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Managing Employee Relations through Strategic Human Resource Management: Evidence fromTwo Tata CompaniesAuthor(s): Debi S. SainiSource: 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 .Accessed: 09/09/2011 06:06
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IJIR, Vol 42, No. 2, October 2006
MANAGING EMPLOYEE RELATIONS THROUGH STRATEGIC HUMAN RESOURCE MANAGEMENT: EVIDENCE FROM TWO TATA COMPANIES
Debi S. Saini
The turbulence caused by the globalisation syndrome has led the corporate sector to discover new ways of operating and
surviving at the global level in almost all spheres of management. This paper discusses the dynamics of changes that are taking place in management of employee relations and how human resource management (HRM) strategy is being used in this
regard. In doing so, it analyses the contribution of HRM
philosophy in building "new IR" or ''strategic IR." Taking note
of the global developments in IR, the paper focuses especially on 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 high on corporate
priority; but paternalism is acquiring a new meaning. While
employee welfare still remains a priority for promoting employee satisfaction and engagement, the focus on employee loyalty is
getting diluted to give way to "performance orientation/' Both
"empowerment" and "instrumentalist" HR strategies are being used to realize the goals of HRM. The paper also hints towards convergence of Indian and western HR practices.
Dr. Debi S. Saini is Professor of HRM, Management Development Institute, Gurgaon. An earlier version of this paper was presented at a seminar on "Human
Resource Management in the New Era" organised by Gandhi Labour Institute,
Ahmedabad, January 27-28, 2006. I thank the participants for their comments on the original draft, especially Professors Promod Verma, Biju Varkkey, and Vidyut Joshi. I also thank Professor Cecil Pearson, Senior Research Fellow at Curtin
University Business School, Perth, Australia for his comments leading to change in certain earlier positions. Of course, the usual disclaimers apply.
Managing Employee Relations Through Strategic HRM 171
INTRODUCTION
It is evident that substantial changes in workplace structuring have been taking place in the developed as well the developing world 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 are busy guarding against the chill winds of chaotic competition and the resultant consequences as more
and more companies find it difficult to survive and prosper; employees are under strain to save their jobs. For example, of the
Indian companies that were earning profits in the pre-reform era, a large number now belongs 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 front
running companies are busy in building their intangibles so as to
improve their long-term market value; some of the most significant HR intangibles in this regard include: shared mindset, talent,
speed, learning, accountability, collaboration, and quality of
leadership (Ulrich and Smallwood, 2003:14; Ulrich and Brockbank, 2005). Companies focus on policies of cooperation with employees and 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-S
framework, 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
importance of developing soft skills and building high performance work 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 the West, and especially in the UK, is tending to conclude and the concept of human resource
172 The Indian Journal of Industrial Relations
management (HRM) philosophy is getting articulated as a critical variable in corporate survival and growth. It has taken in its strides the concept of industrial relations (IR), which is getting increasingly subsumed within HRM concept (Saini, 2003b). In view of the above
mentioned changes, the basic premises that have guided the
fundamental principles of IR thus far have 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 a method
of seeking industrial justice faces serious challenges in the new
economy.
This paper discusses the dynamics of changes that are taking place in management of employee relations and how HRM strategy is being used in this regard. Thus, it analyses the contribution of
HRM philosophy in building "new IR" or "strategic IR." Taking note of the global developments in IR, the paper focuses especially on the IR scenario in the Indian context. Two case studies of
managing employee relations through HR strategy are being presented to draw conclusions.
HRM STRATEGY: A CONCEPTUAL FRAMEWORK
The global developments in management reveal that strategic HRM is becoming the single largest area of management consultancy, which speaks of its criticality in business success. It
should be understood that HRM strategy is not just interventions oriented at employee welfare and empowerment; it also has aspects of cost control and employee discipline. While it is mainly seen as an important instrument of realizing company vision, it is also
oriented to impliedly dilute collective labour power. HRM as understood in the British and European context seeks to intertwine the perspectives of personnel management and industrial relations and also add cultural and related interventions, thus giving way to "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 to line managers, and changing the levers of people management.
As per the new strategic response, the agenda focuses on promoting attitude and behaviour changes, promoting commitment, customer
Managing Employee Relations Through Strategic HRM 173
orientation, quality focus and flexible working; all these are
eventually intended to help deliver competitive performance.
Enhanced competition
Attitude and behaviour changes Commitment Customer orientation
Quality Flexible working
Competitive Performance
Implications for Industrial Relations
Figure 1: Storey's Model of HRM (Storey, 1995)
(Quoted with permission from the author)
HRM philosophy is now getting largely accepted globally as a
strategic tool for implementing business strategy, though with variable dimensions, through its practice by multinational
corporations and other leading employers even in developing countries. Strategic HRM interventions, among others, involve
focus on certain critical themes like team-building, talent
management, empowerment, involvement, communication,
diversity management, employee development, flexibility, reward
strategy, performance management, competency management, and leadership development. Each organisation may have its own
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 intervention are generally resisted by employees as they view employees as
any other resource and often involve enhanced managerial control on them. They also envisage a greater degree of measurement and
seek cost-effectiveness of people. Empowerment interventions on
174 The Indian Journal of Industrial Relations
the other hand involve trusting the employees, ensuring transparency and fairness in the organisational working, and
involving employees in decision-making as individuals. But HR
interventions in actuality are generally an amalgam of hard and
soft measures. Many high-performing organisations are going all
out to build on the empowerment mode of HRM strategy. While a
large number of organisations have been making claims of adopting
progressive HRM strategies and practices, research especially in
the West, however, explodes the myth of these claims (Mabey, et al., 1998). On paper, both sets of HRM strategies have been found to being vogue. On the whole, it appears that HRM is being used in 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 leading MNCs have been investing heavily in it. Some even attack unionism ruthlessly often with covert state
support as happened in the recent case of Honda Motorcycles and 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 management that was ignorant of cross-cultural realities in India. But it is
important to ask what model of HR strategy is being used by successful firms. And, are their policies in this respect changing?
SHIFTING EMPLOYEE RELATIONS PARADIGMS IN TWO TATA 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 cases
discussed also reflect the changes that are likely to find wider acceptance in Indian organisations as they face a higher incidence of competition. Both these case studies are from one of the leading
Managing Employee Relations Through Strategic HRM 175
industrial groups in India i.e. the Tatas. This group is respected for 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) took over 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 the Delhi Government and Tata Power (which held 51 per cent shares in NDPL and the remaining 49 per cent of its shares were
with the Delhi Government) to distribute electricity in North and North-West Delhi. The immediate concern of its chief executive
officer (CEO) was to facilitate stabilisation of the marriage between the Tata Power and the Delhi Government; and eventually to see
it becoming a lasting success.
The company devised its vision of "becoming the most
preferred and admired energy Company." As per the MoU with the Delhi Government, NDPL was to reduce the aggregate technical and commercial (AT&C) losses from 53 per cent at the
time of acquisition to 20 per cent by 30 June 2007. The Delhi Government had been subsidizing DVB every year for its losses
by about Rs. 15 billion through "loans" that were never expected to be repaid. Some of the key challenges that NDPL was facing since the acquisition included: dealing with rampant theft by slum dwellers as well as industrial/commercial consumers;
changing the consumer perception of the NDPL; providing world class 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
terms of standards of the Tata Business Excellence Model (TBEM) that the Tata Group of companies have adopted for
benchmarking performance.
So as to deal with the problems that the company encountered, the top management of NDPL took several strategic initiatives. Some of the performance initiatives in relation to
people issues that the company immediately took on takeover
176 The Indian Journal of Industrial Relations
included: payment of salary by crediting it in bank account of the employees rather than paying it in cash; installing 1200
computers in various offices of the company in place 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 for better customer service;
provision of mobile 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 the MoU (memorandum of understanding) signed at the time of acquisition, NDPL inherited 5368 employees from the
DVB. Since the use of technology reduced the need for manpower and the complex problem of corrupt meter readers had to be
tackled, the company devised an attractive voluntary retirement
scheme (VRS). Out of the total DVB workforce, 1794 employees sought retirement under the VRS, which included some 90 per cent of the meter readers. The recognised union was involved in
the rightsizing process throughout. NDPL employed 482 new
employees to various positions with new service conditions. The
DVB-scheme employees continued to be governed by the old DVB
pay-structure as 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 from
executive engineer, assistant engineer, etc. to manager, assistant
manager, office associate, work attendant, and so on. Re
designation aroused considerable resistance from most DVB
scheme employees including senior officers, but the company succeeded in overcoming that.
The company was committed to quality that could be inferred from its mission, which read: 'To be the most preferred and admired
energy company we will strive to deliver quality and cost-effective services...." NDPL developed comprehensive employee welfare schemes. Also, it was supposedly the first company in India to have started an employee helpline. Under this any company employee
Managing Employee Relations Through Strategic HRM 177
could submit his/her grievance by e-mail or telephone, and this
helpline assisted in giving a time-bound reply to him/her and helped in processing the grievance. A comparative view of some of the
welfare and performance measures by DVB and NDPL can be
observed in Table 1.
In view of the facts and events presented in the table should be understood the company's relationship with its union. It inherited
the DVB workforce along with its recognized INTUC (Indian National Trade Union Congress) affiliated union and seven staff
associations. It recognized this workers' union but did not recognise any of the staff associations. Except some minor disturbances, the
company had witnessed a peaceful acquisition process. The concept of Joint Interaction Forum (JIF) was put in place at the district, circle and corporate levels to promote employees' involvement in decision
making; monthly and quarterly meetings of JIF were held regularly at district and circle levels.
The CEO gave priority to the issue of union-management relations. 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 in building cooperation in employee relations. The intensity of such efforts could be gauged from the following incident: The
payment of retirement benefits to employees for the period for which they had rendered service to DVB in the pre-takeover phase was the responsibility of the Delhi Government. When NDPL announced 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 employees that the Raising Day would not be celebrated on July 1, 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 would not celebrate Puja and Diwali festivals in 2004 as a mark of protest against the Delhi Government. These
instances were quite significant in internalizing the company's
cooperation-building agenda.
178 The Indian Journal of Industrial Relations
Besides, two batches of union leaders were sent by the
company to the Tata Steel plant in Jamshedpur in September, 2003 for 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 the mindsets of the union leaders.
The HR department played a key role in facilitating performance culture. It was decided that the performance
appraisal (PA) system for the employees should be kept simple; the PA form comprised of only two pages. From year 2004, key result areas (KRAs) were developed from the level of assistant
manager to the top management with a view to assessing individual performance. The joint interaction forum (JIF) proved an important platform for performance improvement as
representatives of union and management aired their respective issues of concern there. An in-house quarterly magazine named
Navodaya was launched in November 2003. The company set up its Human Resource Information System (HRIS).
The above-mentioned initiatives, taken together with good strategy implementation, helped in bringing radical changes in the 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 from 53 in July 2002 to 28 per cent on 31 March, 2006, which meant reduction of about 25 per cent in a period of 45 months from the takeover. A reduction of one per cent in AT&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 first year itself it earned a profit of Rs. 220 million (for the year 2002-03). In fact, the CEO suggested to the Delhi Government in July 2005 not to increase the tariffs for the consumers as NDPL wanted to transfer the benefits resulting from the reduced AT&C losses onto the consumers. In relation to billing errors substantial reduction had taken place since the time of takeover, but they were still believed to be an area of concern.
Managing Employ?e Relations Through Strategic HRM 179
The company has been performing impressively in comparison to its competitors. The number of transformer failures came down
from 584 at the time of takeover to 37 in financial year 2004-05. In the same time the mean time taken to repair cable faults came
down from 11 to 2 days. No-supply complaints came down from
8000 to 2149, and the street lights in working conditions improved from 50 per cent to 99 per cent. Out of the 150 companies which
competed for the position of "the Top 25 Great Places to Work in India" as per a survey conducted by the Grow Talent Company in 2003, NDPL got the 27th rank.
A general manager observed: "The company has been able to
acclimatize about 50 per cent employees into the NDPL 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 appreciated the company's performance but pointed out that "employees remained fearful of losing their jobs in the new scenario, despite the security provided to them by the tripartite MoU signed at the time of acquisition."
NDPL had been working hard since beginning to promote a
performance culture through sagacious leadership of its CEO and various HR interventions. Interestingly, the company's HR
department devised its own HR model as well an HR vision. It
talked of usual HR interventions but there was no mention of the word union in it. A major uprising took place from the workers' rank which successfully challenged the existing union leadership; and charged it of the union having an unholy alliance with the
management. This awakened the management. They transferred
the first HR chief who was a fine HR strategist to another
department and brought a new HR chief who had better expertise in employee relations and labour laws. Overall, the company
performed competitively far better than its two competitor companies that were supplying electricity to the remaining parts of Delhi. The media, government ministers and the public at large
expressed happiness with the performance of NDPL. The company has so far been able to prevent any major IR problem that could
stall its march towards realizing its vision. Of course, the company's
180 The Indian Journal of Industrial Relations
sole recognised union witnesses an attempt of takeover of its
leadership by a rival group, but that did not cause any upheaval in the employee relations scenario (Saini, 2005), even as it caused considerable worries to the NDPL top management.
B. The Tata Steel Limited2
Tata Steel Limited is a one hundred year old steel producing Indian company, which played a pioneering role in industrial development of India. It is located in Jamshedpur in the state of Jharkhand, and is one of most talked-about Tata organisations in the country. It is also believed to be a role model for many line and 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 management and industrial democracy. Like other companies in the post globalisation 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, managing flexibility, change management, and effecting the company's turnaround.
The company noted that its technology had become outmoded and needed to be replaced by new rolling-mill technology of higher capacity and greater speed. It involved not just huge cost but a transformational leadership that could manage the consequential realities. This meant changing the mindsets of its nearly 80,000 employees, and promoting internalisation of new ideas so as to
cope with the changing business environment.
The company practiced values of paternalism and employee loyalty for a long time, which its founders had established and religiously nurtured. It built an industrial township in Jamshedpur looking after nearly all civic needs. It nurtured employee loyalty by catering to their needs; worker's relatives were given preference in new recruitment as a strategic priority. It had trouble-free IR for more than 50 years. Russy Modi, its CEO and chairman for a long time in the nineteen eighties, worked hard
Managing Employee Relations Through Strategic HRM 181
in performing the crucial role of building and strengthening employee commitment through further strengthening the practice of 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 period of 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 personalized relationship 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 for younger 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 as
their mai baap (parents) reflecting gradual erosion of the paternalist values that the company firmly upheld for so long. They are not able to acclimatize themselves to the supposed environment of
performance-orientation policies. Consequently, the modernisation
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 is difficult to simultaneously pursue both the policies at the same time. The company has been resorting to outsourcing in a big way in a large number of new areas, which also strikes at
the long-held value of building company loyalty by nurturing a
large corporate fraternity consisting of different departments all
run by the company itself.
182 The Indian Journal of Industrial Relations
The changes in people-management philosophy at Tata Steel have helped in improving performance, which resulted in it receiving many international rewards. The World Steel Dynamics rated Tata Steel as the best company in the world in 2000-2001 and third best in 2001-2002. By the year 2003 it also became the most 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 the union in building cooperation; involving families in the change process; investment in new technology; the nurturing leadership of
JRD Tata and Russi Mody furthered by J.J. Irani and B. Muthuraman; and the development and adoption of the Tata Business Excellence Model (TBEM). As part of the TBEM, many initiatives which paid off the transformation process included: continuous improvement projects; quality circles; and six sigma. The changed people management 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. The concern for product quality has given way to process focus as well,
resulting in higher quality at competitive costs. Efforts are being made to make the company leaner and more professional through performance ethic programme (PEP). A large number of employees were involved in evolving Vision 2007, which was formally launched on May 2, 2002 jointly by the managing director and the president of the union.
The company is also moving from the policy of what 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 is concerned with dealing with issues resulting from application of company policies such as measurement of impact of various initiatives, implementing voluntary retirement 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 soft HRM and hard HRM as have been reported in the HRM literature (Saini, 2000).
While some analysts have made a case for reversal of the
policies of Tata Steel towards "adoption of familial style of caring"
Managing Employee Relations Through Strategic HRM 183
(Pandey et ah, 2005), it is important to note that in view of the
exigencies of performance focus as warranted by the era of
competition it would be very difficult to do so. Similarly, Indian
companies are likely to focus on employability rather than the
employment guarantee policies followed in the pre-gobalisation era. Going by the revelations of the HR literature, this issue appears to be a case of either/or situation. The demands of the global chaotic 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 that Tata Steel has considerable scope for taking initiatives in the latter category of people empowerment model and shaping IR through employee care as a way of organisational life.
LESSONS FROM THE TWO CASES: A DISCUSSION
The two case studies presented above show that companies are pursuing cooperative IR as a philosophy through a well
articulated HR strategy. New factors are being 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 of managing IR is noticeable at covert as well as overt levels. The pursuit of such
policies has the potential of attracting individual employees to the core values of the organisation and diluting their propensity to
indulge in hostile unionism. This also helps promote organisational
flexibility.
There is talk of the convergence thesis in management which
is resulting from the increasing influence of globalisation on
corporate practices. As per this thinking management practices would eventually come close to becoming similar over the years across the length and breadth of the globe, with reduced impact of local cultures and indigenous factors. No doubt, it would be
simplistic to completely wish away the impact of cultural influences on organisational working in the short or medium run. The eminent
184 The Indian Journal of Industrial Relations
social historian Francis Fukuyama (Ohtaki and Bucknall, 2005: 23) endorses the convergence thesis when he observes that "in all three areas...? economic, political and social?there are good reasons for thinking that the distinctive institutions and practices fostered 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 of NDPL and Tata Steel, it is
becoming clear that they hint towards legitimating of the
convergence thesis in HRM; for the TBEM that was the turnaround model for Tata Steel was built on edifice of western values of
performance rather than loyalty focus. Being a Tata company, NDPL was also trying to benchmark performance standards set
out in TBEM, though being a new company it was 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-private partnership. 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 of measures 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 competencies to survive in the chaotically 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 internalisation of the change agenda by the union as well as the employees in general. Corrupt and indifferent
employees were encouraged to mend ways or take voluntary retirement. 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 of change agents (in the form of new NDPL schemes employees) to set standards of performance and create
feelings of competition amongst all categories of employees.
The adversarial industrial relations (IR) theory as enunciated in the classical Oxford School of IR discounts possibility of any
Managing Employee Relations Through Strategic HRM 185
lasting cooperation between management and workers as they are usually operating in a zero-sum bargaining situation. And
peace is brought about through the agreement reached through bargaining on issues at hand. The theory postulates that such
cooperation can be possible only during times of recession. It argues that parties would revert to adversarialism when recession is over.
How far these formulations hold good in the era of globalisation? How were cooperative industrial relations noticeable in the case
of the two companies under study? No doubt, the policies and interventions devised and implemented by the HRM department, and co-espoused and supported by the sagacious leadership of the CEO, helped determine industrial harmony. They worked towards adopting the Tata culture in the company's IR issues that bothered the common employee the most. NDPL's decision not to celebrate the raising day, Puja and Diwali festivals in 2004 as a mark of protest against the Delhi Government not releasing the retirement money for DVB-scheme retired employees reflected an
astute strategy of employee care that facilitated the change agenda. But its overall HR policies should be seen as falling short of a purely paternalist agenda.
The lasting industrial peace at the Tata Steel that it has been able to sustain since long leading to its success as an Indian steel
giant through practice of paternalism in IR is well-known in Indian literature on HRM. But the recent changes in this company's
policies show that the policy of paternalism was difficult to sustain
any more in the present era. Despite difficulties the company could build an effective strategy for making the employees agree for the VRS and used its HR systems and leadership in helping the attainment of this goal. Eventually, it could reduce their workforce
by 35000 and make Tata Steel competitive and the cheapest steel
producing company in the world, which has the vision of
becoming an EVA. (economic value added) positive company.
CONCLUDING REMARKS
In the post-globalisation scenario, issues in IR are getting merged as aspects of strategic HRM. Cooperation in IR is being built through both the "instrumentalist" and "empowerment" dimensions of HR Strategy. Often harsh measures are also adopted
186 The Indian Journal of Industrial Relations
either as control measures for promoting performance and cost
effectiveness or through practice of unfair labour practices (ULPs) by employers with covert supports of state agencies. In India they have 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 resource manipulation; this is so considered due to the de-unionization potential of soft strategy of people management. 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 are successfully pursuing union substitution policies of the type followed by IBM and Kodak, among others. The number of such companies is increasing fast as they seek to reap competitive advantage through better employee
motivation and engagement. Many others merely have built facades of employee concerns. In a situation of increasing indifference of state apparatus towards union rights, many employers are using this opportunity in successful violation of minimum 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 various
ways to promote change acceptance, like it happened 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 are expected 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 include
building 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
Managing Employee Relations Through Strategic HRM 187
without unions. But it is certain that traditional paternalism including employee appeasement is difficult to practice today if
companies have to stay competitive.
Further, competitive performance would warrant adoption of a
higher degree of globally-tested HR practices as the pressures are also becoming global. Thus, as per the convergence thesis that is
being debated in management, the management practices of MNCs are expected to eventually dilute the influence of cross-cultural realities as has been discovered by Hofstede (1980). The case of Tata Steel
surely gives hints towards such convergence as the company is clearly
withdrawing from its professed values of pure paternalism. The NDPL has also made efforts towards building a high performance work
system by adopting some of the most modem practices reported in the HRM literature including balanced score card, human resource
information system, knowledge management, job re-design, employee involvement, performance management, and transformational
leadership. Of course, it still has miles to go in fully implementing an
"empowerment" HR model and reaping its fruits.
NOTES
1. The NDPL case here is mainly based on facts and events from two cases: North Delhi Power Ltd.: Dynamics of Change, a case by Saini and Bhatnagar (2005), and Cooperative Employee Relations at North 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 case was constructed with the help of interviews from some former senior managers at Tata Steel, analysis of information from the
internet and company website, analysis of academic literature on Tata Steel, and interaction with Mr. B. Muthuraman, the present Managing Director of Tata Steel.
3. As revealed in a private discussion between the author and Mr. B.
Muthuraman.
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Managing Employee Relations Through Strategic HRM 189
Table 1: Some Major Employee Welfare Initiatives Undertaken by NDPL
Pre-takeover August 2005
S.No. Delhi Vidyut Board North Delhi Power Limited
Medical claim of indoor patient/ treatment was being reimbursed
by DVB after the expenditure was incurred by the employee from his
pocket.
A Janata Insurance Scheme with a
cover value of Rs. 100 thousand
for accident injuries; premium was
paid by the employees. No forum/platform for interaction between management and
employee representatives.
Time-bound Promotion Scale
(TBPS) was being allowed to the
eligible employees after consider able lapse of time. Many cases since
1994 onwards were pending.
Pathetic working conditions in offices; no cleanliness and
hygiene maintenance.
Potable drinking water not available in many District/Zonal offices
No gift was given to employees on any occasion
No function was ever held to celebrate the Labour Day on May 1.
No sports meet ever organised
Forty hospitals were empaneled; no payment required to be made
by the employee concerned; the
employee had to just show the
Identity Card and avail treatment.
NDPL got every employee insured
against work-related accidents for
a cover value of Rs. 250 thousand
at company's cost.
A Joint Interaction Forum (JIF) launched at the district and circle level; monthly and quarterly
meeting of JIF held.
Time-bound Promotion Scale cases
were updated. All employees who were eligible for TBP were allowed the same on 30th June and 31st
December every year? No case
was pending. A number of buildings renovated; hygienic conditions maintained.
Proper drinking water available in all District/Zonal offices. Water
purifiers were installed or filtered
(bottled) water was provided. A wrist watch was given to every work charge and contractual
employee to commemorate the
Raising Day on July 1, 2003.
Labour Day was celebrated every
year by observing Industrial
Harmony Week; it involved
employee participation in it.
Sports meets for employees and
dependents.