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Managing Employee Relations through Strategic Human Resource

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Managing Employee Relations through Strategic Human Resource Management: Evidence from
Two Tata Companies
Author(s): Debi S. Saini
Source: Indian Journal of Industrial Relations, Vol. 42, No. 2 (Oct., 2006), pp. 170-189
Published by: Shri Ram Centre for Industrial Relations and Human Resources
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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 theglobalisation syndromehas led

the corporate sector to discover new ways and
of operating
survivingat theglobal level inalmostall spheresofmanagement.
This paper discusses thedynamics of changes thatare taking
place in management of employee relations and how human
resourcemanagement (HRM) strategy is being used in this
regard. In doing so, it analyses the contribution ofHRM
philosophy in building "new IR" or ''strategic IR." Taking note
of theglobal developments in IR, thepaper focuses especially

on the IR scenario Two case studies of
in the Indian context.
HR
relations are
managing employee through strategy being
presented to draw conclusions. It is that
argued building
on
cooperative employee relations continues to be high corporate
is acquiring a new
priority; but paternalism meaning. While
employeewelfare still remainsa priority

for promotingemployee
satisfactionand engagement, focus on employee loyalty is
the
getting diluted togive way to "performanceorientation/'Both
and "instrumentalist" HR are
"empowerment" strategies being
used to realize thegoals ofHRM. The paper also hints towards
convergence of Indian and western HR practices.
Dr. Debi S. Saini is Professor of HRM, Management Development Institute,

An earlier version of this paper was at a seminar on "Human
Gurgaon. presented
Resource in the New Era"
Management organised by Gandhi Labour Institute,
Ahmedabad, January 27-28, 2006. I thank theparticipants for their comments on
theoriginal 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 forhis comments leading to change in
certain earlier Of course, the usual disclaimers
positions. apply.

Managing EmployeeRelations Through StrategicHRM 171
INTRODUCTION
It is evident that substantial inworkplace structuring

changes
have been taking place in the developed as well the developing
world for the last 15 years or so. Such changes are
being intensified
in the business environment. In the
by the increasing turbulence
new economy employers are busy guarding against thechillwinds
of chaotic and the resultant consequences as more
competition
and more companies find it difficult to survive and prosper;
are under strain to save
their jobs. For example, of the
employees
Indian companies that were earning profits in the pre-reform era,
a number now to the category (Kumar,
large belongs loss-making
2003). Both manufacturing and service sectors are attempting to
achieve more with less resource to remain competitive.
In'order to be successful in business environment

today's
are hard to come out of the mindsets of the
companies trying
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

some of themost
improve their long-term market value; 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 In terms of Mackenzie's 7-S
importance.
framework, most strategy gurus and corporate stalwarts have been
their focus from strategy, structure and systems to staff,
shifting
style, skills, and shared values. This focus has exacerbated the
importance of developing softskills and building high performance

work of many new themes in HR
systems through adoption
and More and more
strategy people development. global
now increasingly focus on talent and competencies of
companies
"individuals" in their attempt to develop competitive advantage.
Ghoshal and Bartlett (1997) refer this as individualized corporation.
The long debate on HRM in theWest, and especially in the

UK, is tending to conclude and the concept of human resource

172 The Indian Journalof IndustrialRelations
management (HRM) philosophy is getting articulated as a critical

variable in corporate survival and growth. It has taken in its strides
theconcept of industrial relations (IR),which isgetting 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 farhave got shaken vigorously;
and are being re-defined so as to be in tune with the new realities.
The adversarial of collective labour power as a method
approach
of seeking industrial justice faces serious challenges in the new
economy.
This paper discusses the dynamics of changes that are taking

place inmanagement 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 theglobal developments in IR, thepaper 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 inmanagement 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 thatHRM strategy is not just interventions
oriented at employee welfare and empowerment; it also has aspects
of cost control and employee discipline. While it ismainly seen as
an instrument of realizing vision, it is also
important company
oriented to impliedly dilute collective labour power. HRM as
understood in theBritish 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 are
employers 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, focus and flexible all these are

quality working;
eventually intended to deliver competitive
help performance.
Attitudeand
behaviour changes
Commitment
Enhanced Competitive
competition Customer orientation Performance
Quality
Flexibleworking
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,

diversitymanagement, employee development, flexibility,reward
strategy, performance management, competency management,
and leadership development. Each organisation may have itsown
requirement about the requisite behaviour that is sought to be
HR interventions. Strategic HR interventions can
shaped through
be broadly divided into two categories: 'Instrumentalist" (hard)
and "empowerment" (soft) (Saini, 2000). Hard HR intervention
are as as
generally resisted by employees they view employees
any other resource and often involve enhanced managerial control
a greater
on them.
They also envisage degree of measurement and
seek cost-effectiveness of people. interventions on
Empowerment

the other hand involve trusting the employees, ensuring

transparency and in the organisational
fairness working, and
in as individuals. But HR
involving employees decision-making
interventions in actuality are an of hard and
generally amalgam
soft measures. are going all
Many high-performing organisations
out to build on the empowerment of HRM a
mode strategy. While
large number of organisations have been making claims of adopting
HRM and research in
progressive strategies practices, especially
theWest, however, explodes themyth of these claims (Mabey, et
al., 1998). On paper, both sets ofHRM strategies have been found
tobeing vogue. On thewhole, it appears thatHRM is being used
in instrumentalist as well as empowerment senses as per the
exigencies of the business strategy.
HR has come to occupy an in case of

important place
even as the number of such
professionally-run organisations,
organisations is not too large. But cases of pursuit of de
unionisation policies are not few and far between. Many
organisations including leadingMNCs have been investingheavily
in it. Some even state
attack unionism ruthlessly often with covert
support as in the recent case of Honda Motorcycles
happened
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, two case studies,

through
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 soft HRM
choosing
strategies, but at the same time, some of the values of
long-held
are or are cases
paternalism getting diluted being redefined.
The
discussed also reflect the changes that are likely to findwider
in Indian as a incidence
acceptance organisations they face higher
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
welfare as strategic
employee 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.
as a
July 1, 2002 per privatisation arrangement devised between
theDelhi Government and Tata Power (which held 51 per cent
shares in NDPL and the remaining 49 per cent of its shares were
with theDelhi Government) to distribute electricity inNorth and
North-West Delhi. The immediate concern of its chief executive
officer (CEO) was to facilitatestabilisation of themarriage between
the Tata Power and the Delhi Government; and eventually to see
it becoming a success.
lasting
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 DVB every year for its losses
subsidizing
by about Rs. 15 billion through "loans" that were never expected
to be repaid. Some of the key challenges thatNDPL was facing
since the acquisition included: dealing with rampant theftby
slum dwellers as well as industrial/commercial consumers;
changing the consumer perception of theNDPL; 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 Tata brand image in
establishing
termsof standards of theTata 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 to all executives, junior engineers and
phones
other field staff for better connectivity; improvement in the
physical infrastructure; and
sponsoring executive/field staff for
training to different countries.
As per theMoU (memorandum of understanding) signed at

the time of acquisition, NDPL inherited 5368 employees from the
DVB. Since the use
of technology reduced the need formanpower
and the complex problem of corrupt meter readers had to be
tackled, the company devised an attractive retirement
voluntary
scheme (VRS). Out of the totalDVB workforce, 1794 employees
sought retirement under theVRS, 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 tobe governed by theold DVB
as per the MoU, and were also entitled to pension
pay-structure
and retirement benefits as per the DVB structure.
Besides various initiatives in organisational restructuring,

almost all designations were to reflect functional rather
changed
than hierarchical importance. Thus were from
they changed
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 itsmission, which read: 'To be themost
preferred and admired
we will strive to deliver
energy company quality and cost-effective
services...." NDPL welfare
developed comprehensive employee
schemes. Also, itwas the first company in India to have
supposedly
started an employee helpline. Under this any company employee

Managing Employee Relations Through StrategicHRM 177
or
could submit his/her grievance by e-mail telephone, and this
helpline assisted ingiving a time-bound reply tohim/her and helped

in processing the grievance. A comparative view of some of the
welfare and measures DVB and NDPL can be
performance by
observed in Table 1.
In view of the factsand 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 thisworkers' union but did not recognise
any of the staff associations. some minor disturbances, the

Except
company had witnessed a process. The concept
peaceful acquisition
of JointInteractionForum (JIF)was put inplace at thedistrict,circle
and corporate levels to promote involvement in decision
employees'
making; monthly and quarterlymeetings of JIFwere held regularly
at district and circle levels.
The CEO gave priority to the issue of union-management

relations. He and HR chief took a stand on three of the
positive
issues which were of grave concern to the common
pending
disbursement of monetary assistance to widows of
employee:
uniforms; time-bound promotions. This
employees; employees'
helped inbuilding cooperation inemployee relations.The intensity
of such effortscould be gauged from the following incident: The
payment of retirement benefits to employees for the period for
which theyhad rendered service toDVB in thepre-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' even after more
dues
than two years of privatisation. This aroused deep resentment
the retired as well as the the
among serving employees against
The HR Chief issued a circular to all the employees
government.
that theRaising Day would not be celebrated on July1, 2004 due
to the non-receipt of the retirement benefit by the 1,797 retired
He also issued another circular that the
employees. suggesting
NDPL would not celebrate Puja and Diwali festivals in
fraternity
2004 as a mark of protest the Delhi Government. These
against
instances were in internalizing the company's
quite significant
cooperation-building agenda.

Besides, two batches of union leaders were sent by the

company to theTata 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 for performance as
important platform improvement
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 (HRIS).
System
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 July2002 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 firstyear itself it earned a profit of Rs. 220
million (for the year 2002-03). In fact, theCEO suggested to the
Delhi Government in July2005 not to increase the tariffsfor 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 StrategicHRM 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 inworking conditions improved
from 50 per cent to 99 per cent. Out of the 150 companies which
competed for theposition of "the Top 25 Great Places toWork 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 theNDPL ethos;
about 30 per cent are fence-sitters; and about 20 per cent have not
at all." The CEO too endorsed somewhat similar view.
changed
He also felt that changing the mindset of the contractors' staff
focus on their A union office bearer appreciated
required training.
the company's but pointed out that "employees
performance
remained fearful of their in the new scenario, despite
losing jobs
MoU
the security provided to themby the tripartite signed at the
time of acquisition."
had been working hard since beginning to promote a

NDPL
of itsCEO and
performance culture through sagacious leadership
various HR interventions. the company's HR
Interestingly,
devised its own HR model as well an HR vision. It
department
talked of usual HR interventionsbut therewas no mention of the
word union in it.A major uprising took place from theworkers'
rankwhich successfully challenged the existing union leadership;
and charged it of the union having an unholy alliance with the
This awakened the management. They transferred
management.
the firstHR chief who was a fine HR strategist to another
a new HR chiefwho had better expertise
department and brought
in employee relations and labour laws. Overall, the company
far better than its two competitor
performed competitively
companies thatwere supplying electricity to the remaining parts
of Delhi. The media, ministers and the public at large
government
NDPL. The company
expressed happiness with theperformance of
has so far been able to prevent any major IR that could
problem
stall itsmarch towards realizing its vision. Of course, the company's

sole recognised union witnesses an of takeover of its

attempt
leadership by a rival group, but thatdid 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 in
organisations
the country. It is also believed to be a rolemodel formany line
and HR managers as well as academicians; for they admire its
practice of adopting ethical working, a good of
degree
transparency, corporate social responsibility, care,
employee
proactive HRM and IR practices, and participatory
management
and industrial Like other companies in the post
democracy.
globalisation era, it also faced several which,
challenges, among
others, include: coping with of chaotic
rigours competition,
upgrading technology, customer-orientation in terms of cost and
quality, need for and
reengineering rightsizing, managing
flexibility, change management, and effecting the company's
turnaround.
The company noted that its

technology had become outmoded
and needed tobe replaced by new
rolling-mill technology ofhigher
capacity and greater speed. It involved not just huge cost but a
transformational that could manage the consequential
leadership
realities. This meant changing themindsets of its
nearly 80,000
employees, and internalisation of new ideas so as to
promoting
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. Itbuilt an industrial township in Jamshedpur
looking afternearly all civic needs. Itnurtured employee loyalty
by catering to their needs; worker's relatives were
given
preference in new recruitment as a It had
strategic priority.
trouble-free IR formore than 50 years.
Russy Modi, itsCEO 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

as well as the union in agreeing to the intended reforms,
employee
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
sensitivity amongst employees to the needed reforms.

requisite
For facilitating the internalization of the reform agenda, besides
the efforts of the company chairman Ratan Tata, at least two
directors the role of exemplary leadership, i.e.
managing played
J. J. Irani and his successor, the present CEO, B. Muthuraman.
Thus the company shifted from its strategy of paternalism in
to focus on performance-orientation. This
employee management
involved the concept of performance-related-pay and
enforcing
the pay hikes based on The company
undermining seniority.
considerably diluted its policy of building personalized
and employee loyalty and showed allegiance to new
relationship
values in employee relations that are being adopted in general
multinational to attract talent. It has shown
by the companies
for younger employees, and competitively higher pay
preference
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 who had all through seen the company as
employees,
theirmai baap (parents) reflectinggradual erosion of thepaternalist
values that the company firmlyupheld for so long. They are not
able to acclimatize themselves to the supposed environment of
policies. Consequently, themodernisation

performance-orientation
in the
process in the company has resulted in a tangible decline
Tata heritage of human touch. The turnaround story of Tata Steel
shows that it is difficult to simultaneously pursue both thepolicies
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
of different all
large corporate fraternity consisting departments
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 theworld in 2000-2001 and thirdbest
in 2001-2002. By the year 2003 it also became themost cost-effective
steel company in the world. Several factors can be said to be
responsible for this success. Among others, these include: the role
of theunion inbuilding cooperation; involving families in thechange
process; investment in new technology; the nurturing leadership of
JRDTata and Russi Mody furtheredby J.J.Iraniand B.Muthuraman;
and the development and adoption of the Tata Business Excellence
Model (TBEM). As part of theTBEM, many initiativeswhich 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 were
employees' suggestions
accepted and awarded, led to improvement in the quality of
and a
suggestions saving of Rs. 1.5 billion in the year 2002. The
concern for has way to focus as well,
product quality given process
in higher at costs. Efforts are
resulting quality competitive being
made tomake the company leaner and more professional through
performance ethic programme (PEP). A large number of employees
were involved in was
evolving Vision 2007, which formally launched
on May 2, 2002 jointlyby the
managing director and thepresident
of the union.
The company is also moving from the policy of what B.

Muthuraman labels as "ambiance" HRM to HRM.3
"consequential"
By the former he refers to a concern for care, satisfaction,
employee
and proactive HR policies and the latter is concerned with
dealing
with issues resulting fromapplication 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 softHRM and hard HRM as
have been reported in theHRM literature (Saini, 2000).
While some have made a case for reversal of the

analysts
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

of performance focus as warranted the era of
exigencies by
competition itwould be very difficult to do so. Similarly, Indian
are to focus on rather than the
companies likely employability
employment guarantee policies followed in the pre-gobalisation
era. Going by the revelations of theHR 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 monetary cost, like personal touch,
involving
communication, practice of caring and empowering style. It
appears thatTata Steel has considerable scope for taking initiatives
in the lattercategory of people empowerment model and shaping
IR through care as a way of organisational life.
employee
LESSONS FROM THE TWO CASES: A DISCUSSION
The two case studies presented above show that companies

are cooperative IR as a a well
pursuing philosophy through
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 of such
pursuit
policies has thepotential 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 come close to becoming similar over the years
eventually
across the length and breadth of the globe, with reduced impact
of local cultures and indigenous factors. No doubt, itwould be
to completely wish away the impact of cultural influences
simplistic
on in the short ormedium run. The eminent
organisational working

social historian Francis Fukuyama (Ohtaki and Bucknall, 2005:

23) endorses the convergence thesiswhen he observes that "in all
three areas...? economic, and social?there are
political 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
the current economic crisis will accelerate
exceptionalism,
trends in all three areas." Going by the
homogenizing
developments in the two cases of NDPL and Tata Steel, it is
becoming clear that they hint towards legitimating of the
convergence thesis inHRM; for theTBEM thatwas the turnaround
model for Tata Steel was built on edifice of western values of
than a Tata company,
performance rather loyalty focus. Being
NDPL was also trying to benchmark standards set
performance
out in TBEM, a new company itwas far away from
though being
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 led to the malaise in the earlier organisation,
partly
were diluted a combination ofmeasures
substantially by including
sagacious appropriate changes in different systems and
leadership,
processes, and efforts towards changing the mindsets of the
concerned so as to build organisational competencies
employees
to survive in the chaotically competitive business scenario. In the
NDPL case, among others, use of employee welfare
strategic
measures was
adopted
as a
key intervention for facilitating a faster
acceptance and internalisation of the change agenda by theunion

as well as the employees in general. Corrupt and indifferent
were to mend ways or take
employees encouraged 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 formof 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 in a zero-sum situation. And
usually operating bargaining
peace is brought about through the agreement reached through
bargaining on issues at hand. The theory postulates that such
can be times of recession. It argues
cooperation possible only during
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
interventionsdevised and implemented by theHRM department,
and co-espoused and supported by the sagacious leadership of
the CEO, helped determine industrial harmony. They worked
towards adopting theTata culture in the company's IR issues that
bothered the common employee themost. NDPL's decision not to
celebrate the raising day, Puja and Diwali festivals in 2004 as a
mark of protest against theDelhi Government not releasing the
retirement money for DVB-scheme retired employees reflected an
astute strategy of employee care that facilitated the change agenda.
But itsoverall HR policies should be seen as fallingshortof a purely
paternalist agenda.
The lasting industrial peace at the Tata Steel that ithas been
able to sustain since to its success as an Indian steel
long leading
giant throughpractice of paternalism in IR iswell-known in Indian
literature on HRM. But the recent in this company's
changes
policies show that thepolicy of paternalism was difficult to sustain
any more in the present era. Despite difficulties the company
could build an effective strategy formaking the employees agree
for theVRS and used itsHR systems and leadership inhelping 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
an EVA. (economic value added) company.
becoming positive
CONCLUDING REMARKS
In the post-globalisation scenario, issues in IR are getting
merged as aspects of HRM. in IR is being

strategic Cooperation
built through both the "instrumentalist" and "empowerment"
dimensions of HR Strategy. Often harsh measures are also
adopted

either as control measures for promoting and cost

performance
effectiveness or throughpractice 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
in authoritarian ways or articulated
ruthlessly through carefully
HR some scholars label the latter HRM as
strategies; approach
"propagandist policies." Some have argued that in the new era,
HRM stands for human resource this is so considered
manipulation;
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 union
successfully pursuing
substitutionpolicies 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. others
Many merely have built facades
of employee concerns. In a situation of indifference of
increasing
state apparatus towards union are
rights, many employers using
this opportunity in successful violation ofminimum labour standard;
for state agencies have begun to look the other way when labour
laws are violated by employers. Such evidences are available from
Indian statesof 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 like it happened in the cases
change acceptance,
of NDPL and Tata Steel. These cases have shown how the
organisation's expectation from employees is increasing in their
efforts to survive and are to
stay competitive. Employees expected
provide high-quality products and services at the lowest possible
prices. Since employees are seen as drivers of higher
principal
corporate performance, many companies have been investing in
devising and well-articulated HR strategy so as to
implementing
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-testedHR practices as the pressures are
also becoming global. Thus, as per the convergence thesis that is
being debated inmanagement, themanagement practices of MNCs
are to
expected eventually dilute the influence of cross-cultural realities
as has been discovered by Hofstede (1980). The case of Tata Steel
as the company
surely gives hints towards such convergence is clearly
withdrawing fromitsprofessed values ofpure paternalism.The NDPL

has also made effortstowards building a high performance work
systemby adopting some of themost 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, itstillhas miles togo in fullyimplementingan

"empowerment" HR model and reaping its fruits.
NOTES
1. The NDPL case here ismainly based on facts and events from two cases:
North Delhi Power Ltd.: Dynamics ofChange, a case by Saini and Bhatnagar
(2005), and Cooperative Employee Relations atNorth Delhi Power Ltd., a
case by Saini (2005).
2. The Tata Steel case is shorter form of its larger version written by the
author. This case was constructedwith the help of interviews from some
former senior managers at Tata Steel, of information from the
analysis
internetand company website, analysis of academic literatureon Tata Steel,
and interactionwith Mr. B.Muthuraman, thepresentManaging 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 IndividualisedCorporation,

Harper Collins Publishers, New York.
Hofstede, G. (1980), Culture's Consequences: Software of theMind, Sage, Beverley
Hill.

188The Indian Journalof IndustrialRelations
Kumar, Krishna (2003), "Has Indian Inc Failed inPlaying theLeadership Role?,"
Vikalpa, Vol. 28 No. 3 (July-September)
Mabey, Christopher, Denise Skinner and Timothy Clark (1998) (eds.), Experiencing
Human Resource London.
Management, Sage,
Ohtaki, Reiji and Hugh Bucknall (2005),Mastering Business inAsia: Human Resource
Management, JohnWiley & Sons (Asia) Pvt. Ltd., Singapore.
Patil, B.R. (1998), "A Contemporary Industrial Relations Scenario in India with
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No.3.
Pandey, S.N., JaiB.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 ofNew Industrial Relations and Postulates of

Industrial Justice,"The Indian JournalofLabour Economics, Vol. 46, No.4.
Saini, Debi S. (2005), Management Case: "Cooperative Employee Relations at

North Delhi Power Ltd," Indian Journalof Industrial Relations, Vol. 41,
No.2.
Saini, Debi S. (2005a), Management Case: "Honda Motorcycles and Scooters India
Vision? The
Ltd.," Journal of Business Perspectives, Vol.9, No.4.
Saini, Debi S. and Jyotsna Bhatnagar (2005), Management Case: "North Delhi
Power Ltd: Dynamics of Change," Vikalpa, Vol. 30 No.4.
Saini, Debi S. and Sami A. Khan (Eds.) (2000), Human Resource Management:
Perspectivesfor theNew Era, Response Books (A Division of Sage), New
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Storey, J. (1995) Human ResourceManagement :A Critical Text, Routledge, London.
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Table 1: Some Major Employee Welfare Initiatives Undertaken by NDPL
Pre-takeover 2005
August
S.No. Delhi Vidyut Board North Delhi Power Limited
Medical claim of indoor patient/ Forty hospitals were empaneled;

treatment was
being reimbursed no payment required to be made
by DVB after the expenditure was by the employee concerned; the
incurred by the employee fromhis employee had to just show the
pocket. IdentityCard and avail treatment.
A Janata Insurance Scheme with a NDPL got every employee insured
cover value of Rs. 100 thousand work-related accidents for
against
foraccident injuries; premium was a cover value of Rs. 250 thousand
paid by the employees. at

company's
cost.
No forum/platform for interaction A Joint Interaction Forum (JIF)

between management and launched at thedistrict and circle
employee representatives. level;monthly and quarterly
meeting of JIFheld.
Time-bound Promotion Scale Time-bound Promotion Scale cases
(TBPS) was being allowed to the were updated. All employees who
eligible employees after consider were eligible forTBP were allowed
able lapse of time. Many
cases since the same on 30th June and 31st
1994 onwards were December No case
pending. every year?
was
pending.
Pathetic working conditions in A number of buildings renovated;
offices; no cleanliness and conditions maintained.
hygienic
maintenance.
hygiene
Potable drinking water not Proper drinking water available in
available inmany District/Zonal all District/Zonal offices.Water
offices purifierswere installed or filtered
(bottled) water was provided.
No giftwas given to employees A wrist watch was
given
to every
on any occasion work and contractual
charge
to commemorate the
employee
Raising Day on July 1, 2003.
No functionwas ever held to Labour Day
was celebrated every
celebrate the Labour Day on May 1. year by observing Industrial
Harmony Week; it involved
employee participation in it.
No sports meet ever
organised Sports meets for employees and
dependents.

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Managing Employee Relations through Strategic Human Resource

Article in Indian Journal of Industrial Relations · January 2006

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MANAGING EMPLOYEE RELATIONS THROUGH

The turbulence caused by theglobalisation syndromehas led

of theglobal developments in IR, thepaper focuses especially

employeewelfare still remainsa priority

Dr. Debi S. Saini is Professor of HRM, Management Development Institute,

This content downloaded from 115.111.95.19 on Sat, 22 Feb 2014 06:45:40 AM

It is evident that substantial inworkplace structuring

In'order to be successful in business environment

running companies are busy in building their intangibles so as to

leadership (Ulrich and Smallwood, 2003:14; Ulrich and Brockbank,

intangibles, managing talent and creation of future competencies

importance of developing softskills and building high performance

The long debate on HRM in theWest, and especially in the

This content downloaded from 115.111.95.19 on Sat, 22 Feb 2014 06:45:40 AM

management (HRM) philosophy is getting articulated as a critical

This paper discusses the dynamics of changes that are taking

managing employee relations through HR strategy are being

HRM STRATEGY: A CONCEPTUAL FRAMEWORK

The global developments inmanagement reveal that strategic

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orientation, focus and flexible all these are

Implications for Industrial Relations

Figure 1: Storey's Model of HRM (Storey, 1995)

HRM philosophy is now getting largely accepted globally as a

management, empowerment, involvement, communication,

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the other hand involve trusting the employees, ensuring

exigencies of the business strategy.

HR has come to occupy an in case of

important to ask what model of HR strategy is being used by

SHIFTING EMPLOYEE RELATIONS PARADIGMS IN TWO

This section seeks to understand, two case studies,

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industrial groups in India i.e. the Tatas. This group is respected

A. North Delhi Power Ltd. :Dynamics of Change1

The company devised its vision of "becoming the most

preferred and admired energy Company." As per the MoU with

technology (IT) and internalizing the company's culture to that

So as to deal with the problems that the company

people issues that the company immediately took on takeover

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included: payment of salary by crediting it in bank account of

training to different countries.

As per theMoU (memorandum of understanding) signed at

Besides various initiatives in organisational restructuring,

designation aroused considerable resistance from most DVB

The company was committed to quality that could be inferred

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helpline assisted ingiving a time-bound reply tohim/her and helped

In view of the factsand events presented in the table should be

any of the staff associations. some minor disturbances, the

The CEO gave priority to the issue of union-management

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Besides, two batches of union leaders were sent by the

The HR department played a key role in facilitating

appraisal (PA) system for the employees should be kept simple;

The above-mentioned initiatives, taken together with good

(aggregate technical and commercial) losses. The AT&C loss