Towards a new

Paradigm of IR Strategy

Gaurav Singh | Gurpreet Singh | Valay Chauhan

Definition – Industrial Relations

• Industrial Relation is that part of management which is concerned with the manpower of the enterprise whether machine operator, skilled worker or manager

Bethel, Smith & Group

• The term Industrial Relations include recruitment, selection and training of workers, personnel management as well as collective bargaining policies and practices

Dale Yoder

• The dealings or relationships of a usually large business or industrial enterprise with its own workers, with labour in general , with government agencies, or with public

Merriam- Webster

Approaches of IR

Unitary Approach

Marxist Approach

Pluralistic Approach

Unitary Approach

• Mutual Co-operation , individual treatment, team – work

• Work conflict is considered to be temporary deviation

• No “WE-THEY” feeling

• Reactive IR Strategy

• Conflict is not only unnecessary but also destructive

Pluralistic Approach

• It perceives :

• Organizations as coalitions of competing interest

• Trade Unions as legitimate representatives

• Stability in Industrial Relations

• Conflict between management and employees is inevitable

• Unions balance the power between employees and management

Marxist Approach

• Conflict is a product of Capitalist society

• It focuses on type of society

• Industrial conflict is synonymous to political and social unrest

• Capitalism would promote monopolies

• Weakness and contradiction intrinsic to the capitalist system would result in

revolution and evolution of socialism over capitalism

Parties to IR

Employees

Courts and Tribunals

Employees Associations

Government

Employers

Factors affecting IR

Institutional Factors – labour legislation, employer’s federation , system of beliefs,

Economic Factors – structure of labour force, demand & supply, economic organization

Technological Factors – mechanization, automation , rationalization

Social and Cultural Factors – population, customs & beliefs, ethnicity

Political Factors – political parties & their ideologies , involvement in trade unions

Government Factors – industrial policy, labour policy, economic policy

Industrial Relations Strategy

• Antecedent control

• Interrupt and redirect

• Listen and talk it over

Reactive Strategy

• Leverage subject matter, vertical & technical expertise

• Accelerate project execution

• Increase employee attraction and retention

Proactive Strategy

Industrial Relations - New Paradigm

Change Models

Kurt Lewin

Burke-Litwin

Sociotech--nical

Sytems

Open Systems

Parallel Structure

Kurt Lewin change theory model

• The Kurt Lewin change theory model is based around a 3-step process

(Unfreeze-Change-Freeze) that provides a high-level approach to change. It gives a

manager or other change agent a framework to implement a change effort, which is

always very sensitive and must be made as seamless as possible.

• The Kurt Lewin model can help a leader do the following three steps:

• Make a radical change

• Minimize the disruption of the structure’s operations

• Make sure that the change is adopted permanently

Unfreeze

• Unfreezing means getting people to gain perspective on their day-to-day activities, unlearn their bad habits, and open up to new ways of reaching their objectives.

• The current practices and processes have to be reassessed in order for the wheels of change to be set in motion.

Change

• Once team members have opened up their minds, change can start. The change process can be a very dynamic one and, if it is to beeffective, it will probably take some time and involve a transition period

• A change process has to be viewed as an investment, both in terms of time and the allocation of resources.

Freeze

• Once the organizational changes have been made and the structure has regained its effectiveness, every effort must be made tocement them and make sure the new organization becomes the standard

• Further changes will be made down the line, but once the structure has found a way to improve the way it conducts its operations, “re-freezing” will give the people the opportunity to thrive in the new organization and take full advantage of the change

Burke- Litwin model

• The Burke-Litwin model shows the various drivers of change and ranks them in terms of importance. The model is expressed diagrammatically, with the most important factors featuring at the top. The lower layers become gradually less important. The model argues that all of the factors are integrated (to greater or lesser degrees). Therefore, a change in one will eventually affect all other factors.

• Burke-Litwin believe environmental factors to be the most important driver for change. Indeed, most change can be traced back to external drivers for change. Important elements of organizational success, such as mission and strategy, leadership and organizational culture, are often impacted by changes that originate outside the organization.

External environment

Mission & Strategy

Leadership

Organization Culture

Structure

Work Unit climate

Task Requirements & Individual Abilities

Individual Values

Employee motivation

The Burke-Litwin model

shows the various

drivers of change and

ranks them in terms of

importance. The model

is expressed

diagrammatically, with

the most important

factors featuring at the

top. The lower layers

become gradually less

important.

Sociotechnical systems

• Sociotechnical systems (STS) in organizational development is an

approach to complex organizational work design that recognizes the

interaction between people and technology in workplaces.

• The term also refers to the interaction between society's complex

infrastructures and human behaviour. In this sense, society itself, and most

of its substructures, are complex sociotechnical systems.

• Sociotechnical refers to the interrelatedness of social and technical aspects of

an organization.

• Sociotechnical theory is founded on two main principles:

• One is that the interaction of social and technical factors creates the conditions for successful (or unsuccessful) organizational performance. This interaction consists partly of linear“ cause and effect" relationships (the relationships that are normally "designed") and partly from "non-linear", complex, even unpredictable relationships (the good or bad relationships that are often unexpected). Whether designed or not, both types of interaction occur when socio and technical elements are put to work.

• The corollary of this, and the second of the two main principles, is that optimization of each aspect alone (socio or technical) tends to increase not only the quantity of unpredictable, "un-designed" relationships, but those relationships that are injurious to the system's performance.

Open Systems Planning

• Open systems planning is a powerful process for managing personal and organizational change.

• Open systems by definition are changing. When there is awareness, the system can manage this change to meet its own needs. Change management in this model is a three-step process.

• How are things NOW?

• How do I/we want things to be in the FUTURE?

• HOW do I/ we get there?

• The clearer we are about the situation NOW and the desired FUTURE state, the easier it is to act powerfully to improve the situation.

NOW Map

System

(Can be person, group etc.)

Influence

(Anything that influences the

system or is influenced by it)

Nature of relationship

(Use a phrase, and a picture if you

can, to describe this)

Feelings

(Add a few words to describe

how you feel about the

relationship e.g. angry,

frustrated, happy etc.)

A manager Customers Remote, uninvolved

Picture could be manager in a box

separate from customers.

Frustrated

Boss Friendly, supportive

Picture could be two people at one

desk both smiling

Content

IT department Demanding but unproductive.

Picture could be one angry person and

a group of people running around in

circles.

Cross

Future Map

System

(Can be person, group etc.)

Influence

(Anything that influences the

system or is influenced by it)

Desired feelings

(Add a few words to describe how

you would like to feel about the

relationship e.g. excited, content,

happy etc.)

Nature of relationship

Use a phrase, and a picture if you

can, to describe how the

relationship would be if you felt

that way

A manager Customers Satisfied, hopeful. Working and learning together.

Picture could be the manager working

on a project with customers.

Boss Content, satisfied Friendly, supportive, productive.

Picture could be two people at one

desk working on a project

IT department Powerful Professional, no nonsense, effective

People looking at a planning chart and

saying "We are on track!"

Parallel Structure

The term organizational parallel structure has two distinct meanings within the

broader topic of business management. The most common meaning relates to

a parallel system of learning throughout a business entity, separate and

complementary to traditional top-down bureaucratic structure. The term can

also refer to parallel leadership hierarchies created through parent company

acquisitions. In the latter meaning, two companies may emerge in ownership

but keep distinct operating branches as divisions within the parent company.

Its all about managing People

• Research shows that there is a direct relationship between a company’s

financial success and its commitment to management practices

• Culture and capabilities of an organization - derived from the way it manages

its people- are the real and enduring sources of competitive advantage

• Despite enormous amount of research done, organizations still want

evidence of relationship between good economic results and firm’s capability

of managing their people

Evidences

Substantial gains, on the order of 40 percent, can be obtained by implementing high performance management practices

One standard deviation increase in use of such practices is associated with a 7.05 percent decrease in turnover and on a per employee basis, $27,044 more in sales and $18,641 and $3,814 more in market value and profits, respectively

One standard deviation improvement in human resources system was associated with an increase in shareholder wealth of $41,000 per employee”- about a 14 percent market value premium

Apple’s Story

• In 1985, 20 % employees were laid off; in 1991 10 % and in 1993 2500 people were laid off

• Apple was not giving job security to their employees but rather gives challenging job assignments and after completion of their respective projects they terminate the employment of respective employees

• Eventually people feared of losing their jobs at the end of job assignment and they started slowing down their work

• Resulted in poor services, high accident rate and increased turnover and absenteeism adversely

• Later on they realized this and Stephen Jobs told fortune,” Innovation has nothing to do with how many R&D dollars you have…it’s not about money. It’s about people you have, how you’re led and how much you get it”.

7 practices of successful organizations

• Employment Security

• Selective Hiring

• Self Managed teams and Decentralization as Basic Element of Organizational Design

• Comparatively High Compensation Contingent on Organizational Performance

• Extensive Training

• Reduction of status difference

• Sharing Information

Contrast between HRM Vs IRIn

dust

rial

Rel

atio

ns

Hum

an R

esource M

anag

emen

t

• Parties : employees, employer,

trade unions & government

• Implementation of HR policies

results in IR

• Demand for change and

reformulation of HRM

objectives and goals

• Parties : employee and employer

• Formulation of objectives,

policies , procedures and

programmes of HR

• Reformulation of policies on the

basis of conflicts

The Strategic Choices

• Protest-agitate framework – if providing negative gain to labour, shift from collective to composite (labour while accepting changes in IR, broadens its bargaining to include quality, market share, financial matters) bargaining

• Proactive approach to restructuring by labour by first accepting changes, contributing to improving organizational efficiency and profitability and then moving to gain sharing mechanisms with final stage of working backwards to negotiate easier redeployment of labour on expansion for market demands.

• To achieve all of the above, substantial investment on training and research is of prime importance.

• Centralized trade unions – currently existing only for having representation in tripartite bodies and ILO, have a good potential if they organise the growing unorganised sector by improving their wages and conditions thereby helping organized enterprise unions as management in organized sector would then have less incentive to push work to unorganized sector.

• Management choices – IR needs to be brought in purview of strategy.

• Use ‘sound labour relations’ as competitive advantage.

• Employing policies involving ‘no retrenchment’ (SAIL, Philips, CG etc.),

formalize productivity increases in bargaining agreements (Mahindra BPR –

3X productivity by reengineering)

• Sensible technological improvements as in case of RAV4 by Toyota

(production work centred approach) by subordinating automation to worker

autonomy

• Strategic HR choices relating to industrial restructuring must accept pluralist concept of union identity and worker interests as stakeholders

• Placing the worker in centre of restructuring process and integrating him with organizational change is essential.

• Training concerning behaviour skills, socialization are of more significance as seen in Japanese firms towards lean practices and are also relatively easier as in contrast a high skill requirement in German firms.

• However the most critical choice revolves around providing worker with autonomy and empowerment.

References

• Burke & Litwin, ‘A Causal Model of Organisation Performance and Change’, Journal of Management, Vol 18, No 3 (1992), pp 523–545.

• “Frontiers in Group Dynamics” Lewin (1947)

• http://www.nickheap.co.uk/articles.asp?ART_ID=79

• “Industrial Restructuring and Labour relations” Somnath Gosh

• “Performance Management :Systems, Processes and Organizational Practices” Somnath Gosh