Decisional dilemma in maintaining

industrial peace in PSU in India

Sumit Mishra, Shashi Kant, Vinay Sharma and Rajat Agrawal

Company history and background Sumit Mishra is Research

Scholar at the Indian
XYZ Manufacturing Ltd, a public sector undertaking (PSU[1]), established in 1977 by the Institute of Technology
Government of India. The company’s core competency lies in the power industry especially Roorkee, Roorkee, India.
in the manufacturing and services of engineering equipment. Later on, it also expands into Shashi Kant is Research
other business related to infrastructure development. It has also been regarded as one of Scholar, Vinay Sharma is
the most professionally run government organizations. In later phases of expansion, the Professor and
company diversified into other infrastructural development related projects. In the last four Rajat Agrawal is
decades, the company has gained a reputation of providing dividends to its shareholders Associate Professor. All
every year. The company is also renowned for its quality product and customer satisfaction are based at the
Department of
from the day of its inception. It has a pan-India presence with various manufacturing units
Management Studies,
located at different parts of the country and a corporate office at Mumbai. The company is
Indian Institute of
highly praised in the power sector industry for its well-designed manufacturing processes
Technology Roorkee,
and technology, which are supported by a highly qualified and skilled workforce. The Roorkee, India.
company has a manpower of 34,000 employees comprising three type of cadres i.e.
workmen, Supervisors and Executives. The company’s top and middle management
comprises executives, who are from prestigious institutions, such as the Indian Institute of
Technology (IIT), Indian Institute of Management (IIM) and National Institute of Technology
(NIT), giving it an edge over others.
The company’s management believes in framing policies after due discussion with a cross
section of employees of all three cadres for achieving industrial peace. In 1983, the
company adopted a model of worker participation in management. Subsequently,
participative forums were created involving participation of management’s representatives
and trade unions (workmen’s representative), wherein issues related to employees are
discussed and addressed holistically with a purpose to enhance productivity in the
company and at the same time ensuring employees’ welfare. These participative forums
have, in the last four decades, provided a sense of involvement to every employee through
their representative in decision-making and contributing toward framing the company’s
policies for achieving production targets and ensuring employees’ welfare at the same
time. Somehow, over a period, this has brought an active involvement of trade unions in
manufacturing units trying to achieve a balance in relationship of management and its
employees to maintain industrial peace.
Disclaimer. This case is written
solely for educational
Market scenario purposes and is not intended
to represent successful or
unsuccessful managerial
XYZ Manufacturing Ltd had seen an era of monopoly in the power industry before 1991. In the decision-making. The author/s
year 1991, the Government of India was facing the problem of fiscal deficit and the country’s may have disguised names;
financial and other
economy was in lurch as the country faced a liquidity crisis. The new model for economic recognizable information to
reforms was introduced by the Government of India as LPG i.e. Liberalization, privatization and protect confidentiality.

DOI 10.1108/EEMCS-06-2016-0117 VOL. 7 NO. 2 2017, pp. 1-15, © Emerald Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
 globalization. This changed the market dynamics of the Industry as it brought competition from
private players and also created opportunities to compete in the global market. PSUs started
facing challenges in achieving sustainable growth. Management of XYZ Manufacturing Ltd had
continuously put a thrust on making important organizational changes like policy
transformation, introducing new technology for productivity enhancement, expansion in
existing infrastructural facilities and technological advancement along with innovative business
practices involving all the stakeholders. The company has seen a linear growth in its turnover
particularly for 1991 except for 2014-2015 (Exhibit 1).
The power sector market was hit by the financial crisis in 2009 followed by issue of land
acquisition, environmental clearances and coal shortage which brought new challenges to
the company. This has affected ongoing power projects, which later went on hold. This also
had an impact on inventory management and production processes in different
manufacturing units of the company. Also factors, likes land acquisition, environmental
clearances and coal shortages to power projects, later resulted in a dip in the order inflow
for the company (Exhibit 2). This brought an added pressure on the management of the
company to focus on cost cutting and enhancing employees’ productivity. The company,
with its participative forums, shared the critical information and challenges about the power
sector market and its impact on the growth of the company with its employees. Top
management appealed to employees through public address, conferences, meetings and
the company’s internal magazine etc. for enhancing productivity and quality of production
with the use of cost cutting measures to cope with the market scenarios. Management was
very well aware that this can only be achieved if industrial peace is maintained through
coordination and participation of trade unions.
The company got support from its employees and innovated new processes to remain
competitive in the market but was still struggling to synchronize with the existing competition,
market scenario and the turnover chart was also showing the downward trend (Exhibit 1).

Raipur unit
The Raipur unit of XYZ Manufacturing Ltd is located in the State of Chhattisgarh. It has a
total workforce of 5,000 regular employees which includes 3,300 workers, 1,100
supervisors and 600 executives. The company is extended over almost 1,400 hectares of
land, which includes a 300-hectare area for the factory and the rest for township, schools,
hospitals, etc.
The majority of employees, approximately 80 per cent of total workforce, lives in the
township area in the company’s accommodation which has facilities like club, park,
schools, hospital, sports club, etc.

Recognition to unions and associations

There are a total of 18 registered trade unions in the Raipur unit, out of which only four had
the status of recognized trade union in the company. These recognized trade unions are
selected on the basis of election held every four years. Trade unions, registered as per the
Trade Union Act 1926 and not having less than 10 per cent of total votes polled, are
recognized by the management and their members take participation in various
participative forums for discussion and deliberation on issues related to the company. The
knowledge of management about the functioning of trade unions played an important role
in managing industrial relations and bringing industrial peace in the company.
Besides unions, there are separate associations of employees belonging to supervisor
cadre, executive cadre and SC/ST category.

PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 7 NO. 2 2017

Participative forums for trade unions
The management of XYZ Manufacturing Ltd believed that the active association of all
employees in various aspects of productive operations in true participative spirit is
essential for the creation of a conducive environment of involvement and commitment of
employees, which always brings industrial peace and motivates employees to contribute
towards organizational objectives. This belief found its nurturing ground in the bipartite forum
created initially to discuss and negotiate the wage revision in 1983 and helped the forum
develop itself into a permanent scaffold for promoting participative spirit. The progression
through various stages of this process of participation has presently brought the company
to the setting where the corporate objective viz.
“To evolve a participative style of management which will ensure good working conditions
and job satisfaction to all employees, wages commensurate with their performance career
advancement and hood will amongst all employees and respect for the human individual”
has been translated into real practice.
With the appointment of an eminent labor leader on the Board of Directors in 1985, the
employees’ participation scheme stands implemented in the company right from the board
level down to the shop floor.
The representative unions participate in three different forums in the organization under the
scheme of worker participation in management (Exhibit 3).

Purpose of trade unions and participative forum

The central function of a trade union is to represent the workers and to protect their
interests. Trade unions help in maintaining effective communication, conflict management,
maintaining discipline among workforce, safety and security, recruitment and selection
process for workers and making workers adapt to any organizational changes, if needed.
Thus, trade unions act as a catalyst for maintaining industrial peace. A good indicator for
industrial harmony is, how effective trade unions are working along with management,
which means no strikes or lock-outs on any working day which affect production. The
company also recognizes the fact that the existence of a strong trade union is a
prerequisite factor for its growth and stability.

Change of guard in the Raipur unit

In the last three years, there had been lots of cacophonous sounds coming from the Raipur unit
because of various incidents which hampered industrial peace. The incidents had been a
major concern for the Industrial Relation Manager to ensure industrial harmony between
management and workers. The top management in the corporate office is very tense and
concerned about this rising incoherence, which was taking place frequently in the Raipur Unit
and many incidents had led to production losses. To address the issues, one of the renowned
experts in managing industrial relations in various manufacturing units, Mr Ashok Kumar, GM
(HR) has been transferred to Raipur Unit from the corporate office.

Reports on industrial relation glitches in Raipur unit

Amit Singh, manager dealing with the industrial relations department for the last six years,
has been called by Ashok Kumar, GM(HR) for a discussion in his office. The role of the
industrial relations department is to act as a coordinating agency between management,
trade unions and employees. This department monitors all the activities of trade unions
inside the plant and ensures no untoward incidents happen which lead to production loss.
Ashok Kumar discussed the situation of industrial relations in the unit.
Ashok conveyed to Amit, “you must be aware that the only priority right now I am having
here is to get things right especially in matter of industrial relation. And I have realized

VOL. 7 NO. 2 2017 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3

 through discussion with you that very small incident were not dealt properly which resulted
in disturbance at shop floor. I find that you and Unions not played your role in managing
these situations which impacted the production activities”.
Amit explained in defense, “Sir, I agree that there are incidents which can be dealt
carefully. But, this unit is almost 40 year old and employees here have a habit of dealing
situation at their own. Most of the times, they never consult their union representative. And
when issues reported to us it has already become worse and unmanageable for us to deal.
Above all being a PSU, it is very difficult to take any disciplinary action against any
employee”.
Ashok became furious at Amit, “I don’t buy your argument. This is just an excuse. Be honest
and accept your mistakes. Now just prepared a brief incident report on any two incidents
happened lately which give me an insight about industrial relation activities here”.
Amit went to his office and prepared a summary report of the two incidents.

INCIDENT 1 – animosity between manager and worker on the shop floor

The HR Department has laid strict guidelines in the form of disciplinary rules for creating a
conducive and amiable environment in the factory premises. These rules are well in line
with the labor laws, which every employee has to follow. Disciplinary rules are essential
while dealing with indiscipline behavior of any employee. This ensures the boundary of
rules into which employees have to conduct their work.
In a disciplinary case, unit management has to follow a certain process for taking action
against any employee involving various steps:

1. holding a preliminary inquiry, if required, for finding out the possibility of misconduct;
2. issuing a suspension order if necessary to the delinquent employee through his Head
of Department against whom the complaint has been registered under the prescribed
disciplinary rules of the company which dealt with the working in the company;
3. issuing a charge sheet to the employee with all the details of the case/complaint and
of charges found against him and giving a minimum of 48 h to the employee to reply
against the mentioned charges through their Head of Department;
4. if the reply of the employee concerned is found unsatisfactory then an Enquiry
Committee for investigation, which consists of senior officials of the company and an
independent official, is formed;
5. enquiry committee will give a date (with timings) on which the hearing would be done
from the employee against whom disciplinary proceedings were going on;
6. a representative from the company and a representative from the employee will put
their facts in front of disciplinary committee; and
7. the disciplinary committee will submit a report to the disciplinary authority and if the
employee is found guilty of some charges than action will be taken as per the company
disciplinary rules for misconduct.
Indiscipline matters were usually handled by the HR department through the help of a union
leader approached by his colleague in his section for employee- related issues on the shop
floor or in the department.
Udham Saini was working as a junior technician in the metal sheet cutting section and was
one of the active members of a recognized trade union of the factory. He was one of the
prominent workers approached by the colleagues in his section for any problem.
Ram Kumar, a subordinate of Udham, one day had a heated argument regarding work
distribution with Kamal Motera, a senior manager, who was in charge of the section. Kamal

PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 7 NO. 2 2017

was delegating some extra work from an employee, who was retiring the next month, to
Ram. Ram was unwilling to take it. Ram approached Udham and discussed the matter with
him and also sought his support in the matter. Udham initially went to Kamal to discuss the
issue.
Udham argued, “You cannot overload any worker at your whims and fancy”.
Kamal replied, “You are no authority to tell my duty. If you have any problem go to Head of
Department”.
Udham moved out of Kamal’s cabin in anger and moved toward Pradeep Khyani, Head of
Department, along with 20 fellow workers of the shop floor. As he entered into the room,
Pradeep asked “What is the matter?”
Udham replied, “Kamal Sir has become an autocratic officer and he is acting like he is
running the Company. He is unnecessary loading the worker with extra work. We all want
his immediate transfer from department, otherwise none of us will resort to work”.
Pradeep replied, “Let me first discuss the matter with Kamal. You all please return to your
work”.
Udham furiously replied, “Then until the transfer of Kamal is not done from this department,
we all will not work. Rest is your choice”.
Pradeep later called Kamal and discussed the matter with him. On the basis of the
discussion, he decided not to take any action against Kamal. Subsequently, he conveyed
his decision to Udham on the telephone through his Personal Assistant. Later, in the
afternoon, Udham went to Pradeep’s office cabin, threatening him and warned of dire
consequences if he did not transfer Kamal. This incident had not been reported to the HR
department by Pradeep and Udham. On the same night, at around 8:00 p.m., Udham went
to Pradeep’s flat, which was situated near the factory premises. He shouted and knocked
at the door many times. Pradeep was inside the flat and did not open the door. Udham
again repeated the warning using abusive language and left the flat after 30 min.
Subsequently, Pradeep filed a police complaint against Udham in the Police Station. Next
morning, Pradeep informed the management through the HR department about the
incident and filed a formal complaint against Udham for initiating disciplinary proceedings.
Accordingly, a charge sheet against Udham was issued by HR, seeking his reply within 48
h for his indiscipline. Later in the afternoon, a group of approximately 300 officers gathered
in front of GM (HR) and the Head of Unit office. They demanded security for their families
and immediate termination of Udham. The management succumbed to the demand of
officers, and Udham was suspended late in the evening. Management did not discuss the
action with any of the trade unions.
The members of the trade unions felt dejected by the decision of management and the
situation worsened. Trade union leaders along with 400 workmen gathered at the factory
gate and protested against management. The trade unions alleged that management was
trying to build distrust between workers and officers. They demanded the immediate
revocation of Udham’s suspension order.
Management was in a fix about the situation and thought of taking a right decision which
would bring industry harmony inside the factory. However, to dilute the matter, no further
action was taken by management against any of the employees and continuous talks were
held with the representatives of trade unions and the Officer’s Association for almost two
weeks during which production work was hampered in the unit.

INCIDENT 2 – Tussle between union and association

In the year 2014, the Ministry had increased the target for the company by 20 per cent as
the financial year was the last year of the Eleventh Five-year Plan. The production activity

VOL. 7 NO. 2 2017 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5

 of the company was closely monitored by the government’s ministry. The machine shop
was a vital shop for achieving the target and an order of the first Ultra Super Critical Turbine
of 1,600 MW has to be delivered by 15th March 2015 and on the top of it, a visit of a minister
and MD was scheduled for the 1st of March. It was already 27th February 2015 and work
was in full swing for achieving the production targets in time.
Gopal Sagar is a very hard working and sincere worker in the turbine shop. He has been
actively involved in the manufacturing process of the first Super Ultra Critical Turbine of
1,600 MW from day one. Gopal joined the company in 1981 as a trade apprentice. He was
a topper in the regional trade apprentices test and had also received a gold medal in the
trade apprentice test at national level. Owing to his hard work and meritorious excellence,
he was recruited as a regular employee on the basis of interview only in 1983 as per the
company’s recruitment policy.
Suraj Jha, Deputy General Manager of the Turbine Shop was known for his benevolent
nature, integrity, discipline and working in the company for 20 years. He acquired expertise
in designing and manufacturing turbines. Thus, he was a key member required for
delivering the first Ultra Super Critical Turbine of 1,600 MW. He was also the Vice President
of the Executive Association.
In a normal morning working day on 27th February 2015 at the factory premises, the work
was going on at a fast pace as it was the last production quarter of January-March 2015.
On this very day, at quarter past nine after tea break, Gopal approached Suraj regarding
the issue of overtime and attendance hours of his co-workers.
Suraj appreciated the concern showed by the Gopal for fellow workers and told him,
“Looking the present targets in front of the management, it is necessary that we all work with
our commitments and focus on efficient time utilization rather than raising such small
issues. Gopal just focus on your work allotted to you”.
Gopal responded, “How can you say that this is not an important issue. Workers are
working equally like any other executive working in the company. First address our issue of
overtime and attendance, then only we will focus on work allotted to us”.
The difference in view point, got converted first into discussions and then into a heated
discussion for half an hour. Suraj, who was otherwise well-known for his amicable behavior
and discipline at work place, in one of the rarest display of losing his temper, slapped
Gopal. As soon as this was known to the workers in the turbine shop, all the workers went
on tool down strike. They started demanding the suspension of Suraj.
Gopal’s affiliated trade union also came forward and joined the protest. They supported
Gopal and demanded that management should take immediate action against the errant
executive. The association of SC/ST[2] employees also entered into the brawl and
supported Gopal because he belonged to the reserved category. All were also stressing
the need for an unconditional apology from Suraj in front of everyone on the shop floor.
Meanwhile, Suraj is quite disturbed and perturbed by the turn of events and feels that he
was not so much at fault because his behavior was a reaction to the abusive talk and
misbehavior of Gopal. He felt that, he has not done anything wrong for which he has to
tender apology because he was concerned about the paucity of time and amount of work
left to be done well in time. And this mounting pressure got reflected in the incident. Later,
the Association of Executives stood up for Suraj and warned the management of
consequences if any action was taken against Suraj because the association believed that
Gopal ’s behavior was also an act of indiscipline and rowdiness.
This tussle between the middle level and workers started giving nightmares to the top
management. Sighting the deteriorating situation, HR came into damage control mode and
asked the Association of Executives, for a meeting to find an amicable solution. All the
senior executives of the turbine group showed up for it. The meeting went on for many

PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 7 NO. 2 2017

hours and after hours of discussion with representatives it was decided that management
had to take appropriate action against both. An enquiry committee was set up for inquiring
into the incident.
Varun Sharma, GM (HR) called the Trade Unions and Executives’ representatives and
stressed upon resuming the work and specifically said, “The project of first Super Critical
turbine of 1,600 MW is very critical and Company’s reputation is at stake. Failure of the
project can jeopardize the Company’s market image. Management promises that it will take
appropriate action delinquent employee once enquiry got completed”.
The trade union’s representative emphasized that in case the management did not take
action against Suraj, there would be a tool down strike again in the unit. The representatives
of the two groups then went back to their shop floor and communicated the outcome of the
meeting with the management. They asked their respective members to resume work for Keywords:
the sake of company. Work finally resumed for the remaining period of the day. The Employee attitudes,
environment on the shop floor remained tense. Organizational behavior,
Discipline,
The management found itself in a quagmire and got bogged down. They had to take
Human resource
immediate action because there was an impending visit of a minister and MD scheduled for
management,
1st of March.
Employee commitment/
Later, many discussions were held with different groups of employees, but no disciplinary motivation,
action was taken against any of the employees. This again affected production work for Employee participation/
almost a month. engagement

Notes
1. Public Sector Undertakings: Public Sector Undertaking (PSU) or a Public Sector Enterprise (PSEs)
are companies owned by the Union Government of India or one of the many state or territorial
government, or both. Major shareholding of more than 50 per cent of these PSUs are with
Government of India (Department of Public Enterprise, Government of India).
2. SC/ST are a subcaste in the caste system followed in India. Government of India has enacted
special laws for the protection of people belonging to scheduled caste and scheduled tribes in
India. SC/ST people are discriminated in the society on the ground of untouchability practices. ST
people live in tribes mostly in jungle areas.
SC/ST are normally socially and financially backward. People of this category have been given
reservation in education and jobs for social upliftment in India since the last five decades.

VOL. 7 NO. 2 2017 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7

 Exhibit 1. Percentage increase/decrease in turnover and PBT

Figure E1

Company Performance
45,000 42,000
40,000
40,000 38,000
36,000

Turonver (Rs in Crore)

35,000 30,940
30,000
25,000
20,000
15,000 12,000
10,000
5,000 3,000 4,100
600 1,100
0
1976 1986 1991 1996 2006 2011 2012 2013 2014 2015
Year
PERCENTAGE INCREASE/DECREASE IN TURNOVER AND PBT
YEAR 2010 2011 2012 2013 2014 2015

TURNOVER 19 24 11.1 5 –9 –18

PBT 33 35 15 –2 –15 –31

Notes: Reason for Decline: Decreasing profit margin because

of market competition, power demand, government policies,
fuel availability, land acquisition, financing and fund
availability, decreasing price margins, technological advancement

Exhibit 2. Order receipt and outstanding

Table EI
Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

Order Receipt
(Rs in crores) 1,700 30,000 50,000 51,600 56,000 52,000 20,000 31,500 2,300
Order Outstanding
(Rs in crores) 35,646 45,000 84,000 114,000 134,000 154,000 125,000 110,000 105,000

Exhibit 3. Participative forum in the company

Table EII
Participative forum Members’ strength in the forum Discussion and deliberation on

Joint Committee Worker’s representative from all manufacturing units, Offices and Division Corporate policies
Management representative: not more than numbers of member of
worker’s side
Plant Council Worker’s representative: 12 Plant issues which are involving
Management representative: All the General Managers/Head of Functions two or more functions for
not more than numbers of member of worker’s side resolving issues
Shop Council Worker’s representative: 12 Shop floor related issues
Management representative: Executives nominated by management but
not more than numbers of member of worker’s side

PAGE 8 EMERALD EMERGING MARKETS CASE STUDIES VOL. 7 NO. 2 2017

Exhibit 4
 Do you find any common issues in all the incidents?
 What proactive actions could management have taken to handle situations in both the
cases?
 Do you think that both incidents could have been handled better? Specify reasons.
 Identify roles and responsibilities of stake holders (officer, trade union, employees,
management, etc) in the situations as discussed in the case.
 What would remain to be key challenges in addressing industrial relation issues in
PSU? Identify the important factors.
 Does a trade union help an organization in maintaining industrial harmony? If yes, how?
Explain in the context of the present case.

About the authors

Sumit Mishra is a PhD Scholar in the department of management studies, IIT Roorkee. He
holds an MBA degree (Finance & Marketing) and a B Tech degree (Electrical &
Electronics). Sumit Mishra is the corresponding author and can be contacted at:
sumitfordoctorate@gmail.com
Shashi Kant is a PhD Scholar in the department of management studies, IIT Roorkee. He
holds an MBA (General Management) and a B Tech degree (Electronics &
Communication).

Vinay Sharma is an Associate Professor in the department of management studies, IIT

Roorkee. His areas of expertise are market development, business opportunity
development, rural marketing, advertising management and strategic management. He is
an avid researcher with a number of papers published and conferences attended to his
credit. He is also active in organizing various workshops, seminars and conferences. Prior
to IIT Roorkee, he held academic positions at UPES, Dehardun, IILM, Lucknow and IMT,
Ghaziabad.

Rajat Agrawal is an Associate Professor in the department of management studies, IIT

Roorkee. He has teaching experience of more than 10 years, besides 2 years of industry
experience. He has participated in various national and international conferences and
published more than 20 papers in different proceedings and journals. He has contributed
chapters in three different books published by IGNOU, Delhi and NIOS, Delhi and given
more than 15 talks on various subjects of rural development and technical and
management education.

VOL. 7 NO. 2 2017 EMERALD EMERGING MARKETS CASE STUDIES PAGE 9