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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.
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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
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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
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Managing EmployeeRelations Through StrategicHRM 173
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
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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
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Managing EmployeeRelations Through StrategicHRM 175
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
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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
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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.
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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.
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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
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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
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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.
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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
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(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
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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
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Managing EmployeeRelations Through StrategicHRM 185
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
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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
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Managing EmployeeRelations Through StrategicHRM 187
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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Managing EmployeeRelations Through StrategicHRM 189
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.
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