managing employee relations through strategic human resource management evidence from two tata...

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


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


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


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


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


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.


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


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


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.


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"


(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


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


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


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


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.

REFERENCES

Ghoshal, Sumantra, and Christopher A. Barlett (1997), The Individualised Corporation, Harper Collins Publishers, New York.

Hofstede, G. (1980), Culture's Consequences: Software of the Mind, Sage, Beverley Hill.


Kumar, Krishna (2003), "Has Indian Inc Failed in Playing the Leadership Role?," Vikalpa, Vol. 28 No. 3 (July-September)

Mabey, Christopher, Denise Skinner and Timothy Clark (1998) (eds.), Experiencing Human Resource Management, Sage, London.

Ohtaki, Reiji and Hugh Bucknall (2005), Mastering Business in Asia: Human Resource

Management, John Wiley & Sons (Asia) Pvt. Ltd., Singapore.

Patil, B.R. (1998), "A Contemporary Industrial Relations Scenario in India with Reference to Karnataka," Indian Journal of Industrial Relations, Vol. 33 No.3.

Pandey, S.N., Jai B.P. Sinha, J.S. Sodhi and S. Mohanty (2005), Tata Steel: Becoming World Class, Shri Ram Centre for Industrial Relations and Human Resources, New Delhi.

Rao, T.V. (1990), HRD Missionary, Oxford & IBH, New Delhi.

Saini, Debi S. (2003b), "Dynamics of New Industrial Relations and Postulates of Industrial Justice," The Indian Journal of Labour Economics, Vol. 46, No.4.

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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.

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