare pursuing cooperative IR as a philosophy through a well

articulated HR strategy. New factors arebeing identified to guide

social partners in the IR game. To this end, comprehensive HRM

strategies are being built which, among others, include proactive

management of IR. Special focus is being put on communication

to facilitate these goals. Strategic approach ofmanaging IR isnoticeable at covert as well as overt levels. The pursuit of such

policies has thepotential of attracting individual employees to thecore values of the organisation and diluting their propensity to

indulge inhostile unionism. This also helps promote organisational

flexibility.

There is talk of the convergence thesis inmanagement which

is resulting from the increasing influence of globalisationon

corporate practices. As per this thinking management practiceswould eventually come close to becoming similar over the years

across the length and breadth of theglobe,with reduced impactof local cultures and indigenous factors. No doubt, itwould be

simplistic to completely wish away the impact of cultural influences

on organisational working in the short ormedium run. The eminent



184 The Indian Journalof IndustrialRelations

social historian Francis Fukuyama (Ohtaki and Bucknall, 2005:23) endorses theconvergence thesiswhen he observes that in allthree areas...? economic, political and social?there are goodreasons for thinking that the distinctive institutions and practicesfostered by Asia's cultural systems will converge over the time

with the pattern seen in the West...Far from reinforcing Asian

exceptionalism, the current economic crisis will accelerate

homogenizing trends in all three areas. Going by the

developments in the two cases ofNDPL and Tata Steel, it is

becoming clear that they hint towards legitimating of theconvergence thesis inHRM; for theTBEM thatwas the turnaround

model forTata Steel was built on edifice ofwestern values of

performance rather than loyalty focus. Being a Tata company,NDPL was also trying to benchmark performance standards set

out in TBEM, though beinga new company itwas far away from

attaining that status.

The NDPL case involves managing change issues in acquisition

of an ailing government-run public utility by a public-privatepartnership. It shows how the nexuses between interest groups,which had partly led to the malaise in the earlier organisation,were substantially diluted by a combination ofmeasures including

sagacious leadership, appropriate changes in different systems and

processes, and efforts towards changing the mindsets of the

employees concerned so as to build organisational competenciesto survive in thechaotically competitive business scenario. In the

NDPL case, among others, strategic use of employee welfare

measures was adopted as a key intervention for facilitating a faster

acceptance and internalisationof thechange agenda by theunionas well as the employees in general. Corrupt and indifferent

employees were encouraged to mend ways or take voluntaryretirement. A manager remarked, We do take care to keep the

union in good humour so as to become a partner in the change

process. Some of the instrumentalist HR strategy measures

included appointment ofchange agents (in theform fnewNDPLschemes employees) to set standards of performance and create

feelings of competition amongst all categories of employees.

The adversarial industrial relations (IR) theoryas enunciatedin the classical Oxford School of IR discounts possibility of any




lasting cooperation between management and workers as theyare usually operating in a zero-sum bargaining situation. And

peace is brought about through the agreement reached throughbargaining on issues at hand. The theory postulates that such

cooperation can be possible only during times of recession. It arguesthat parties would revert to adversarialism when recession is over.

How far these formulations hold good in theera ofglobalisation?How were cooperative industrial relations noticeable in the case

of the two companies under study?No doubt, thepolicies and

interventionsdevised and implementedby theHRM department,and co-espoused and supported by the sagacious leadership oftheCEO, helped determine industrial harmony. They workedtowards adopting theTata culture in thecompany's IR issues thatbothered thecommon employee themost. NDPL's decision not tocelebrate the raising day, Puja and Diwali festivals in 2004 as amark of protest against theDelhi Government not releasing theretirement money forDVB-scheme retired employees reflected an

astute strategy of employee care that facilitated the change agenda.

But its verallHR policies should be seen as falling hortofa purelypaternalist agenda.

The lasting industrial peace at theTata Steel that ithas beenable to sustain since long leading to its success as an Indian steel

giant throughpractice ofpaternalism in IR iswell-known in Indianliterature on HRM. But the recent changes in this company's

policies show that thepolicy ofpaternalismwas difficulttosustain

anymore in thepresent era. Despite difficulties the company

could build an effective strategyformaking theemployees agreefortheVRS and used itsHR systems and leadership inhelping theattainment of this goal. Eventually, it could reduce their workforce

by 35000 andmake Tata Steel competitive and thecheapest steel

producing company in theworld, which has the vision of

becomingan EVA. (economic value added) positive company.

CONCLUDING REMARKS

In the post-globalisation scenario, issues in IR are gettingmerged as aspects of strategic HRM. Cooperation in IR is beingbuilt through both the instrumentalist and empowermentdimensions ofHR Strategy. Often harsh measures are also adopted



186 The Indian JournalofIndustrialRelations

either as control measures for promoting performance and cost

effectivenessor throughpractice of unfair labourpractices (ULPs)by employers with covert supports of state agencies. In India theyhave been pursuing de-unionization or union dilution either

ruthlessly in authoritarian ways or through carefully articulated

HR strategies; some scholars label the latter HRM approach as

propagandist policies. Some have argued that in the new era,

HRM stands for human resourcemanipulation; this is so considered

due to the de-unionization potential of soft strategy of peoplemanagement. However, in the new era HR strategy involving

cooperative unionism more often than not can be been as a

necessity to cope with competition.

The key question is, can HRM become a means to administer

industrial justice? Some companies aresuccessfully pursuing union

substitutionpolicies of thetypefollowedby IBM andKodak, amongothers. The number of such companies is increasing fast as theyseek to reap competitive advantage through better employee

motivation and engagement. Many others merely have built facadesof employee concerns. In a situation of increasing indifference of

state apparatus towards union rights, many employers are usingthis opportunity in successful violation ofminimum labour standard;for state agencies have begun to look the other way when labour

laws are violated by employers. Such evidences are available from

Indian states of Rajasthan, Tamil Nadu, Kerala and even West

Bengal, among others (Venkata Ratnam, 2001).

At the same time, HR interventions are being used in variousways to promote change acceptance, like ithappened in the cases

of NDPL and Tata Steel. These cases have shown how the

organisation's expectation from employees is increasing in their

efforts to survive and stay competitive. Employees areexpected to

provide high-quality products and services at the lowest possible

prices. Since employees are seen as principal drivers of higher

corporate performance, many companies have been investing in

devising and implementing well-articulated HR strategy so as to

support high-performance work systems, which also includebuilding cooperative IR. In case these reform agendas lead to

peaceful employee relations in an organisation, it should be

considered to be an alternative model of industrial justice, with or




without unions. But it is certain that traditional paternalism

including employee appeasement is difficult topractice today if

companies have to stay competitive.

Further, competitive performance would warrant adoption of a

higher degree of globally-testedHR practices as thepressures arealso becoming global. Thus, as per the convergence thesis that is

being debated inmanagement, themanagement practices of MNCs

are expected to eventually dilute the influence of cross-cultural realities

as has been discovered byHofstede (1980). The case ofTata Steelsurely gives hints towards such convergence as the company is clearly

withdrawing from tsprofessedvalues ofpurepaternalism.TheNDPLhas alsomade efforts towards building a high performancework

systemby adopting some of themost modem practices reported intheHRM literature including balanced score card, human resource

information system, knowledge management, job re-design, employeeinvolvement, performance management, and transformational

leadership.Of course, it tillhasmiles togo infully mplementing n

empowerment HR model and reaping its fruits.

NOTES

1. The NDPL case here ismainly based on factsand events fromtwo cases:

North Delhi Power Ltd.:Dynamics ofChange, a case by Saini and Bhatnagar(2005), and Cooperative Employee Relations atNorth Delhi Power Ltd., a

case by Saini (2005).

2. The Tata Steel case is shorter form of its larger version written by the

author. This casewas constructed with thehelp of interviews fromsome

former senior managers at Tata Steel, analysis of information from the

internet nd companywebsite, analysis of academic literature n Tata Steel,and interactionwithMr. B.Muthuraman, thepresentManaging Director ofTata Steel.

3. As revealed in aprivate discussion between the author and Mr. B.

Muthuraman.

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ChristopherA. Barlett

(1997),The Individualised

Corporation,Harper Collins Publishers, New York.

Hofstede, G. (1980), Culture's Consequences: Softwareof the ind, Sage, BeverleyHill.



188The Indian Journalof IndustrialRelations

Kumar, Krishna (2003), Has Indian IncFailed inPlaying theLeadership Role?,Vikalpa, Vol. 28 No. 3 (July-September)

Mabey, Christopher, Denise Skinner and TimothyClark (1998) (eds.), ExperiencingHuman Resource Management, Sage, London.

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Management, JohnWiley & Sons (Asia) Pvt. Ltd., Singapore.

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Pandey, S.N., JaiB.P. Sinha, J.S.Sodhi and S.Mohanty (2005), Tata Steel:BecomingWorld Class, Shri Ram Centre for Industrial Relations and Human

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Saini, Debi S. (2005),Management Case: Cooperative Employee Relations atNorth Delhi Power Ltd, Indian Journalof IndustrialRelations,Vol. 41,

No.2.

Saini, Debi S. (2005a),Management Case: Honda Motorcycles and Scooters India

Ltd., Vision? The Journal of Business Perspectives, Vol.9, No.4.

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Table 1: Some Major Employee Welfare Initiatives Undertaken byNDPL

Pre-takeover August 2005

S.No. Delhi Vidyut Board North Delhi Power Limited

Medical claim of indoorpatient/treatment was

being reimbursed

byDVB after theexpenditure wasincurred by theemployee fromhis

pocket.

AJanata

Insurance Scheme with a

cover value of Rs. 100 thousand

for ccident injuries;premium was

paid by theemployees.No forum/platform for interactionbetween management and

employee representatives.

Time-bound Promotion Scale

(TBPS) was being allowed to the

eligibleemployees afterconsider

able lapse of time. Many cases since

1994 onwards werepending.

Pathetic working conditions in

offices; no cleanliness and

hygiene maintenance.

Potable drinkingwater notavailable inmany District/Zonaloffices

No giftwas given toemployeeson any occasion

No functionwas ever held tocelebrate theLabour Day onMay 1.

No sports meet everorganised

Forty hospitals were empaneled;no payment required tobemade

by the employee concerned; the

employee had to just show the

IdentityCard and avail treatment.

NDPLgot every employee

insured

against work-related accidents for

a cover value of Rs. 250 thousand

at company's cost.

A Joint nteraction Forum (JIF)launched at thedistrict and circle

level;monthly and quarterlymeeting of JIFheld.

Time-bound Promotion Scale cases

were updated. All employees whowere eligible forTBP were allowed

thesame on 30th Juneand 31stDecember every year? No case

was pending.A number of buildings renovated;

hygienic conditions maintained.

Proper drinkingwater available in

allDistrict/Zonal offices.Water

purifierswere installed or filtered

(bottled)water was provided.

A wrist watch was given to everywork charge and contractual

employee to commemorate the

Raising Day on July1,2003.

Labour Daywas celebrated every

year by observing Industrial

Harmony Week; it involved

employee participation in it.

Sportsmeets foremployees and

dependents.

Hrm Tata Companies

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