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Nature of

Industrial Relations:
Traditional & Changing
Debi S. Saini
Professor of HRM
Management Development Institute, Gurgaon

The issues discussed in the presentation are:

• Importance of theory for managers for diagnosing the problems

• Nature of industrial conflict & industrial relations

• Focus of the discipline of IR

• Traditional issues in IR

• Frames of reference of IR: Unitarist––Pluralist––Marxist

• New World of Work & emergence of neo-unitarism in IR

• Some cos. that practice neo-unitarist or neo-pluralist strategies

Two Main Components of this Course:
Management of Personnel/People
(Systems, policies, controls, skills, productivity, efficiency)

Management of Industrial Relations

(conflict, Interests, rights, democracy, discipline)

Lately, the two perspectives are getting

merged into an integrated HRM framework

Saliency of HR’s Strategic Contribution

University of Michigan Study:

HR Deptt’s Impact on Business

--Accounts for as much as 43% of

total impact on bus. performance

Role of Inter-personal mgt. in Managerial Success

HBS Study—89: 11
Stanford Business School Study--88: 12
On Intertwining Theory
and Practice:
Understand IR Issues
in Context

Mgt./IR Practice need to be linked to Mgt. Theory

HR’s Role in Building the 4+2 Org

Wiliam Joyce, Nitin Nohria, & Bruce Robertson

1. Limited resources
2. Separating theory from practice
3. Relying on pre-conceived truth about success
4. Underestimating the difficulty of the problem

They developed a book to avoid these problems:

— Analyzed 60,000 pages of info. from 200 firms in multiple industries
Dave Ulrich, Human Resource champions,
(Harvard University Press), p. 237

“ CK Prahlad, a world renowned professor

of strategy, meets frequently with groups
of HR executives. He claims that one
reason HR has not become pivotal to To make HR practices
business as it should be is that HR more than isolated acts,
often lacks knowledge of theory. managers and HR
Theory explains why events happen. professionals must master
the theory behind HR
Theory provides explanations based on work;
logic for how events relate to each they need to be able to
other. Theory weaves individual events explain conceptually
into predictable and generalizable how and why HR
patterns.” practices lead to their

Emergence of
Heathrow Management Theory
in People Management in mid-1980s:
Attempt to relate Practice with Causality
On Understanding
the Roots of
Industrial Conflict

Today, Labour-Mgt. Conflict is Pervasive: Why?

• Conflict is endemic in society/orgs./IR

• Industry is a microcosm of society: Grs./Individuals

• Why conflict: Divergence of interests, values, goals

• Societal/indl. conflicts: Complex phenomenon

––Difficult to fully understand/describe: HMSI case shows that
Industrial Relations


Industrial Relations: Simply Speaking:

“Industrial relations (IR) is the process

through which employers & employees interact,

and, through which they regulate conflict

at the workplace”

§ Includes all employment relationships: Unionized or not

§ IR is an interdisciplinary field of study 12
How can we view Industrial Relations

J. H. Richardson (Leeds University) Important

• “Industrial relations is regulation
is needed
the art of living together all relations;
for purposes of production” the regulation

How can we view Industrial Relations contd…

Hugh Clegg (Clegg & Flanders pioneers of Classical Oxford School of IR)

“Industrial relations is a study of

workers and their unions,

employers and their associations,

and State & its institutions/agencies

concerned with regulation of employment.”

Imp.: Different powers, roles, interests, duties of Actors
Dynamics of Industrial Conflict: Factors at Macro Level

• Industrial conflict dimensions in a country depend on:

––Acceptance of Market or democratic socialism as values

––Distribution of power in society––Societal Ideology

––State of the economy

––Nature/composition of labour market

––Use & acceptability of strike/collective bargaining

• Globalization diluting welfare state: Focus on market economics

Q 1. What broad environmental

Factors contributed
to the Conflict
in the HMSI case?

Two Extreme Models
of Industrial Relations


Perfectly Pluralist IR Model

• Presence of trade union/s; union rights respected

• Recognition of the trade union by the employer

• Presence of adversarialism in relations

• Negotiated settlement guides IR

• Freedom to strike/lockout to parties

Reflected in: Classical Oxford School of IR (by Allan Flanders & Hugh Clegg)

Perfectly Neo-Unitarist Industrial Relations

• Employer strives for Decent Work, Cooperative IR

• Commonality of interests is projected

• Union undesirable; so union-substitution strategies

• Efforts to satisfy employee needs: Psychological contract

• Reflected in HRM Approach to IR 19

Leading Companies
are investing in
Building Cooperation
Psychological Contract
Google has become a magnet
for like-minded geniuses:

Google: $200 billion market cap.

The only U.S. companies

with larger market caps:

Exxon Mobil, at $328.4 billion

Microsoft, at $276 billion
Wal-Mart, at $207.6 billion

Google Creating Joy by Giving Employees

what they need: casualness, diversity, fun

Focus of
the Discipline of IR

Focus of the Discipline of IR
A. IR Institutions
(permanent form of custom or law)

––Employer associations
––State/ Labour Bureaucracy
––Tribunal/Labour Court
––Labour law

Focus of the Discipline of IR

B. Characters (or actors) in IR e.g.
––Union leaders

––HRM Managers

––Conciliation Officers/ Mediators

—Arbitrators/labour judges

––Labour Courts/tribunals

––Labour Lawyers/Consultants
Focus of the Discipline of IR cond…
C. IR procedures (aim at: Procedural justice)




––Procedure for going on strikes/ lockouts

––Inquiries/Disciplinary procedure 25

Q 2. Who you think

were Actors in IR
in the HMSI Case:
Directly or Indirectly

Traditional issues
Industrial Relations


Q 3. In view of HMSI case,

state the issues
that are in focus

Traditional Problems in IR

1. Job satisfaction: Job design––reward

2. Negotiating Wage/salary/VRS

3. Alienation & discontent: Social & psychological problems

4. Grievance management: Boss––Environment––Rule-centricity

5. Communication

Traditional Problems in IR

6. Industrial dispute settlement––Dealing with Impasse

7. Tackling Indiscipline, absenteeism & mobility

8. Managing Labour Laws

9. Designing Labour welfare/QWL

10. Joint consultation, participation, involvement

The IR actors
try to derive Power
from Various Sources


Q 4. What do you think have

workers gained in HMSI case?
What are their sources
of strength?

Q 5. It is said that
IR is a game of power.
In your view,
how much power was enjoyed
by the three main actors in IR?


Frames of Reference
in Industrial Relations
& New Issues in IR

Frames of Reference: Unitarism & Pluralism
Unitarism Pluralism
1. Assumptions: about Interests 1. Assumptions about Interests
—Common interest/objectives —Mgrs. & employees have: different objectives

2. Assumptions: about conflict 2. Assumptions about conflict

—Inevitable—Be negotiated
—Inevitable, destructive: Be avoided
—Caused by difference of power/interests/values
—Caused by: Poor mgt/communication

3. Assumptions about trade unions: 3. Assumptions about Union

—Unwanted intrusion —Not the cause of conflict: Conflict is inherent
—Legitimate part of workplace relations

4. Assumptions: collective bargaining 4. Assumptions about Collective bargaining

—Generates conflict; doesn’t resolve it —Fairer outcomes
—Balances employee & mgt. power


III. Marxist (Radical) Perspective

• Pluralist view of society that conflict can be negotiated is wrong
––Capitalist profit is key influence on co. policy

• Control enforced downwards by capital’s agents

––Surplus value generation by capitalist

• The Marxist general theory of society argues:

––Class conflict in capitalism is inevitable; it is the source of societal change

––Without conflict society will stagnate

––Class conflict is caused by disparity in power

––Differential access to education, media, govt. jobs

––Employees socialized into accepting the status quo

Marxist Perspective contd…

• CB: limited accommodation of fundamental divisions

––Unions/IR instts. are concerned only with marginal issues

• Law not independent referee

• Industrial Justice: only if revolution


Q 6. Do you think that workers have

an unqualified right to form union in India;
if so what is the logic of such a law?

Q 7. What role was played
by the AITUC leader,
Gurudas Dasgupta
in the IR system of HMSI?


Q 8. What role was played

by the media?

Q 9. What were
the major concerns
of the three main actors in IR
including Central & State Govts.?


Q 10. On the basis of this case,

in what way you think
are the government’s need
of more foreign direct investment (FDI)
and its concern for social justice
through unionism related?

World of Work & Emergence
of Neo-unitarism in IR


Neo-Unitarism through Union Substitution

Attractive satisfying jobs
Reward strategy

Emp Involvement, Strategic
Substitution attempts
empowerment Selection
Through Progressive

Culture Make workplace

Building, flexibility Investment in funful & implement
Individual diversity Fair standards
HRD for WM
& managers
Special focus on Balancing Reward & Culture

Reward Culture of respect & dignity

The latter requires meeting employee expectations

Culture Built through Individual diversity, empowerment, leaders hip

In Search of Excellence revealed their Importance

Caring & Enjoyment

The new Paradigm emphasizes

Creativity, HRD, excitement, fun, trust, involvement
Communication & Relationship-building/care are
Key to Employee Engagement & Cooperative IR

that mutually benefit
the parties concerned


Q 11. Are there some new

Issues that HMSI must focus on
so as to pursue
a viable HRM strategy
to realize its Vision?

New Issues in IR: Dominance of HRM Approach

1. Developing Cooperative IR/de-adversarialism

2. De-unionization
through state support

3. Promoting EI, not WPM

4. Continuous Communication 49

New Issues in IR: HRM Approach contd…

5. Managing IR through HRM strategy

6. Flexibilty management:
––Core & periphery WM

7. VRS (Voluntary Retirement Scheme) and lay offs

8. Open approach to grievance redressal

Examples of
Some Leading Companies
that Practice
Neo-unitarism or Neo-pluralism
in People Management


Classic Strips
Employee Dignity
(a very small company)
Classic Stripes (Mfg.): Come Out of Control Mindset

• 500 WM including contract WM—Most are blue-collared

--Manufactures automobile graphics— established by Kishore Mushale

• 4 WM 25 yrs. ago (in 10’ x 10’): Built 44 acre campus in Vasai

--Three plants now: Mumbai—Vasai--Hardwar

• Main motto was: “dignity at work.”

--Believes in: “ valuing every individual, giving people their due,
freedom, respect, opportunity backed by lots of training.”

Classic Strips: Some HR Initiatives contd…

• Won Safety & Environt 2003 award (SIGA given to 5 cos. worldwide.)

• Employee spends 2 ½ hrs every month on training (kaizen)

• A relationship committee: Meets twice in a month

--Comprises of employees across levels

• Has a library with trade journals, magazines and books

• DM Policy: Women make 1/3rd of the workforce

--Proactive DM policy: Even for handicapped WM

• Shares with employees a %age of its annual profits

Professionalism &
Out-of-Box Thinking
always helps
Employee Engagement: The case
of Class Stripes

Southwest Airlines
Only major airline to earn profit every yr. for nearly 3 decades

Southwest has won the Triple Crown for 5 yrs in a row

(best on time performance, fewest complaints, fewest lost bags)
No other airline has won this award

Southwest’s operating costs are 20% below the industry average

--The company is 84% unionized
Serves over 64 cities; 35,,000 employees

528 aircrafts on April 2, 2008

Large no. of job applicants every year (Emp. branding)

Every company I have ever gone in,

they say people are number one,
but they’re just not.

They don’t live up to that,

and we do.”

Gary Kelly, CFO, Southwest Airline

Many companies are trying to live their faith in people

Vitas Inc. USA

Vitas Inc. USA

• Employees highly cared; wear the 4 Co. values on Shirts
1. Patients and families come first
2. We take care of each other
3. I’ll do my best today & do even better tomorrow
4. I am proud to make a difference

• Live a sense of pride: Great excitement in working for vitas

• HR-VP received: “HR Leadership of the Year 2006” award of SHRM

• One nurse said: “Sometimes we wonder why we came here so late.”

Tata Steel Ltd.:
Care through
Paternalism & Involvement

Tata Steel Ltd.: People Model

•People work at less than 50% of market worth; don’t leave

• See fulfillment of their need for dignity, stability, security

• It used paternalism (kin employment) & family invitation

• CSR creates a sense of pride in employees

Q 12. What do you think were
the principal causes of the trouble
that HSMI faced?


Q 13. What are the

key challenges before HMSI
in the post-July 25 scenario?

Q 14. What HRM strategy
was followed by HMSI
consciously or subconsciously;
do you think that this was different
from the global HR strategy of HONDA?
Why, if at all, are there differences
in the pursuit of the
global and the local strategies?


Q 15. What led to failure of

the HRM strategy of HMSI,
and what are the causal roots of
the breakdown of IR in the company?

Q 16. What people-management strategy
should HMSI adopt
so as to march
towards its vision?


Q 17. What lessons in

people management and IR
do you learn from this case?

The presentation has focused on following learning

• Mgrs need to know theory to diagnose problems appropriately

• It is Utopian to wish away industrial conflict completely

• IR shifting from adversarialism to neo-pluralism/neo-unitarism

• Along with traditional issues, new issues have emerged in IR

• Governments’ new eco. agenda is moving from social justice to growth

• New world of work has led to union-substitution strategies

• HRM strategy is used to promote cooperative IR