employee commitment and employee engagement. Managing organisational Unit 1isIntroduction part Employee Relations you with to of ERM.

This course familiarises conflicts also an important behavioural aspects like motivation, leadership, decision making and Management (ERM) communication that play an important role in employee relations Structure management. ERM is facilitated by tools like Human Resource Information 1.1 Introduction Importance of organisational discipline and grievance Systems (HRIS). Objectives handling are also discussed in this course. Further in this course we will see howOverview of Employee Relations maintaining good employee relations in 1.2 trade unions contribute towards Management an organisation.of Employeegovern employee relations, and an effective 1.3 Importance Many laws Relations Management ERM considers the laws of the land. We will learn how factors like employee 1.4 Employee Relations Management Tool participation, empowerment and employee rewards influence ERM. Further, 1.5 will study how to manage employee Management we Core Issues of Employee Relations relations in organisations that have a Conflict Management global presence. The contemporary issues like managing employees during crises like recession are also discussed in this course. Internal Communication Employee Engagement Career Management Commitment Talent Management and Retention In this unit, you will study the concepts of Employee Relations, Employee Training Relations Management, and the importance of ERM in an organization. This Benefits Administration unit introduces ERM tools and core issues like career management and employee retention addressed by ERM. Employee Self-Service 1.6 Summary TheTerminal Questions 1.7 objectives of Employee Relations Management are as follows: Answers 1.8Improve the effectiveness of the workforce. Case employee satisfaction. 1.9EnsureStudy Gain and retain employee commitment. 1.10 Glossary Prevent conflicts amongst employees. Promote retention of employees. 1.1 Introduction ImproveRelations Management (ERM) is a vital business process that Employee employee-management and employee-employee communication. manages employeremployee and employee-employee relations. It goes by the maximObjectives Learning that a satisfied employee is a productive employee. This unit familiarises you with the concepts of Employee Relations Organisations(ERM). After studying this relations realise able employees are Management following good employee unit, you will be that to: important stakeholders in the organisation. Employees who are content with Define Employee Relations Management. their employers contribute more effectively towards the goals of the organisation. importance of Employee Relations Management in an Explain the organisation. This course explains the of ERM Tool. ERM in organisations and the Describe the features importance of organisational aspects that govern employee relations in a organisation. Describe in detail the core issues addressed by ERM. ERM is influenced by organisational strategies, culture and other factors like

1.2 Overview of Employee Relations Management As the term suggests, Employee Relations Management is all about management of relationship with employees in an organisation. It involves providing required training to employees, maintaining clear communication, ensuring timely addressal of grievances and providing them with a career growth path. Managing employees efficiently is very important for any business organisation irrespective of its size. Employee Relations Management (ERM) is a process that develops and maintains employee relations. ERM ensures employee satisfaction, increases productivity, and improves employee morale. ERM enables employees to do their job in a better manner. ERM enables employees to achieve both corporate and personal goals.

Let us look at one more concept which is related to employee relations but is much older i.e. Industrial relations. Industrial relations can be traced back to the times of industrial revolution when many large scale organisations that employed thousands of labourers were started. But the inhuman treatment meted to the labourers resulted in strikes and huge labour turnover. This necessitated the birth of Industrial Relations (IR) which deals with the relationship between the management and the employees (particularly management trade union relations). Industrial relations emphasised labour legislations and fair treatment to employees.

But today, not many companies have labour unions and hence the focus has shifted from industrial relations to employee relations. Now, industrial relations deals with the study and practice of collective bargaining, trade unionism, and labour-management relations, while Employee Relations Management is a distinct field that deals with non-union employment relationships like ensuring employee satisfaction, the personnel practices and policies of employers, and improving employee commitment, motivation and retention. The important features of ERM are: Communication: The communication channels amongst the employees and between employees and the management must be open. If the opinions of the employees are not considered, the employees become frustrated and their morale gets lowered. Demoralised employees are less productive and may even become hostile. Team briefings,

performance appraisals and employee surveys are different means of improving communication. Management of the Employment Contract: The employment contract specifies the pay, working conditions, safety procedures, rules to be followed, etc. Conflict Management: Conflicts usually arise between employees and sometimes between the employer and the employee. Traditional methods of resolving conflicts like formal disciplining and grievance procedures are now seldom used. Mediation and counselling are increasingly being used to resolve conflicts. Managers are being trained to resolve disputes and avoid conflicts in a professional manner. Employees are advised about the rules, regulations and procedures of the organisation. They are also briefed about their grievance redressal procedures and appeal rights.

Employee Growth: Employees are encouraged to pursue career growth opportunities within the company. Commitment An organisation will be able to succeed only if its employees are committed to achieving the objectives of the organisation. The factors which affect the commitment of the employee are job satisfaction, nature of the job, rewards, benefit programmes, communication within the organisation, promotion policies and organisational culture.

Compliance with Employment Laws: Employment laws deal with issues like unfair dismissals, discrimination, minimum wage, working hours and so on.

Employee relations management is critical due to the following reasons: It improves overall productivity by improving employee morale, productivity, adaptability and communication. It improves job satisfaction and helps in retaining employees. Retaining existing employees is an easier and more cost-effective task when compared to recruiting new employees and training them. It improves the communication system within the organisation. It enhances employee involvement and commitment which are very important to the success of an organisation. Team working and change management can maintain motivation and commitment. It assures customer satisfaction. It increases the synergy between the culture of the organisation and the expectations of the employees. It positions the company as an employer of choice and thus attracts new employees. It increases employee loyalty. Confidential information can be kept more secure. The psychological contract model, reinforced by the findings of different surveys, suggests that ERM practices affect the attitudes of the employees towards the organisation. The psychological contract includes the expectations of both the employers and the employees. If employees get fair treatment, their trust in the organisation increases which in turn increases their commitment and involvement. Self Assessment Questions

1.3 Importance of Employee Relations Management 1. _______________ is a process that develops and maintains employee relations. You now know the concepts of ERM. This section explains the importance of 2. Team briefings, performance appraisals and employee surveys are ERM. A good relationship is one in which there is equal contribution from the different means of improving ______________. parties involved towards making the relationship work. 3. ____________ and __________ are increasingly being used to resolve conflicts. The relationship between a company and its employee is very complex. Efficient management of this relationship is very necessary. By managing 4. The ________________ model reinforced by the findings of different employees effectively, the organisation can capitalise on their strengths and surveys suggests that ERM practices affect the attitudes of the employees improve productivity. towards the organisation.

1.4 Employee Relationship Management Tools Technology can be used to help manage employee relationships. Automated employee relationship management tools help employees to do their tasks in a better way. The following are the different applications existing in organisations which use tools based on different technologies:
HR Systems: Human Resource Information System (HRIS) is used to manage all employee information, all leave details and to administer benefits. HRIS handles payroll and other company financial software and accounting systems. These are used by companies for the following reasons: Employees receive timely and correct wages. Employees apply for leave on their own. Training programs for employees can be automated and streamlined. Performance Management Systems: These help to monitor the performance of employees and link it with their salary increments and bonus payments. Managers keep track of training activities and deadlines. Employee activity logs are used for evaluation and planning. There are many software tools which aid performance appraisals like those from HRdirect, Halogen software, Cornerstone Performance and so on.

Work Flow Systems (WFM): These help in scheduling, organising and co-ordinating the work of the employees. Teleopti CCC and SAP HR are WFM software that include tools to manage, involve and improve the workforce. Knowledge Management Systems: These help employees identify, create, and share their knowledge. Search and retrieval tools enable easy access of content. According to their role in the organisation, employees view content that is relevant to their work. A single software solution cannot be used for these systems. Knowledge management systems use document management tools, e-learning software, knowledge repositories (databases), collaborative technologies (groupware) and social software (wikis).

Project Management Systems: These help in managing and monitoring project activities and in scheduling resources. Project

management systems facilitate creation and approval of project estimates. They define resources and tasks. They also create project milestones and enable easy execution of projects. Project reports are generated easily. Gantt charts help in scheduling projects. Critical path analysis (CPA) and Program Evaluation and Review Technique (PERT) charts help in project planning. Log frames can be used for project monitoring. Software tools like Microsoft Project and SourceForge help in project management. Employee Feedback Systems: Surveys enable employees to voice their opinion about routine tasks, management attitudes, current procedures, and ethics. Many software tools are available to help in employee surveys like those from HR-Survey, and Benchpoint. Employee Self-Service Systems: These systems enable employees to update their personal details. Employees file their expenses, billing and time reports. Employees raise purchase requests and keep track of their project related activities. Employees retrieve human resource related documents, update their tax related information and view their salary details. They can also update their bank information to enable direct salary deposits and reimbursements. Employees can apply for leave and view leave balances. An open forum is provided for employees to present their views. Employees exchange ideas through e-mails and bulletin boards. Employees create and share calendars for better functioning. Tools are provided to employees to perform routine tasks easily and thus focus on other important tasks. Oracles PeopleSoft Enterprise Employee Self-Service is an example of an employee self-service tool.

These technologies are beneficial only if they address the needs of the employees. Clear guidelines need to be provided to use these technologies. Now that you know about the various ERM applications, let us see the benefits of implementing these tools. The benefits of ERM tools are as follows: It strengthens corporate culture. It enhances communication through the use of e-mails, blogs, bulletin boards, shared folders, and e-calendars.

 It educates employees about the products, customers and services of the company through enterprise portals. It facilitates project management. It reduces training costs as employees can be provided on-line and needs-based training. It makes HR management work easier. It facilitates work-flow management and increases productivity. It enhances performance management. It manages resources efficiently. It helps retain and provide career growth to talented employees. It enables easy retrieval of information. It obtains feedback from employees and enables organisations to make appropriate corrections. It assures job satisfaction and helps in retaining employees. It ensures compliance with government requirements. Wipro is one of Indias leading software service companies. It has developed some models to deal with the processes of employee management. Wipro offers flexible Employee Performance Management (EPM) solutions which are delivered either in Business Process Outsourcing (BPO) or Software as Service (SaaS) Model. They make employee assessments easier and more accurate. The EPM model offers the following benefits:

Goal management Performance appraisals Workflow and succession planning Employee development planning Employee training

ation. The organisation wants you to recommend some ERM tools that will help in the efficient functioning of the o

Self Assessment Questions 5. _____________ systems help employees to share their knowledge. 6. ________ systems facilitate creation and approval of project estimates. 7. __________ charts help in scheduling projects.

1.5 Core issues of Employee Relations Management The previous section dealt with the features and benefits of ERM Tools. Now let us consider some of the core issues of ERM.
1.5.1 Conflict Management Conflict management refers to the manner in which mangers handle grievances and disputes. According to Gennard and Judge, Employee Relations aims to resolve difference between the various interest groups regardless of whether these groups comprise different categories of managers or employees.1 Workplace conflicts arise due to differences in perceptions, culture, employee biases, gaps in communication, and so on. A win-win approach is used to resolve conflicts. Mediation and counselling are adopted for resolving conflicts rather than using formal discipline measures. Managers are trained both to avoid and to resolve disputes. External mediators can also be called in if necessary. Large organisations like public sector companies prefer to use internal mediators to resolve conflicts. Unresolved work place conflicts can have a negative impact on the organisation. For example, if the production manager and the quality control Figure 1.1: Causes of Workplace Conflicts manager have differences about implementation of quality procedures, then the work of both the divisions is affected. Figure 1.1 depicts some causes of workplace conflicts. skills help employees get along with the other Conflict management employees, their managers and the customers. These skills help managers identify conflicts, respond to them, get better co-operation from the employees, and avoid conflicts from spreading to other parts of the organisation. The following skill set help managers deal with conflicts: Conceptual skills: Managers need to first understand the causes of conflicts and the different strategies and tactics they can use to resolve the conflict. Communication skills: Managers require good listening skills and the ability to ask the right questions to ascertain the cause of the conflict. They must avoid harmful statements and remain rational.
Employee Relations by John Gennard, Graham Judge, p18, Chartered Institute of Personnel Development, 2005.
1

 Negotiation skills: Managers need to know the policy of give and take required to resolve conflicts. Conflicts are resolved by adopting the following strategies: Counselling: Only a few organisations have professional counsellors on their staff. Many organisations train their managers to counsel their subordinates. Often, just by employing nondirective counselling (listening and understanding), managers can help frustrated employees. Discussions and Debates: Task conflicts are resolved by discussing or debating the options. Consensual decision is made after considering every option. Compromise: This method tries to resolve conflicts by arriving at a solution which satisfies at least part of the requirement of each party involved. Using third parties: As serious conflicts have a negative impact on organisations, third parties with specialised skills are used as arbitrators, mediators or ombudsmen to resolve them.

recognition, and purpose. Organisations that have good employee relations value teamwork and employee feedback. Engaged employees are more committed, helpful, productive and less inclined to take leave. Figure 1.2 depicts the indicators of employee engagement.

1.5.2 Internal Communication Figure 1.2: Employee Engagement Indicators Employee engagement can only be obtained if the senior management communicate frequently on a wide range of businesstraining and job design People management and development activities like and organisational issues. Organisations with good employee relations give a high priority to contribute to employee engagement. A positive psychological contract with internal communication. Such organisationsprofessionals are employee the employees enhances performance. HR ensure that the employees completely understand the communications made to them. champions and focus on the needs and aspirations of the employees. Employee involvement can be achieved by the following practices: For example, The South-West Trains Company has a very good relationship Having formally designated teams with its unions. But when the management realised that not all employees were being kept informed about the different issues, they decided to use Having regular team briefings more direct means of communication. At present, ad-hoc forums are held to Undertaking performance appraisals get feedback from employees. Time with the manager sessions keep the Using problem-solving groups line managers in touch with the operations staff. The intranet and e-mail are Involving employees in decision making used in addition to team briefings to communicate with all the employees. 1.5.3 Employee Engagement Mike Johnson describes employee engagement as a combination of commitment and organisational citizenship2. Organisations can be successful only if the employees have a feeling of job security, respect,

The New Rules of Engagement,2004, CIPD publication

Managers share results with the team and develop team action plans. Tell Dell surveys are held every six months. These surveys help in finding if the managers give regular feedbacks, manage people properly, set a good example of ethical behaviour and so on. Thus Dell engages its employees by constant employee involvement. 1.5.4 Career Management Career development of employees is organisationally supported, manager facilitated, and employee driven. The career management process is based on the establishment of specific goals and objectives. The career management process commences with the formulation of specific goals and objectives. The goals can be of the following kinds: Short-term goals: These are goals to be achieved within the next 1 to 2 years. These are more specific and easy to formulate. Intermediate goals: These are goals to be achieved in the next 3 to 5 years. These are more difficult to formulate as compared to short-term goals. Long-term goals: These are goals to be achieved after 5 years. They are more fluid and very difficult to formulate.

Dell is a computer manufacturing company and has been ranked among the top ten companies by Fortune magazine. It aspires to be a great company and a great place to work. It focuses on the team and individual contributions to the team. Line managers interact with individual team members. All employees are judged on the basis of how they interact with people and their technical proficiency. Quarterly results meetings are held across the business and senior managers answer questions posed to them.

As the nature of the work changes employees may have to modify and update their goals. Figure 1.3 shows the employee career development cycle where managers guide, motivate and provide opportunities to employees in every step towards developing career. Organisations exercising good employee relations have an environment in which employees take control of their own development and maintain their employability. Such organisations ensure that employees are given fair career advancement opportunities. Discriminations are not made on the basis of race, gender or ethnic group. The framework of such organisations enhances employee potential.

1.5.5 Commitment Employee commitment can be defined as the psychological bond of the employee with the organisation and the degree to which the employee identifies with the organisational goals. Employee commitment is an important factor that determines the success of an organisation. Employee commitment is influenced by the following factors: Organisational Values: Organisational values influence employee behaviour. If the organisation values employee participation, the employee feels more committed to contribute to the success of the organisation. Relationship with Supervisor: If the employee has a good relation with the supervisor, it improves commitment. A supervisor has to share information, provide timely feedback and reward good performance. Job Nature: When the job satisfies the employee, commitment increases. Employees given routine or repetitive tasks with no challenges to stimulate them have their levels of commitment decreases. Entrusting employees with responsibility and giving them more autonomy increases commitment.

Organisational Justice: When employees work in a fair and just environment, their commitment increases. Promotions and wage increments need to be awarded in a fair and transparent manner. Employee grievances also need to be addressed and conflicts resolved immediately.

Figure 1.3: Employee Career Development

Increasing commitment is a business necessity. The benefits of gaining employee commitment are as follows: Organisational performance is improved. Employee motivation increases and this increases productivity. Profits increase as sales increases Employee retention is increased. Cost savings is enabled. Training costs of new employees gets reduced. Conflicts in the organisation reduce.

The following are some of the strategies that organisations adopt to retain their employees: Employee Motivation with Learning: Employers encourage learning in the organisation. They sponsor employees when they undertake any enhancement courses after agreeing with the employees that they would continue to work for the organisation for a specific time period. These employees can return to the workforce with better qualifications and hence perform better. Use Money as a Motivational Tool: Money is a complex factor and its 1.5.6 Talent employee retentionRetention defined easily. But it is a fact that influence on Management and cannot be Successful organisations havepower and employees who earn more arein money represents purchasing an effective employee retention strategy order satisfied than other employees. more to maintain their growth and leadership. Organisations which do not give priority to retaining employees lose them to their competition. Brand Building: This is a long-term approach and aims at attracting the bestmuch easier to retain satisfied employees than recruit newcomers. It is of talents. It requires consistency in operations and good organisation culture to enhance the become the organisation. Training newcomers to image of productive is very costly and requires more effort and resources. Talent can be retained only by enhancing employee 1.5.7 Training motivation and job satisfaction. Figure 1.4 shows a diagrammatic representation of the factors affecting employee retention. of employees. Many organisations have a policy of personal development Training programs are undertaken by organisations when the results of a performance appraisal indicate that training is essential. Training programs are also undertaken to enable employees to undertake new roles which require more skills. The training programs undertaken by an organisation deal with the following: Communications: People with different languages and customs are employed and they need to be trained in interpersonal communication. Computer skills: These skills have become very essential even for routine administrative tasks. Quality initiatives: Implementation of programs like Total Quality Management, Quality circles, benchmarking require training of employees in quality procedures, concepts and standards. Customer service: Employees need to understand and meet the needs of the customersFigure 1.4: Factors Affecting Employee Retention to stay competitive. Human relations: Employees are trained to avoid misunderstanding and conflicts and build interpersonal relations.

 Safety: Employees are trained in safety measures especially if they handle heavy equipment, work in hazardous conditions or deal with hazardous chemicals. Ethics: Organisations today are more socially responsible. Hence employees are made familiar with the corporate values and morals. Sexual harassment: Employees are made aware of what constitutes sexual harassment in order to avoid such behaviour. Training and development activities contribute to the personal development of the employee and enhance employee engagement. The benefits of having training programs in an organisation are as follows: They enhance job satisfaction and improve employee morale. They make processes more efficient thus increase productivity and profits. They increase employee motivation. They improve the corporate image of the company. The organisation becomes more capable of adapting to new ideas and technology. The organisation has more innovative strategies and ideas. They increase employee retention and reduce turnover. You can now understand the importance of having training programs in organisations. Training programs show the employee that the organisation is truly interested in the personal development and skill enhancement of the employee. The employee in turn becomes committed to the organisation and helps the organisation to achieve its goals. 1.5.8 Benefits Administration Employees are the most important asset of an organisation. Organisations that practice good employee relations management have many benefits programs in order to attract and retain employees. The problems in implementing an efficient benefits program arise due to the following reasons: The employer is unable to collect key information and verify them. The employee is unable to access information about the different benefits program. This increases job dissatisfaction and turnover.

The benefits administration process has to be streamlined and automated. The features of an effective benefits administration process are as follows: It is easier to create and manage multiple benefits programs. It creates employee benefit plan profiles. It creates eligibility criteria. It maintains beneficiaries and dependents information. It facilitates performance reviews, tracks past review details, and schedules future reviews. It interfaces directly with insurance providers and payroll systems. It merges and audits monthly insurance or benefits. It complies with government requirements. There is an annual review of the benefits program. You now know the advantages of implementing a good benefits program in an organisation. Automated benefit systems help both the employers and the employees. Good benefit programs enhance employee retention. 1.5.9 Employee Self-Service Employees feel empowered when organisations have employee self-service modules to manage personal data. The accuracy of employee information is improved with the introduction of such modules. The administrative workload of the HR staff is also significantly reduced. The following list enumerates the features of an employee self-service module: It facilitates creating and updating personal details like name, address, telephone numbers, etc. It maintains passwords for security of information. It maintains information about emergency contacts, beneficiaries, and dependents. It facilitates enrollment in benefits programs. It allows updating of tax related information like exemptions and savings details. It allows viewing of salary details like gross pay, deductions made, and net pay. It maintains bank related information for direct deposits of salary and reimbursements.

 It allows employees to apply for leave and check for leave balance. Employers can review the leave details of the employees. It allows employees to submit details about expenses. It allows internal and external job applications. It also permits checking of job application status. It facilitates viewing of training program details and enrolment. It maintains health and safety records. The employee self-service module enables employees to manage their personal data. The accuracy of the data improves and the work of the Human Resource staff is also made easier. Self Assessment Questions 8. _________________ refers to the manner in which mangers handle grievances and disputes. 9. Employee engagement can only be obtained if the senior management ______________ frequently on a wide range of business and organisational issues. 10. Mike Johnson describes employee engagement as a combination of _____________and ___________________. 11. Successful organisations have an effective __________________ strategy in order to maintain their growth and leadership. 12. __________________ module empowers the employees to manage their own personal data.

pany in your town and find the employee benefits given by the company and the method in which these benefits

involvement and commitment. It improves job satisfaction and helps in retaining employees. It improves the communication system within the organisation. It also ensures customer satisfaction. Employee relationship management tools facilitate employee management. ERM tools can be used for HR management, performance management, knowledge management, work-flow management and project management. They also enable employees to manage their personal data. The core issues of ERM are conflict management, internal communication, employee talent management and retention, employee commitment, employee training, employee self-service, and benefits administration.

1.7 Terminal Questions 1. Explain the concepts of Employee Relations Management. 2. Why is ERM important? 3. What are the different systems in an organisation which use ERM technologies?
4. What is conflict management? Why is it important? 5. Why is employee retention important? 6. What are the different kinds of training programs implemented by organisations? 7. Explain the employee self-service module of ERM.

1.8 Answers
Answers to Self Assessment Questions 1. Employee Relations Management 2. Communication 3. Mediation, counselling 4. Psychological contract 5. Knowledge management 1.6 Summary 6. Project management Employee Relations Management (ERM) is a process that develops and 7. Gantt maintains employee relations. ERM ensures employee satisfaction, 8. Conflict management increases productivity, and improves employee morale. Employee relations 9. Communicate management is important as it enhances overall productivity, employee 10. Commitment and organisational citizenship

11. Employee retention 12. Employee self-service Answers to Terminal Questions 1. Refer Section 1.2 2. Refer Section 1.3 3. Refer Section 1.4 4. Refer Section 1.5.1 5. Refer Section 1.5.5 6. Refer Section 1.5.6 7. Refer Section 1.5.8

1.9 Case Study

me of these agents work from home. These agents help people deal with health, work-life and well-being issues. T agement tool, IEX TotalView.

ficiency of the nurses to about 92%. suit them. This increases their job satisfaction. ile taking the needs of the company into consideration.

bidding.

employee issues. become very accurate. The company has also been able to maintain a consistent service level. As employees choo

ement tool? tted the company?

1.10 Glossary
Term Description Ad-hoc Made or happening only for a particular purpose or need; not planned before it happens Arbitrators A person who is officially appointed to make a decision between two individuals or groups who do not agree Audit An official examination Beneficiaries A person or a group who receives money or other advantages Blogs Records of thoughts, opinions or experiences that is put on the Internet for others to read Brand building Enhancing a brands power through advertising campaigns, sponsorships and promotions Bulletin boards A place on a computer system where users can read messages and add their own Company portals A company intranet which can serve as a gateway to other networks Compliance Obeying an order, rule or a request Conceptual Based on ideas or principles Confidential Secret, often in business or military situation. Consensual With the agreement of all people involved Counselling The process of listening to someone and giving them advice Database connectivity Access to a database

Discrimination reating a person or a group differently because of their skin colour, religion, sex, etc. mployee retention Keeping employees in the company thnic group he people of a race or nationality who share a distinctive culture orum ublic medium or place used for debates Grievance redressal Measures to correct a wrong that is done Harassment Behaviour that annoys or upsets someone ntranet A system of connected computers which allow people within the organisation to communicate and share information Mediation he process of talking to people or groups involved in a disagreement and helping them to find a solution to their problems Ombudsmen omeone who works for the government or a large organisation and deals with the complaints against it Organisational citizenship xtent to which the voluntary support and behaviour of an individual contributes to the success of an organisation erception Belief or opinion held by people based on how things appear to them erformance appraisals rocess by which a manager examines and evaluates the work of an individual by comparing it with preset standards roject milestone A project checkpoint to evaluate how the project is progressing or a scheduled event signifying the completion of a major deli Reimbursement ayment of money to compensate someone who has spent money for you Repository A place which contains lots of detailed information or knowledge Workflow tracking Monitoring tasks, procedural steps, inputs, outputs or people involved for each step in a business process

References 1. Employee Relations by John Gennard, Graham Judge,Chartered Institute of Personnel Development, 2005 CIPD publication, 2004 2. The New Rules of Engagement, 3. http://www.managementhelp.org/trng_dev/basics/reasons.htm 4. http://it.toolbox.com/blogs/enterprise-design/why-employee-relationshipmanagement-21687

Unit 10 Collective Bargaining and Negotiation

Structure 10.1 Introduction Objectives 10.2 Collective Bargaining Collective Bargaining Process Collective Bargaining Issues 10.3 Phases of Collective Bargaining and Negotiation 10.4 Collective Bargaining Advantages 10.5 Negotiation Approaches Conditions for Negotiation 10.6 Summary 10.7 Terminal Questions 10.8 Answers 10.9 Case Study 10.10 Glossary

10.1 Introduction In the previous unit you learned about trade unions and their role in representing workers. You know that one of the activities trade unions engage in is collective bargaining. Collective bargaining is a method of negotiation between representatives of employees and employers to reach an agreement on the rights and duties of workers. Usually union leaders represent employees in this negotiation process. In this unit you will learn about collective bargaining and the various stages involved in the process.
Bargaining is a term that is widely used to arrive at a collective agreement that usually handles issues such as wages, working hours, training, health, safety of the employees and the authority to participate in the affairs of the organisation. In this unit, we will discuss the importance of collective bargaining. Thereafter, we will understand the process involved in negotiation.

Learning Objectives After studying this unit you will be able to: Explain the concept of collective bargaining. Describe the process involved in collective bargaining. Explain the different phases of collective bargaining. Describe the process of negotiation. Analyse the various negotiation approaches.

employee issues. The process includes negotiations between an employer and a group of employees to determine the conditions of the employment. The result of the collective bargaining process is called the Collective Bargaining Agreement (CBA). It is a type of negotiation that is used by the employees to work with their employers. During the process, the employees representatives approach the employer and then attempt to negotiate a contract that both sides can agree upon. Once both the parties have reached a contract that they find agreeable, it is signed and kept in place for a specified period of time. This final contract is called the collective bargaining agreement. Figure 10.1 illustrates the various steps of the collective 10.2 Collective Bargaining bargaining process. International Labour Organisation (ILO) defines collective bargaining as negotiating regarding various terms and conditions of employment between employer and employees to arrive at ansteps2: The process comprises of the following agreement. Collective bargaining serves a dual purpose, that is, it provides an approach of determining the wages and conditions of work for a group of workers covered by the agreement through free and voluntary negotiations between the two independent parties concerned in the organisation. It also facilitates the employers and workers to define by agreement the rules governing their relationship. According to Boone and Kurtz1, collective bargaining is a process of negotiation between management and union representatives for the purpose of arriving at mutually acceptable wages and working conditions for employees. Collective bargaining can be beneficial to both the workers and the employers. For workers, collective bargaining ensures that employees are provided with adequate wages andCollective Bargaining Figure 10.1: Process of good working conditions. It helps employers stabilise industrial relations by maintaining industrial peace that otherwise may be disrupted by unrest of the labour. 1. Prepare: This phase facilitates the formation of a negotiation team. The team is selected in such a way that the representatives of both the parties Collective bargaining is a discussion process between employers and have necessary skills that are required for negotiation. It is essential that the employees. It is of both the employers and the unionemployer as well as the representatives termed collective because both the examine the situation in employees behaves as aon which the negotiation takes It is known also vital order to prepare a basis group rather than individuals. place. It is as bargaining whether there is actually any reason to negotiate at all. It that to analyse because it involves methods of arriving at an agreement is involves various proposals and offers. important to intimate information regarding various operations, working conditions and other relevant norms to the members participating in the process of bargaining and negotiation. 10.2.1 Collective Bargaining Process You now know what collective bargaining is. We will discuss the general process involved in collective bargaining and negotiation towards resolving
1 Contemporary Business, by Louis Boone and David Kurtz 2

www.conceptspace.london.edu/textview.asp?id=GF&term=Collective+bargaining

2. Discuss: Both the parties are responsible for deciding the rules that support the negotiations. It is important to create an environment of trust and understanding. This ensures that the discussion progresses towards reaching an agreement. 3. Propose: This phase can also be termed as Brain Storming. It is a technique to solve any queries in a creative manner. It facilitates in opening up of various and options to resolve any issues. This ensures that the opinions of both the parties are sought. 4. Bargain: The process of negotiation becomes easy if a problem solving attitude is adopted. This stage comprises the time when what ifs and supposes are set forth and the drafting of agreements take place. 5. Settlement: Once both the parties agree on all the issues discussed, an agreement is reached.

who facilitates the meetings between the two parties, while the arbitrator acts as a judge and listens to both the parties of the organisation and then makes a final decision. Once a decision is made by the arbitrator, it is legal binding on both the disputing parties. 10.2.2 Collective Bargaining Issues From the previous sections you have learned that labour issues are negotiated during the collective bargaining process. Some of them are Wages illustrated in table 10.1.

Hours Working Conditions Table 10.1: Collective Bargaining Issues Job Security Regular Compensation Regular Work Hours Rest Periods Seniority Overtime Compensation Overtime Work Hours The process of negotiating a union contract may take long a time. Once the Grievance Procedures management and the members of the union of the negotiation team arrive Evaluation upon an agreement, the members of the union then accept or reject the agreement by a majority vote.Incentives If the agreement is accepted, the contract is approved and sanctioned. On Vacations hand, if the agreement is rejected by the other Now you will learn that the theUnion Membershipinvolved in collective the members of the union, scope of discussions labour and management negotiation teams Promotion bargaining is varied. and negotiating. force issues, other factors that affect continue bargaining Apart from labour Insurance the functioning of an organisation are also considered. The scope of the issues discussed includes theHolidays following: Dues Collections It is important that the both the parties of the organisation agree upon a Layoffs

proposal on a voluntary basis. This avoids the need to have an impartial third Union and Management Cooperation and Communication: It is very part listening to both the parties. However, in case of any dispute, the essential to have cooperation andcalled thecommunicationthe responsibility dispute is referred to a third party effective mediator. It is between the union mediator to that represents the workforce and the to a common of the organisationget both the parties of the organisation management. This includes various activities for the the responsibilities of the employers in settlement. It is necessarysuch asmediator to understand the views of both making decisions by cooperating with recommendations considers the the parties. This ensures that impartialthe union. This alsoare made by the extent of for settling the differences. However, the mediator can make only mediator support given by the employer to the activities of trade unions. suggestions and advice the parties to compromise on to a common solution. The mediator has no authority to force either of the parties to settle the Employment and Working Conditions: This includes various factors contract to a common agreement. such as contracts of the employees, employee termination, redundancy principles, working time and schedules of the employees, holiday and paid leaves of the employees. If mediation fails to bring about an understanding between both the parties, next step deployed is arbitration. Here, both the sides agree to as theWages and Remuneration: This includes various activities suchinvolve in wages, minimum wage tariffs, already payment, extra payment for risky the process of arbitration. You overtimeknow that the difference between a working and an arbitrator is that the mediator is an impartial third person mediatorconditions and payment for working on holidays.

 Occupational Safety and Health: This includes safety and health measures for employees. This ensures that preventive and corrective measures are taken that facilitates improved working conditions in the organisation. This allows reduction of risks at work place. Human Resource Development: This includes various activities such as training and human resources development activities, creation and utilisation of various social funds in the organisation for employees. Management and Union Conflict Resolution: This includes various procedures like mediation and arbitration that can be applied in situation such as serious disagreements between the management and the unions that represent the employees of the organisation. Thus, Collective bargaining ensures an effective means for the employees to attain their objectives such as wages, hours and working conditions and for the employers to maintain a peaceful work environment. Self Assessment Questions 1. Expand CBA. 2. The process of negotiating a union contract may take long duration of time. State true or false. 3. Collective bargaining ensures healthy industrial relations. State true or false. 4. ______________ ensures that preventive and corrective measures are taken that facilitates improved working conditions in the organisation. 5. Issues discussed in collective bargaining include wages, hours, ______________ and ______________ of the employees.

sation and find out how employee issues are dealt. Note down the issues discussed in collective bargaining and ho

issues to be discussed with the employer are considered. A proposal of these issues is submitted to the employer. This proposal forms the agenda for the negotiation. The next step towards the preparation process is to select a negotiating team. The management team may be led by the human resource manager if the issues of discussion involve working conditions and employee benefits. A financial officer becomes part of the negotiating team if issues like employee wages and pensions are the topics of discussion. Union negotiating teams include the union representatives and negotiation specialists. Participating members generally have the skills in drafting agreements along with skills in negotiating. On submitting the proposal and selection of the team, the negotiator of the team recognizes various phases of negotiation. Since, it includes 8 phases for collective bargaining and negotiation, it is termed as an Eight Approach to Collective Bargaining or Negotiation. They are the following phases: 1. Preparing: It is important to examine various factors that are concerned with the negotiations that are both internal and external to the organisation.

Examining Internal factors: It is very essential to examine the performance of the organisation. It is critical for the unions to be aware of the various profits and loss statements, notes, balance sheets and other information that is concerned with the financial reports of the organisation. It is also important that the union negotiating team knows about the organisation budgets and strategic plans. Factors such as profitability, liquidity, leverage and activity ratios help in examining the performance of the organisation. This information along with the intelligence provided by the workforce ensures that the expansions, purchases, investments and other details about the organisation are clearly analysed.

10.3 Phases of Collective Bargaining and Negotiation Examining External Factors: It is very essential to examine various Youfactors that are external togeneral process involved in collective various are now familiar with the the organisation. The factors include bargaining. Before starting rateprocess of negotiation, a decision has to be levels of management, the of inflation, investments, rate of interests and made on the representation of employees. You are familiar that typically, growth in economy. unions represent employees. Once worker representation is fixed, the

2. Arguing: It is important for the negotiators to argue effectively. However, it is necessary to negotiate rationally and reasonably. The negotiation process involves diplomacy and negotiators are expected to use a blend of logic as well as emotional appeal while negotiating. When arguments become heated, it is important for a negotiator to take a break from the discussion. 3. Signalling: Since negotiation is an interactive and dynamic process, it is important for negotiators to develop active listening skills. It is necessary for the negotiators to convey appropriate body signals along with the words that they speak. These signals help negotiators assess the following cases: Proposals that will meet with little resistance Proposals that can be accepted with some modification Proposals that have low chances of success in the current round of negotiations.

and produce it in a formal form. Decisions are then taken regarding various issues such as the date for the payment of the revised wages, timing of introduction of new benefits in the organisation and so on. Table 10.2 shows a summary of the negotiation process.
Table 10.2: Negotiation Process Process Function Prepare Know what you want. Understand them Open Put your case. Hear theirs Argue Support your case. Expose theirs Explore (Propose) Seek understanding and possibility Signal Indicate your readiness to work together Package Assemble potential trades Close In the next section you will learn about negotiation and the various 4. Proposing (Exploring): Once, the negotiator is a clear with the signals Reach final agreement approaches employed in negotiations. received, the team is Sustainprioritise the proposals that are considered. able to Make sure what is agreed happens Self Assessment Questions

5. Packaging: The proposals are then presented in an appealing manner 6. ______________ activity defines extra payment for risky working where strong proposals are clubbed with the ones that have lower chances ofconditions and payment forthat an agreement is ready that contains all the acceptance. This ensures working on holidays. 7. What is the function for the settlement in the process of Negotiation. elements that are crucial of signalling phasebetween the negotiating parties 8. ______________ activity defines that all the elements that are crucial for the settlement between both the parties of the organisation are available. 6. Bargaining: This is the actual process of meeting demands. Both parties present theirnecessary and discuss rationallythem reasonably to win over the 9. It is not demands to negotiate which of and can be approved. This is a painstaking and lengthy process. It finally results in a collective agreement of process of negotiation. State true or false. the proposals and disputes. 10. The function of Signal process is ______________. 7. Closing: This is a critical step in the process of bargaining. Closing of the process too early or too late results in various disputes. Thus, it is necessary to assess the best time to close by considering various factors such as mood of the negotiating parties and the economic factors. All ambiguities have to be cleared in this stage. The participants are briefed about the decisions taken and issues that are withdrawn. 8. Agreeing: This is the final stage of the bargaining and negotiation process. This phase ensures that the negotiators draft an agreement

 It facilitates settlement of any disputes without any conflict It ensures that there is peace between both the parties through dialogues It facilitates participation from both the parties. It ensures mutual trust and understanding between both the trade union and the management of the organisation. It facilitates stabilised union membership in societies that have multiple unions. It ensures healthy industrial relations. It makes the employees feel more involved and wanted in the organisation It ensures that individual stress and employee insecurities are discussed It establishes the employee and the management rights in the organisation. It develops a sense of responsibility among the employees It ensures that the strength of workforce is increased. It in turn increases the overall bargaining capacity of the workforce It ensures that the morale and productivity of the employees is increased. Effective collective bargaining ensures that the trade unions movement is efficient It facilitates in securing a prompt and fair settlement of grievances. It provides a flexible means for the adjustment of the wages and employment conditions It facilitates the management to resolve issues at the bargaining level rather than taking up complaints of the individual workers. It ensures a sense of job security among the employees It ensures that a channel of communication is open between the workers and the management. This further increases worker participation in decision 10.4 Collective Bargaining Advantages making. You now know that collective bargaining is a process of bargaining in groups opposed to individual bargaining. The bargaining industrial disputes as It plays an essential role in settling and preventingcould relate to many factors such as the payment of the employees, holiday, overtime,This helps It ensures that a harmonious industrial climate is established. bonus, shiftpace of nationsand so on. There are manyand social development. the arrangements efforts towards economic benefits of collective bargaining. Some of them are the following: It encompasses fluidity and ample scope for a compromise, for a mutual give-and-take before the final agreement is arrived at.

10.5 Negotiation The term negotiation is derived from a Latin word negotiatus, which means to carry on business. Negotiation is a process that involves resolving disputes between two disputing parties. The process of negotiation can occur in business, non profit organisations, various branches of government, legal proceedings and in everyday life. Although negotiations can be done by everyone, there are professionals such as union negotiators, leverage negotiators, peace negotiators, hostage negotiators, diplomats, brokers and legislators3 who are best suited for negotiations.
In terms of an organisation, bargaining is a process that always takes place between the labour and the management of the organisation. However, negotiation is a process that can include more than one group of workers and more than one employer. There are various ways of structuring the process of negotiation to gain a better understanding of the process. The following are two views of negotiation that can be employed by the parties who wants to negotiate. The first view involves the following three elements: Process: It refers to how the parties negotiate. It includes the context, the parties involved, the various tactics used by the parties and the stages involved in negotiation. Behaviour: It includes the relationships among various negotiating parties. It refers to the communication between the parties and the various styles adopted by them. Substance: It refers to the information that the parties are ready to negotiate. It includes information such as the agenda, the issues and various other options for the issues and the concluding agreement. The second view toward structuring negotiation involves four elements. They are the following: Strategy: It includes various top level goals and objectives such as final outcome of the process Process and Tools: Both the elements include various steps that have to be followed in negotiation. It also refers to the roles and responsibilities that have to be taken in both preparing and negotiating with the participating parties.
3 http://www.laynetworks.com/TYPES-OF-NEGOTIATION-IN-ORGANISATIONS.html

 Tactics: It includes various statements and actions employed for negotiation. Negotiators who are skilled and experienced adopt various tactics that range from direct presentation of demands or taking up more deceptive methods. There are various kinds of people involved in the process of negotiation. Some of these as identified by Shell include the following: Accommodating: Accommodators are the people who are sensitive to the emotional states, body language and the verbal signals of the other parties involved in the negotiation. Avoiding: When avoiders feel that the negotiation is unnecessary, the avoiders can simply tend to avoid and defer the various aspects of negotiating. This can be viewed as a process dealt with skills and diplomacy. Collaborating: Collaborators are the people who are skilled and perceive various tactics of negotiating. This ensures understanding the concerns and interests of other parties involved in the process of negotiation. Competing: Negotiators who are competitive usually have instincts for process of negotiation. Their strategic style of negotiation can dominate the process of bargaining. Competitive negotiators tend to neglect the importance of relationships. Compromising: The art of compromising is useful when the time is limited to complete a deal. However, when time constraint is taken into account, the compromisers tend to rush the process of negotiation and make concessions quickly. 10.5.1 Negotiation Approaches Let us now look into the methods of negotiation. Many different negotiation styles can be used when different parties sit down for negotiations. The two basic types of bargaining are traditional bargaining and partnership bargaining. There are many variations of each style. Each approach is listed and explained below.

Traditional Approach: Each side proposes its demands and the other side responds with counter-proposals. Neither party considers the needs and demands of the other party. The process is negative as it involves a

struggle of give-and-take on most issues. This approach is referred as win-lose policy. This means that one party gain results in another party loss. However, this is true only when a single issue needs to be resolved. Partnership Approach: This is a new approach to negotiation. Both parties take into consideration the needs and demands of the other party. This approach is also known as interest-based bargaining as emphasis is given to the interests of both parties. The union and management list and explain their needs. The discussion that follows involves ways to meet all needs that are not only acceptable but also beneficial to both parties. This approach is positive as it imparts a cordial approach to negotiations.

Advocates Approach: In this approach, a skilled negotiator plays the role of an advocate for one party. The negotiator tries to understand the very basic requirements that the other party would be willing to accept. The negotiator then alters their demands accordingly. A negotiation is said to be successful in the advocacy approach when the negotiator is able to obtain all the objectives that the party decides. Creative Approach: This approach ensures that negotiating parties get a fair share of their demands. It allows creative negotiation. The following example best illustrates this approach. For its new aeroplane, 787 Dream liner, Boeing buys composite plastic wings designed and manufactured by Japanese suppliers. Boeing then sells the completed 787s back to Japanese airlines, all with a nice subsidy from the Japanese government. This is the result of being creative in negotiations.

10.5.2 Conditions for Negotiation We have discussed the different styles of negotiation. There are various conditions that can affect the success or failure of a negotiation process. Some of the factors are listed below: Willing Participants: It is essential to identify the people or the groups that are willing to negotiate on disputing issues. Interdependence: For any negotiation process to be productive, participants of the process have to be dependent upon each other so that mutual needs and interests are met.

 Readiness to Negotiate: It is important for the participants to be ready to negotiate for any dialogue to begin. It requires adequate planning and preparation with various strategies in mind to negotiate efficiently. Means of influence or leverage: It is important to have some means to influence the attitude of negotiators. Leverage or influence can help change the point of view of negotiators and it helps to reach agreements on issues of disagreement. Agreement on Common Issues: It is important for the participants to agree upon some common issues and interests. It helps in progressing the negotiations and move on to other issues. Readiness to Settle: For any negotiations to succeed, the participants need to be willing to settle issues. If participants do not reach any agreement, negotiations prolong and result in failure. Unpredictability of Outcome: Negotiations are made because the outcome of not negotiating is unpredictable. For example, by going to court a person has half a chance of winning. That person may decide to negotiate rather than take the risk of losing as a result of a judicial decision. Thus, Negotiation is more predictable than court because if negotiation is successful, the party will at least win something. Sense of Urgency: Generally, negotiations occur when there is pressure or it is urgent to reach a decision. Urgency may be imposed by either or by potential negative or positive consequences to a negotiation outcome. Some of the external constraints that affect the negotiation process are the court dates, imminent executive or administrative decisions and any predictable changes in the environment. Internal constraints that affect the process include the artificial deadlines selected by a negotiator to enhance the motivation of another to settle. Thus, for any negotiations to be successful, the participants must jointly feel a sense of urgency and be aware that they are vulnerable to adverse action or loss of benefits if a timely decision is not reached.

Psychological Elements: It is vital to ensure that any strong expressed or unexpressed feelings about the other party do not affect a person's psychological readiness to bargain. Thus, psychological barriers that affect the settlement process have to be set aside if successful negotiations are to occur.

 Practical Agreement: Sometimes, some settlements may be substantively acceptable but may be impossible to implement. Thus, participants in negotiations have to be able to establish a realistic and workable plan to carry out their agreement if the final settlement is to be acceptable and hold over time. Resources to Negotiate: It is necessary for the participants in negotiations to have the interpersonal skills necessary for bargaining and, where appropriate, the money and time to engage completely in dialogue procedures. Thus, inadequate or unequal resources may block the initiation of negotiations or hinder settlement. Self Assessment Questions 11. The psychological barriers that affect the settlement process have to be set aside if successful negotiations are to occur. State true or false. 12. The word negotiation is derived form a Latin word ______________. 13. Partnership Approach is also called as ______________. 14. The Traditional approach is also termed as ______________ .

egarding hike in your salary as you have been performing well. How will you negotiate with the management of th

organisation and selecting the negotiating team. The negotiator of the team recognises the eight phases of negotiation, namely, preparing, arguing, signalling, proposing, packaging, bargaining, closing and agreeing. Negotiation is a process by which involved parties resolve matters of dispute by holding discussions and coming to an agreement which can be mutually agreed by them. Many different negotiation styles can be used when different parties sit down for negotiations. The common approaches adopted are traditional, partnership, advocacy and creative approach. There are many variations of each style.

10.7 Terminal Questions 1. Analyse the various issues considered in the process of collective bargaining.
2. List out the various categories of people involved in the process of negotiation. 3. Bring out the advantages of collective bargaining. 4. Describe the various approaches of negotiation. 5. Explain the phases of collective bargaining and negotiation.

10.8 Answers Answers to Self Assessment Questions 1. Collective Bargaining Agreement 2. True 3. True 10.6Occupational Safety and Health 4. Summary Collective bargaining is ajob security process between employers and 5. Working conditions, discussion employees to attain certain conditions. It allows taking joint decisions. This 6. Wages and remuneration: ensures a democratic way of work in the organisation. It allows 7. Indicate your readiness to work together representatives of both the management as well as the employees 8. Packaging participate in the affairs of the organisation. It ensures building stable 9. False relationships among the parties involved. It facilitates in achieving discipline in the organisation. It allows to work together 10. Indicate your readiness understanding between two parties to arrive at a common approach. Collective Bargaining is a method of negotiation in which 11. True employees use authorised union representatives to assist them. 12. Negotiatus 13. Interest-based bargaining 14. Win-lose policy. Collective bargaining process starts with choosing a representative of the employees followed by submitting a proposal to the management of the

Answers to Terminal Questions 1. Refer section 10.2.1 2. Refer section 10.5 3. Refer section 10.4 4. Refer section 10.5.1 5. Refer section 10.3

10.9 Case Study

ecreased shares in the U.S. automobile market. This pushed the General Motors to have a common agreement tha

10.10 Glossary

l decision. Once a decision is made in the process of arbitration, it serves as a legal bond on labour and management

arding the rights and duties of people at work. It aims to reach a collective agreement that sets out various issues such as em

oss of value. Money, or cash on hand, is the most liquid asset. It helps in examining the performance of the organisation

solution, but cannot impose a resolution on the conflicting parties

References 1. Contemporary Business by Louis Boone and David Kurtz 2. http://www.laynetworks.com/Types-of-Negotiation-in-organisations.html 3. en.wikipedia.org/wiki/Negotiation

Unit 11 Laws Related to Employee Relations

Structure 11.1 Introduction Objectives 11.2 Evolution of Employee Laws in India 11.3 Laws Relevant to Employee Relations Standing Orders Act -1946 Factories Act -1948 Employment Exchanges Act -1959 Apprentice Act -1961 Contract Labour Act -1970 11.4 Laws Relevant to Organisational Conflicts Trade Union Act -1926 Industrial Disputes Act -1947 11.5 Laws Relevant to Employee Wages and Compensation Workmens Compensation Act -1923 Payment of Wages Act -1936 Employee State Insurance Act -1948 Minimum Wages Act - 1948 Employee Provident Fund Act - 1952 Maternity Benefits Act -1961 Payment of Bonus Act -1965 Payment of Gratuity Act -1972 11.6 Summary 11.7 Terminal Questions 11.8 Answers 11.9 Case Study 11.10 Glossary

11.1 Introduction By now you must be familiar with the concepts of trade unions and their role in collective bargaining and negotiation. In this unit we will discuss some of the Indian laws related to Employee Relations.

The term Employee Relations refers to the relations between employers and their employees. Every country has laws which regulate employee relations. India is a country which complies with the International Labour Organisation (ILO) standards and has laws which ensure the welfare of employees. In India the power is distributed between the union governments and the state governments. Legislations regarding certain issues can be formed or amended by both the union government and the state government. Such issues are called concurrent subjects. Labour is a concurrent subject. So both central and state governments enforce laws regulating labour.

We will discuss the legislations of India which are related to employee relations and industrial disputes and the year these acts came into effect. Thereafter, we will also learn about the various laws related to employee wages and compensation. Learning Objectives After studying this unit, you will be able to: Discuss the evolution of Employee Relation laws in India. Identify the different labour laws related to Employee Relations. Describe the laws relevant to organisational conflicts. Describe the laws relevant to employee wages and compensation.

Government intervention was minimal. The first laws regulating the conditions of miners and factory workers were introduced by the British. The Factory Act of 1881 and the Mines Act of 1923 aimed to regulate child labour, working hours, safety and sanitation conditions. The Trade Disputes Act of 1929 recognised trade unions and enabled the government to intervene and settle disputes. The Government of India Act of 1935 empowered provincial governments to have their own labour legislations. But representatives of employees wanted uniform labour legislation in all provinces. The government invited representatives of employers and workers to participate in the India Labour Conference of 1942. A Standing Labour Committee was set up to promote uniform labour legislation, to settle industrial disputes and to discuss issues which were significant to both employers and employees. After independence, more than 55 central labour laws and over 100 state labour laws were introduced. In 1968, a board of arbitration was set up to resolve differences between employers and employees. The government plays a dominant role in employee relations by its labour legislations, labour courts and administrative officers. Labour courts, industrial tribunals and national tribunals have also been set up. Acts like the Essential Service Maintenance Act have been introduced to maintain essential services and curb strikes or lock-outs. The Industrial Disputes Act was introduced in 1947 to settle disputes. The Minimum Wages Act of 1948 ensures the setting and revision of minimum rates of wages for certain scheduled industries involving hard labour. The of Employee Laws in IndiaAct of 1948 ensures sickness 11.2 Evolution Employees State Insurance benefit, maternity benefit, disablement benefit and medical benefit. India. In this section, we discuss about the evolution of employee laws in The Employees Provident IndianAct of 1952 aims to provide state level have Employee laws of the Fund government at central and security to the industrial workersa highretirement or in case of retrenchment, example, a sought to ensure after degree of protection for workers. For or for their dependentsworker can the terminated only for proven The Bonus Actfor 1965 permanent in case of be early death of employees. misconduct or of aims to settle disputes arising from issues related to bonus payments. The habitual absence. Shops and Commercial Establishment Act regulates the working conditions and terms of employment of workers employed in shops, commercial Legislations regulating employee relationsso on. major role in the overall establishments, theatres, restaurants and play a progress and economic development of the country. These legislations are amended from time to time according to the changing circumstances and environment. The aftermathhave an idea of the evolution of the rise of tradein India, let us Now that you of the industrial revolution saw employee laws unions, collective bargaining, formulation of variousin detail. analyse some laws governing employment labour laws, and labour courts. The colonial period did not see many industrial relation policies.

Self Assessment Questions 1. The first laws regulating the conditions of miners and factory workers in India were introduced by the ________. 2. The ______________ Act of 1935 empowered provincial governments to have their own labour legislations. 3. The __________ Act of 1948 ensures the setting and revision of minimum rates of wages for certain scheduled industries involving hard labour. 4. The _________________________ Act regulates the working conditions and terms of employment of workers employed in shops, commercial establishments, theatres, restaurants and so on.

Submission of Draft Standing Orders: The various rules governing the submission of the draft standing orders are as follows. Employers have to submit to the Certifying Officer five copies of the draft standing orders proposed for adoption in their establishment within six months from the date on which this act becomes applicable to the establishment. The draft has provision for every matter set out in the schedule which is applicable to the industrial establishment, and as far as is practicable, conform to the prescribed model standing orders. The draft standing orders has to be accompanied by a statement giving prescribed particulars of the employees in the industrial establishment including the name of the trade union, if any, to which they belong.

11.3 group of employers in similar industrial establishments can submit a A Laws Relevant to Employee Relations joint draft the most important subject to certain prescribed plays a vital Labour is of standing orders, resource of any industry and conditions. role in realising the goals of any organisation. In India, we have many laws which Certification of Standing employee administration and employee welfare. deal with issues related to Orders: The following procedure is adopted for certifying the draft of relations between the management and the employees. These laws regulate the standing order: It is essential to have complete knowledge of the laws, bye laws, regulations and ordinances the draft ofto the industry in general and to the organisation 1. On receiving pertaining the standing order, the certifying officer forwards in copy of it to the trade union of the workmen. If there are no of an industry a particular, to effectively and efficiently manage employees such trade or an organisation. Let us now analyse somea notice in the in detail. form. unions, it is given to the workmen along with of these laws prescribed The workmen can raise objections, if any, to the draft standing orders. This has to be submitted within fifteen days from the receipt of the notice.
11.3.1 Standing officer then decides whether any modification or addition to 2. The certifying Orders Act 1946 The Industrial Employment (Standing necessary of 1946 is applicable the draft submitted by the employer is Orders) Actto make the draft standing throughout India. It is enforced in every industrial establishment which orders certifiable. employs or had employed 100 or more workmen on any day of the preceding 3. months. This officer then employers draft standing orders and sends 12The certifying act compelscertifies the in industrial establishments to copies of the certified standing of employment and also to familiarise union accurately define the conditionsorders to the employer and to the tradetheir or other prescribed representatives of act has been amended by various employees with those conditions. This the workmen within seven days. state governments. For example, this act has been amended in Maharashtra by The Maharashtra Act 54 of 1974, in Mysore by the Mysore Act 37 of 4. If not satisfied by Madras Act 24 of 1960, and in Andhra Pradesh by A. P. 1975, in Madras by the order of the certifying officer, the employer, workman, trade Act 9 of 1969. union or other representatives of the workmen can appeal to the appellate authority within 30 days from the date on which copies are received. The appellate authority, whose decision is final, confirms the standing orders either in the form certified by the certifying officer or after making any necessary modifications.

5. The copy of all standing orders is filed by the certifying officer in a register in the prescribed form, and the certifying officer furnishes a copy to any person applying for it on payment of the prescribed fee. Let us now discuss the provisions of the Factories Act of 1948. 11.3.2 Factories Act 1948 The Factories Act regulates labour employed in factories. It applies to the whole of India. This act applies to all factories which use power and employ 10 or more workers, and applies to factories not using power and employing 20 or more workers, on any day of the preceding 12 months. According to this act, every factory has to be registered and needs to obtain a licence for working which has to be renewed at periodical intervals. The plans, designs and specifications of any proposed construction or extensions to the factory have to receive the prior approval of the state government.

The main provisions of this act are as follows: Facilities: It specifies the minimum requirements regarding health (cleanliness, ventilation and temperature, lighting and control of glare, etc.) safety (protection of eyes, handling of explosive and inflammable materials, etc.), and general welfare of workers (first-aid, canteens, shelter rooms, crches, urinals, drinking water etc.). Safety: Fencing of machinery needs to be done. Adequate fire-fighting facilities must be provided. Hoist and lifts have to be in good working condition. Stairs and passages have to be free from obstruction. Safety appliances to protect the eyes from dangerous dusts, gases, and fumes have to be provided. Pressure plants have to be regularly checked. Working Hours: The working hours cannot be greater than 48 hours in a week. Weekly holiday is mandatory. Compensatory holidays have to be given if the worker works on weekly holidays. A worker cannot be made to work for more than nine hours in a day. Half an hour rest is to be provided after five hours of work. Overlapping of shifts is not allowed. Overtime Wages: A worker has to be paid overtime wages at double the rate of regular wages if the worker works beyond 9 hours a day or 48 hours a week.

 Leave: A worker is permitted a leave of one day for every 20 days of work performed in the previous calendar year provided that the worker had worked for 240 days or more in the previous calendar year. Child Employment: Children below age of 14 cannot be employed. Children between 14 and 15 years of age can be employed only for 4.5 hours per day or during the night. Adolescents cannot work between 7 pm and 6 am. Obligation regarding Hazardous Processes and Substances: Provide Information about hazardous substances and processes and the dangers and health hazards involved. Ensure safety measures and make emergency plans. Appoint safety committees.

11.3.4 Apprentice Act - 1961 The Apprentice Act of 1961 aims to provide practical training to technically qualified persons in different trades so as to promote skilled manpower. The scheme is also applicable to engineers and diploma holders. The apprentice has to enter into a contract of apprenticeship with the employer which has to be registered with Apprenticeship Adviser. Obligation of Employer: The duties of the employers according to this act are as follows: Every employer has to provide training to the apprentice using the services of a suitably qualified person. Every employer has to provide sufficient instructional staff, who possess adequate you know the provisions of the Factory and theoretical training, the Now that qualifications and can impart practical Act, let us next discuss and facilities for testing the apprentices. Employment Exchange Act of1959. Every employer has to take apprentices in proportion to the skilled 11.3.3 Employment Exchanges Act 1959 workers employed in different trades. But employers can engage a higher According to the Employment Exchanges Act, the employer has to notify to number of apprentices than the prescribed minimum. the employment exchanges about all vacancies other than vacancies in unskilled trade reserves places for scheduled castes and schedules to be Every categories, temporary vacancies and vacancies proposed tribes. filled through promotion. Vacancies which will be filled using the result of any Employers have to pay interview held apprentices at prescribed of, any examination conducted or stipends to theby, or on recommendation rates. independent of Apprentices:Union or State Public Service Commission and Obligations agency such as Every trade apprentice undergoing the like need not be notified. The vacancies need to be notified to the apprenticeship training has the following obligations: Central Employment Exchange or Local Employment Exchange. The Employment Exchanges Act does not compel an employer to recruit any person through have to learn exchange conscientiously and diligently andhave Apprentices employment the trade to fill a vacancy. Employers also try to update as skilled workers before theabout their staff strength at regular qualify the employment exchanges expiry of the period of training. Apprentices have to attend practical and instructional classes regularly. intervals. Apprentices have to execute all lawful orders of their employers and superiors in the establishment. Apprentices have to carry out the obligations specified in employers in of This act is applicable to the whole of India and includes the the contract apprenticeship. both in public and private sectors. This act applies to establishments establishments which perform non-agricultural activities and employ 25 or more workers. Penalties are imposed if any employer fails to notify the employment exchanges about any prescribed vacancies. Let us next discuss the Apprentice Act.

Let us now examine the Contract Labour Act of 1971. 11.3.5 Contract Labour Act 1970 The Contract Labour Act is applicable to the whole of India. It applies to every organisation in which 20 or more workmen are employed or were employed on any day of the preceding 12 months as contract labourers. This act does not apply to organisations in which work only of an intermittent or casual nature is done. In order to administer this act, a Central Advisory Contract Labour Board advises the central government and a State Advisory Contract Labour Board advises the state government. The central or state government can also prohibit contract labour on the advice of these boards. Any contractor can undertake or execute any work through contract labour only after obtaining a licence from a licensing officer. This license has to be renewed regularly. Every principal employer and every contractor needs to maintain registers and records which give particulars of the contract labour employed, the nature of work performed by the contract labour, and the wages paid to the contract labour. The various provisions of this act which ensure the welfare of the contract labourers are as follows: Canteens: The contractor has to provide one or more canteens if more than 100 contract labourers are employed. Restrooms: The contractor has to provide well-lit and properly ventilated restrooms. Other Facilities: The contractor has to provide drinking water, toilets washing facilities, and first-aid boxes which are properly equipped and easily accessible. Payment of Wages: A contractor will be responsible for timely payment of wages to each contract labourer. When training is completed, all trade apprentices appear for a test which is conducted by the National Council. Apprentices who pass the test get a certificate of proficiency. It is not mandatory for the employer to offer any employment to any apprentice who has completed the period of the apprenticeship training, nor is it compulsory for the apprentice to continue to work under the employer.

Self Assessment Questions 5. The _______________ act compels employers in industrial establishments to define accurately the conditions of employment under them and to also to familiarise their employees with the said conditions. 6. The _______________ Act compels employers to notify the Employment Exchanges about all vacancies in their establishments. 7. The __________ Act regulates labour employed in factories in India. 8. The ______________ aims to provide practical training to technically qualified persons in different trades so as to promote skilled manpower. 9. The _____________ Act aims to ensure the welfare of the contract labourers.

Contraventions to the provisions of this act are punishable by imprisonment or fines. We have so far discussed the laws that govern employee relations. Let us now discuss some laws which regulate industrial conflicts.

This act specifies that at least half of the office bearers of the trade union must be engaged or employed in the industry with which the trade union is connected. According to this act, the funds of the trade union can be spent only for the following purposes: For payment of salary, allowances and expenses of the office bearers of the trade union. For payment of expenses incurred for the administration of the trade union. For the legal expenses of any member of the trade union incurred for legitimate trade union activities. For compensating the loss of members at times of disputes. 11.4 Laws Relevant to Organisational Conflicts For paying allowances to members or their dependants on account of Clashes of death, sickness, or injury. an organisation, cause dissatisfaction events like interest, which occur within among the parties involved. This leads to industrial disputes or conflicts. For providing education or religious benefits (like funeral or religious Trade unions play an important role within an industry. The legislation which ceremonies) trade unions is the dependants. regulates theto members or their Indian Trade Unions Act of 1926. The Industrial Disputes Act of 1947 is an important legislation for investigation For publishing of periodicals related to trade now discuss these and settlement of all industrial disputes. Let us union activities. legislations. 11.4.1 Indian Trade Unions Act 1926 The Indian Trade Unions Act was passed in 1926 and has been amended in 1928, 1960 and 1964 and 2001. The Indian Trade Union Act is applicable to the whole of India. You know that the main activity that trade unions involve in is collective bargaining. Trade unions fight for the rights of the workers and ensure better working conditions. The Trade Union Act of 1926 recognises the rights of workers to form trade unions and to resort to strikes to enforce their demands. For example, a civil court granted permission to the workers to conduct strike in the trade dispute between Ahmedabad Textile Research Association and ATIRA Employees' Union in 1995. The Trade Union Act specifies the rights and duties of the trade unions and also grants immunity to the leaders and members of the trade union from civil and criminal proceedings for legitimate trade union activities. This act regulates the membership rates to the unions and also specifies the refund procedure.

The main aim of this act is to settle industrial disputes and maintain peace in the industrial sector. The following provisions are made for settling disputes under this act: Works Committee: If the establishment has employed more than 100 workers in the preceding 12 months, then a works committee consisting of the representatives of the employers and the employees is formed. The number of employee representatives will not be lesser than that of the employers. Conciliation Officers: The duty of the conciliation officer is to settle disputes amicably and fairly. The function of the conciliation officer is mostly administrative. Board of Conciliation: This is constituted to settle complex and important disputes. It is usually formed if the works committee is unable to settle the disputes. It has equal representations of the employer and the employees. Court of Enquiry: This investigates all matters referred to it and submits its findings to the government within six months from the start of the enquiry. Labour Court: This Trade unions can be amalgamated together as one Two or more registered adjudicates industrial disputes. The state government appoints onewith or without dissolution or division of their funds provided that Trade union person who has served any of the below positions to enquire and give a verdict: at least sixty per cent of the members of the unions involved vote in favour of the proposal. A former judge of the high court A judge for three years in the district court We have so far discussed the Trade Union Act. Let us next analyse the A Disputes any Industrialmember ofAct. tribunal for at least two years A judge in any court of the country for seven years 11.4.2 A chairmanDisputes Act 1947 Industrial for any provincial labour court for at least five years Industrial Dispute is defined as any dispute or difference between employers Industrial Tribunal: This has only one person nominated in it to and employers, or employers and workmen, or workmen and workmen, adjudicate industrialwith the employment or non-employment, or theany of of which is connected disputes. Such a person must have served as terms the following positions: conditions of labour of any person.1 employment, or with the A judge of a high court A District Judge or an Additional District Judge for at least three years

Indian Business Environment by T.R.Jain, Mukesh Trehan and Ranju Trehan; 2009

 National Tribunal: This is appointed by the central government to settle disputes of national importance or if the industrial establishments involved function in more than one state of the country. One person who has served in the following position is appointed to the tribunal: A judge of a high court A chairman of the Labour Appellate Court for at least two years Arbitration: Any dispute can be referred to arbitration with the consent of the parties involved. The consent has to be obtained before the dispute is referred to a tribunal or a court. The Board of Arbitration needs to have equal representations of the parties involved and if the parties decide so, one person can be elected to be the arbitrator to settle the dispute.

The Industrial Disputes Act prohibits public utility services and other establishments which are essential for maintaining public service from indulging in strikes and lock-outs. The Industrial Disputes Act also has provisions which ensure that an employer does not illegally retrench or refuse to employ workers. It also ensures that workers receive adequate compensation in case of retrenchment or layoff. Both the employers and the employees are bound by any agreement reached. Persons who breach the agreement are punishable by fines or imprisonment. This section has explained to you the various aspects of the Industrial Disputes Act. Let us next analyse the laws relevant to employee wages and compensation. Self Assessment Questions 10. The ___________ Act of 1926 recognises the rights of workers to form trade unions and to resort to strikes to enforce their demands. 11. The main activity trade unions involve in is ____________. 12. The main aim of the _______________ Act is to settle disputes and maintain peace in the industrial sector.

The government can also appoint two persons as Assessors to assist the res materials out of recycled plastic. You employ 20 permanent staff and 10 contract labourers. List the industrial tribunal.

11.5 Laws Relevant to Employee Wages and Compensation Employee compensation laws ensure economic security of the employees. Workers' compensation laws ensure compensation from employers for the cost of injuries or occupational diseases which the employees have got in the course of their work. Worker's compensation legislations ensure that employers provide a reasonably safe place to work, suitable equipment, rules and instructions. Table 11.1 gives information about the different laws of India that regulate employee wages and compensation.
Table 11.1: Indian Laws Regulating Wages and Compensation Laws Year Purpose Workmens Compensation Act 1923 Provide compensation for injuries, accidents and occupational diseases Payment of Wages Act 1936 Ensure prompt and regular payment of wages Minimum Wages Act 1948 Fix and revise minimum rates of wages Employees State Insurance Act 1948 Provide benefits to employees in case of sickness, maternity and employment related injury Employees Provident Fund Act 1952 Provide for the future of the worker after retirement Maternity Benefits Act 1961 Provide benefits to women employees during their pregnancy Payment of Bonus Act 1965 Regulate the bonus paid to employees Payment of Gratuity Act 1972 Have a uniform payment of gratuity throughout the country

of their employment. Employers also have to compensate the dependants of the employees in the event of the death of an employee while on duty. The rate of payment of compensation is as follows: In the event of death, Compensation = 50 % of the monthly wages of the deceased employee x relevant factor or Rupees 80,000 whichever is higher In the event of permanent or total disablement, Compensation = 60 % of the monthly wages of the disabled employee x relevant factor or Rupees 90,000 whichever is higher The relevant factor depends on the age of the concerned employee and the number of years the employee could have worked. Employees need not pay compensation for the following events: For disablements which last only 3 days or lesser. For disablements which arise out of drinking alcohol, using drugs or disregarding safety rules.

Let us now examine the laws that regulate employee wages and compensation in detail. 11.5.1 Workmens Compensation Act - 1923 The Workmens Compensation Act is applicable to the whole of India. This act covers workers of factories, mines, plantations, construction companies, transport undertakings, railways, shipping companies and circuses. This act is applicable to all establishments which have 20 or more employees. Even casual workers are covered by this act. Employers have to compensate workers for temporary, partial and permanent disabilities and occupational diseases which occur in the course

The wage period can be weekly, fortnightly or monthly but never more than a month. Monthly wages have to be paid by the 7th of the following month or 10th if the establishment has 1000 or more employees. Wages can be paid as currency notes, coins, cheques or it can be directly credited to the bank account of the employee. Deductions are permitted for absence of duty, for damage or loss of goods entrusted to the employee, house accommodation if provided, recovery of advance, loans given, income tax, provident fund, ESI contribution, insurance premium, amenities provided, and deductions by order of Court. A maximum of 75% of the salary is deductible if deductions are wholly or partly made for payments to co-operative societies, else only a maximum of 50% of the salary is deductible. This act also regulates the amount of fine an employer can impose on an employee for acts of omission. An Inspector of Factories is appointed to supervise the payment of wages to the employees. Employers who violate the law can be fined or imprisoned.

Let us next discuss the benefits of the Employee State Insurance Act. 11.5.3 Employee State Insurance Act - 1948 The Employee State Insurance Act provides benefits to employees in case of sickness, maternity and employment injury. An employee can avail medical The benefit of this act isand disablement benefits. benefits, cash benefits, that it ensures that employers use adequate safety devices to minimise workplace accidents and injuries. Employers are also encouraged to provide suitable medical treatment for injured employees in This act extends to the whole of India. All factories and establishments that order 20 mitigate the effect ofare governed by this act. have to or more employees their injuries. This act ensures that no employer can Payment discharge or punish an Let us now discuss the features of the dismiss, of Wages Act. employee during the period the employee receives sickness or maternity 11.5.2 Payment of Wages Act - 1936 disciplinary action against such benefit. Employer also cannot take any employees. of Wages Act ensures prompt and regular payment of wages The Payment and also prevents employers from making arbitrary deductions in the wages. This definition of employees according to men act does not include persons to The Act ensures equal remuneration for this and women. This act applies the whole of India. This act is7,500 per month,government Army, Navy or Air drawing wages over Rupees applicable to all member of establishments, factories, mines, plantations, transport services, oil-fields, and workshops. Force, partners of firms, persons employed in government establishments, and construction workers employed to raise additional building after the initial set up of factory. Wages according to this act includes all remuneration, bonus, or sums Both employers and employees contribute not include house rent payable for termination of service, but doesto the Employee State Insurance Corporation Fund in every wage period. Normally, the allowance, medical expenses, travel allowance, etc. wage period is a month. The employees contribution is 1.75% of wages and the employers

contribution is 4.75%. Employers cannot deduct their contribution from the salary of employee. The various benefits provided by the Employee State Insurance Corporation (ESIC) under this act are as follows: Medical Benefits: Employees and their workers can avail medical treatment from ESI hospitals and dispensaries. Sickness Benefits: An employee can avail a maximum of 91 days of sickness benefits at a rate corresponding to the average wage rate provided the employee has made ESI contributions for at least 78 days. Maternity Benefits: A female employee can avail a maximum of 10 weeks paid maternity leave provided she has made contributions for at least 70 days. Six weeks of paid leave can be claimed for miscarriages. Nominees can claim full cash benefits if a female employee dies during delivery. Disablement Benefit: A worker can claim 40% of the standard benefit for temporary disablements lasting more than 3 days. A worker can claim cash benefits corresponding to the loss of earning capacity for partial and total disablements. Dependants Benefit: The wife, minor children or the widowed mother of an employee who dies in service are entitled to a pension. Retirement Benefit: Worker who have made contributions for five years or more and who have retired from work can claim medical benefits for themselves and their spouse.

employees. The central government has enforced a national floor level minimum wage and has fixed it as Rupees 45 per day with effect from 30th November 1999. Let us next discuss the provisions of the Employee Provident Fund Act. 11.5.5 Employee Provident Fund Act - 1952 The Employee Provident Fund Act of 1952 extends to the whole of India except the state of Jammu and Kashmir. It is applicable to every establishment in which 20 or more workers are employed drawing a maximum wage of Rupees 6500 per month. The employee contributes 12% of the wages to the provident fund and the employer contributes an equal amount. But 8.33% of the employers contribution goes to the employee pension fund. The various benefits provided by the different schemes of this act are as follows: Employee Provident Fund Scheme: The worker can claim advances from the provident fund for construction of houses, and for education or marriage of children. Employee Pension Scheme: The widow or children of a worker who dies in service can claim pension from the fund. Employee Deposit Linked Insurance Scheme: The legal heir or nominee of a deceased employee can claim insurance benefits equal to the balance in the fund up to a maximum of Rupees 60,000. Let us now discuss the features of the Maternity Benefits Act. We have so far analysed the provisions of the Employee State Insurance 11.5.6 Maternity Benefits Act - 1961Wages Act. Act. Let us next discuss the Minimum The Maternity Benefits Act provides for the full and healthy maintenance of 11.5.4 Minimum children Act certain period before and after child-birth. This women and their Wages for - 1948 Act Minimum Wages Act fixes minimum rates which are not covered by the Theapplies to factories, plantations and mines of wages in certain Employee State Insurance Act. employments. The minimum rates of wages also include Special Allowance (Variable Dearness Allowance) which is linked to the Consumer Price Index Number. The SpecialMaternity Benefits Acttwice a follows: act extends to The provisions of the Allowance is revised are as year. This the whole of India. The minimum wages are reviewed at regular intervals, but these intervals cannot exceed five years. This act entitles women employees who have worked for a minimum of 80 days to claim 12 weeks of maternity leave of which not more then six weeks shallminimum the date of expected delivery.the basic needs of the employees The precede wages paid must provide for and their families and also maintain the working efficiency of the

 This act prohibits work by women in any establishment during the six weeks immediately following the day of delivery or miscarriage. This act ensures the payment of maternity benefit at the rate of average daily wage for the period of the woman employees actual absence, and any period immediately following the date of delivery and including the actual day for delivery. When prenatal confinement and postnatal care is not provided free of charge, women employees can claim a medical bonus of Rupees 250. No employer can discharge or dismiss a woman for her absence from work in the prenatal or postnatal period. Let us next discuss the provisions of the Payment of Bonus Act. 11.5.7 Payment of Bonus Act 1965 The Payment of Bonus Act is applicable to any factory employing 10 or more persons where powerless processing is carried and in other establishments that employ 20 or more persons. However, this act is not applicable to government employees, Municipal Corporation or Municipality employees, railway employees, university and other educational institutions employees, public sector insurance employees, Reserve Bank of India and public sector financial institutions employees, charitable hospitals, social welfare organisations and defence employees. Once the act is applied, it continues to be applicable even when the number of employees is below 20.

The minimum bonus payable is 8.33% and the maximum is 20%. Bonus has to be paid every year within eight months from close of accounting year. Bonus has to be paid to all employees whose monthly salary does not exceed Rupees 3,500 per month provided they have worked for at least 30 days in the accounting year. But, for employees earning between Rupees 2501 to Rupees 3500 only a salary of Rupees 2,500 is considered for calculation of bonus. According to this act, the duties of the employers are as follows: To compute and pay the annual bonus as specified by the act To submit an annual return of bonus paid to employees during the year To produce the registers or records maintained and to co-operate with the inspector who is appointed by the government by notification on the Official Gazette

 To audit their account according to the directions of a Labour Court or Tribunal or any other authority The rights of the employers according to this act are as follows: Right to forfeit bonus of an employee, who was dismissed from service for fraud, riotous or violent behaviour, theft, or sabotage Right to deduct from the bonus payable to an employee any financial loss caused by misconduct of the employee Right to refer any disputes regarding the application or interpretation of any provision of the act, to the Labour Court or Labour Tribunal We have discussed the provisions of the Payment of Bonus Act. Let us next discuss the Payment of Gratuity Act. 11.5.8 Payment of Gratuity Act - 1972 A gratuity is a retirement benefit payable to a worker. Gratuity is a reward for good, efficient and faithful service rendered for a considerable period.2 The Payment of Gratuity Act aims to have a uniform payment of gratuity throughout the country. This act has been amended in 1984, 1987 and 1998. This act is applicable to the whole of India except for the state of Jammu and Kashmir. The provisions of this act are as follows: It stipulates compulsory payment of gratuity by managements of factories, plantations, oilfields, ports, railways, shops and other establishments which employ 10 or more persons in the event of superannuation, retirement, resignation or death of an employee. The gratuity is calculated at the rate of 15 days salary for every year of service completed subject to a maximum of Rupees 3,50,000. The right of a worker to gratuity can be forfeited in certain cases.

International Labour Law Reports, Volume 14 by Zvi H Bar-Niv; 1996

Self Assessment Questions 13. The _______________ Act provides for the full and healthy maintenance of women and their children for certain period before and after child-birth. 14. A ___________ is a retirement benefit payable to a worker. 15. According to the Employee Provident Fund Act of 1952, the employee contributes _____ of the wages to the provident fund and the employer contributes an equal amount.

sation in the cases mentioned below. Give reasons for your answers. actory and developed asthma due to exposure to the fumes in the factory. n works factory cut his fingers while cutting iron sheets. But Sunder was under the influence of alcohol. ipal corporation, slipped from a garbage truck when he was loading garbage in it and fractured his hand. The doc

filled through promotion. The Apprentice Act of 1961 aims to provide practical training to technically qualified persons in different trades so as to promote skilled manpower. The Contract Labour Act of 1970 aims to ensure the welfare of contract labourers. Indian legislature has created laws which aim to resolve industrial disputes. The Industrial Disputes Act of 1947 is an important legislation for investigation and settlement of all industrial disputes. The legislation which regulates trade union is the Indian Trade Unions Act of 1926. India also has laws which regulate employee wages and compensation. The Workmens Compensation Act of 1923 provides for compensation for injuries, accidents and occupational diseases. The Minimum Wages Act of 1948 ensures the fixation and revision of minimum rates of wages. The Employees State Insurance Act of 1948 and other acts provide sickness benefit, maternity benefit, disablement benefit and medical benefit. The Employees Provident Fund Act of 1952 provides for the future of the industrial worker. Thus, the legislations of the Indian government aim to ensure the welfare of the workers.

11.7 Terminal Questions 11.6 Summary 1. Discuss the evolution of employee laws in India. Employee laws of the Indian governments at central and state level have 2. Whatto ensure a high degree of protection for workers. The first laws sought are the provisions of the Factories Act of 1948? regulating the conditions of miners and factory workers were introduced by 3. Explain features of the law which regulates contract labour. the British. After independence more than 55 central labour laws and over 4. Explain the Trade Unions Act of 1926. 100 state labour laws have been introduced. 5. How does the Industrial Disputes Act of 1947 help in settling industrial disputes? India has many laws which regulate employee administration, employee 6. Discuss any two laws relevant to employee wages and compensation. welfare, and relations between the management and the employees. The Industrial Employment (Standing Orders) Act of 1946 compels employers in industrial establishments to accurately define the conditions of employment 11.8 Answers under them and to also to familiarise their employees with the said Answers to Self Assessment Questions conditions. The Factories Act of 1948 regulates labour employed in factories in 1. British Employment Exchanges Act of 1959 compels the employers to India. The notify the employment exchanges of all vacancies other than vacancies in 2. Government of India unskilled categories, temporary vacancies and vacancies proposed to be 3. Minimum Wages 4. Shops and Commercial Establishment

5. Industrial Employment (Standing Orders) Act of 1946 6. Employment Exchanges 7. Factories 8. Apprentice Act of 1961 9. Contract Labour 10. Trade Union 11. collective bargaining 12. Industrial Disputes 13. Maternity Benefits 14. gratuity 15. 12% Answers to Terminal Questions 1. Refer section 11.2 2. Refer section 11.3.2 3. Refer section 11.3.5 4. Refer section 11.4.1 5. Refer section 11.4.2 6. Refer section 11.5

11.9 Case Study

uld grant permission for it. It decided to use lockouts and promoted inter-union rivalries as a pressure tactic to ma ment to get the plant to be declared a sick unit by the Board of Industrial and Financial Reconstruction (BIFR) in 1

Questions 1. Do you think that the Indian labour laws helped the workers of The Murphy Electronics Company? Give reas 2. Explain how a strong trade union could have helped the workers of The Murphy Electronics Company.

11.10 Glossary

on t erson who has attained puberty but who has not reached full maturity; a teenager e ement e who is bound by a legal agreement to work for an employer for a specific time period in return for practical training in a trade

xecuted in good faith; authentic

at handles non-criminal legal matters ent Exchange yment office which assists a job seeker in finding a job or an employer in recruiting an employee

e birth of a child; during pregnancy

d immediately after the birth of a child References

1. The Changing Face of People Management in India by Pawan S. Budhwar, Jyotsna Bhatnagar; 2009 2. Reforming the Labour Market by Bibek Debroy, P. D. Kaushik; 2005 3. International Labour Law Reports, Volume 14 by Zvi H Bar-Niv; 1996 4. Industrial Law by Arun Kumar; 2003 5. http://labour.delhigovt.nic.in/act/details_acts/trade_union_act_1926 6. http://labour.nic.in/annrep/files2k1/lab5.pdf

Unit 12 Participation and Empowerment

Structure 12.1 Introduction Objectives 12.2 Employee Participation and Empowerment Objectives 12.3 Employee Participation Employee Relations, Involvement and Participation 12.4 Advantages of Employee Participation 12.5 Employee Participation in India 12.6 Methods of Participation Direct Methods of Employee Participation Indirect Methods of Employee Participation 12.7 Employee Empowerment Behavioural Effects of Employee Empowerment Empowerment and Performance Empowerment Management Practices Reasons for Failure of Empowerment 12.8 Summary 12.9 Terminal Questions 12.10 Answers 12.11 Case Study 12.12 Glossary

12.1 Introduction By now, you must be familiar with the laws of the Indian government that regulate employee relations. In this unit, you will learn about employee participation and employee empowerment. The advantages of employee participation and the methods that implement it are also discussed in this unit.
In the complicated field of employee management, the words Empowerment, Participation, and Involvement are often used but interpreted differently by different people. This unit provides an insight into these words. We will first differentiate between Participation and Involvement, and then analyse how the concept of Empowerment falls within these perceptions.

According to the Chartered Institute of Personnel and Development 1(CIPD), employee participation is described as a method in which the participation of employee which helps to offer other employees with a chance to manipulate and where suitable, involve in decision making processes on matters which have a good effect on them in an organisation.

Employee Involvement is a structured process that encourages employee participation with the objective of initiating work related changes. Empowerment involves sharing decision making and implies that more authority is delegated to the employees.2 Learning Objectives After studying this unit, you will be able to: Explain the objectives of Employee Participation and Empowerment in an Organisation Define Employee Participation Assess the advantages of Employee Participation Describe the state of employee participation in India Define Employee Empowerment Explain the methods of Employee Participation Analyse the effects of empowerment on employees

12.2 Employee Participation and Empowerment Objectives Employee participation and empowerment have in recent times become popular buzzwords. Employee participation involves employees in decision making and empowerment helps in delegation of authority. Let us first discuss the objectives of employee participation and empowerment and later analyse each of them in detail.
The primary objectives of employee participation and empowerment are as follows: To Increase Efficiency of Organisations: Enhancing productivity has become one of the major objectives of all organisations and in some cases, a corporate obsession. Several organisational psychologists, both in-house as well as professional consultants, are fully committed to
1 2

en.wikipedia.org/wiki/Chartered_Institute_of_Personnel_and_Development Empowerment: HR Strategies for Service Excellence by Conrad Lashley; 2001

establishing employee contribution schemes within organisations. Many organisations have found that the systematic implementation of employee participation and empowerment schemes has helped in improving productivity. To Improve Employee Relations: Organisations seek to fully develop and utilise the skills, knowledge, and motivation of the workforce in order to realise organisational goals. Employee participation and empowerment are crucial for motivating the employees. Since the 1980s, numerous employeeparticipation efforts and workplace committees have been implemented in many establishments. These schemes include quality circles, employeeparticipation teams, total-quality management teams, team-based work structures, safety-and-health committees, profit sharing plans, joint labourmanagement training programmes, information-sharing forums, joint task forces, employee-ownership programmes, and employee representation on corporate boards of directors.

To Enhance Job Satisfaction: Professional and technical employees value the freedom to decide how to do their work without close supervision. They also value timely information and communication regarding things that affect their work and their organisation. Autonomy and involvement in organisational activities contribute to job satisfaction and thus decrease turnover. To Make Entrepreneurs out of Employees: Organisations want employees to identify with their company better. Organisations want employees to align their goals with that of the company. Employee shares, employee loans, stock options or limited company shares and so on help increase a sense of ownership. They enhance employee involvement and participation and help in motivating the employees. To Improve the Quality of Work Life (QWL): Employee participation allows the workers to have a greater influence on their working environment. The workers are able to participate in decisions on matters related to wages, safety, health, and work facilities and thus improve the quality of their work life.

 To Secure Mutual Co-operation of Employees and Employers: Employee participation helps in achieving industrial peace and avoiding conflicts. You can now explain the objectives of employee participation and empowerment. Let us next analyse employee participation and its benefits. Self Assessment Questions 1. Many organisations have found that the systematic implementation of employee participation and empowerment schemes has helped in improving ________________. 2. Autonomy and involvement in organisational activities contribute to _______________ and thus decrease turnover. 3. Organisations want employees to ________ their goals with that of the company.

12.3 Employee Participation Employee participation is the process by which workers take part in the decision making processes, and do not just blindly follow the instructions of their supervisors. Employee participation is essential for empowerment of employees in an organisation.
Empowerment implies decentralising authority in an organisation. Team participation is very essential for empowerment. Team members are motivated to make decisions by themselves according to the guiding principles and structures that are set up for self management. Quality initiatives within an organisation require employee participation. Each and every employee is encouraged to take incorporate quality measures in all activities in order to satisfy the needs of the customers. Employee participation is also essential for the efficient management of human resources in organisations. Employees feel motivated when organisations empower employees to take decisions. Employee participation is also known as Employee Involvement (EI) Examples of schemes which encourage employee participation include the following: Project Management Teams or Quality Teams: Workers perform tasks that assign significant responsibilities to the team.

 Suggestion Schemes: Workers are provided with channels through which they can convey new ideas to their supervisors. Frequently, deserving suggestions are suitably rewarded. Consultation Exercises and Meetings: Workers share their ideas and experiences which help to achieve the common tasks and goals. Delegation of Responsibilities Within the Organisation: Employees who deal with customers often have to be empowered to make their own decisions and assigned more responsibilities. Multi-Channel Decision Making Techniques: Decisions are not only taken in a descending flow, they also result from communications upwards, sideways, and in various other ways within the organisation.

12.3.1 Employee Relations, Involvement, and Participation According to Farnham (1997), participation of employee is one of the four strategy choices for the administration of the relationship of an employment. Farnham states that, An employee has the right to question and influence organisation decision making and this may involve representative workplace democracy.4 In contrast, involvement of an employee is more unique and individualistic. Involvement aligns commitment with the various organisational goals and is influenced by employee relations management. Employee involvement includes upward and downward communication flows. Downward communication flows from higher management down to line staff and involves written information like staff newsletters, noticeBy now you must be familiar with Collective Bargaining. It iscommunication boards, staff handbooks, and in-house journals. Downward also a form of employee participation. Collective bargainingteam or cascade meetings and also involves other official channels such as represents a process of negotiation about working conditions and terms of employment whereby two staff forums. or more parties (employers and employees associations) come together and negotiate with a view of reaching an agreement.3 Thus collective bargaining enables employees to take or informal.decision making process Upward communication can be formal part in the It includes employee through the employee representatives of the trade appraisals of the superiors suggestions, employee surveys, and performance unions. and is sometimes correlated to quality management tools that include quality circles, quality improvement groups, etc. Adoption of the Employee Stock Ownership Plan (ESOP) makes employees stakeholders in the company and organisational decision-making is The participation of employees in hence increases employee participation and feelings of ownership. For example, United Airlinesinvolved in thegave nowadays being encouraged by all the people who are of the U.S.A. 55% of its equity stake to namely the employers, workers, trade unions, and employment relationship, its employees in exchange of pay cuts and was able to secure employee participation. the state. Blyton and Turnbull have found that more attention is being given to employee involvement and participation. But there are different opinions on the degree of employee participation in decision making. Questions are The Occupational Health and Safety Management Systems of U.S.A. also being raised employee participation at to meaningfully influence strategic recommendson the ability of employeesall levels in decisions that affect the decisions. safety of employees. It which employee of safety health and The range of matters in suggests the usedecision-making is enabled is also joint labour-management committees, work the year 2004 representatives,debatable. Therefore, Blyton and Turnbull, in groups and have proposed a gradual increase in employee involvement from the stage teams to support employee participation in implementing health and safety of no participation to can conduct workplace inspections, analyse safety schemes. Employeesthe stage of employee control. In reality, employee involvement may and revise safety rules, of train new employees. hazards, develop fall between the processandjust receiving decisions to joint consultation and decision making. Enhancing employee participation Let us next see how employee involvement and participation influence employee relations.
www.heacademy.ac.uk/assets/hlst/documents/resource_guides/employee_empowerment_perception_ Political Transformation, Structural Adjustment and Industrial Relations in Africa by International Labour Organisation; 1994 and_involvement.pdf
4 3

involves understanding the nature of employee relations and a change in the notions of how employee relations is embodied in industrial relations. Gaining employee involvement and participation is a time consuming process and requires a lot of support from the top management. Joint consultation meetings, group briefings and regular management walkabouts encourage employee involvement and participation. Employees have to be properly trained to enable them to take part effectively in the decision making process. Employee involvement and participation processes have to be regularly monitored and reviewed so that employees can contribute to the achievement of the overall goals of the organisation. Implementing employee participation and involvement schemes help in improving employee relations within the organisation.

Self Assessment Questions 4. Employee participation is the method in which the workers take part in the ___________ processes. 5. Employee participation is essential for _____________of employees in an organisation. 6. Employee participation is also known as employee________. 7. Gaining employee involvement and participation is a time consuming process and requires a lot of support from the _____________.

team members are not aware of what needs to be done. Previously, the team members just did what their manag

for the organisation in several ways. Companies like IBM, General Foods, Texas Instruments, Procter & Gamble, Ford, Motorola, Honeywell, 3M, and Hewlett-Packard have employee participation programmes. Employee participation benefits both the employees and the employers. The advantages of employee participation are as follows:

Enhanced Employee Performance and Productivity: Employees clearly understand their tasks as there is no ambiguity in their communications with the managers. This helps employees to perform in a better way. Employees are better informed and are able to identify and overcome the hurdles to productivity. Enhanced Organisational Excellence and Efficiency: Employee participation reduces the number of inconsistencies. Knowledge of the tasks enables employees to make intelligent decisions and this increases the overall efficiency. Enhanced Employee Commitment: Employees become more dedicated and work toward achieving the objectives of the organisation. Reduced Absenteeism and Employee Turnover: When employee suggestions are valued and rewarded, the job satisfaction level increases. This helps in retention of employees and reduces absenteeism. Reduced Labour Conflicts: Employee participation builds trust and mutual support. Employees align their goals with that of the organisation, and conflicts within the organisation reduce. Improved Communication within the Organisation: Effective communication is essential for building employee participation. Managers develop their communication skills in order to inform their subordinates of their intentions and perceptions. Employees too communicate better with their superiors through suggestions and joint-meetings.

Reduced Resistance to Changes: Employee participation enables them 12.4 Advantages of Employee Participation to quickly adapt to organisational changes as there is a clear understanding You have now learned what employee participation is. Let us now discuss of employee expectations. the advantages of employee participation. Employee Participation implies that management of anEmployees desire to be actively involved in theirin Enhanced Morale: organisation advocates employee involvement work execution and improvement of various business processes. It is beneficial and make significant contribution to their organisations. Employee

participation satisfies many of the psychological needs of the employee and thus increases their morale. Increased Innovation and Creativity: Employee participation enables employees to suggest and implement novel ideas which help in decision making and problem solving. You now know the advantages of employee participation. Let us next discuss how employee participation is enabled in India. Self Assessment Questions 8. Employee participation implies that management advocates employee involvement in execution and improvement of various _______________. 9. _________________ is essential for building employee participation. 10. Employee participation satisfies many of the ____________ needs of the employee and thus increases their morale.

12.5 Employee Participation in India The legal provisions and gazette notifications of the Indian government enable indirect participation of workers by the representatives of the workers. These representatives are usually elected by the workers.
Since independence the Indian government has initiated many schemes which provide for employee participation both at the enterprise and shopfloor level. They include the following: Works Committee: The Industrial Disputes Act of 1947 provides for limited participation of workers representatives in bipartite works committee in order to ensure good relations between employers and employees. Committees like the canteen committee and the safety committee are statutory. Joint Management Council (JMC): JMCs were introduced in 1958 to administer employee welfare, training, changes in work practices, formulation of standing orders, organisational productivity and so on. Employee Directors in Nationalised Banks: Banks were nationalised in 1969. The Indian government made it mandatory for nationalised banks to have employee directors representing both workers and

officers. The Board of Hindustan Antibiotics (Pune), HMT (Bangalore), The Tatas and DCM, also have adopted this practice. Amendment of the Indian Constitution: The Indian Constitution was amended in 1976 and Section 43A was inserted in the Directive Principles. This enabled workers participation in management at floor and plant levels in manufacturing and mining industries which employ 500 or more workers. Councils were given powers to deal with issues relating to production, waste management, absenteeism, safety and resource utilisation.

Scheme for Workers Participation in Management: This scheme was introduced in 1977 and was applicable to commercial and services organisations which have 100 or more employees. Scheme of 1983: The 1983 scheme regulating employee participation was applicable to all central public sector enterprises. It set up a tripartite committee. Workers Share in Equity: The Union Budget of 1985-1986 had provisions for offering stock options up to five percent of the total shares in order to increase workers participation in management. Participation of Workers in Management Bill of 1990: According to this bill, every industrial enterprise needs to constitute one or more Shop-Floor Councils at the shop floor level and Establishment Council at the establishment level. These councils must have equal representation of employers and employees.

Nowadays, managements have started using Japanese methods of direct participation like two-way communication, kaizen, suggestion schemes, quality circles, 5S and so on. BHEL, Mahindra and Mahindra, Godrej and Boyce have implemented quality circle groups. We have now discussed employee participation in India. We will next analyse the different methods of employee participation. Self Assessment Questions 11. The legal provisions and gazette notifications of the Indian government enable ____________ participation of workers by the representatives of the workers. 12. The Indian government has made it mandatory for nationalised banks to have _______________ representing both workers and officers. 13. The Indian Constitution was amended in 1976 and Section 43A was inserted in the _____________ to enable workers participation in management. 14. Employers prefer to have employee participation at the ________level.

In India, the twin processes of globalisation and liberalisation began in 1990 and gathered momentum in 2000. Suddenly there was a need for a flexible, more qualified and a versatile workforce. Employees realised the need for encouraging employee participation. Most trade unions prefer employee participation to be implemented by using the union. Trade unions also want employee participation to begin at the board level. But employers prefer to bypass the union and establish direct contact and communication with the employees. Employers prefer to have employee participation at the floor level. Also many export processing zones and information technology enterprises are union-free. Many white-collar workers prefer individual treatment and do not appreciate the value of the trade unions. The trade unions too have realised the benefits of co-operating with the management.

providing opportunities to individual employees or small teams to influence the way their jobs are organised. Direct participation is influenced by the communication, information and consultative channels provided by the employer. Direct participation is mostly management driven. The direct methods of employee participation include the following: Newsletters: These communicate the latest happenings and events within a company to the employees and the clients, both potential and existing, of the company. Employee Reviews: These are conducted by the immediate supervisor of the employees to review employee performance. Self-managed Teams: These require higher levels of autonomy, satisfaction, job security, and support from management. Team Briefings: These are regular meetings between the managers and their teams to exchange information and ideas. Team Meetings: These provide a forum for problem solving, and decision-making. Managers also provide important information to the team members in these Participation 12.6 Methods of meetings. Employee participation mainly refers to the participation of employees in Suggestion Schemes: These are informal ways of obtaining ideas from decision making. There are many ways to implement employee participation. employees. Employee participation can take both direct and indirect form. But, nowadays direct methods are more popular. Research has suggested that an the Quality Circles: These are mechanism which develop and utilise integrated approach to enhance employee participation is better than a nonpotential of people in order to enhance product quality and productivity. integrated one. The integrated approach capabilities, confidence and These require the development of skills, tries to enhance organisational performance and profitability bythe combined process of training, on the job creativity of the people through adopting effective communication methods and enhancing employee consultation. Few methods like having suggestion experience and participation. The work conditions need to facilitate an boxes are easy to implement. Others areemployee motivation and environment which creates and sustains much more complicated. Irrespective of the method adapted, the main purpose of employee commitment towards work excellence. participation is to enhance efficiency by the effective use of human resources. Let us now discuss the direct methods of encouraging employee Profit Sharing: This is an arrangement by which the owner(s) of a participation. company shares a percentage of the profit earned with the employees. Problem-solving Groups: These focus on understanding issues, considering all possible factors and finding a solution. 12.6.1 Direct Methods of Employee Participation Employee Surveys: These are formal mechanisms for and focus Direct methods of employee participation are task oriented collecting on employee opinions. work performance. They are characterised by rewards enhancing individual and performance appraisal systems. Direct participation is enabled by

Now that you know the direct methods of employee participation let us next analyse the indirect methods. 12.6.2 Indirect Methods of Employee Participation Indirect employment participation takes place when employees participate through representatives at the workplace. This employee representation provides a mechanism for both employees and employers to express their opinions, perceptions, interests and concerns about the functioning of the workplace and the decision making processes of the organisation. Collective bargaining is a traditional method of indirect participation wherein the trade union negotiates on behalf of the employees. The different forms of indirect participation are as follows: Joint Consultation Committee (JCC): These are commonly used in public sector companies in India. Both managers and employees value this as a useful form of participation. The flexibility of the JCCs enables a consultative approach. They can either be dominated by the management or enable employee representatives to influence organisational decisions. JCCs are based on the three following principles:

A clear separation between consultation and negotiation issues Regular participation of managers and implementation of decisions Legitimate employee representation Work Councils: These are used by the management to consult with the employee representatives on issues related to production and employee relations. They provide a forum for discussing contentious issues. Work Councils are more formal than JCCs and often have some rules regulating them. Work Councils appoint employee directors. The management informs the work council about important issues. Employee representatives can consult experts to get a better understanding of the issues.

Worker Directors Schemes: Worker Directors represent the workers in the board of the company. This enables workers to have a stake in formulating the long term goals of the business. Workers become more committed when they participate in setting the objectives of the organisation.

12.7 Employee Empowerment Empowerment is defined as the process of enabling or authorising an individual to think, behave, take action, and control work and make decisions in autonomous ways.5 Empowerment refers to the process of assigning job responsibility to a worker and providing the worker with the power of decision making regarding the job without having to obtain the sanction of a superior. Empowerment is thus influenced by the level of responsibility and power offered to a worker. Employee empowerment involves the following activities:

Redistribution of power and authority Increasing involvement of employees with the goal of achieving organisational success Complete participation of employees in decision making processes Self-motivation Healthy interaction amongst teams and building of team spirit Emphasising co-operation among employees Making employees more proactive

5 humanresources.about.com/od/glossarye/a/empowerment_def.htm

One of the simple methods to start employee empowerment in an organisation is to set up a suggestion box in which employees can make proposals without fear of penalty or revenge. But a suggestion box is effective only if the employee suggestions are acted upon. Hence, supervisors have to read and think over the suggestions. Suitable suggestions have to be accepted so that the workers feel that they can impact the working of their organisation. Failure to agree to or execute any suggestions highlights that all the authority belongs to the supervisors and not the employees. Supervisors can conduct meetings where employees can make queries or proposals and obtain answers.

Employee empowerment will be successful only when the management is receptive to new ideas and approaches. Here are examples of two companies which empower their employees in order to improve their customer service. The Ritz Hotel has permitted its front desk employees to spend up to a maximum of $2000 on the spot to resolve a customer complaint. Disney World has authorised its employees to replace lost tickets, spilled food, and damaged souvenirs, even if the fault lies with the customer.

Empowerment happenseffectsworkers are sufficiently trained, behaviour. Let us next analyse the when of empowerment on employee provided with appropriate information and excellent tools, completely involved in key 12.7.1 Behavioural Effectsremunerated. Employee empowerment involves decisions, and are honestly of Employee Empowerment Employee how much responsibility and factor of administrative and finding out empowerment is a significant ability a worker can efficiently organisational efficiency and the establishment of Empowerment implies manage without becoming pressurised or anxious.inventive and quality performances. Empowerment enables employees to clear objectives and managers and workers working collectively to set up feel that they are influencing their jobs Employee empowerment positive way. The following identify opportunities.and work environment in aworkshops and books can are the effects of empowerment an employee in decision-making methods. assist an organisation in training on employee behaviour: Employee empowerment provides authority to the workers and thus makes themenables employees to have more control over their job It happier. It makes employees more proactive, creative and innovative It makes employees independent and employees show more initiative Effective implementation of employee empowerment requires the executive It to be completely committed to abilities and vision fully and accept teamenables employees to use their the process of permitting workers to responsibility for their executive management might want to control the make resolutions. Thejob range of decisions made. Creating decision-making teams is a process that It makes employees more competent enables employee empowerment, since it enables supervisors and It allows to put forward their ideas for the progress of in the face of employees leaders to mobilise organisational members the organisation. organisational challenges

 It enables leaders to set higher performance goals, and helps employees to accept these goals It is useful in motivating subordinates to persist in their endeavours despite difficult organisational obstacles It enhances job satisfaction at an individual level It makes employees more self-determined It makes employees more resilient in the face of adversity The software company Siebel empowered its employees to manage their own personal data and career development. This has increased job satisfaction and has reduced turnover. Let us next discuss the effects of employee empowerment on their performance. 12.7.2 Empowerment and Performance In 1999, Kirkman and Rosen identified positive relationships between team empowerment and team efficiency. According to the empowerment theory, empowered individuals perform better than the individuals who are not empowered. The effects of empowerment on employee performance are as follows: It makes employees responsible for performance outcomes It helps in maintaining consistent performances of teams It enables employees to identify and resolve obstacles and hence achieve job performance It improves job efficiency It makes employees more knowledgeable about their work and hence they are able to plan and schedule their activities in a better way It makes employees work harder as they view themselves as able to influence organisational outcomes It enables employees to face difficult situations in a better way and thus increases their performance It improves the employees feelings of self-worth and confidence and this translates into higher levels of performance

Let us next discuss the management practices which encourage empowerment. 12.7.3 Empowerment Management Practices According to Conger and Kanungo, The practice of empowering subordinates is a principal component of managerial and organisational effectiveness.6 But it is generally found that most managers resist empowerment and feel threatened by the idea of delegating authority to their subordinates. Managers have to view themselves as leaders in order to be able to empower their subordinates. For an organisation to carry out and promote employee empowerment, the higher management has to trust and interact with workers. Employee interaction is one of the significant signs of employee empowerment. Sincere and repetitive communication on all issues from essentials of the strategic plan, key performance indicators, economic performance, down to day to day decision making are the main factors of empowerment management practices. The management practices that encourage empowerment are as follows:

Planning and selecting training methods that ensure technical and linguistic efficiency Ensuring that the culture of the organisation encourages independence, group effort over inconsistency and competition, superior performance standards, non-discrimination and meritocracy Enabling open interaction and forming widespread networks Communication of performance expectations to team members and generation of motivating and significant goals Promotion of opportunities for workers to take part in decision making techniques Fostering employee independence

Thus the four empowerment dimensions- meaningfulness, competence, selfdetermination and impact affect employee performance.
6

http://www.feb.ugent.be/nl/Ondz/wp/Papers/wp_03_210.pdf

12.7.4 Reasons for Failure of Empowerment Employee empowerment can be effective only if it is properly implemented and has the support of top management. Measures for employee empowerment fail due to the following reasons: Higher management does not believe in empowering employees or makes only half-hearted attempts to empower the employees. Managers do not know what empowerment means. Managers do not establish boundaries for decision making. Questions like who will take decisions in the absence of the manager, or who takes day-today decisions have to be clearly answered. Supervisors do not have a strategic framework for implementing empowerment. Supervisors do not provide the information and opportunities for learning that is required for the workers to equip themselves to take proper decisions. Workers misuse the authority offered to them. Some managers are reluctant to delegate authority as they feel that they might lose power in decision making. Managers do not trust the employees to make the correct decisions. Sometimes managers undermine the decisions taken by the employees and change them. Managers do not publicly support employee decisions and stand behind their employees. Some employees fear empowerment and do not want take any decisions by themselves Sometimes employees are not given due credit for their decisions and actions. Thus, we see that the obstacles to empowerment have to be removed in order to ensure its success. Let us next discuss the reasons for empowerment failure. Self Assessment Questions 15. Empowerment is defined as the process of enabling or authorising an individual to think, behave, take action, and control work and make decisions in __________________ ways.

16. Empowerment happens when workers are sufficiently trained and provided with appropriate ____________ and excellent____________. 17. Empowerment implies managers and workers working ___________to set up clear objectives and identify opportunities. 18. One of the simple methods to start employee empowerment in an organisation is to set up a _______ box. 19. _________ is one of the significant signs of employee empowerment.

up computer networks for small and medium-sized companies. List down the ways in which you can empower you

turnover, labour conflicts and resistance to changes. Many schemes have been initiated by the Indian government to increase employee participation. Employee participation can take both direct and indirect form. The direct methods of employee participation include newsletters, employee reviews, self-managed teams, team briefings, team meetings, suggestion schemes, quality circles, profit sharing, problem-solving groups and employee surveys. The different forms of indirect participation are collective bargaining, joint consultation committees, work councils, and worker directors schemes.

Empowerment happens when workers are sufficiently trained, provided with appropriate information and excellent tools, and are completely involved in key decisions. The management also has to be committed to the process of permitting workers to make resolutions. Empowerment enables employees to feel that they are influencing their jobs and work environment in a positive way. Empowered individuals perform better than the individuals who are not empowered. Sincere and repetitive communication on all issues from 12.8 Summary strategic plan, key performance indicators, economic essentials of the Employee participationdaythe day decision making are the main factors of performance, down to is to process by which workers take part in the decision making processes. Empowerment implies decentralising authority in empowerment management practices. Measures for employee an organisation. if it does not have the support of the management and the empowerment fail employees. The objectives of employee participation and empowerment are to increase the efficiency of the organisations, to improve employee relations, to enhance job satisfaction, to improve the quality of work life, and to secure the mutual co-operation of employees and employers. 12.9 Terminal Questions 1. Explain of schemes which encourage employee participation include Examples the objectives of employee participation and empowerment. project managementparticipation. What are the schemes schemes, 2. Define employee teams or quality teams, suggestion that encourage consultation exercises and meetings, delegation of responsibilities within the employee participation? organisation, and multi-channel decision making techniques. Employee 3. What are aligns commitment with the participation? involvement the advantages of employeevarious organisational goals and is influenced by employee relations management. Gaining employee enable 4. What are the measures introduced by the Indian government to involvement and participation requires a lot of support from the top employee participation? management. Joint consultation meetings, group briefings and regular 5. What are the different kinds of employee participation methods? management walkabouts encourage employee involvement and participation. Employee participation enhances employee performance, 6. Explain what is Employee empowerment? What are the effects of commitment, innovation, creativity, morale and productivity. It also increases employee empowerment? organisational excellence and efficiency. It reduces absenteeism, employee

12.10 Answers
Answers for Self Assessment Questions 1. productivity 2. job satisfaction 3. align 4. decision making 5. empowerment 6. involvement 7. top management 8. business processes 9. effective communication 10. psychological 11. indirect 12. employee directors 13. directive Principles 14. floor 15. autonomous 16. information, tools 17. collectively 18. suggestion 19. employee interaction Answers for Terminal Questions 1. Refer section 12.2 2. Refer section 12.3 3. Refer section 12.4 4. Refer section 12.5 5. Refer section 12.6 6. Refer section 12.7

12.11 Case Study

esponsibility in order to develop and utilise the capabilities of the employees for the benefit of the company. emes and elected employee representatives. orking conditions through Health Circles. Employees look for ways to improve the quality and efficiency of process anagement Representative Committee (BMRC). All of these are governed by rules and standards and have elected nsensus is adapted. Certain fixed procedures

ussed by the employee representatives and the Executive Board. ly between a companys works council and its management are first escalated to the division level, then to group

12.12 Glossary
Term Description Bipartite An agreement between two parties Decentralising Delegating decision making and assigning responsibilities to sub-units Directive Principles Guidelines to the central and state governments of India for formulation of laws and policies Employee Stock Ownership Plan A scheme which gives employees stocks of the company after a certain period of employment Forum An assembly for open discussion Gazette notifications An announcement in an official publication Globalisation The process by which businesses expand their operations throughout the world Liberalisation The relaxation of rules and controls governing trade and commerce in a country Statutory Enacted or authorised by a legislation Tripartite An agreement executed between three parties White-collar workers Salaried and educated workers who do not perform manual labour

References 1. Empowerment: HR Strategies for Service Excellence by Conrad Lashley; 2001 2. Employee Relations by John Gennard and Graham Judge; 2005 3. The Changing Face of People Management in India by Pawan S Budhwar and Jyotsna Bhatnagar; 2009 4. Employee Relations in Context by David Farnham; 2000 5. Managing Employee Involvement and Participation by Jeff Hyman and Bob Mason; 1995

Unit 13 Employee Rewards

Structure 13.1 Introduction Objectives 13.2 Employee Rewards Needs for Employee Rewards 13.3 Formulating Employee Rewards 13.4 Types of Reward system 13.5 Recognition programs Importance of Employee recognition Reward versus Recognition 13.6 Summary 13.7 Terminal Questions 13.8 Answers 13.9 Case Study 13.10 Glossary

13.1 Introduction By now you must be familiar with the concept of employee participation, empowerment, and its goals. We also know about the advantages of employee participation and the methods to implement it. In this unit, we will discuss on another important aspect with reference to employee compensation, called as Employee Rewards.
The history of Employee Rewards is quite brief. It dates back to the early 20th century. As a distinct and formal management process used in the evaluation of work performance, Employee Rewards really dates from the time of the Second World War that is not more than 60 years ago. Yet in a broader sense, the practice of Employee Rewards is a very ancient art. In the scale of historical things, it might well place a claim to be the world's second oldest profession! Employee Rewards seems to be both inevitable and universal. In the absence of a carefully structured system of recognition, people will tend to judge the work performance of others, including subordinates.

This unit elaborates on the need of Employee Rewards, a description of the types of a reward system and importance of employee recognition. Learning Objectives After studying this unit, you will be able to: Explain the need for employee rewards. Identify the points to consider while formulating a reward system. Analyse different types of Reward systems. Explain the importance of Employee recognition.

top non-monetary compensation named by full and part-time office workers, with regular communication. This can make your employees more productive without shaving one millimetre off your bottom line. Therefore, there is a need for employee rewards and its results are mentioned below: Retention: A good employee reward program is a positive impact on employee retention. When the employee is content with the reward program then, it will be easy for the organisation to retain the employee. Health and Safety: Solid employee reward programs also have measurable positive effects both on safety and workplace health. This reduces overall health-care costs for both employee and employer. 13.2 Employee Rewards Motivation: A crucial outcome of a good employee reward program is An Employee Rewardamong personnel. This organisations helping the enhanced motivation system consists of an also includes integrated policies, processes, connections between professional goals and personal employees to make and practices for rewarding its employees. This is done in accordance with their contribution, skill, competence, and their market goals. worth. It is developed within the framework of the organisations reward philosophy, strategies, and policies.reward program also increases form of Engagement: A solid employee It contains arrangements in the processes,engagement in the workplace, a factor that converts into improved employee practices, structures, and procedures. These arrangements will provide and maintain appropriate types and levels of pay benefits and other performance and better customer experience. forms of reward. Return on Investment: Employee reward programs provide a concrete Return on Investment (ROI)2. Studies have shown that employee recognition and rewards of a non is to reward employees fairly, equitably, and The overall objective monetary basis show a greater return on investment than do cash in accordance with their value to the organisation. This further consistently, awards. helps in the achievement of the organisations strategic goals. Bottom Line: Ultimately, from the employer's viewpoint, employee reward programs haveand employee benefits. bottom line for reasons such It is not just about pay a positive effect on the A reward system consists of as, the positive effect fixed, variable pay, and employee benefits which financial rewards like on health care costs, performance, and workplace engagement. together comprise total remuneration. The system also incorporates nonfinancial rewards like recognition, praise, achievement, responsibility, and According to many management consultants, rewards, employee benefits, personal growth. The combination of financial human resource professionals, career coaches, book authors and bosses, the total Employee reward and non-financial compensation comprises from a range of industries; there are 15 best ways to reward employees without spending much of company system. funds. They are: 13.2.1 Needs for Employee Rewards 1. world where working hours: to boast about running "lean reward that In a Have flexibleorganisations like If there is one complimentaryand mean," it rises seem nearly impossible to compensate employees, for doing good may above the rest, it is flexible work schedules. It is commonly suggested that without breaking the budget. According to a gain with the least firm For work flex time is a plus side that offers, the most survey by staffing pain. example, give a little latitude in determining work schedules and to was Accountemps1 found that frequent recognition of accomplishments take the time for family or personal issues such as
1 http://www.accountemps.com/ 2 http://en.wikipedia.org/wiki/Rate_of_return

doctors appointment and banking errands. As long as the employee deserves, and does not abuse the privilege, this can go a long way to building trusting and mature relationships with key workers. 2. Send a handwritten note: Supervisors must ask top management people to write a personal note to employees, who deserve recognition. 3. Make work fun: Create some events to provide fun to employee. 4. Help them connect: Introducing employees and staffs to key suppliers, customers or someone in senior management can, help make an employee's career. 5. Bring in the casualness: For example, implementing a non formal day. It can make employees feel right at home with each other, which translates into increased productivity. It is great to work in an office where, employees are more concerned about doing quality work than, what they are wearing. 6. Celebrate employees family special days: Every birth and wedding deserves a celebration. Each employee must be made to leave office early on special days, and the food is on the house. No need to make up the time. Give memorable gifts for employees spouse or family and apologies, for taking them away from their families on a Sunday. 7. Reward effort as well as success: Even if employees ideas sometimes fail, you must encourage the employees to keep producing new ideas. This stimulates innovation and positive behaviour, not winning. 8. Give them free days: Give a certain number of free days off to employees to use, as they see fit. Employees can use these days as they like. They do not have to pretend to be sick. They can go to the beach, read a book, and play with their kids and so on. 9. Serve refreshments: During the hectic times of the year, serving drinks and refreshments to colleagues helps to build a comfortable environment. Small gestures will build great companies. As you serve, you can encourage colleagues and hear about real consumer issues. 10. Celebrate employees birthday: Host a monthly, hour-long birthday lunch for any employee, with a birthday that month. Employees are invited to ask him anything. They feel recognised, and he gains loyal employees who share their ideas.

11. Applaud their efforts literally: If an employee has done something really worthwhile, have your entire staffs to give them a standing ovation at the next meeting. 12. Have a Wall of Fame: Set a public space within your firm for employees, with reference to their success. On this public space place photos of employees who have accomplished something truly special, along with the details of what they did, to earn their place on the wall. 13. Create your own Club Med: Set aside a space or unused office in your building, where employees can meditate, chill out or nap. 14. Invite their feedback and ideas: Great employees are not mercenaries. They do not just want to enjoy the work; they want to be passionate about it. If you want your employees to sense valued and inspire their passion on your behalf, encourage them to make their own decisions. You can have systems in place to monitor and control the implementation of ideas. However, you must be certain not to compromise the enthusiasm, creativity, and hard work that make them possible in the first place.

15. Remember the secret words: While telling your staffs or employees, you appreciate them, and be obvious. No one does it enough or is specific enough about what the employee did. So, when you share your feedback or appreciation, be specific about what you really liked, so they not only feel appreciated but can do it again.

Activity 1: Find out the employee rewards practises at Dell with the help of internet. Self Assessment Questions Fill in the blanks 1. An _____________ system consists of an organisations integrated policies, processes and practices for rewarding its employees. non2. The combination of financial rewards, employee benefits and financial compensation _________ the total Employee reward system. 3. During the hectic times of the year, serving drinks and refreshments to colleagues helps to build a _________ ___________. 4. Giving out ___________ money that can be redeemed for gifts and other goodies may not be strictly free.

13.3 Formulating Employee Rewards As we have seen, it is very easy to reward an employee; however, the hard part is to plan a reward system, which is suitable to organisations strength and capacity. Organisation has to look into whether it can withhold the reward system consistently to all his employees at all times. Organisations motivation depends on the individual's ability to understand what is being asked of him or her. Once this has been done, strengthen the original communication with regular meetings or memos, promoting the program. Keep your communications simple but frequent, to ensure staffs are kept abreast of changes to the system.

Reward systems are actually more than just bonus plans and stock options. While they frequently include both of these incentives, they can also include awards and other recognition, promotions, reassignment, non-monetary bonuses like vacations, or a simple thank you. Therefore, to overcome all these difficulties, a reward system is formulated. Formulating a reward system includes the following points: Decide on the types of tasks that will be rewarded. For instance, if you have a big and important deadline coming up, perhaps you will give awards for those who complete their tasks three days ahead of schedule. On the other hand, you would like to give rewards based on a specific number of contracts that sales people are expected to sign. Choose some items that would be good for rewards. They must be desirable enough so that your employees will work harder to get them. Avoid giving out money or bonuses as rewards, as employees might come to expect it again and again. Some good ideas for rewards are gift cards or certificates for local restaurants, cinema, cruises or other travel-related rewards, tickets to sporting events, and gift baskets. Choose the variant levels of success that you wish to reward. For instance, if a salesperson earns five new contracts, he receives one type of a reward, such as a gift basket. However, for 10 new contracts, he receives tickets to an Indian Premier League (IPL) game. Rewards at all levels, inspire all kinds of employees to work harder, and gives them realistic goals.

 Always fulfil your reward promises. If you had promised a reward, but had not given it when the target has been met. Then, none of your employees will trust your employee rewards program, and you will not have good results.

13.4 Types of Reward system There are a number of diverse types of reward programs aimed at both individual and team performance. They are discussed below.
Variable pay: Variable pay or pay-for-performance is a reward system in which a portion of a person's pay is considered "at risk." Variable pay can be fixed to the performance of the company, the results of a business unit, an individual's accomplishments, or any combination of these. It can take many forms like bonus programs, stock options, and one-time awards for significant accomplishments. Some companies and firms choose to pay their employees less than competitors, but attempt to motivate and reward employees using a variable pay program instead. According to some experts, "The test of a good pay-for-performance plan is simple. It must motivate managers to produce more earnings growth that far exceeds the extra cost of the program. Though employees must be made to stretch or to work on weekends, the goals must be within reach."

Bonuses: Bonus programs have been used in Indian business, for some time. They usually reward individual achievements and are frequently used in sales organisations to encourage salespersons, to generate additional business or higher profits. They can also be used, however, to recognise group achievements. Without a doubt, increasing numbers of businesses have switched from individual bonus programs, to one that rewards contributions to corporate performance at group, departmental, or companywide levels.

individual or group's basic functions. Otherwise, they run the risk of being professed as entitlements or regular merit pay, rather than a reward for outstanding work. Proponents, however, argue that bonuses are a perfectly legitimate means of rewarding outstanding performance. They also argue that such compensation can actually be a powerful tool to encourage future top-level efforts.

Profit Sharing: Profit-sharing refers to the policy of creating a pool of money to be distributed to employees, by taking a stated percentage of a company's profits. The amount given to an employee is most of the time equal to a percentage of the employee's salary, and is distributed once a business closes its books for the year. The benefits can be provided either in cash, or via contributions to employer's 401(k) plans3. It is a profit for a company which offers this type of reward because, it can keep fixed costs low. The idea behind profit-sharing is to reward employees for their works and contributions, to a company's achieved profit goal. It encourages employees to stay put because, most of the time it is structured to reward employees who stay with the company. Most profit-sharing systems require an employee to be vested in the program over a number of years before receiving any monies. Unfortunately, since it is rewarded to all employees, it tends to dilute individual contributions. In addition, while profit is vital, it is only one of many goals a company may have and is. According to Jack Stack 4 profit sharing is "an accumulation of everything that happens in the business over a given period of time". Therefore, it is difficult for most employees to connect their actions to. Stack argued that "employees should be able to see the connection between their actions, decisions, and participation, and changes in a company's goals." Like bonuses, profit sharing can in the long run, be viewed as an entitlement program if the connection between an employee's actions and his or her reward becomes gloomy.

According to many experts, small businesses interested in long-term benefits must probably consider another type of reward. Bonuses are generally short-term motivators. By rewarding an employee's Stock Options: Stock options have become an increasingly popular achievements for of previous year, say and large encourage This method in the territorythe upper managementcritics, theycompanies. a shortterm perspective rather than for middle management and other rewarding started in recent yearsfuture-oriented accomplishments. In addition, both reward companies, and be carefully structured, to employees inthese mature systems need to start-ups. Employee stock-ensure they are rewarding achievements above, and beyond an 3 http://www.karvy.com/articles/pensionplans.htm
4 http://www.inc.com/magazine/20040401/25stack.html

option programs or systems, give employees the right to buy a specified number of a company's shares at a fixed price for a specified period of time (usually around ten years). They are generally authorised by an organisations board of directors, and approved by its shareholders. The number of options an organisation can award to employees is, usually equal to a certain percentage of the company's shares outstanding.

could be considered a portion of compensation, current accounting methods do not require businesses to show options as an expense on their books. This tends to inflate the value of an organisation. Organisations should think carefully about this as a benefit. However, if accounting rules were to become more conventional, corporate earnings could be impacted as a result. Like profit-sharing plans, stock options habitually reward employees for Group based Reward System: As more small businesses use team has sticking around, serving as a long-term motivator. Once an employee structures to reach their objectives, certainentrepreneurs look for ways to four been with an organisation for a many period of time, usually around reward co-operation is fully vested in the program. If the employee leaves the years, he or she between departments and individuals. Bonuses, stock options, and profit sharing can fully vested, to reward teamare cancelled. After organisation prior to being all be used those options and group achievements. An entrepreneur vested in the system, he or shegroup an employee becomes fully can opt to reward individual or can contributions or a combination ofan allotted number of shares atsystems are purchase from the company the two. Group-based reward the strike reviewed on the fixed price originally agreed to. This purchase is known as price, or a measurement of team performance, and with individual rewards received on the basis Once the stock is purchased, the systems "exercising" stock options. of this performance. While these employee encourage individualitworks towards common business goals, they also tend can either retain or sell it, on the open market with the difference in to reward price and market price being,along with average, andthe value of strike underperforming employees the employee's gain in above average employees. A reward system, which recognises individual the shares. achievements in addition to team performance, can provide extra incentive for employees.

Offering additional stock in this way presents risks for both the organisation and the employee. If the option's strike price is much higher than the market price of the stock, the employee's option is worthless. Activity 2: When an employee exercises an option, the organisation is required to Visit any multinational companysnew shareand research onbe publicly traded. The system which are incorporated by issue a website of stock that can the types of rewards Selforganisations market capitalisation grows by the market price of the Assessment Questions share, rather than the strike price that the employee purchases the stock State whether the following is True organisation earnings (impacting both for. The possibility of reduction of or False 5. the company and are actually more than just bonus plans and stock Reward systems shareholders) arises when the organisation has a options. number of shares outstanding. To keep ahead of this likelihood, greater 6. earnings must increase at a rate fulfil the reward promises. outstanding An organisation may or may not equal to the rate at which shares increase. Otherwise, giving out money must repurchase shares on 7. Organisations should avoid the organisation or bonuses as rewards. the open market to reduce the number of outstanding shares. 8. Variable pay can take many forms like bonus programs, stock options, and one-time awards for significant accomplishments. 9. The idea behind profit-sharing is to reward employees for their works and contributions to aoffering a stock optionloss. organisation is that an One benefit of company's achieved to an 10. organisation gets the ability to take a tax deduction for compensation Stock options habitually reward employees for sticking around, serving expense, when it provides shares to employees who are exercising their as a long-term motivator. options. Another benefit to offering options is that while organisations 11. An entrepreneur should only opt to reward individual contributors.

13.5 Recognition Programs For small business entrepreneur and other managers, a recognition program may appear to be merely extra effort on their part with few tangible returns in terms of employee performance. While most employees certainly appreciate financial awards for a job that is done well, many people merely seek recognition of their hard work. This presents an opportunity to motivate employees for an entrepreneur with more cleverness than available cash.
In order to develop an effective recognition system, a small business entrepreneur must be sure to separate it from the company's reward program. This ensures a focus on recognising the efforts of employees. To this end, although the recognition may have a monetary importance such as a luncheon, gift certificates, or plaques; Money itself is not given to recognise performance. Glasscock and Gram noted in National Productivity Review that, efficient recognition methods must be sincere, fair, consistent, timely, flexible, appropriate, and specific. They go on to explain that it is important that every action and tasks, which supports an organisation's goal is recognised. It might be through informal feedback or formal company-wide recognition. Likewise, each and every employee must have the same opportunity to receive recognition for their work.

Recognition must be done in a timely fashion and on a frequent basis. This must be done so that, an employee's action will not go overlooked, and so that it is reinforced to encourage additional high performance. Like rewards, the method of recognition needs to be suitable for the achievement. This also ensures that those actions, which go extreme in supporting corporate goals receive the most attention. However, an entrepreneur must remain flexible in the systems of recognition, as employees are motivated by different types of recognition. Finally, employees need to clearly comprehend the behaviour or action being recognised. A small business entrepreneur can ensure this, by being specific in what actions will be recognised. Then the actions are reinforced by communicating exactly, what an employee did to be recognised.

Recognition can take a variety of forms. Structured programs can include frequent recognition events, such as banquets or breakfasts, employee of the month or year, an annual report, or yearbook. All these recognitions feature the accomplishments of employees, and department or company

recognition boards. Informal or spontaneous recognition can take the variety of privileges such as working at home, starting late or leaving early or long lunch breaks. A job well done can also be recognised by providing additional support or empowering the employee, in ways such as greater choice of assignments, increased authority, or naming the employee as an internal consultant to other staff. Symbolic recognition such as plaques or coffee mugs, with writings can also be effective, provided they reflect sincere appreciation for hard work. These concluding expressions of thanks, however, are far more likely to be received positively, if the bestowed is a small business entrepreneur with limited financial resources. Employees will look less kindly on entrepreneur of thriving businesses, who use such inexpensive items as centrepieces of their reward programs. Both reward and recognition programs have their own place in small business. Small business entrepreneur must first determine desired employee behaviours, skills, and accomplishments that will support their business goals. By rewarding and recognising outstanding performance, entrepreneurs will have an edge in a competitive corporate climate.

etail firm. Using the types of reward systems and recognition program concept, depict your own facts as what all

your employees. These challenges are also important for the success of your organisation. The most significant tips for Effective Recognition are: All employees must be eligible for the recognition. The recognition must convey the employer and employee with specific information about, what behaviours or actions are being rewarded and recognised. Anyone who then achieves or performs to the level or standard stated in the criteria, receives the reward. The recognition must happen as close to the performance of the actions as possible, so the recognition reinforces behaviour the employer wants to encourage. You do not want to invent a process in which managers "select" the people to receive recognition. This type of process will be observed forever as "favouritism" or talked about as "it is your turn to get recognised this month." This is why processes that award an individual, such as "Employee of the Month," are rarely effective. Employees also like recognition that is random, and that provides an element of surprise. If you show gratitude to a manufacturing group, every time they make customer deliveries on time with a lunch. Gradually, the lunch becomes a certain or an entitlement and is no longer rewarding. If you relate recognition to real achievements as negotiated in a performance development planning meeting, you need to make sure the recognition meets the above stated requirements. Supervisors must also 13.5.1 Importance of Employee Recognition apply the criteria consistently, so some organisational oversight may be Employee recognition is a communication tool that strengthens and rewards necessary. the most important outcomes people create for your business. When you recognise people effectively, it will reinforce your chosen means of recognition. These are the kinds of actions and behaviours you want to repeatedly see in people. An effective employee recognition system is simple, immediate, and powerfully reinforcing. When you judge employee recognition processes, you need to develop recognition that is equally powerful for both the organisation and the employee. You must address the challenges or issues that may arise, if you want the recognition you offer, to be viewed as motivating and rewarding by

tool to lure top employees in a competitive job market, as well as to increase employee performance and retention. As noted, even if employee recognition programs are often combined with reward programs, they retain a different purpose altogether. Recognition programs are generally not monetary in nature, while they may have a cost to the company. Sue Glasscock and Kimberly Gram in Productivity Today distinguish the terms stating that recognition elicits a psychological benefit whereas; reward indicates a financial or physical benefit. Although many elements or components of designing and maintaining reward and recognition systems are the same, it is useful to keep this difference in mind. Especially it has to be done for small business owners interested in motivating staffs, while keeping costs low.

Self Assessment Questions Fill in the blanks 12. Recognition must be done in a _______ fashion and on a ________ basis. 13. Recognition can take a ________ of forms. 14. Employee recognition is a ______________ tool that strengthens and rewards the most important outcomes people create for your business. 15. Encompassing ______________ programs are often combined with ___________ programs retain a different purpose altogether. 16. Employee recognition has to be done for ______ _______ ______ interested in motivating staffs while keeping costs low.

13.5.2 Reward versus Recognition Although these terms are time and again used interchangeably, reward, and recognition systems must be considered separately. Employee reward systems incline to programs, set up by a company to reward performance and motivate employees, on individual and/or group levels. They are normally measured separate from salary, but may be monetary in nature or otherwise have a cost to the company. While previously mentioned domain of large companies, small businesses have also begun employing them as a

few tangible returns in terms of employee performance. Employee recognition is a communication tool that strengthens and rewards the most important outcomes people create for your business. To have an effective employee recognition, small business entrepreneur and other managers must focus on, employee recognition programs. Therefore having all the above aspects will definitely help an organisation to keep their employees satisfied and motivate them always.

13.7 Terminal Questions 1. Briefly explain Employee Rewards. 2. According to you, why do you think Employee reward is a need? 3. Explain the points to be considered while formulating a reward system. 4. Mention the types of Reward systems. 5. Briefly explain the Reward versus Recognition study. 13.8 Answers Answers to Self Assessment Questions 1. Employee Reward. 2. Comprises. 3. Comfortable environment. 4. Monopoly. 5. True. 6. False. 7. True. 8. True. 13.6 Summary 9. False. So far in this unit we have studied how an Employee Reward system 10. True. consists of an organisations integrated policies, processes, and practices for rewarding its employees. In addition, we have also known the importance for 11. False. a reward system in any organisation, no matter how big or small it is. 12. Timely, Frequent. 13. Variety. 14. Communication. Studying the types of reward systems and formulating a reward system is 15. Employee recognition, Reward crucial for any organisation. It is not only the reward system that helps an 16. Small business owners organisation to grow and achieve goals, but employee recognition is also a
crucial part. For small business entrepreneur and other managers, a recognition program may appear to be merely extra effort on their part, with

Answers to Terminal Questions 1. Refer section 13.2. 2. Refer section 13.2.1. 3. Refer section 13.3. 4. Refer section 13.4. 5. Refer section 13.5.2.

13.9 Case Study

opeds. These are available in the brand names 'sharp' and 'double sharp where 'sharp' is their traditional product d they were comfortable in the market. However, with the opening of the new generation of fuel-efficient mopeds, ew model, the competitors had already strengthened their position in the market. harp' is a new generation vehicle. It was costlier, but its performance was much superior. It is compared favourab ed young sales engineer to launch a strong sales drive. Mr. Maresh Tiwari, MTech and a diploma holder in marketin and to book the orders. The company had introduced a new financial assistance system. Under this scheme, buye tate the loans. His performance was excellent in the first year, and in the second year of his service.

sh Tiwari asked him as to how much it would cost to the company. The marketing manager calculated and inform

13.10 Glossary
Term Description Professed Perceived to the reward which an organisation is entitled to. Proponents One who argues in support of something like in this unit it is with reference to employee reward. Entrepreneur A person who organises, operates, and assumes the risk for a business venture. Luncheon An afternoon party at which a light meal is served for the employees who achieve their goals. Lure Attracting employees for a specific task. Monetary Financial related rewards like money, bonus.

References 1. Employee Reward by Michael Armstrong. 2. 1001 Ways to Reward Employees by Bob Nelson. 3. A Handbook of Employee Reward Management and Practice by Michael Armstrong.

Unit 14 International Employee Relations Management

Structure 14.1 Introduction Objectives 14.2 Internationalisation Dimensions of Internationalisation Management of Overseas Branches 14.3 International Employees Problems Associated with International Employees Benefits for International Employees 14.4 International Employee Relations Management 14.5 Role of Human Resource Management International Human Resource Management 14.6 Summary 14.7 Terminal Questions 14.8 Answers 14.9 Case Study 14.10 Glossary

14.1 Introduction In the previous units, you learnt about employee relations within a single country. In this unit, we will learn about the relevance of employee relations management in an organisation that has global presence.
At the end of the 20th century and the beginning of the 21st century, companies started expanding their business. Ever since organisations internationalised, there has been a considerable amount of increase in employment opportunities in organisations that have either become or are a part of Multinational Corporations (MNC). As a consequence, the employee relations within a national context is subjected to a broader and international range of influence. The major area of internationalisation has been in people management. In this unit we will first learn about internationalisation. It is necessary to analyse why companies chose to internationalise and its significance as this

century is the age of multinational employees. For the growth of any organisation, the employer-employee relationship has to be good but as organisations broaden their range and function in the international scene, they face problems in their employer-employee relations. We will discuss these problems and its solutions in this unit. Finally, we will learn the role played by a HR in internationalisation and its significance.

Learning Objectives After studying this unit, you will be able to: Explain the different ways in which an organisation can make its presence across the globe. Assess the distinctions in Employee Relations Management (ERM) of international employees. Describe the role of Human Resources management in the international organisation.

Secondly, an employee working in a company who is sent to work in an overseas branch of the same company is called an international employee. For example, an employee working in Microsoft sent to work in the Indian branch of Microsoft. Thirdly, an employee who goes to a different country to accomplish a specific task is called an international employee. This consumes very little time when compared to the other perspectives. The task can take just about a fortnight, a month or so. We have discussed about internationalisation and international employees. In the next section we will discuss the dimensions of internationalisation. 14.2.1 Dimensions of Internationalisation The emergence of new technology and trends has made internationalisation 1possible. The advancement in the area of information transfer and communications has helped in internationalisation as the transfer of data and information can take place within a short span of time. Free trade agreements incorporating the free movement of capital that facilitates crossborder investment of all kinds 14.2 Internationalisation has increased with internationalisation. It has various dimensions to decide toof them are listedbecause of two reasons. Organisations usually it. A few go international below: Either because it faces competition from companies outside its national borders orexpansion organisation finds cheaper resources and expanded It is an when the of international trade. markets in other countries. It favours trade across national borders by removing tariff barriers, extends free trade agreements like the North American Free Trade Initially, the (NAFTA), going international involvesproposed the free trade Agreement choice of European Union (EU) and only export to foreign customers in one country or the import of few products from one country or area including China, Japan, South Korea and Association of Southeast one supplier. At this stage, the impact of the international business activity is Asian Nations (ASEAN). less and the management does not pay too much attention to it. The organisations chooseproduct markets and enhances the when the of It develops global to establish international divisions pressure sales exceed 10 to 20 percent of the total revenue or global sourcing reaches international competition expected levels. It favours cross-national integration of production within MNCs We have analysed why and when does an organisations go international. It expands the number and influence of MNCs through joint projects, Now we will discuss the various perspectives of international employees. cross-national achievement and union of foreign direct investment (FDI) When we say international employees there are three perspectives to it. It is an international distribution of labour Firstly, an employee who works in an overseas project for a specific period of time (until the completion of the project) can be called an international employee. For example, an employee working in Infosys in India is sent to work for an overseas project in Australia.
1http://www.businessteacher.org.uk/business-environments/globalisation-internationalisation/

manage their overseas branch. Internationalised companies have a wide range of choices to decide on how an overseas branch can be managed. The deciding factors are the industry in which they function, the structural form, and the stage of development of the company. There are four major approaches to manage overseas branches. They are: Ethnocentric Polycentric Regiocentric Geocentric Let us look at each of these approaches in detail: Ethnocentric: It is often seen that the decisions relating to value, culture and strategies are determined by the parent company. Very little power is vested in the subsidiaries. The subsidiaries of a company are managed by an expatriate or a former staff of the parent company. The locals have very little to do with the way things are carried out in a company. Lines of communication are usually uni-directional as commands are issued by the headquarters. The host-country branch has a diplomatic role to play but is dominated by the customs of the parent company. It is believed that this is during the first stage of development of companies intending to go international and the management at the headquarters takes an alternative step only after a specific period of time (when the company has made progress or established itself internationally).

14.2.2 Management of Overseas Branches We have described internationalisation and analysed the various dimensions of it. We will now discuss how the internationalised companies

 Polycentric: Here the local conditions, values and system are taken into consideration in a company. The subsidiary is governed by a home-country (the country in which the headquarters is located) staff and considered as a self-governing business unit. Major decisions, strategy planning and financial investments are decided at the headquarters. However, in this approach the manager of the subsidiary is a local staff and manager-employee relationship is better. This approach helps in maintaining the policies in employee relations as it is compatible with the culture and regime of host-country. Companies like Lever Brothers and Unilever follow the polycentric approach.

Regiocentric and Geocentric: Here the subsidiaries are not limited to boundaries such as home country or the region where an organisation has presence. It is organised on a regional basis or geographic basis such as worldwide or global. Control of staff and decision making responsibility is based on regional or geographic constraints. In case of regiocentric, the managers are appointed from the host-country and in case of geocentric, the managers are from any part of the world, that is, the most suited person is appointed for the job. Colgate and Palmolive are examples of companies that follow geocentric approach.

It is seen that the companies which follow Polycentric, Regiocentric or Geocentric are truly globalised. In such companies we can expect development of a region or worldwide approach to employee relations policies and practices. Self Assessment Questions Many American and Japanese companies have been charged of trying to 1. The amount of free trade agreements incorporating the free movement of introduce employee relations policies and strategies which are suitable to capital that facilitates cross-border investment of all kinds has increased their home culture but incompatible with the host-country tradition. This with _______________. strategy is followed in organisations as they believe that their strategies are not only the best an also the only way to proceed. 2. Internationalisation is but international distribution of _________. 3. Lines of communication are usually multi-directional in an ethnocentric The organisation or false. approach. State true runs the risk of not taking notice of the tradition and culture of the host-country thereby offending the local employees. The 4. In polycentric approach,subsidiary may is governedin the_________ staff local employees in the the subsidiary not believe by a same values and considered as a self-governingadapt to the parent company regime. and thoughts and hence do not business unit. McDonalds follows the ethnocentric are appointed from the _______. 5. In case of regiocentric, the managersapproach.

14.3 International Employees We have studied the approaches by which an organisation manages its overseas branches. International employees face many issues due to factors like difference in culture, legal system and language. In this section, we will now analyse the problems associated with international employees.
14.3.1 Problems Associated with International Employees We will discuss some specific problems faced by international employees. Employee Working Overseas Problem One of the major problems associated with employees working in overseas branches is, which law has to be followed by the employee. The two choices are the laws of the home-country law or the laws of the host-country in which the employee is working. For example, when an employee of an Indian company works in an American branch, there are chances of confusion for the employee as to follow the Indian laws or the American laws. Solution Judicial courts normally follow the legislation of its own country and so do organisations. There are a few organisations that follow the laws of the home-country. The overseas branches of this company are forced to follow the same law irrespective of the country in which they work. However, few companies are flexible. They follow the laws of the country in which the branch is located. International Personal Information Flow, Privacy, and Security

 Collected for specific, legitimate reasons Held only if it is relevant to the reasons Precise and up to date Legally processed Stored only until required Employee details can be transferred across nations only if the company is authorised to do so. International Employee Assistance Programme Problem Often employees often hesitate when assigned to work overseas,. The major reason is separation from their families. Difference in culture, tradition, legal system, and language adds to the stress of the employee. The consequences of these factors are: complicated health problems, interrupted careers, worries concerning dependent elderly parents and so on. Solution Research has suggested that support and adjustment from family members helps solve this problem to a great extent. Besides, an organisation called Federal Occupational Health (FOH) is working towards solving this problem. FOH provides round the clock service. The services provided are counselling, stress management programmes, and health and welfare seminars for the benefit of the international employees.

Apart from the aforementioned issues, there are few other issues that affect international employees. They are as follows: Problem Employers have to consider the International Privacy laws while transferring the that an employer faces is deciding which employee laws The first problemdetails of employees across national borders. These to are applicable project. The selection depends on the skills of the select for a foreigneven if the transfer of information happens within the same company. Governments across the globe different cultures, who employee. Employees who can adjust and adapt to have imposed laws and regulations to maintain privacy of employee desire to work know about different cultures and who have the information. in foreign projects are best suited. Solution Few organisations expect employees to analyse and achieve things on their own. Newly relocated employees may find it difficult problem. It without The Data Privacy Directive is a solution to the above to start off states guidance. Inpersonal information usually requirehas to be anyadaptof the new that the the beginning, they of employees guidance to one to the organisational as well as country culture. following:

 The salary package to be offered to the international employees can be an issue of uncertainty. The currency values of countries differ from each other. For example, consider employees from the European branch working in the Indian branch of the same company. In Europe, the employees will be paid in Euro. The currency values of Euro and Rupee are definitely not the same, so the questions arises whether to pay the employees working in the Indian branch in Euro or Rupee? If the employees are paid in Rupees, the salary would seem less. If the employees are paid in Euro, the other employees will think the company is playing unfair by paying the European employees more and paying less to those local employees.

The overseas branch and the home company have to establish mentoring programmes for employees to avoid possible pitfalls. Usually, a foreign mentor helps the employee in adjusting to the new regime. Apart from this, a mentor keeps the employee informed all the events in the home company like the organisations progress, issues and procedures.

The assignments given to employees have to be based on their individual skills. An employee learns new tools and techniques while working in overseas assignments. Once the employee returns from the overseas assignment, organisations hesitate to provide opportunities to the employees which utilises the newly developed skills. Organisations have to entrust these employees with better opportunities and allow them to develop these new skills.

resources. Multinational risk pooling provides ways by which an organisation can reduce the cost, time and resources to manage and administer risk benefits. It is a profit sharing system. It combines the premium paid to insure the risk benefits worldwide into a single account that gives an experience rating across borders. The main aim is to provide corporate governance, increase efficiencies of international companies and help in making use of the opportunities offered in todays increasingly global business environment.

International Expatriate Medical Insurance: International employees cannot avail their medical insurance and schemes outside their homecountry. So without medical insurance, when these employees require medical assistance in a foreign country, they have to spend exorbitant prices for treatment. International Expatriate Medical Insurance provides a solution to this problem by providing facilities such as Multinational individual and group expatriate insurance, International expatriate employee and dependent insurance, Replication of home country benefit levels, Medical evacuation insurance and services, International business travel accident insurance and so on for the benefits of international employees.

Expatriate Insurance Service: Expatriate Insurance Service is an international health insurance for expatriates of all nationalities working around the world. This health insurance has a wide range of schemes to suit the needs of the international employees. All the schemes offered have an exceptional value for money combined with a wide-range of benefit packages. 14.3.2 Benefits for International Employees Self Assessment Questions In the previous topic we understood the common problems international employees face. Now we will learn about some of the benefits employees 6. Employer-employee relations become organisation. They are an enjoy while being part of the international even more difficult with exposed to internationalised legal systems, the culture differs across the globe, the different cultures, organisation asand language. Hence, they learn a lot more legal systems change, overseas branch. used are different. State true from their experience inand the languages From overseas assignments, or false. international employees are exposed to various tools and techniques which 7. used in the host-country. This adds to the skill set transferring the details areEmployers must consider the ____________ while of the employee. Let of employees across national borders. us look into some of the benefits of international employees. 8. FOH works for the benefit of _______________. 9. The overseas branch and the home company have to establish a Multinational Risk Pooling: Many internationalised organisations find it mentoring programme for employees to avoid possible pitfalls. State true difficult to provide their subsidiaries with risk benefits in terms of cost and false.

10. Courts do not follow the assumption that the legislation applies only to conduct that occurred within the country. State true or false. 11. ________ is a profit sharing system. 12. Expatriate Insurance Service is an international health insurance for expatriates of all nationalities and working only in India. State true or false.

an employee for an overseas assignment. The technology being used for the project is new. What kind of an emp

14.4 International Employee Relations Management Having discussed the problems faced by international employees, we will now discuss the measures taken by international organisations to develop a better relationship with their employees.
Organisations have come up with various programmes to develop a better relationship with their employees in the home branch and the overseas branch. These measures basically provide benefits to the employees. When employees are benefited from the company in which they work, it reinforces employee engagement and commitment. It also helps in building a better rapport between the employers and employees. The measures taken by organisations to ensure effective employee relations are as follows:

Trade Union: Unions work towards accomplishing goals like increased wages and better working condition for employees. A trade union has a leader who represents the union members. The leader negotiates labour contracts with employers on behalf of the union members. The attitude of trade unions towards MNCs and responses to their impact on collective bargaining vary.

Some MNCs do not keep their job guarantee commitments after relocating to a foreign country. Trade unions of these countries suggest the local governments to withdraw their financial support to such MNCs. Grievance Handling: To redress grievance, an aggrieved employee can always approach higher officials to solve problems. In the case of international employees a mechanism similar to domestic organisation grievance handling is created to handle employee grievance. It not only solves the problems of the employee but also helps to build a better employer-employee relation. Behavioural and Organisational Aspects: You already know that employee engagement and commitment, motivation, empowerment are important aspects of effective employee relations. In an international organisation, the management of international employees have to consider the local culture and morals when imbibing these values in the employees.

The leadership and authority of the local management plays an important role in implementing these values. With the guidance of the parent company, the local manager can motivate and empower employees. For example, McDonalds get ideas on how to launch new products in their regional menu from its local employees. These employees are able to better understand the markets than a global manager. This way, the organisation gets valuable information while empowering employees.

Human Resource Information Systems: You are familiar that organisations use Human Resource Information Systems (HRIS). They are online applications which enable organisations to store, track and manipulate data according to the needs of the HR, payroll and accounts, and other operations within an organisation. Such employee relationship management tools help create a centralised approach to managing employees distributed across the globe. Information on employee management, career growth, performance management, etc., are easier to track and in turn help in managing international employees. Organisational communication systems In countries like the be connected at anytime of the day, anywhere in the enable employees toNetherlands and the UK, trade unions normally have a positive view of MNCs and they welcome the inflow of foreign investments. world. Trade unions in Poland have signed special deals like no-strike agreement to attract investments from countries like the USA and Japan.

Self Assessment Questions 13. __________ work towards accomplishing goals like increased wages and better working condition for employees 14. To redress grievance, an __________ employee can always approach higher officials to solve problems. 15. Expand HRIS. 16. The management of international employees have to consider the ________ culture and morals when empowering and motivating employees.

Through ffd8ffe000104a46 494600010201006f 006e0000ffe20c58 4943435f50524f46 494c45000101000 00c484c696e6f021 000006d6e747252 47422058595a200 7ce000200090006 003100006163737 04d534654000000 004945432073524 14.5 Role of Human Resource Management 742000000000000 000000000000000 You are now familiar with the concepts of internationalisation. We will now 0f6d600010000000 learn about international human resource management. To study the 0d32d4850202000 international human resource management we first have to be able to 000000000000000 Figure 14.1: Elements of Good HR Management analyse the role and significance of human000000000000000 resource management. Let us 000000000000000 now learn the role of HR management in an organisation. 000000000000000 Let us now discuss the role of a HR manager in an organisation in detail. 000000000000000 000000000000000 The roleResourcemanager must majorline with the needs of theof an Human of a HR 2 (HR) plays a be in role 001163707274000 in the development organisation. 001500000003364 assets, highlights Successful organisations have become more adaptive, flexible to change, organisation. HR management considers employees as 657363000001840 andimportance of teamwork, and employee involvementis adecision making. the customer-oriented. In this context the HR manager in strategic partner, 000006c77747074 an employee advocate, and a change mentor. Let us look into these roles 000001f000000014 played by a HR managercandetail: a major 626b70740000020 basic function of an in have The management of HR impact on the 400000014725859 5a0000021800000 organisation. Companies that have a productive HR are the ones which are successful. They make the best use of the 0146758595a0000 workforce. organisations 022c00000014625 Strategic Partner: To prove their abilities to contribute to the 8595a0000024000 000014646d6e640 Theorganisation, the HR managers play the role of a increasedpartner. They efficiency and productivity of employees can be strategic by providing 000025400000070 contribute and help in carrying out business plans and aims of the proper training, good leadership and work environment, and lucrative 646d6464000002c organisation. 400000088767565 incentives to the employees. It is the key factor for competitiveness in an 640000034c00000 The HR business plans and aims are set up to be efficient and strategic organisation. Employees who are trained proveto attain the overall have 086766965770000 business Figure 14.1 shows the elements of a good HR management better skills. plans and aims of the organisation. The influences of strategic 03d4000000246c7 partnership on HR services are design 56d69000003f8000 (WF in the figure stands for workforce). of work positions, hiring services, 000146d65617300 rewards, recognition and strategic pay, performance development and 00040c000000247 appraisal systems, career and succession planning, and employee 465636800000430 0000000c7254524 development. 30000043c000008 0c6754524300000 43c0000080c6254 52430000043c000 Employee Advocate: In this role, the HR manager plays a significant 0080c7465787400 000000436f707972 in the success of an organisation by being the voice of the employees 696768742028632 and by supporting the employees. As an employee advocate, the HR 920313939382048 2 http://humanresources.about.com/od/hrbasicsfaq/a/hr_role.htm 65776c6574742d5 creates a work environment in which the employees would be inspired 061636b61726420 and happy. 436f6d70616e7900 006465736300000 000000000127352 474220494543363 13936362d322e31 000000000000000 000000012735247 422049454336313 936362d322e3100 000000000000000 000000000000000 000000000000000 0000000

The HR managers help in establishing an organisational culture and environment in which people have the skills, concern and commitment to serve clients and customers well. In this role, the HR manager provides opportunities for employee development, employee assistance programmes, profit-sharing strategies, approaches to solve problems and regularly scheduled communication opportunities for the growth of an organisation. Change Mentor: To evaluate the effectiveness of an organisation, the HR managers constantly monitor changes in the organisation. The awareness of the change strategies and the knowledge to implement it makes a HR manager worthy. The knowledge to link these strategies to the needs of the organisation reduces the chance of employees being discontented and reluctant to change.

14.5.1 International Human Resource Management We have learned about the role of HR management in an organisation. We can deduce that a good HR manager is critical to the organisation. Now we will analyse International Human Resource Management (IHRM) in a MNC. Figure 14.2 shows the role of a HR manager. A human resource personnel who knows multiple languages is preferred for the role of an international HR manager. The international HR manager works worldwide in the following human resource activities: Help in placing staff returning from overseas assignments Repatriation Prepare staff to work in overseas assignments Translate the cultural differences across the globe to the global The HR manager recognises the vision, missions, and goals of an employees organisation and gives the organisation a picture of how successful these IHRM Challenges measures are by constantly monitoring the changes. Let us discuss some of the problems that international HR managers face Figure 14.2 HR managers. compared to depicts the role of a HR manager. Difference in culture, levels of economic development, and legal systems in different countries may require organisations to change their hiring, firing, training, and compensation policies depending on the country. Organisations have to make a decision about the selection of managers. That is, if the manager must be from home country, host country or a third country. Training and progress of an individual in an international organisation may be more difficult than in a domestic organisation. Compensation systems have to be adapted to meet the labour market needs of the country. International Employee Recruitment and Selection Now we will discuss the criteria for recruiting employees in an international organisation. The skills and abilities that an international manager requires can be categorised as the following: One who is can perform the task One who can workFigure 14.2: Role of a HR Manager in a foreign location

Figure14.3 shows these skills that an international manager must possess.

Figure 14.3: Skills of International HR Manager

In the case of selecting functional employees in an international organisation, the following points are noted: As organisations go international, the market for executives is also internationalised. Members in the top management teams are diverse. College graduates are usually not hired for foreign positions. However, most of the MNCs hire them with the intention of sending them abroad later on. Self Assessment Questions 17. An International HR has to select a manager from ________, ________ or a _________ country. 18. An international HR manager works towards preparing employees for overseas assignments. State true or false 19. The efficiency and productivity of employees can be increased by providing __________, good leadership and work environment, and _________.

MNC. The company is recruiting a manager to work in an overseas branch. Analyse the skills that you would look f

14.6 Summary Late 20th century and early 21st century saw organisations making its presence in the international market. Reasons to internationalise was to expand their market or because they faced competition from companies outside their national border.
The most common form of international organisation is the multinational company. There are many ways in which multinational companies decide to manage overseas branches. They may use the Ethnocentric, Polycentric or Regiocentric and Geocentric approach in managing their foreign operations. The companies which follow Polycentric or Regiocentric and Geocentric are more successful. Employers face a many challenges with their international employeremployee relations. With international employees the problems are more complex as factors like culture, language and legal systems affect the issues. International employees also enjoy certain benefits. They not only get to learn new cultures, legal systems, and languages and travel to new places, but are also eligible for certain insurance schemes and policies. Organisations constantly work towards ensuring better international employer-employee relations to succeed in the global scenario. Factors such as trade unions, international industrial relations affect the policies adopted by organisations. The HR department of a company plays a major role in the development of a company. The HR recognises the changes required for the development of a company and devises the plans to accomplish the same. International human resource management plays an important role in governing the behavioural aspects like motivation, communication and decision making capabilities of international employees. International employee commitment and empowerment are just as important as in any organisation.

14.7 Terminal Questions 1. Why did organisations choose to go international? 2. What are the approaches adopted by MNCs to manage their international branches and employees?

3. What are the problems faced by international employees? 4. Explain the methods adopted by organisations for international employee relations management. 5. Explain why a HR manager is a strategic partner, an employee advocate and a change mentor.

14.8 Answers
Answers to Self Assessment Questions 1. Internationalisation 2. labour 3. False 4. home-country 5. host-country 6. True 7. International Privacy laws 8. International employees 9. True 10. False 11. Multinational risk pooling 12. False 13. Trade unions 14. aggrieved 15. Human Resource Information System 16. local 17. Home, host or a third country 18. True 19. proper training , lucrative incentives Answers to Terminal Questions 1. Refer section 14.2 2. Refer section 14.2.2 3. Refer section 14.3.1 4. Refer section 14.4 5. Refer section 14.5

14.9 Case Study

an indication that the employer-employee relation was not smooth. The MNC decided to seek the services of ABC asks was to bring about a change in the employee relations. The first step towards improvement was to elect a ne the MNC was slow due to their ineffective employee relations and it was a task of the MNC management to impro cators. had to pay the rest of the amount. The ABC team used this negative development to test how well the supervisor the solution proposed by the organisation management, but they were assured that the company was doing ever

14.10 Glossary

the importing country.

of exporting that can be included in the export price.

FTA eliminates barriers of trade and investment between the USA, Canada and Mexico.

and so on. The aim includes to stimulate the economic growth, social progress, cultural development among its members, th

ong the member countries. EU has developed a single market through a common system of laws which is applicable to all m

References 1. International Human Resource Management: Policy and Practice for the Global by Dennis R. Briscoe, Randall S. Schuler 2. http://www.uncg.edu/bae/people/woodley/Nov13.ppt#256,1,International Human Resource Management (IHRM) and Labour Relations 3. http://gbci.net/human_resources.shtml

Unit 15 Contemporary Issues in Employee Relations

Structure 15.1 Introduction Objectives 15.2 Careerism 15.3 Stress and Employee wellness in organisation 15.4 Organisational Justice Type of Organisational Justice 15.5 Organisational Misconduct Basic Organisational Liability Standards 15.6 Issues with Contract labour and temporary workforce 15.7 Managing Employee Relations Through Organisational Change Interpersonal Communications Conflict Management 15.8 Employee relations for the diverse workforce and Multinational Companies (MNC) 15.9 Employee relations during crises Recession 15.10 Summary 15.11 Terminal Questions 15.12 Answers 15.13 Case Study 15.14 Glossary

15.1 Introduction By now you must be familiar with the factors taken into account for effective Employee Relations. We have also discussed the importance of employee relations management in an organisation that has global presence. This unit discusses contemporary issues like managing employee relations during organisational changes or economic changes like recession. This unit includes a topic on careerism. It deals with an individual orientation of the career management, for the advancement through non-performance-based means.
As we know, stress develops chronic diseases; this unit explains the significance of developing an employee wellness plan. It gives an outline to

carefully develop and implement wellness programs, to reduce stress among the employees. An overview of Organisational Justice and Organisational Misconduct is also included in this unit. Organisational justice is an important aspect that needs to be considered in the workplace. This is due to the effects associated with the fair or unfair treatment. It also includes some basic organisational liability to control any misconduct. Contract workers are considered as indirect employees working for definite duration. This unit has discusses some of the issues pertaining to appointing contract labourer. As the technology and information processing advances, organisation must undergo major changes to survive in the business today. This unit also mentions about the Interpersonal Communications and Conflict Management skills, that managers must have, to maintain good employee relation during the changes made in an organisation. Employee relation during financial crisis and the ways to overcome the stress caused by fear of recession are also covered in this unit. Learning Objectives After studying this unit you will be able: Explain the effect of individual view of careerism on Employee Relations. Assess the importance of stress and employee wellness in an organisation. Describe the negative influence of organisational misconduct in an organisation. Explain the issues related to contract labour and temporary workforce. Explain how to manage employee relations for a diverse workforce/multinational companies Describe the methods adopted to manage employee relations during crises.

It is the desire of the careerist, who will stop at nothing to gain success. At your academic stage, you desire for careerism with the prospect of financial stability. For example, students aim to become a doctor because they find life in this field more luxurious. This kind of act is referred to as paying for/buying a degree. Careerists in this case will not have any interest beyond the financial gain in their chosen field. Careerism is the attitude and activity that places one's career above everything else. Careerism involves ambition to achieve one's goal; however a desire to develop oneself professionally is usually taken as normal, healthy, and virtuous. Long hours of hard work and a dedication towards work that even exclude free time, results in good promotion. However, there is always need of some moral principle to advance one's career goals. Careerism involves compromising some moral rules in the pursuit of career advancement. The two major causes of careerism are promotion system and the willingness of the services or company, to portray the importance of promotion to its employee. Now that we have defined the meaning of careerism, let us now know the meaning of extreme careerism. Extreme Careerism Over past two decades, Extreme Careerism has become common in many organisations. In 1994, United States added 17 additional working days to their calendar. According to Bratton and Kacmars book, The Dark Side of Impression Management, Extreme Careerism is the propensity to pursue career advancement, power, and prestige through any positive or negative nonperformance based activity that is deemed necessary.1 With this non-performance based activity, an employee can influence any person whom they wish to impress.

15.2 Careerism believe that, their personal goals do not align with Extreme Careerists Careerism is the desire to achieve professional advancement by any that organisational or business goals. They focus on short-term strategies possible means, usually at the expense of their own integrity.
1 Reference: The Dark Side of Impression Management

are aimed at personal advancement, rather than long-term success of an organisation. Over the past few years, there have been many cases of extreme careerism in business, organisational, and political ethics. Extreme careerists walk on the right path of career. Each individual needs to determine this right path for themselves.

15.3 Stress and Employee Wellness in Organisation Many companies have started worksite fitness and health promotion programs for its employee. These programs help to reduce the level of stress and risk of coronary heart disease. Recent research has found that implementation of health promotion programs control the heath care costs, absenteeism, and turnover. Issues associated with participation and implementation of these programs is also taken into consideration.
Now let us discuss the kind and level of stress an individual experiences in an organisation. Stress in Organisation Stress is described as the impact caused by the pressure. As the speed at which our society operates increases, the pressure to maintain that speed also increases. The effect of pressure mainly depends on the kind of position we have in an organisation. However, the stress enables an individual to meet the deadlines and all levels of demand. Stress causes illness and produces several other conditions that create severe effect on employee's performance. This in turn affects an employer's workforce. Leon Warshaw, in his book on dealing with stress in the workplace, states that: "Stress affects personality, modifying our perceptions, feelings, attitudes and behaviour. And it reaches beyond its immediate victims to affect the political, social and work organisations whose activities they direct and carry out."2 This statement clearly indicates that increase in stress has caused a wide range of effects on employee that include absenteeism, decreased efficiency, physical and mental illness, and growth in early retirement.

2 Book: Managing Stress by Leon Warshaw

Recent study indicates that certain jobs contribute some factor for making their work environment more stressful than others. Some of the factors that increase the stress in the workplace are: Level of decision-making. Dangerous physical or emotional conditions. Repeated exchange of information with others.

Employer must prioritise and enrol those who are in greatest need of this wellness program. Employer must motivate these high-risk individuals to participate. Some company offer incentive for the participants, while others impose certain penalties on non-participants. For example, some companies started to increase insurance premium contributions of non-participants, while others started raising their deductible levels. For example, the police officers, fire fighters, and air traffic controllers are under constant pressure. They need to have quick decision-making ability. Companies can take effective health care risk management practices to Hence their level of stress is higher when compared with the people working minimise job stress. With the help of effective selection process and proper as medical records technicians, librarians, and musical instrument repairers. training procedure, companies can meet their demand. With the clear job descriptions, company can stressthe most early reorganisation of the factors Employer can manage the have with the suited applicants for the job. This also creates the stress in the workplace. of the job responsibilities. The that helps candidate to have a clear idea implementation of pay-for-performance program reduces uncertainty regarding rewards, which in turn reduces stress. The following section discusses how an organisation implements employee wellness programs. These programs help the employees to overcome their stress and other related problems. Some stresses are inherent and the companies find it difficult to reduce such kind of job stress. Employee Wellness Employee wellness focuses on the human resource management to remove For example, Fire fighting is a dangerous job, where you cannot find any certain health related problems. These health problems are caused by source to eliminate the stress. In this case, workers must learn to manage improper choice of lifestyle that includes smoking, obesity, and lack of stress by their own. Companies can only offer stress counselling program to exercise. their employees to work off their stress. Some of the common health problems that affect the workplace are Cancer, Employee Assistance Programs (EAPs) intend to increase productivity and heartto resolve and respiratory illness. These diseases account for 61 percent help disease, any personal issues. EAPs, with their mentors who are of hospital claims. This in turn creates the workplace problems suchto psychological health professionals, provide confidential counselling as absenteeism,fuse productivity, and increased medical costs. workers who lost their personal problems with the work productivity. These counselling are then documented to have a track on improvements in For example, people with high blood pressure are likely to to monitor the worker's health, productivity, and performance. This helps have medical claims of more than INR 2 lakhs per year. the medical benefits costs, and substantially reduction in the absenteeism, the workplace accidents. The medical claims costs for smokers are 22 percent higher than nonsmokers. Many organisations offer wellness programs to improve and maintain the overall health of their employees. These programs are effective as they help each employee to quit smoking, manage stress, and improve nutritional habits. Recent research signifies that taking part in wellness programs reduces absenteeism and increases productivity.

Figure 15.1 represents Employee Wellness Plan Protocol:

Figure 15.1: Employee Wellness

Figure 15.1 illustrates that a company develops a realistic picture of employee's health issues. Then, they create an employee wellness plan to improve the lifestyle of their employee. Later, the company promote the wellness programs by offering health counselling. They also provide incentives to encourage employees to chosen health related events and programs. Company then implement the wellness program and finally, review the result based on the improvement in employees quality of life, productivity, absenteeism rate, and reductions in health care costs. The feedback obtain from employees about this program maximise the return on investment. As you are now aware of various factors that increase the stress in the workplace and employee wellness programs undertaken to reduce the stress, let us now discuss on the concept of Organisational justice. Self Assessment Questions 1. _________ is the desire to achieve professional advancement by any possible means, usually at the expense of theircan influence any person, 2. With ________ based activity, an employee own integrity. whom they wish to impress.

3. Stress is described as the impact caused by the pressure.(True/False) 4. _________ focuses on the human resource management to remove certain health related problems. 5. _________intend to increase productivity and help to resolve any personal issues.

15.4 Organisational Justice Organisational Justice is the main factor of citizenship behaviour and its related outcomes are satisfaction, and commitment towards work. It also focuses on employee's equality in outcomes such as payment and the procedures to determine those outcomes. Organisational justice builds trust in employee, which in turn gets displayed in citizenship behaviour.
The concept of justice differs based on the people's cultural values. The people with collectivistic cultures differ from the people with individualistic cultures, in terms of equity and equality. With good organisational justice, you can have more positive outcomes from an employee in the workplace. If employees are treated with full justice, they follow all the rules and regulations of an organisation. They will be more committed towards work, have more trust in organisation, and feel more satisfied with the justice they receive. 15.4.1 Type of Organisational Justice Organisations focus on three specific forms of justice. They are: Procedural Justice Procedural justice is identified by the equality of processes that helps to determine the type of outcomes used, the way they are distributed, and to whom the outcomes are given. Some of the organisational procedural justice includes freedom from bias, accuracy, consistency, and correction of errors. Distributive Justice Distributive Justice is identified by the reasonable employees in an organisation that recognise the actual outcomes they obtain. Issues may arise if the employee experiences something negative in the workplace that cannot be prevented. Issues may also arise if they do not get the same outcome they expected to have or when the outcomes are inadequate. Interactional Justice Interactional justice is identified by the awareness of equality in the procedural treatment of others. Issues may

arise if the employees are judged wrongly and denied of respect or privacy. A low level of interactional justice can be related to possibility of sexual harassment. Recent study shown that differences in personality and aggressive behaviour of an individual effect the way they react to the inequality in the organisation. Employees perception of procedural justice is determined by re-organising their performance rating. With this rating system, employees' view of organisational justice increases. The figure 15.2 shown below gives an overview of the three specific forms of organisational justice.

Figure 15.2: Organisational Justice

The following section discusses the basic organisational liability standards to deal with agent misconduct.

Organisational Justice brings changes in employee behaviour, by connecting it with aspects such as productivity, p

15.5 Organisational Misconduct Organisational misconduct has now been recognised as the matter of serious social and economic concern. It has also been estimated that the annual cost of corporate crime, is much greater than ordinary crime. Organisational misconduct are typically hidden, hence their scope and nature are not very clear. Thus, investigations remains limited to self-report surveys.
15.5.1 Basic Organisational Liability Standards There are three basic organisational liability standards to deal with agent misconduct. These liabilities are called duty-based liability regimes that identify the presence of internal work structure, to determine if the organisation has met its duty of care or not. The three basic Organisational liability standards are: Strict vicarious liability Negligence Composite Regimes Compliance

Negligence-based Organisational Liability Systems do not compel organisations to implement level of organisational enforcement and production. As this liability fails to cover up all the cost of their harmful conduct, it is considered as inferior to strict liability regimes. Composite Regimes Compliance This liability regime is imposed by combining liabilities of both strict vicarious liability and negligence. Composite Liability Regimes assign liability, based on strict liability standard, however approves this allocation of liability based on a negligence standard. Let us now know the various issues concerned with hiring contract labour and temporary workforce. Self Assessment Questions 6. The concept of _______ differs based on the people's cultural values. 7. Name the three specific forms of justice. 8. __________ Organisational Liability Systems do not compel organisations to implement level of organisational enforcement and production. Strict vicarious liability This liability is imposed when organisational staff conducts some punishable crime, despite many warnings given to them by the organisation, to stop the harm. The basic idea behind strict vicarious liability is to incorporate all of the costs, associated with their activities. This leads to appropriately priced organisations products and delivery of the finest amount of services. Strict vicarious liability systems compel the organisations to implement the most favourable level of internal organisational enforcement and prevention technique. When the organisation starts to cover up all the costs of any damage it causes, this technique helps to reduce the frequency of the harm. The rate of the harm is reduced up to the point such that, reduction equals the benefits. Negligence This liability is imposed when organisational staff conducts some punishable crime and the organisation fails to provide standard of care. This clearly states that organisation was not able to avoid the harm. This in turn implies that, they failed to observe industry standards with regards to various operating methods.

Companies cover the temporary agency's administrative costs. The temporary employee gets only a portion of what the company charged for their services. The percentage of income paid to the temporary workers depend on the type of service they are offered, experience in that particular service, and other special skills required for that job, as set by the company. The contract labour system does not provide the basic right of secure job with regular living income. Hence, Contract Labour Act has been implemented to legalise the contract labour system. The following section discusses how to enhance interpersonal communication and develop your conflict management skill.

15.7 Managing Employee Relations through Organisational Change

Organisation must undergo major changes at various stages in their development. The changes occurs when organisations decide to change their overall approach for success, make some changes in a major section or practice, and intend to change the way by which, it usually operates. Owners and managers make efforts to achieve success in the major changes they create in their operations. Some get a very good result, while 15.6 Issues with Contract Labour and Temporary Workforce others fail to accomplish success in this effort. There are no adequate Contract labour is an inappropriate name given to the employee working on educational programs to provide proper guidelines, to analyse employee contract in an organisation.is most widely heard in corporate priorities of an relation basis. This name It is necessary to identify critical world. Organisations call their worker as employee, when they workpriorities. organisation and take appropriate changes to address those on an employer direction and for whom there is a wide range of income reporting. However, independent contractors are self-employed; they account for their own taxes There are few and are skills for the employer's direction and control. and expenses,importantnot under managing employee relations. They are: Interpersonal Communication Conflict Management Now-a-days organisations appoint temporary workers to quickly fill positions of immediate need. Later, they incorporate these temporary employees into their long-term planning efforts. Temporary workers provide flexibility to the organisations, with an idea of having opportunities for future full-time employment. As they readily accept to handle any kind of risk, companies take more advantage of the flexibility they provide. However, temporaries always look for the companies that offer better salary package.

There are four dimensions to optimise interpersonal communications, they are: Influence The constant interaction provides people an opportunity to extend their circle of interpersonal influence. This interaction skill offers professional satisfaction. With the intension to enhance ideas, it gives ability to influence, negotiate, and leverage valuable information. For example, no matter what the situation is, the salesmanship skills tend to influence people to buy the product. Interpersonal facilitation People with this skill are well-aware of the interpersonal aspects of work by constantly monitoring the workplace. Those who are known as People person impose some significant questions to themselves, about the business strategy and employee relations issues. They then try to develop the efficiency of the organisation.

Relational creativity This dimension focuses on establishing good relationship with diverse groups in the workplace. This interaction is possible through visual and verbal imagery. For example, for implementing a marketing strategy, a team lead can be designated for a particular consumer segment. Team leadership This dimension benefits those who maintain a good employee relation within the workforce. They feel good with the daily interaction they make in the work environment. Those who follow this dimension do not really care about the activities that, do not allow them to get engaged with others. For example, by maintaining good employee relation within the workforce, team leaders can sort things out with direct interactions with their employees. Manager can have a profound interest in any or all the four dimensions. These dimensions are very important when engaging diverse groups, 15.7.1 Interpersonal Communications developing people, and creating employee relations strategies. Interpersonal communication is a skill that allows the manager to build good relationship withManagement 15.7.2 Conflict the overall staff. Interpersonal communication skill helps to interact and work with diverse groups of people. If interactions are in favour Conflict Management is a skill that helps in resolving, employee relation of organisation, then it helps to build right workplace attitudes and issues more efficiently. It also creates satisfaction among the workgroup. behaviours. During interaction, managers must have some respect towards their employees. components to optimise an employee in an organisation, There are seven If there is no respect for conflict management, they are: then managers find it difficult to get the work done, as per their requirement. Speak your mind and heart Manager must speak up what they think. Many people find it difficult to express their needs, wants, and desires.

This results in conflicts because; people get frustrated due to improper communication. For example, when an employee is very distress with the manager's management style, goes to the manager to discuss the matter. However, instead of finding solution, the manager brings up some other issues. This makes an employee feel frustrated. Proper solution is to speak up and address the problem instead of avoiding it. Listen well Listening skills are the important aspect to manage conflicts in an organisation. This skill focuses on what people say and not on your response. Focus on only positive aspects of conversation and let other party know of what you are doing. For example, active listening enables managers to demonstrate that they understand what their employee is saying and how he/she is feeling about it. Express strong feelings appropriately Conflict creates a sudden rise in emotions such as happiness, anger, and sorrow. Manager must respect those emotions and examine the kind of stress the person is experiencing. For example, consider an employee named Gracie. If Gracie is experiencing some kind of distress, talk to her as, Gracie, I understand your conviction on this matter, and I am willing to work through it so that, we can bring closure to the issue," Never say, Gracie, I am tired of your complaining and the poor attitude exhibited by you and your co-workers. To me, this is a done issue."

Remain rational for as long as you can Manager must focus on solving the issues and stay connected to that person throughout the conversation. Later, sum up the situation and ask questions. For example, consider two employees named Gracie and Angel working for the same organisation. When there is conflict between these two employees in an organisation, meet with each of them and say, "Gracie, I heard you say that you and Angel are having issues communicating. Allow me to meet with Angel so that I can assist in addressing your concerns."

Review what has been said Manager should ensure that the conflicts raised are clarified soon. If the issues still exist, they should ask questions to get answers to solve the problem in better way. For example, when the problem pertaining to some racial insult is not yet solved, say "To get at the root of the issue, I need answers to my questions. Why did Gracie hurl a racial insult at Angel?"

 Learn to give and take Managers must have two-sided conversation, to have a short or long-term solution to the conflict. For example, allow your employee to express their point of view pertaining to some topics. Avoid all harmful statements Managers must not verbally attack to put individuals on the defensive. This reduces the chance of quickly resolving any conflict or issues. All the above seven components helps to improve the conflict-management skills, and will develop positive employee relations in a workplace. Self Assessment Questions 9. Contract labour is an appropriate name given to the employee working on contract basis.(True/False) 10. Companies cover the _______ agency's administrative costs. 11. _________ is a skill that allows the manager to build good relationship with the overall staff. 12. Conflict Management is a skill that helps in resolving ________ issues more efficiently a. employee relation b. conflict c. manager d. racial

Global shared services that incorporates some aspects of employee relations, find it very difficult to identify the differences in employment law, policies, and procedures that differs from one country to another. It is a misgiving to look upon employee relations as something transactional that can be compartmentalised into a one size fits all solution. This does not take account of the very fabric and relationships that make an organisation work.3

As you are now aware of various dimensions to optimise interpersonal communications and several components to enhance conflict management, let us now study the importance of maintaining good employee relation in global organisation.

15.8 Employee relations for the diverse workforce and Multinational Companies (MNC)
Multi-National Companies (MNCs) have a good range of options to manage employees and employee relations, in their various foreign-based subsidiaries. MNCs usually take either ethnocentric or polycentric approach to manage employee relations. As there is major regulation in foreign labour market and employment relationship, MNCs are capable to follow only polycentric approach. MNCs have employee relations practices based on, either high-performance value-adding or least cost model. Globalised shared service structure deals with variety of linguistic and cultural relationship. Hence, shared service stress lies between policies of corporate structures, and legal parameters of local practices. It is difficult and unavoidable to arrange these two different constructs such that, there are very little gaps between them.

Diversity in the workforce helps to increase the capability of the organisation and its employees. Some of the points that must be considered for good employee relations in global organisation are: Developing and maintaining the customer needs, and business demands. Maintaining a productive workforce that motivates employees. Enhancing image and reputation, to easily partner with the diverse customers and shareholders, aligned with business strategy. Promoting mutual accountability and ownership for diversity.

3 Andy Cook of employee relations experts Marshall-James

job. The fear of recession created confusion among employees as well as employers. The only possible way to overcome this fear is stop reacting in a way that creates distrust and confusion. During crises, company usually cut down the additional expenses such as drop facility for late-leavers, outings and birthday cake. Non-performers go through a tough time to secure their jobs. However, organisations sometimes tend to be generous. Recession is the time to find out valuable employees in an organisation. It is the time when organisation gets the best work results from the employee, which helps to have a stable position in market. This recession is taken as positive investments to create a greater effect on the workforce. A group of employees can be easily managed in good economic times. However, managing a group of employees during downsizing is not so easy. Recession has produced a great effect on worker's morale and productivity. Some guidelines that help managers to stay positive and motivate the employees are: The following section discusses some of the guidelines that help managers Honest and Frequent Communication to stay positive during recession and motivate their employees. Recognise Signs of Stress Plan Work Tasks Ahead to Reduce Stress 15.9 Employee Relations during Crises Recession Employee Relations is concerned with maintaining employer-employee relationships that result in satisfactory productivity, motivation, and morale. This factors help to prevent and resolve all the problems that affects work environment. Business owners must motivate the right people to keep up their performance level, and bring them on board. For better perspective of right candidate, the company must impose standard hiring and training processes as well as conduct various assessments. Management expert believes that employees are the most important asset for the success of any company. However, only small percent of company uses systematic process to select, manage and plan for growth of employees. However, economic crisis of 2008/2009 made many companies and employees to find the ways to get through the hard times, and secure their

and plan a work task ahead. They should communicate with employee to share long-term milestones and provide weekly due dates.

r any financial crises. If the company was closed due to recession, do a research and find out the alternative effor

Self Assessment Questions 13. MNCs usually take either _______ or polycentric approach to manage employee relations. workforce helps to increase the capability of the 14. ________ in the organisation and its employees. 15. Business owners should motivate the right people to keep up their performance level and bring them on board. (True/False). 16. ______ is the time to find out valuable employees in an organisation.

Honest and Frequent Communication Employees should be notified of the global economic impacts during crises and arrange regular meetings to keep everyone informed. Communication is the key to share all known and unknown facts. This in turn helps to prevent any kind of rumours from spreading. Recognise Signs of Stress Managers have to recognise the signs of stress in an employee. They have to identify, whether an employee is experiencing any kind of stress. With a good communication with an employee on non-work topics, helps to evaluate their level of stress. Plan Work Tasks Ahead to Reduce Stress Stress in employee usually occurs when there is pay cut or some bad news about the economy. This in turn affects morale and productivity of an employee. Managers should take this high-risk employee into consideration

Contract labourer helps the organisation to fill the positions of immediate need. Organisational Change is a major aspect to improve the overall strategy to achieve success. Managers should posses Interpersonal Communications and conflict management skills to maintain good employee relation. Employee relation should be maintained in diverse culture of workplace. Recession is the time to identify valuable employees in an organisation.

15.11 Terminal Questions 1. Explain the concept of Employee Wellness. 2. Describe the types of Organisational Justice. 3. Explain the three basic Organisational liability standards. 4. What are the four dimensions to optimise interpersonal communications?
5. Mention the guidelines that help managers to stay positive and motivate the employees during crises.

15.12 Answers 15.10 SummaryAssessment Questions Answers to Self Careerism is referred as professional advancement at the expense of one's 1. Careerism ownNon-performance 2. life. Extreme Careerism has become common in many organisations. Extreme Careerists believe that their personal goals do not align with 3. True organisational or business goals. Stress is described as the impact caused 4. Employee wellness by the pressure. Stress increases as the speed at which our society operates 5. Employee can be managed by the early increases and Assistance Programs (EAPs) reorganisation of the factors that 6. Justice creates the stress. 7. The three specific forms of justice are: Procedural Justice Organisations offer Justice Distributive employee wellness programs to manage stress. Organisational Justice in the workplace helps to achieve favourable Interactional Justice outcomes and can expect that employee to obey organizational rules. The 8. Negligence-based three types of justice are Procedural justice, Distributive Justice, and 9. False Interactional Justice. 10. Temporary 11. Interpersonal communication Organisational Misconduct is the serious issues in today's corporate world. 12. a) Employee relation The three types of justice are Procedural justice, Distributive Justice, and 13. Ethnocentric Interactional Justice. Organisational Misconduct is the serious issues in 14. Diversity today's corporate world. The three basic Organisational Liability to deal with 15. True agent misconduct are Strict Vicarious Liability, Negligence, and Composite 16. Recession Regimes Compliance.

Answers to Terminal Questions 1. Refer to section 15.3 2. Refer to section 15.4 3. Refer to section 15.5 4. Refer to section 15.7 5. Refer to section 15.9

15.13 Case Study

s and public health issues. Due to sudden growth and in funding in niche market, this organisation has to make hu

eam; Financial team. There was need of more talented staff to discuss with external partners and suppliers. The or e workplace. Some of the issues such as inability to effectively negotiate, the inability to handle difficult conversa y diverse business partners, developing effective communication was very important aspect. es they covered include:

en the needs of the organisation and fund partners and their potential expectations.

e group of team leaders. With good and productive results of this training, organisation requested CEDR to train a

Organisation deal with the conflict of lack of interpersonal communication within organisation? ntify the key issues that had possibility to create conflict throughout the workplace?

15.14 Glossary

general management and reporting on eligible activities. This also includes costs of evaluation, record keeping and maintain

d either by corporation or by individuals identified with a corporation or other business entity. ach ates people and culture according to the standards of one's own culture. h ich is company-centred rather than a client-centred to conduct of business.

mposed upon a person even though that person may not have done anything wrong.

References 1. Contemporary Issues in Employment Relations By David Lewin; ISBN 0913447927, 9780913447925. 2. Journal-Ethical Issues in Contemporary Human Resource Management Journal: Employee Relations Vol : 23 by: Mike Noon. 3. www.cornellpress.cornell.edu/cup_detail.taf?ti_id=4626. 4. Employment Relations By Ed Rose Edition: 2 - 2004.

ffd8ffe000104a46494 60001020100c800c800 Unit 2 Strategic Employee Relations 00ffe20c584943435f50 524f46494c450001010 0000c484c696e6f0210 Management 00006d6e7472524742 Structure 2058595a2007ce00020 2.1 Introduction 009000600310000616 Objectives 373704d53465400000 000494543207352474 2.2 Different Strategy Levels in an Organisation Corporate Level Strategy 200000000000000000 00000000000f6d60001 Business-Unit Level Strategy 00000000d32d485020 Functional Level Strategy200000000000000000 People Strategy 000000000000000000 2.3 Strategy and Employment 000000000000000000 Policies 000000000000000000 2.4 Future Challenges 000000000000000000 2.5 Performance Management Services 000000116370727400 2.6 Quality, Involvement and Commitment as Competitive Advantages 000150000000336465 2.7 The Psychological Contract: Interest and Expectations 736300000184000000 6c77747074000001f00 2.8 HR Infrastructure 0000014626b7074000 2.9 Employee Surveys 002040000001472585 2.10 Summary 95a000002180000001 2.11 Terminal Questions 46758595a0000022c00 2.12 Answers 0000146258595a0000 024000000014646d6e 2.13 Case Study 640000025400000070 2.14 Glossary 646d6464000002c4000 000887675656400000 34c0000008676696577 2.1 Introduction 000003d4000000246c7 56d69000003f8000000 The previous unit explained the concepts of Employee Relations 146d6561730000040c0 Management. This unit familiarises you with the concepts of Strategic 000002474656368000 Relations Management. You will learn about the strategies and employment 004300000000c725452 policies adopted for effective Employee Relations. You will be introduced to 430000043c0000080c6 performance management, quality management, and employee commitment, expectations and75452430000043c0000 interests. 080c625452430000043 c0000080c7465787400 Johnson and Scholes define strategy as Strategy is the direction and scope 000000436f707972696 of an organization over the long-term; which achieves advantages for the 768742028632920313 organisation through its configuration of resources within a changing 93938204865776c6574 742d5061636b617264 20436f6d70616e79000 064657363000000000 000001273524742204 9454336313936362d3 22e310000000000000 000000000127352474 220494543363139363 62d322e31000000000 000000000000000000 000000000000000000 000000000

environment, to meet the needs of markets and to fulfil stakeholders expectations. 1

The main levels of strategy of an organisation are: Corporate level strategy: It frames the overall business direction and goals. Business-unit level strategy: It specifies the methods the organisation uses to compete in particular markets. Functional level strategy: It outlines the strategy of individual departments and divisions like finance, marketing, etc. People strategy: It matches an organisations activities with its resources. Let us now analyse the levels of strategy of an organisation. Learning Objectives This unit familiarises you with the concepts of Strategic Relations Management. After studying this unit, you will be able to: Identify the different levels of strategy in an organisation. Explain why strategic people management is essential for the success of an organisation. Explain how the strategy of an organisation influences its employee policies. Recognise the role of Quality, involvement and commitment as competitive advantages. Assess the role of HR infrastructure and employee surveys in Strategic Relations.

1 http://www.oppapers.com/essays/Johnson-And-Scholes/269474

2.2.1 Corporate Level Strategy Corporate level strategy is usually devised at the board level. It defines the following for an organisation: The overall mission. The game-plan. The management of the business portfolio. The priorities of each business unit regarding resource allocation. The structuring of the business. The methods of financing the business. The alliances to be made. The acquisitions/ mergers to be performed. Figure 2.1 depicts the factors which influence corporate strategy.

Figure 2.1: Factors Influencing Corporate Strategy

From Figure 2.1 you can see that the corporate strategy is influenced by the external environment, the people and systems within the organisation, the 2.2 Different Strategy Levels in an Organisation organisation structure, resources within the organisation, the current values Organisations haveand the expectations and objectives of the organisation. of the organisation different levels of strategic decision making. Although these levels are inter-related, each one of them has its own scope and reach. The different levels of strategy in an organisation are corporate level, Corporate strategy examines internal (within the company) and external business-unit level, functional level and people level. Let us now examine factors (competitors, clients, customers), frames a new vision for the each level of strategy that exists in an organisation in detail. organisation and aligns policies, practices and resources to achieve that vision. It provides an overall direction to the organisation. The corporate visions of some organisations are listed below GE (General Electric): We bring good things to Life.

 Microsoft: To enable people and businesses throughout the world to realise their full potential. The corporate vision influences the business mission. A good business mission should be: Clear: It should be stated in a language that is easily understood by most of the employees. Achievable: The employees must feel that the organisation can achieve the specified objectives. Challenging: Each employee should exert as much effort as possible to contribute to the overall success of the mission. According to Johnson and Scholes, corporate strategy can be evaluated by the following criteria: Suitability: Is the strategy economically viable? Is it suitable to the current corporate capabilities and environment? Feasibility: Are the resources (finance, people, time, knowledge etc.) available to implement the strategy? Acceptability: Will the stakeholders (shareholders, employees, customers) react favourably to the strategy? For example, Dell Computers is a leading PC supplier. The corporate strategy adopted by it is to deliver innovative and cost-effective solutions which address customer needs. Dell Computers tries to deliver this through its in-house Research and Development division and by forming strategic partnerships with top industry suppliers and original development manufacturers. We have so far discussed corporate strategy. Let us now discuss the business-unit level strategy of an organisation. 2.2.2 Business-Unit Level Strategy Business-unit level strategy is mainly concerned with how the organisation gains advantage over its competitors. It deals with the following: The methods the organisation uses to compete in particular markets The new opportunities that the organisation identifies or creates The products or services to develop The customers that the organisation targets

For example, the business strategy of a furniture manufacturer is decided by the following factors: The type of furniture the furniture manufacturer wants to market (home furniture, office furniture etc.) The competitors who market similar furniture The quality of furniture the furniture manufacturer wants to market (solid wood, plywood) The customers the furniture manufacturer targets (individual customer, corporate, educational institutions) According to Porter (1985), the three basic factors that influence the decisions making process are: Cost leadership: It aims to offer lower costs than the competitors without lowering quality. Product differentiation: It tries to achieve industry-wide recognition that the different products and services of the company are superior in quality when compared to that of the competitors. Specialisation by focus: It tries to establish a niche market.

For example, when the corporate strategy of a business is being the lead player in a specific market, the functional strategies of each division would be as follows: Manufacturing division: to produce good quality goods. Human resource division: to train staff in order to have a highly skilled workforce. Marketing division: to increase sales by increasing advertising. The different kinds of functional strategies are Marketing strategy: It deals with pricing, selling and distributing a product. Production strategy: It deals with what products to produce (issues like new products for existing markets or products for new markets), the production chain, etc. Finance Strategy: It aims to align the financial management of the organisations with its mission and goals. The decisions to be made are regarding budgets, liquidity issues, credits, cash flows, loans, capital investments etc. Human Resource Management (HRM) strategy: It deals with managing We have discussed the business-unit level strategy. Let us now discuss the an important asset of the organisation its work force. functional level strategy of an organisation. R & D strategy: It deals with issues like innovation and development of 2.2.3products, and the addition of new features in existing products. new Functional Level Strategy Functional level strategy is concerned with how different units of the It is essential that various functional units organise themselves withcorporate business (marketing, finance, manufacturing, personnel) transform care in order to achieve their aims and synergise withgoals. According to Johnson and business level strategies into operational the rest of the business. Let us now analyse the concepts of describes how and Scholes, functional strategy people strategy. the component parts of an organisation in terms of resources, processes, people and their skills are 2.2.4 People Strategy a strategic architecture which will effectively define pulled together to form the avenue. 2 aims to match the activities of an organisation with its People strategy human resources. An effective strategy for people management is vital to the success of an organisation. Research carried out by the Institute of Work Functional units helpCentre for Economic Performance shows a clear link Psychology and the in framing the business and corporate strategies by providingthe adoption of good human resource business practices and between input on resources and capabilities. Once the higher level strategies performance. The research proves that focussing on key people improved are framed, action-plans are framed for each department, in order to accomplishissues will improve productivity and profitability. People management the higher level strategies. strategy aims to:

2 People and Organisations - Employee Relations, third edition by John Gennard and Graham Judge

Ensure that the employees are satisfied with their jobs, working environment, rewards and career prospects.

 Develop employee commitment by motivating them to move beyond contractual obligations to emotional commitment. This develops a strong sense of loyalty to the organisation and its customers. Manage organisation culture by concentrating on the important cultural aspects of the organisation. The culture of an organisation is defined by: The artefacts and symbols of the organisation. The stories and myths within the organisation about its various successes or failures. The rites and rituals that define employee behaviour. The rules and procedures that set parameters for employee behaviour and action. The role models within the organisation. The beliefs, values and attitudes reflected in the daily activities. The ethical standards which set the boundaries of acceptable behaviour. The five main features of people management are: Developing a strategic view of managing employees. Involving employees in the business. Investing in communication. Managing employee performance. Viewing employees as individuals. Developing a Strategic View of Managing People An organisation must ensure that its people are at the centre of any strategic business planning. The key issues that an organisation must address while planning its business strategy are: Are the right knowledge, skills and competencies available within the organisation? Should people be recruited from outside? Can the knowledge, skills and competencies of the people be developed to explore new business opportunities? Involving People in the Business Emphasis on team work will involve employees in the business. Teams need: More autonomy and freedom for self-management.

 Clear objectives and targets. The freedom to plan and undertake work, acquire resources and improve the processes, products and services. Investing in Communication To be successful, an organisation must invest heavily in communications. Businesses that show a high growth have implemented the following in enhancing communication within the organisation: Communicate their business strategy to all employees Give feedback on performance to all employees regularly Use a wide range of communication methods Managing Employee Performance Employees perform well if they Know what they have to do Get feedback on their performance Know the areas in which they have to improve Know how they can improve themselves If employee expectations are not well defined, it can lead to low morale, dissatisfaction, absenteeism and high turnover. Viewing Employees as Individuals High performing organisations view people as individuals and use techniques of involvement which encourage satisfaction and commitment. This section explained the various levels of strategy in an organisation. We will next discuss how organisational strategy influences employee policies. Self Assessment Questions 1. The main levels of strategy of an organisation are __________, __________, __________, and _________. 2. __________ strategy is usually devised at the board level. 3. __________ strategy is concerned with the methods the organisation uses to compete in specific markets. 4. According to Porter, the three basic factors that influence the businessunit level strategies are ________________, ______________, and _____________. 5. People strategy is concerned with matching the activities of an organisation with its _____________.

6. Improvement in productivity and profitability can be achieved by focussing on key _______________ issues. 7. Employees can be involved in the business by emphasising on _______________. 8. To be successful, an organisation must invest heavily in _______________.

roduct, say a new shampoo. Note the factors that determine the business strategy of the organisation. List the pe

It is very important that the strategy of an organisation maximizes its competitive advantage. An organisation must constantly re-evaluate itself and make necessary improvements. Organisations should design and manage employment policies which will improve their business. The process of change and its impact on the formulation of strategy poses many challenges. For example, if there are trade unions in an organisation and there is a trend towards individualism, then the organisation must decide whether the trade unions have to be encouraged or marginalised. The workforce of Southwest Airlines (a U.S. airline company) is organised into nine unions for pilots, technicians, transportation workers, customer service personnel, mechanics, cleaners, reservation agents and flight attendants. The company has welcomed these unions and maintains cordial 2.3 Strategy them. The companyPolicies ensured that these unions have relations with and Employment has also the same objectives asemployee relations are formulated. Figure 2.2 shows how the company. The strategies and policies on employee relations must be in synergy with the business strategy and also be innovative, clear and action-oriented. The employee relations strategy must respond to the needs of the organisation. It must assist the employee in understanding their goals and the methods used to achieve their goals. The employee relations specialist formulates the employee relations strategy based on the philosophy of the organisation. The needs of an organisation in terms of its employee relations policy are defined by the following areas:

The change management procedure: It deals with issues as diverse as increasing productivity, improving employee involvement, or introducing team working. Attitude towards trade unions: It decides whether to encourage trade Figure 2.2: Strategy and Employee Relations unions or not. The business strategy defines the Human Resource Management (HRM) Practical employee relations strategies include: strategy which in turn defines the employee relations strategy. The employee Regulation of workplace agreements. policies and practices. relations strategy defines the employment Protection of employee issues. By Human Resource (HR) infrastructure support. of strategy in an now, you can differentiate the different levels organisation. Let us nowmanagement. strategy of the organisation links with Growth performance see how the the different aspects of employee relationship namely employee resourcing, employee development and employee reward.

Self Assessment Questions 9. The strategies and policies on employee relations must be in synergy with the __________ strategy. 10. The ________________ formulates the employee relations strategy based on the Organisations philosophy. 11. The _____________ procedure deals with issues as diverse as increasing productivity, improving employee involvement, or introducing team working.

2.4 Future Challenges Future challenges in the area of employee resourcing are developing appropriate recruitment and selection policies.
Regarding employee rewards, the HR personnel face constant challenges in: Stimulating employee commitment. Motivating employees. Enhancing performance. Balancing monetary and non-monetary rewards. As far as employee development is concerned, the challenges facing the HR personnel are in deciding if: New staff has to be recruited or if in-house staff has to be trained. People with special skills or general skills have to be recruited. Staff have to be trained only to execute their current project or for enhancing their knowledge or skills.

Now you know how employee policies are influenced by organisational strategies. Let us next analyse the future challenges of an organisation.

2.5 Performance Management Services Armstrong and Baron (1998) define performance management as, A strategic and integrated approach to increase the effectiveness of an organisation by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.3 The features of a good performance management program are:
Key Performance indicators: These are critical measures that identify that the employee is doing what needs to be done and at the level that it should be done. These then provide the basis for reward and recognition. Organisational competencies: These identify the organisational traits that are very important for its success, the framework for employee recruitment, employee duties and employee contributions. Performance reviews: These provide feedback to the employees on how they are performing. They can be paper-based or web-based. Training programs and explanatory material: These include handbooks that are provided to both appraisers and appraisees. The appraisal process is explained along with examples of completed appraisal forms. Now you can explain the performance management of an organisation. Let us next discuss how an organisation can achieve excellence by adopting the concepts of quality, involvement and commitment.

of an organisation. How will you assess the performances of new employees who have completed their training an The directors of the organisation have to consider challenges the organisation might face in the future and their impact on the employees. The external political, economical (rate of inflation, interest rates etc) and societal Self Assessment Questions influences (demographic the areaalso have to be considered before 12. Future challenges in trends) of employee resourcing are developing strategies of___________and ______ policies. appropriate the organisations are decided. Changes in technology also impact the strategy of the organisation. 13. _________________ can provide feedback to the employees on how they are performing. YouA good employment contract clearly states organisation has to consider 14. now know the future challenges which an the basic ______ and while planning of both the relations. Let us next analyse performance ___________ employee employer and the employee. management in an organisation.
3 http://en.wikipedia.org/wiki/Performance_management

2.6 Quality, Involvement and Commitment as Competitive Advantages

The three critical factors that help achieve organisational excellence are: Commitment to quality customer service. Commitment to a high quality of work life. Employee involvement. Employee involvement implies that employees at all levels are involved in the successful operation of the business. Employee involvement is present only when employees have the following facilities: Authority to make decisions. Good understanding of business operations. Training and personal development opportunities. Good and open channels for communication. Good performance management programs. A good reward program. Quality customer service should be the core priority of any business. The top management should be totally committed to quality and this commitment should be communicated to employees at all levels. Customer feedback should be constantly used to improve business practices. Organisations display a commitment to a high quality of work life if they follow the practices listed: Help employees balance their personal and work life. Give its employees challenging jobs without overworking them. Does not discriminate amongst its employees. Equip its employees with the correct tools, materials and equipment. Ensure job security.

2.7 The Psychological Contract: Interest and Expectations Psychological contracts are the foundation of employer-employee relationships. According to Rousseau (1989), Psychological contracts are defined as the beliefs individuals hold regarding the terms and conditions of the exchange agreement between themselves and their organisations.
The written contract of the employees cannot include every aspect of the employment relationship. The psychological contract bridges the gap by defining the mutual beliefs, views and duties of the employer and the employee. The psychological contract reduces employee insecurity and helps shape employee behaviour. Psychological contracts are based on promises made by both the employers and the employees. Every employee expects a fair deal and clear communication. Every employer expects employees to perform well and protect confidential information. The general promises made by the employers are of the following types: Career development: These promise good career growth and timely promotions. Job nature: These promise a challenging and interesting job. Social environment: These promise a pleasant working environment. Financial compensation: These offer correct compensation. Work-life balance: These promise a good understanding of the personal situation of the employee. The promises made by the employees are of the following types: Good performance: These assure the willingness to work hard and do the job well. Loyalty: These assure the willingness of the employee to continue to work in the best interests of the company. Organisations can gain competitive advantage the employee to work flexible Flexibility: These promise the willingness of if they incorporate employee involvement, quality assurance and a highthe work allotted. hours (like overtime) in order to complete commitment to good quality of work-life in their culture. Employees too become committed to the Ethical conduct: Theseof the employees improves and like protecting organisation. The morale assure good ethical behaviour productivity confidential information and dealing honestly with the resources of the increases. organisation. The next section explains the concept of the psychological contract.

have great expectations from the organisation. When the newcomers gain experience, their expectations weaken. The psychological contracts of the newcomers develop as their socialisation within the organisation increases. Violations of the psychological contract occur when either the employer or the employee fails to fulfill one or more obligations of the psychological contract. Employees respond to the breaches of the psychological contract by: Quitting the organisation. Asking their superiors for better work conditions. Having lesser loyalty to the organisation. Neglecting their work. Being absent or late more often This section discussed the importance of the psychological contract. Let us next analyse the HR Infrastructure needed for organisational success. Self Assessment Questions 15. _______________ implies that employees at all levels are involved in the ____________ are the foundation of employer-employee relationships. 16. successful operation of the business. 17. ______________ of the psychological contract occur when either the employer or the employee fails to fulfil one or more obligations of the psychological contract.

2.8 HR Infrastructure Figure 2.3 illustrates how managers and employees interact in a good HR infrastructure. A good HR infrastructure should:
Support the mission, vision and values of the company. Be simple, flexible and reliable. Support and enable the flow of work. Connect the employees to the overall system. The five strategies to strengthen the HR infrastructure of an organisation are: Attaining HR expertise. Employees form their expectations on the basis of their interactions with the Implementing performance management. people in the organisation and the culture of the organisation. Newcomers Implementing HR policies and procedures.

 Understanding and complying with labour laws. Developing training programs.

Figure 2.3: HR Infrastructure

The essential HR building blocks that build a productive workplace are: Employment Contracts: A good employment contract clearly states the basic rights and obligations of both the employer and the employee. Staff Handbooks: These provide information about what is expected of the employees and what the employees can expect from the organisation. Policies and Procedures: These specify the working of the organisation. Good job descriptions: These describe the manner in which each job fits into the overall organisation. Proper Performance Evaluation Systems: These improve employee productivity. Compensation System: It rewards and reinforces right behaviour.

2.9 Employee Surveys Employee satisfaction is very essential for the success of an organisation. Employee surveys help in finding out the opinions of the employee regarding the organisation and the co-workers. Employee surveys also indicate to the employees that their opinion is very important. The feedback from the employee helps the organisation in understanding what it is doing well, and in what areas it should improve. Employee survey results provide guidelines for the business. Employee surveys also act as an effective communication tool. Employee surveys can be conducted online or on paper.

The different kinds of employee surveys are: Employee Satisfaction Survey: Sometimes employees find it difficult to communicate their feelings and expectations. These surveys help to bridge the gap between the employer and the employee. They give an opportunity for employees to voice their opinions. Culture Survey: This enables identifying the current corporate culture. We can determine if the culture of the organisation is in sync with the corporate vision. Certain negative cultural elements like disrespectful treatment of employees, poor planning, and lack of team work will affect the success of the organisation. These have to be identified and corrected.

Ethics Survey: Corporate ethics are essential for an organisation. Ethics survey enables the employee to understand the ethics and values of the company. The company can also determine the feelings of the employee regarding the ethical standards of the company. Productivity Surveys: Employee productivity is in direct proportion to employee satisfaction. Productivity can be improved if the organisation understands employee expectations and attitudes. As organisations grow, they have to reassess and correct their policies and procedures. They have to use better employee recognition programs. Organisations have to ensure the career development of the employees. Favouritism and bias have to be removed. Health and Safety Surveys: These surveys help to identify health and safety lapses. They provide statistics on time lost from work due to accidents. They also determine if the safety policies are productive Now that you know the HR Infrastructure essential for a being adhered to. organisation, let us next discuss the importance of employee surveys.

anization. Since last eight months, it is being observed that there is a decline in the employee productivity an incr uct an employee survey to look into the problem. Suggest a survey and also suggest 5 to 10 questions for the sur

Self Assessment Questions 18. A good __________________ clearly states the basic rights and obligations of both the employer and the employee. 19. _____________ help in finding out what the employee thinks about the organisation and the co-workers. 20. _____________ is in direct proportion to employee satisfaction.

Organisations should strengthen their HR infrastructure to be successful. Employee surveys provide guidelines for the business and influence the direction the business takes. Organisations have to identify future challenges and frame appropriate strategies for them.

2.11 Terminal Questions 1. Explain briefly the different levels of strategy in an organisation. 2. How are employment policies influenced by the strategies of the organisation?
3. What are the future challenges that an organisation may face? 4. Describe Performance Management Services. 5. How can organisations gain a competitive advantage? 6. Explain psychological contracts. 7. How are employee surveys helpful to an organisation? 2.10 Summary You have now learned that strategy defines the long-term plans and scope of 2.12 Answers an organisation. The different levels of strategy in an organisation are Answers to Self Assessment Questions -Corporate level, Business-Unit level, Functional level, and People strategy. 1. corporate level, business unit level, vision, long-term objectives, policies Corporate strategy defines the mission, functional level, people 2. plans of level and corporatethe organisation. Business unit strategy is concerned with how a 3. business-unit level a specific market. Functional strategy is concerned business competes in withcost leadership, productof the business translate corporate and business 4. how the different units differentiation, specialisation by focus level strategies into operational goals. People strategy matches the activities 5. human resources of an organisation with its human resources. 6. people management 7. team-work 8. strategy of an organisation strongly influences its employee policies. Thecommunications Performance management is a strategic and integrated approach to improve 9. business the performance of the employees of an organisation. 10. employee relations specialist 11. change management Organisations can gain competitive advantage if they incorporate employee 12. recruitment, selection involvement, quality assurance and a high commitment to good quality of 13. performance appraisals work-life in their culture. 14. rights, obligations TheEmployee involvement defines the mutual beliefs, views and duties of 15. psychological contract the employer and the employee. It fills the gaps of the formal contract. It 16. Psychological contract helps in shaping employee behaviour. Breaches in psychological contract 17. Violations lead to dissatisfaction. 18. employment contract

19. employee surveys 20. Employee productivity Answers to Terminal Questions 1. Refer section 2.2 2. Refer section 2.3 3. Refer section 2.4 4. Refer section 2.5 5. Refer section 2.6 6. Refer section 2.7 7. Refer section 2.9

2.13 Case Study

lity. erformance with focus on the customer. An example of this is found in their Strategic Spare Parts project. This p d a strategy to manage spares by categorising them to "critical parts" and "non critical parts". The actual impleme

ring, purchase and installation. These items could be sourced as and when needed.

s who had to make the final decision on whether the project investment was worth the cost. decisions like changes in the method the job is done are proposed by the staff. But there is a constraint that these

ons taken in RWE Power? making to all levels in the Organisation?

2.14 Glossary

ption ions control of a firm by purchasing more than half of its voting shares. als al analysis and evaluation done according to certain set criteria to determine merit or acceptability s made object such as a tool or a work of art; an object reflecting contemporary society or popular culture. my dence or freedom as of the will or one"s action; self-governing. encies ncy of qualification; cluster of knowledge, abilities and skills that enable a person (or an organisation) to act effectively in a jo ration and interconnections of different units; arrangement of different units

he organisation's actions, objectives, and policies. Key stakeholders in a business organisation include creditors, customers,

al effects.

References 1. http://www.oppapers.com/essays/Johnson-And-Scholes/269474 2. People and Organisations - Employee Relations, third edition, John Gennard and Graham Judge. 3. http://en.wikipedia.org/wiki/Performance_management 4. http://www.engaging.com.au 5. http://www.erstrategies.com.au/services 6. http://www.employeesurveys.com/default.htm

Unit 3 Organisational Aspects in Employee Relations Management

Structure 3.1 Introduction Objectives 3.2 Organisational Commitment and Engagement Organisational Commitment Employee Engagement 3.3 How Organisations Work The Strategy Variable The Business Process Variable The Goals and Measurement Variable The Human Capabilities Variable The Information and Knowledge Management Variable The Organisation Structure and Roles Variable The Culture Variable The Leadership Variable The Issue Resolution Variable 3.4 Organisational Culture

3.1 Introduction By now you must be familiar with the concepts and strategies of Employee Relations Management (ERM). In this unit, you will learn about organisational aspects in employee relations management.
There are different aspects in an organisation like organisational commitment and engagement, culture, and diversity which affect the effective management of employee relations. In this unit, we will examine these aspects and introduce you to the influence of these aspects on employee relations. Thereafter, we will also get familiar with the presence of organisational conflicts and the different types of organisational conflicts. In the next section, you will learn about the role of organisational commitment and engagement for effective ERM. Learning Objectives After studying this unit, you will be able to: Explain the various organisational aspects in practising effective employee relations. Describe the role of organisational commitment and engagement for effective employee relations. Explain how organisational culture affects employee relations. Discuss the concept of resolving conflicts in organisations. Elements of Organisational Culture Dimensions of Organisational Culture Types of Organisational Culture Edgar Scheins Levels of Organisational Culture 3.5 Conflicts in Organisations Different Aspects of Organisational Conflicts Types of Organisational Conflicts Conflict Resolution 3.6 Summary 3.7 Terminal Questions 3.8 Answers 3.9 Case Study 3.10 Glossary

Model of Organisational Commitment Meyer and Allen define a committed employee as one who stays with an organisation attends work regularly, puts in a full day and more, protects corporate assets, and believes in the organisational goals.2 According to Meyer and Allen there are three attitudes which characterise the commitment of an employee to the organisation. They are as follows: Affective Commitment: The employee commits to the organisation because the employee wants to. The employee aligns his goals with that of the organisation. The employee wants to continue working for the organisation. Continuance Commitment: The employee commits to the organisation because the employee has to. Employees fear that they will suffer economic losses (like pension accruals) and social losses (friendships within the organisation) on losing organisational membership. Factors such as the years of employment and the unique benefits the organisation offers also affect continuance commitment. Normative Commitment: The employee commits to the organisation owing to feelings of obligation. For example, the organisation sponsors the training or education of the employee, and hence the employee feels a moral obligation to continue working in the organisation. Thus, you see that employee commitment is in a psychological state which defines the relationship of the employee with the organisation and affects the decision to continue or discontinue organisational membership. Research 3.2 Organisational Commitment and Engagement has proved that those employees with strong affective commitment continue Organisational the organisationthe psychological attachment of an employee to remain with commitment is compared to those with continuance to the organisation. Employee engagement involves commitment, loyalty and commitment and normative commitment. pride in the organisation. We will first discuss about organisational commitment before moving on to learning about employee engagement. Guidelines to Enhance Organisational Commitment Previously, we discussed the modes of organisational commitment as 3.2.1 Organisational Commitment defined by Meyer and Allen. Now we will learn how to improve commitment Bateman and Strasser define organisational commitment as in an organisation. The following guidelines help enhance organisational multidimensional in nature, involving an employees loyalty to the commitment: willingness to exert on behalf of the organisation, degree of organisation, goal and value congruency with the organisation and the desire to maintain membership1. Commit to people-first values: Employ managers who are employee champions and who act as role models for the employees.
1 A Longitudinal Analysis of the Antecedents of Organizational Commitment, Academy of Management Journal, 1984 2

Commitment in the Workplace: Theory, Research and Applications. 1997

 Clarify and communicate the mission of the organisation: Clearly state the mission and ideology of the organisation. Practise value-based hiring. Emphasise value-based orientation and training. Be clear about requirements: Employees need to clearly understand what is required of them so that they commit their time and resources and successfully complete their tasks. If the employees do not receive clear communication, they become frustrated. Adopt a problem-solving approach: Identify problems and involve employees in problem resolution planning. Allocate responsibilities. Document the decisions made and circulate them among those involved. Measure progress: Measure employee progress and achievements. Guarantee organisational justice: Communication channels need to be extensive and open. Organisations need to have proper grievance addressing procedures. Emphasise teamwork: Emphasise sharing and cross utilisation of resources. Encourage interdependence of employees. This helps to build trust and commitment. Support employee development: Provide challenging jobs. Enrich and empower individuals. Ensure employment security. Provide developmental programs and ensure timely and merit based promotions. Recognise achievements: When employees achieve set goals, reward and recognise them. Basic Approaches to Study Organisational Commitment We now know the methods to increase employee commitment toward an organisation. You can next learn about the two basic approaches to study organisational commitment, which are as follows: Commitment-related attitude approach: This defines organisational commitment as an affective commitment to the goals and values of the organisation. The employee is willing to exert a lot of effort on behalf of the organisation. The employee identifies with the goals of the organisation and wishes to continue employment to facilitate these goals. Commitment-related behaviour approach: This focuses on behaviours which are influenced by internal normative pressures and act to achieve

organisational goals and interests. The behaviour resulting from commitment has the following characteristics: It reflects sacrifices made for the organisation. It indicates preoccupation with organisational activities and thoughts. You have to aware that commitment, defined using this approach, has the following characteristics: The employee does not leave the organisation for selfish interest or gains. The employee is willing to work selflessly for the organisation and contribute to the success of the organisation. The employee is willing to continue employment with the organisation even when the organisation faces difficulties. The employee completely accepts the goals and values of the organisation.

In this section we learned that organisational commitment of an employee involves loyalty and engagement of the employee to the organisation. In the next section we will understand what employee engagement is. 3.2.2 Employee Engagement Shuck and Wollard define employee engagement as an emergent and working condition as a positive cognitive, emotional, and behavioural state directed toward organisational outcomes.3Engagementillustrates the various Figure 3.1: Employee Figure 3.1 aspects of employee engagement that affect any organisation. Now that you know the meaning of employee engagement, let us get familiar with its characteristics. The characteristics of engaged employees are as follows: They completely believe in the goals and values of the organisation They are deeply involved and enthusiastic about their work They commit their time and resources for the success of the organisation They are more productive and less likely to discontinue employment They recommend their organisation to others They focus more on the customer They believe that they can positively impact the following features of the organisation :
3 A Historical Perspective of Employee Engagement: An Emerging Definition, 2009

Quality of the products of the organisation

 Customer service of the organisation Costs in their job or department Research and studies show that engaged employees are more productive than non-engaged employees. In manufacturing industries, we find that plants having engaged employees perform better. The beverage company, Molson Coors found that engaged employees were five times less likely than non-engaged employees to have a safety incident and seven times less likely to have a lost-time safety incident. In sales too, low engaged teams lag behind more engaged teams. Companies with highly engaged employees show better operating incomes. The U.S. mortgage banking company, New Century Financial Corporation, found that non-engaged accounts executives produced 28% less revenue than their engaged colleagues. Engaged employees are more innovative and are better at problem-solving than their non-engaged counterparts.

Factors Influencing Employee Engagement Now that you are familiar with the characteristics of employee engagement, we will discuss the factors that affect employee engagement. The factors that influence the degree of employee engagement are the following: Employer engagement: Employers remain engaged with their employees if the employers understand employee expectations and preferences. Employee perceptions of job importance: The attitude of an employee towards the job and the organisation has a great impact on the loyalty of the employee. Employee clarity of job expectations: The job expectations are clearly stated so that the employee stays more focussed. Career advancement and improvement opportunities: Employees remain engaged if their suggestions are valued and incorporated. Employees are provided growth opportunities in the organisation by means of timely promotions. Regular feedback and dialogue with the superiors: Employees value feedback. Proper feedback directs employees in the right direction. Quality of relations with peers, superiors, subordinates: Employee engagement is influenced by the quality of the relationship with their colleagues, especially their managers.

 Perceptions of the ethos and values of the organisation: Organisational values are one of the important drivers of employee engagement. Absence of inspirational leadership disengages employees. Effective Internal Employee Communication: Employees perform poorly when there is poor internal communication and they in turn become disengaged. Reward to engage: Rewarding good work boosts employee morale and enhances engagement. We have now discussed the various aspects about organisational commitment and employee commitment. The dynamics of any organisation affect the people working in it. In the next section we will familiarise the various factors that affect the functioning of an organisation. Self Assessment Questions 1. The three attitudes which characterise the commitment of an employee to the organisation are ______________, ________________, _____________. 2. When there is _____________ the employee commits to the organisation owing to feelings of obligation. 3. Absence of ___________ leadership will disengage the employees.

d information and communication technologies in order to improve the organisational processes. You are asked t

Organisations, irrespective of their size, usually follow certain procedures to function effectively. There are many variables that affect the efficient functioning of an organisation. We will now discuss each one of them. 3.3.1 The Strategy Variable The Strategy variable determines the nature and the direction of the business. Organisations align their strategies with their goals and define a set of expectations. The issues organisations consider while doing this are as follows: Does the strategy consider future external environment? Has the executive team determined where the organisation will be in the future? Does the strategy incorporate specific and measurable set of values? Does the strategy decide which markets it will serve? Does the strategy decide where and how to deploy the organisational resources? Organisations then decide how to implement the strategies. The considerations made are as follows: Is the strategy understood by employees at all levels? What are the plans for implementation? How can performances be measured? Are the strategies being effectively and efficiently implemented? How can changes in the environment be incorporated? 3.3.2 The Business Process Variable The Business Process variable identifies the processes that are important for implementing the organisational strategies. The processes are executed in an efficient manner. The questions deliberated regarding this are as follows:

3.3Are the processes well Work How Organisations documented? For youthecomprehend the organisational aspects that influence employee Can to people understand and implement them? relations, you have to understand how an organisation works. Let us first Are what an organisation is. An organisation is defined as a social revisit the procedures sufficient for accomplishing the tasks? Have the flaws inpursues collective goals, controls its performance and arrangement which the processes been identified and corrected? has a clear boundary separating focus on work-flow? Are processes managed with it from its environment.
Are the processes enhancing employee capabilities?

3.3.3 The Goals and Measurement Variable The Goals and Measurement variable defines the financial and non-financial goals essential for the success of an organisation. Organisations translate strategic goals to business process goals, then to functional goals and then finally to individual goals. The considerations to be made while setting organisational goals are as follows: Are there a manageable number of goals? Does the performance evaluation system correctly evaluate achievement of the goals? 3.3.4 The Human Capability variable The Human Capabilities variable defines the combination of capabilities, skill, knowledge and values that are essential for strategic success. The issues to be considered while appointing staff are: Does the capability of the individual match the required capability? How can future capabilities be developed? What kind of people need to be recruited to meet the shortfalls? 3.3.5 The Information and Knowledge Management variable The Information and Knowledge Management variable identifies the information and knowledge required for the success of the organisation. Organisations have to consider the following factors while obtaining and managing information: Is the right knowledge required for the implementation of the strategy and core processes being captured? Are people who need information allowed access to it? Are people effectively using the knowledge? Are automated information systems being effectively used? 3.3.6 The Organisation Structure and Roles Variable The Organisation Structure and Roles variable identifies the structure that supports the strategy of the organisation and the business processes. Organisational structure is reorganised only when it impedes the success of the organisation. The considerations made while defining the structure of the organisation and the roles of the employees are as follows: Does the structure facilitate the processes? Are roles within the department clearly understood?

3.3.7 The Culture Variable The Culture variable defines the rules, rituals, practices, values and norms of conducting the business. The issues to be addressed regarding the organisational culture are as follows: Is the culture supporting the organisational strategy and the business processes? Does the culture enable maximum employee contribution? Does the culture attract and retain talent? 3.3.8 The Leadership Variable The Leadership variable has many dimensions: visioning, inspiring, mobilising, developing, aligning, risk-taking, role-modelling, and cheering. The factors affecting leadership are as follows: Are managers functioning as effective leaders? Are there sufficient leaders in the organisation? Is there a system for developing leadership? 3.3.9 The Issue Resolution Variable The Issue Resolution variable defines how issues are handled within the organisation. The various considerations made are as follows: Are causes of conflict identified? Are issues resolved effectively and efficiently? Do employees have problem-solving and decision making skills? Are potential problems prevented? Do teams that work at different locations or times resolve issues?

6. The __________ variable sets the direction of the organisation and motivates employees to go in that direction.

3.4 Organisational Culture Organisational culture describes the psychology, attitudes, experiences, beliefs and values of an organisation. It is defined as the specific collection of values and norms that are shared by people and groups in an organisation and that control the way they interact with each other and with stakeholders outside the organisation.4
An organisation is said to have a strong culture if its employees are aligned with the organisational values. Organisations that have a strong culture function efficiently. On the other hand, in organisations that have a weak culture, the employees are not aligned with the organisational values. Control has to be exercised through extensive procedures and rules. In organisations with a strong culture, Groupthink can develop. Groupthink is a state wherein people do not challenge organisational thinking even if they have different ideas. Innovative thinking gets discouraged in such situations. Innovative organisations need people who are willing to change the status quo, and to implement new ideas and procedures. 3.4.1 Elements of Organisational Culture Now that we have defined organisational culture, let us look into the elements that define organisational culture. They are as follows: The Paradigm: It defines the mission and values of the organisation. It outlines the functions of the organisation. Having knowledge on defines the processes and the rules which monitor the Control systems: It how different variables affect the functioning of an organisation helps you get a better understanding of the aspects that impact organisational activities. employee relations. In this section, you learned how culture variable impacts Organisational We will next learn about the different organisational of an organisation.structures: It outlines the reporting lines, hierarchies and the direction of work-flows. cultures. Power structures: It specifies the decision makers and their power reach. Self Assessment Questions Symbols: It includes organisational logos, designs and symbols of power like allocation of parking be defined as a social arrangement which pursues 4. An ___________ can space. collective goals, controlsItits performance and has a clear boundary Rituals and routines: outlines procedures like meetings and reporting. separating it from its environment. Stories and Myths: It conveys the organisational values. 5. The ________ variable determines the nature and the direction of the business. 4 Strategic Management by Charles W. L. Hill, and Gareth R. Jones, 2001.

3.4.2 Dimensions of Organisational Culture National, religious and cultural groupings affect the organisational cultures. The different dimensions of organisational culture are as follows: Power distance: This is the degree to which there are differences in levels of power. A high degree indicates that some individuals have more power than others. A low score shows that people have more or less equal rights. Risk avoidance: It reflects how the much organisation is willing to take risks. Individualism versus Collectivism: Individualism refers to the extent to which people stand up for themselves. Collectivism refers to the interdependence of individuals in a group. Gender differences: It concerns the traditionally accepted male and female values. For example, male values include competitiveness, assertiveness and ambition. Long versus Short term orientation: Perseverance is emphasised in long term orientation while immediate profits are emphasised in short term orientation. 3.4.3 Types of Organisational Culture We will now discuss the different types of organisational culture. Deal and Kennedys classification: Deal and Kennedy classify organisational culture on the basis of feedback and risk factors as follows: The Tough-Guy Macho Culture: This is a very stressful culture in which feedback is quick and rewards are high. Such culture can be found in brokerage firms or police forces. The Work Hard-Play Hard Culture: This is present in large organisations which try to assure good customer service. Here few risks are taken, but feedback is prompt. Team meetings, jargons and slogans characterise such organisations. The Bet Your Company Culture: This culture is present in organisations which undertake development and exploration projects like the oil prospecting industry. Here high risk decisions, whose results will be known only after some years, are taken.

 The Process Culture: This culture is often associated with public services where people are very cautious and there is little or no feedback. Such cultures produce consistent results even though a lot of red tape is present. Charles Handys classification: Charles Handy classified organisational culture as follows: Power culture: Power lies in the hands of a few people. Few rules and a little bureaucracy are present, but decisions are quickly taken. Role culture: A highly defined hierarchical structure is present. The position decides the power wielded. Task culture: Teams are formed to solve problems. Expertise of a person decides the power of the individual. Such organisations have a matrix structure. Person culture: Every individual believes that they are superior to the organisation. Such organisations cannot succeed. Arthur F Carmazzis Classification: Carmazzi classifies organisational culture as follows: Blame culture: Employees blame others to avoid being reprimanded. Fear and distrust are present. Innovation and people initiatives are absent. Multi-directional culture: There is very less cross-department communication and interaction. Loyalty is restricted to specific departments. As there is no co-operation organisations become inefficient. Live and Let Live culture: There is average co-operation and communication but people have low creativity and lack future vision. Brand Congruent culture: Employees believe in the product or service of the organisation. People co-operate to achieve organisational goals. People use their personal resources to solve problems. Leadership Enriched culture: Employees view the organisation as extensions of themselves. There is excellent co-operation. Individual goals are aligned with organisational goals. People overcome their egos and bring out the best in each other. Leaders develop other leaders.

Robert A Cookes Classification: Cooke classifies organisational culture into the following three groups: Constructive culture: Employees are encouraged to interact with each other and work to their full potential. There is high level of satisfaction, motivation, and teamwork. Quality, co-operation and creativity are highly emphasised. The concepts of empowerment, total quality management, continuous improvement, transformational leadership and reengineering are supported. Passive-Defensive culture: Employees interact with each other in ways that do not threaten their own security. Employees are expected to obey their superiors and avoid interpersonal conflict. Rules and procedures are emphasised. Unresolved conflicts increase turnover. There is lower level of motivation and satisfaction. Aggressive-Defensive culture: Employees approach tasks in ways that do not threaten their own security or status. They are encouraged to appear competent, superior and in control. Those who admit to shortcomings are considered weak. Employees compete with one another. Short-term gains outweigh long-term growth. Entrepreneurial Culture: Stephen McGuire defines entrepreneurial organisational culture as a system of shared values, beliefs and norms of members of an organization, including valuing creativity and tolerance of creative people, believing that innovating and seizing market opportunities are appropriate behaviours to deal with problems of survival and prosperity, environmental uncertainty, and competitors threats, and expecting organizational members to behave accordingly.5 The characteristics of an entrepreneurial organisational culture are as follows: Empowerment of people Value creation by means of innovation and change Hands-on management Freedom of growth Tolerance of failure Emphasis on the objectives for the future
Entrepreneurial Organizational Culture: Construct Definition and Instrument Development and Validation by Stephen Mc Guire, 2003
5

 Attention to detail Employee commitment and responsibility 3.4.4 Edgar Scheins Levels of Organisational Culture According to Edgar Scheins organisational model, the three cognitive levels of organisational culture are as follows: At the first level, the artefacts of the organisation are present. They include the office facilities, the furnishing, the rewards, the way employees dress and interact, the slogans, mission statements, etc. At the second level, the values of the organisation are recognised. The attitudes of the members of the organisation determine organisational behaviour. At the third level, the tacit assumptions of the organisation are found. These include the unspoken rules which exist within the organisation. Edgar Scheins organisational model offers insights to the reasons for newcomers being unable to assimilate organisation culture quickly. It also helps us to understand that instituting cultural changes is made difficult by the underlying tacit rules and dynamics of interpersonal relationships. Self Assessment Questions 7. ________________ describes the psychology, attitudes, experiences, beliefs and values of an organisation. 8. _____________ define the processes and the rules which monitor the organisational activities. 9. Organisations with ___________ culture have very less crossdepartment communication and interaction. 10. Robert. A. Cooke classifies organisational culture into __________, _____________, and _______________ cultures

in your town and try to determine their organisational culture. Compare your observations on the behaviours and

3.5 Conflicts in Organisations Earlier we discussed the different variables of organisational functioning, specifically conflict resolution factor that affect employee relations. Now we will see what conflicts are and what causes them. Organisational conflict is due to the actual or perceived differences in needs, interests, objectives and values of people working together. Conflicts in organisations occur between the following members:
Individuals within the organisation Individual and group(s) in the organisation. The staff and the organisation Conflicts in organisations arise due to the following factors: Ideology: The perceptions and beliefs of individuals in the conflict are different. Objectives: The objectives of those involved in the conflict can be very different. Even if the people involved in the conflict have the same objectives, they may want to use different methods to achieve the objectives. Territorial perceptions: People involved in the conflict may feel that the other party has violated agreed or implied operating territorial boundaries. Personality differences: Rivalries, jealousies, personality clashes, and power struggles can cause conflicts between individuals. We have to keep the following factors in mind while assessing the potential for conflicts in workplaces: Nature of work Structure and division of work Personality and objectives of individuals Organisational ethics, beliefs, values and expectations Organisational culture Past attitudes and approaches towards management or staff Present attitudes and approaches to employee relations Future plans for employee relations

3.5.1 Different Aspects of Organisational Conflict You now know some of the causes of conflicts in an organisation. Let us look into the different aspects of organisational conflict. There are four aspects of organisational conflict and they are as follows: The parties: The conflict may involve two or more parties. The parties to the conflict and the reasons for the conflict are clearly identified. This becomes a difficult task if there are many sub-groups involved each of which has its own agenda. The issues: The issues of the conflict are any of the following: Disputed topics or subjects Different perceptions of the topics The interests of the parties involved The acceptability of the proposed resolutions The hierarchy and priority of contentious issues The dynamics: The following factors are considered to understand the dynamics of the conflict: The factors that reveal the conflict The factors that fuel the conflict The changes in the situation of the conflict The length of time of the conflict The attitudes and changes in the attitude of the people involved The position and influence of vested interests The possibility of resolution of the conflicting interests The power and influence of key players The accuracy of the predictability of outcomes and developments The range of outcomes The hurdles which block progress Management of the conflict: Conflicts are dealt with in the following ways: Institutionalise the conflict: Have set rules, precedents, and procedures to resolve conflicts. Contain and control the conflict: Isolate and tackle severe conflicts. Remove the causes of conflict: This can be done by improving channels of communication and using conciliation and arbitration techniques.

Early Warnings of Conflict Now that you are familiar with the factors in a conflict, you must know that it is important to identify conflicts in its early stages. Every manager and employee needs to be able to identify the signs of conflicts and respond to them as soon as they occur. All staff members have to raise issues of concern immediately. This contributes to the well-being of the organisation. The early signs of the presence of conflict are as follows: Declining performance: Declining performance trends of a department indicate the presence of conflict. Declining morale: Conflicts lower morale and increase turnover, absence and rate of accidents. To identify a conflict, you have to know the different types of conflicts that can arise in an organisation. We will discuss it in the following topic. 3.5.2 Types of Organisational Conflict The different forms of conflict in an organisation are as follows: Personal conflict: This conflict arises due to differences in the perceptions and personality of individuals. Professional counsellors may be required to resolve such conflicts but managers try to understand and resolve them. Role conflict: People have formally defined roles in an organisation. Apart from this they have roles outside the organisation as a parent, child, spouse all of which affect their organisational role. Conflicts arise when these different roles interfere with each other. Role conflicts also arise when an individual gets inconsistent demands. For example, an employer demands an employee to produce superior quality work while the team makes demands to increase the production. Such role conflicts sometimes motivate the employee to perform better, and sometimes it causes frustration and reduces efficiency. Inter-Group conflicts: Conflicts arise in groups when there is a scarcity of resources or a struggle for power and status within the group. Inter-group conflicts also arise when rewards and recognitions are not properly awarded. The two kinds of intergroup conflict are the following: Horizontal strain: This occurs when different functions like sales and production compete with each other.

 Vertical strain: This occurs when there is competition between different hierarchical levels like foremen and shop workers. 3.5.3 Conflict resolution Once you know the aspects and types of conflicts, you have to understand the steps that can be taken to resolve the dispute. Conflicts are resolved by adopting the following methods: Counselling: If the organisations cannot have professional counsellors on their staff, then managers can be trained to counsel employees. Just by employing non-directive counselling (listening and understanding), managers can help their frustrated subordinates. Avoidance: One strategy that is employed is not paying attention to the parties involved in the conflict. Another strategy used is isolating partially or fully the parties involved in the conflict in order to limit interaction. Smoothing: This technique tries to achieve harmony between the parties involved in the conflict. Dominance or Power Intervention: A higher authority tries to impose a solution to resolve the conflicts of the subordinates. Compromise: Conflicts can be resolved by meeting at least part of the demands of the parties involved in the conflict. Confrontation: The parties involved in the conflict are brought face to face and a solution is arrived by having frank discussions. Self Assessment Questions 11. ________________ conflict arises due to differences in the perceptions and personality of individuals. 12. _________________ type of inter-group conflict occurs when there is competition between different hierarchical levels. 13. In _____________ method of conflict resolution, the parties involved in the conflict are brought face to face and a solution is arrived by having frank discussions.

ource manager of a manufacturing industry and find out how they manage inter-group conflicts in their organisatio

3.6 Summary The different aspects of an organisation like organisational commitment, engagement, culture, and diversity affect the effective management of employee relations.
Organisational commitment defines the loyalty of an employee to the organisation, willingness to exert on behalf of the organisation, degree of goal and value congruency with the organisation and the desire to maintain membership. The three kinds of employee commitment are affective commitment, continuous commitment and normative commitment. Employee engagement is essential for the success of an organisation. Factors like employer engagement, career advancement opportunities, timely feedback, and a good rewards system enhance employee engagement. Organisations, irrespective of their size, follow certain procedures to function effectively. They frame strategies, set goals, decide processes, define roles, recruit skilled employees, and evaluate performances. Organisational culture describes the psychology, attitudes, experiences, beliefs and values of an organisation. The different kinds of organisational culture are role culture, power culture, multi-dimensional culture, constructive culture, brand-congruent culture, and so on. Organisational conflict is caused due to the actual or perceived differences in needs, interests, objectives and values of people working together. Causes of conflict have to be identified and resolved either by counselling, confrontation, imposing a solution, or avoidance.

3.7 Terminal Questions

1. Define organisational commitment. What are the different models of organisational commitment? 2. What are the different factors that influence employee engagement? 3. Explain briefly the different variables which are involved in the working of an organisation. 4. Define organisational culture. How does Charles Handy classify organisational culture? 5. Explain the three cognitive levels of organisational culture.

6. What are the different aspects of organisational conflict? 7. How can conflicts be resolved?

3.8 Answers Answers to Self Assessment Questions

1. Affective commitment, continuance commitment, normative commitment 2. Normative commitment 3. Inspirational 4. Organisation 5. Strategy 6. Leadership 7. Organisational culture 8. Control systems 9. Multi-directional 10. Constructive, passive-defensive, aggressive-defensive 11. Personal 12. Vertical strain 13. Confrontation

3.9 Case Study

esources. sis of parameters like teamwork, integrity, respect for customers, co-ordination, excellence in work and so on. Usin gram helped the company to boost the morale of its employees and improve its service standards. This resulted in ees undergo an intensive two-year training program which familiarises them with the business ethos of the compa Answers to Terminal Questions ned in different fields like HR, sales and marketing, finance, front office management, 1. Refer section 3.2.1 2. Refer section 3.2.2 3. Refer section 3.3 4. Refer section 3.4.3 5. Refer section 3.4.4 6. Refer section 3.5.1 7. Refer section 3.5.4

lems. They are given ample scope for career development, self-development and excellent opportunities for learn chical levels against a set of predefined targets. The BSS includes an Employee Satisfaction Tracking System (EST

3.10 Glossary
Term Description Accruals A gradual increase in an amount of money Affective Causing emotion or feeling Arbitration An informal hearing regarding a dispute Bureaucracy The body of officials and administrators especially of a government department Cognitive Pertaining to the mental processes of perception, memory, judgment, and reasoning Empowerment Increasing the spiritual, political, social or economic strength of individuals and communities Entrepreneurial Willingness to take risks in order to make a profit

undamental character or spirit of a culture; the underlying sentiment that informs the beliefs, customs, or practices of a grou archies system of persons or things ranked one above another. de ruct, hinder. ns anguage and vocabulary peculiar to a particular trade, profession, or group s aphic representation or symbol of a company name, trademark, abbreviation, etc., often uniquely designed for ready recognit ho ng or characterised by qualities considered manly x m of organisation structure based on horizontal and vertical relationships. lising ing together, Preparing (power, force, wealth, etc.) for action mative cting the assumption of such a norm or favouring its establishment digm xample serving as a model; pattern. tape ssive formality and routine required before official action can be taken. gineering ematic starting over and reinventing the way a firm, or a business process, gets its work done. us quo existing state or condition.

ed by or inferred from actions or statements ning

process of identifying, developing and documenting vision and values, leading towards strategy and tactics.

References

1. A Longitudinal Analysis of the Antecedents of Organizational Commitment, Bateman and Strasser, Academy of Management Journal, 1984 2. Commitment in the Workplace: Theory, Research and Applications. Meyer and Allen, 1997 3. A Historical Perspective of Employee Engagement: An Emerging Definition, Shuck and Wollard, 2009 4. Strategic Management, Charles W. L. Hill and Gareth R. Jones, 2001 5. Entrepreneurial Organizational Culture: Construct Definition and Instrument Development and Validation, Stephen Mc Guire, 2003

Unit 4 Behavioral Aspects in Employee Relations Management

Structure 4.1 Introduction Objectives 4.2 Motivation Theories of Motivation Motivation and Achievement Motivation and Money Motivation and Employee Relations 4.3 Leadership Leadership Theories Leadership Styles 4.4 Communication Types of Communication Importance of Organisational Communication Methods to Improve Organisational Communication 4.5 Decision Making Types of Decision Making Models of Decision Making 4.6 Power and Authority 4.7 Summary 4.8 Terminal Questions 4.9 Answers 4.10 Case Study 4.11 Glossary

4.1 Introduction In the previous unit, you learned about the organisational aspects of Employee Relations Management. In this unit, you will learn that qualities like leadership, communication, and decision-making capabilities are prerequisites for effective Employee Relations. In this unit, you will learn about the behavioural aspects that affect employee relations.
Employee Relations is closely linked to employee behaviour. Behavioural aspect in employee relations management is concerned with the

development and motivation of employees. The study of behavioural aspects in employee relations management helps organisations to create a work environment that stimulates and enables employees to perform to the best of their ability. Any organisation can be successful only if it understands the people who work in the organisation, their wants and needs, hopes, fears, desires and aspirations. We will discuss the following behavioural aspects in this unit: Motivation: This focuses on how employees can be motivated to perform better and increase organisational productivity and profitability. Leadership: This deals with the qualities and capabilities of an effective leader and the roles and functions adopted by a leader in ER. Communication: This focuses on the principles of effective communication, understanding the processes involved, and the different perceptions of people. Decision-making: This deals with the processes by which effective decisions are achieved, communication and promulgation of decisions, and their acceptance by the people in the organisation. Power and Authority: This deals with the sources of power and authority, and the use of power and authority in ER situations. You will learn that qualities like leadership, communication, and decisionmaking capabilities are prerequisites for effective Employee Relations. Learning Objectives After studying this unit, you will be able to: Define the role of employee motivation in Employee Relations Explain the necessary leadership qualities for effective Employee Relations Describe the need for effective communication in Employee Relations Analyse the effective use of power and authority in managing Employee Relations

jobs. The ER strategies can be successfully implemented only if there is a clear understanding of what motivates people at work. The principles of motivation and the organisational factors that contribute to individual and group motivation need to be considered. How groups and individuals function at work, and the roles and priorities they have, has to be taken into account. Effective Employment Relations is based on the following: Understanding how human beings react in specific situations and how they try to satisfy basic needs, drives, instincts and wants The effects of education, training, ethics, standards, expectations and rewards on the individual The nature of work and the effect work has on the individual The expectations of relations at the workplace. Workplace relations include inter-group relations and the relation between individuals and the organisational culture.

4.2 Motivation You know that one of the aspects of employee behaviour that influences employee relation is motivation. Employee motivation describes the intensity of vigour, commitment, and resourcefulness with which employees do their

System 2: This style is benevolent authoritative. There is some consultation and participation of the work force in some areas. Confidence, trust and communication are at low levels. System 3: This style is consultative. Aims and objectives are framed after consultations with subordinates. Teamwork is encouraged. Communication is two-way. Rewards are used to motivate the employees. Productivity is higher. There are low levels of absenteeism and turnover. Production quality improves. System 4: This style is participative. The supervisors have a very supportive relationship with the workforce. Group decision-making is adopted. Very high performance and ambitious goals are set for the entire organisation. According to Likert, this system is ideal for employee and profit oriented organisations. Frederick Herzberg Hygiene Motivation (Two Factor) Theory1 According many theories the factorsmotivation. Let us examine some There are to this theory, regarding causing job satisfaction are different from thatof motivation.dissatisfaction. Herzberg called the factors causing theories causing job satisfaction as motivators and those causing dissatisfaction as hygiene factors. Table 4.1 lists the factors affecting job attitudes in their order of 4.2.1 Theories of Motivation importance. System 4 Theory Rensis Likert Likert examined high performing managers and supervisors who achieved Table 4.1: Factors Affecting Job Attitudes high levels of production at lowHygiene factors employee involvement and levels of cost by Motivators motivation. Likert asserted that high levels of productivity and profitability can Company policy be achieved by an organisation only if it makes optimum use of its workforce. Achievement Workgroups are highly productive only if a supportive style of supervision is Supervision present and if the individuals feel a sense of worth, importance and esteem Recognition in belonging to that workgroup.Relation with the boss Likert identified the following four styles of management in his System 4 model: of work Nature
Work conditions Responsibility Salary System 1: This style is exploitative authoritative. Power radiates downwards Advancement from the top. The workforce is not consulted or involved in any decision Relation with management due to fear. There making. The workforce complies with the toppeers Growth

are low levels of confidence, trust and motivation in the workforce. The output generated is only slightly above the expected minimum. Teamwork is absent.

1 www.netmba.com/mgmt/ob/motivation/herzberg

Herzberg believes that job enrichment is required to ensure job satisfaction. The management ensures that the job is challenging enough and makes full use of the employee capabilities. If an employee demonstrates increased ability then more responsibilities may be given to the employee. According to Herzberg job satisfaction may not cause motivation. He contends that true motivation is within the employee and not in external factors. Let us now examine how motivation influences employee achievement. 4.2.2 Motivation and Achievement We have discussed various theories on employee motivation. We will now see how motivations linked to achievements. All employees, irrespective of their levels, need achievements. High achievers are those individuals who regularly complete their work with high degrees of quality and effectiveness. Employees need tasks and targets against which their achievements can be measured and regular feedback on the work done. Organisations develop the following characteristics within their employees to help them attain higher levels of achievement: Activity Autonomy Long-term vision Self-discipline Self-motivation Self-awareness Research conducted by Chris Argyris in the USA (1990) has proved that the employees of organisations which encourage the opposite characteristics (passivity, dependence, short-term vision and so on) become frustrated and ineffective. Employees who are achievement-oriented enjoy life and feel in control. Their motivation to achieve targets keeps them dynamic and enhances their selfAccording to Herzberg, the factors that determine job satisfaction or respect. Achievement-motivated people are only concerned with their dissatisfaction depend on the nature of the job. Incentives or threats can act personal achievement and not with rewards. as motivators only in the short-run. Management ensures that the hygiene factors do not contribute to job dissatisfaction. Management also ensures The three motivational factors that the work itself which lead that factors are provided intrinsic toinfluence achievement are:to job satisfaction. belief about ones capability to achieve targets Attitude or Drive or desire to achieve targets Strategy or techniques employed to attain targets

Motivation is affected by many factors one of which is money. In the following section we will see what effect money has on employee motivation. 4.2.3 Motivation and Money According to Herzberg, money does not enhance the intrinsic nature of work. If a person is doing voluntary work, money may not affect the motivation to do the work. But some times, money can make work life bearable. Money acts as a motivating factor due to the following reasons: High salary levels can enhance self-image and self-esteem. Wages earned form the basis of inter-occupational comparisons. An individual who earns more tends to be more satisfied than a person earning a lower amount. The salary paid reflects on the importance the organisation places on the employee. It also indicates the value of the job that is carried out. A high sounding job title with a low salary does not increase job satisfaction.

motivate employees and improve employee relations, managers identify employee needs and frame appropriate strategies. Employee needs include the following: Basic needs: These include needs like air, water, food and shelter. If any of these needs are not met, the employee becomes frustrated. Safety needs: Employee job security has to be ensured to increase job satisfaction and help the employee perform better. Interpersonal needs: Employees need to interact with their colleagues. Managers plan team outings and teamwork activities. Self-esteem needs: In order to have well motivated workers, their performances need to be appreciated and rewarded. Praise from higher authorities has to be conveyed to the concerned employee. Self-actualisation: Opportunities for growth have to be provided in order to enhance motivation. We will next discuss why managers find it important to motive employees. Managers give high priority to employee motivation due to the following reasons: Research has proved the effect of financial incentives on job performance. Studies have employees are more productive and profitable. Motivated shown that profit-sharing and performance linked pay rewards enhance productivity and organisational performance. Motivated employees provide better quality customer service. Motivated employees are more likely to limitationsthe financial incentives. But organisations have to be aware of the stay with of company. Money alone cannot be usedtraining new staff is reduced. The cost of recruiting and as a motivator. It used in conjunction with other non-financial reinforcements to fulfill the psychological needs of an Managers can focus on core business issuesconditions contributes to by employee. Money along with the organisational without getting distracted employee problems. employee motivation. Supporting employee decisions and trusting and encouraging employees Money can be a positive motivator when motivation can take the form ofor a enhance employee motivation. Financial it addresses basic necessities sense of achievement. Money can be a negative motivator when it is used to overtime payment, loyalty bonus, or cash incentives. Perks like transport gain superiority or power over others. facilities, training and education, insurance, discounted products and so on can also help motivate employees. Now that we have covered how monetary gains affect employees, let us now find out how motivation affects employee relations. Employee motivation is be an ongoing process. In order to enhance employee motivation, managers need to eliminate context obstacles which 4.2.4 Motivation and Employee Relations prevent the employees from doing a good job. Motivated employees may not You must know that managers need to learn how to motivate employees and be able to meet their goals if the following conditions prevail: the factors which affect motivation. They use this knowledge along with their skills and the processeswell defined employee relations. In order to Their targets are not to enhance

 Their goals are not well communicated The work procedures interfere with their efforts Thus we can see that motivation plays in an important role in employee relations and that motivation and employee relations are closely linked. In the next section we will discuss how leadership as a behavioural aspect affects employee relations. Self Assessment Questions 1. _______________ is the intensity of vigour, commitment, and resourcefulness with which employees do their jobs. 2. In ________ management style power radiates downwards from the top and the workforce is not consulted or involved in any decision making. 3. Herzberg called the factors causing satisfaction as ___________ and those causing dissatisfaction as __________ factors.

according to this theory are shown in figure 4.1. The traits that indicate strong leadership are as follows: Intelligence: This refers to the mental ability of a person and is only a moderate predictor of leadership. The Intelligence Quotient (IQ) of a person can be used as a qualifier for high management jobs, but once the high position is attained, an effective leader also displays good levels of Emotional Quotient (EQ). EQ helps a leader to empathise with the motivation and emotions of others. Many people feel that Carly Fiorina, the ousted leader of Hewlett-Packard, had a high IQ but a low empathy for the people around her and ignored the human aspects of her decisions.

Extraversion: Extraverts have higher social and interpersonal skills. They are more energetic, assertive and self-confident. As extraverts are more dominant, they emerge as natural leaders. For example, Steve Ballmer, the CEO of Microsoft, is an extraverted leader. 4.3 Leadership Let us 4.1 at the traits associated with leadership. Figure lookdepictsdifferent aspects within leadership in order to understand about it as a behavioural aspect. Leadership is defined as the process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task2. Leadership is a very important behavioural aspect that affects organisations and employee relations. The nature and style of leadership plays an important role in employee relations, motivation, conflict resolution, and creation of overall organisational vision and direction. In formal organisations, advancements are based on merit and seniority. The power held by an individual corresponds to the position the individual occupies in the hierarchy. But in informal organisations, leaders emerge from within the organisational structure. The leader is able to attract followers due to a combination of circumstances and the qualities the leader possesses.
Figure 4.1: Traits Associated with Leadership

Let us now examine some theories of leadership. 4.3.1 Leadership Theories Conscientiousness: Conscientious people are organised, dependable, systematic, punctual, and achievement oriented. They take initiative and The Trait Theory: This theory uses traits (characteristics) to distinguish are persistent in all they non-leaders. The traits associated with leadership between leaders anddo. Openness: People who are open to new ideas and try new things 2 Meta-cognitive, social, and emotional intelligence of transformational leadership: Efficacy and become effective leaders.
Effectiveness. Chemers, M. M. (2002).

 Self-Esteem: People with good self-esteem assess their worth and capabilities in a more positive manner. Leaders with high self-esteem are more supportive to their subordinates. People with higher self-esteem are more self-confident and have greater charisma. Integrity: Effective leaders display honesty and integrity. Such leaders are more trustworthy.

In this model, the concern for production is represented on the X-axis and the concern for people on the Y-axis. Each axis is marked from 1 (low) to 9 (high). The different leadership styles that are identified are as follows: The Indifferent or Impoverished Style (1, 1): Managers adopting this style have low concerns for both people and production. Managers are more concerned about preserving their jobs and avoiding getting into trouble. The managers do not want to be held responsible for any mistakes and are therefore, less innovative. Behavioural Theory: Behavioural theory of leadership does not deal with the traits or capabilities of a leader. They focus more on what the leaders actuallyAccommodating thisCountryleadership capabilities are not using this The do. According to or theory, Club Style (1, 9): Managers inherent and can be learned. It correlatesthe people thanof leaders with their actions. style are more concerned about the successes the production. Managers try to ensure security and comfort of the employees hoping that it will enhance performance. The workplace atmosphere is pleasant but not Managerial Grid Model: This is a behavioural leadership model proposed necessarily productive. by Robert Blake and Jane Mouton. This model identifies the different leadership styles based on the concern for people and the concern for production. The Dictatorial Style (9, 1): Managers using this style are more concerned about production than the people. Managers do not consider the needs 4.2 shows the graphical representation of the managerial grid Figure of their subordinates. Managers pressurise their employees to model. achieve company goals by imposing rules and threatening them with punishment. The Status-Quo or Middle of the Road Style (5, 5): Managers adopting this style try to balance employee needs and company goals. But in trying to compromise, the managers do not meet the needs of the company or that of the employee. The Sound or Team Style (9, 9): Managers using this style are concerned about the people and the production. Managers encourage teamwork and employee commitment. Managers make employees feel that they are contributing constructively to the company. The Opportunistic Style: Managers using this style exploit and manipulate their subordinates. This style does not have a fixed location on the grid. Managers adopt the behaviour which offers them the greatest personal benefit. The Paternalistic Style: Managers using this style praise and support their subordinates but discourage their being innovative. This style alternates Figure 4.2: Graphical Representation of the Managerial Grid Model3 between the (1, 9) and (9, 1) locations on the grid.
3 Illustration Source: www.en.wikipedia.org/wiki/File:Management_Grid.PNG#filelinks

Now that we are familiar with various theories on leadership, let us understand the different leadership styles present in organisations. The following section discusses the same. 4.3.2 Leadership Styles Leadership style refers to the manner in which the leader functions and is a result of the philosophy, personality and experience of the leader. The different leadership styles are as follows: Autocratic: In this style of leadership, the leader always makes the final decisions. Employees are closely supervised. Employee interest has to give way to organisational interest. Questioning is discouraged. Autocratic style can be benevolent or tyrannical. Participative or Democratic: In this style, group decision making is favoured. The leaders win the cooperation of the group and motivate them effectively. Laissez-faire: In this style of leadership, the leader gives maximum freedom to subordinates. The leader tries to maintain a congenial atmosphere and avoids decision making. The employees decide their own policies and methods. Inspirational: In this form of leadership, the leader tries to motivate people from within. Intellectual: In this style of leadership, the leader stimulates the employees with novel theories and opportunities. Individualised: In this form of leadership, the leader takes into consideration the individual needs, talents, and desires, and works toward fitting the individual into an appropriate position, rather than forcing the person to fit into the position. You must be familiar with the various aspects of leadership. Next, we will discuss the part communication plays in employee relations. Self Assessment Questions 4. _______________ is defined as the process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task. 5. Managers using the _____________ style of leadership exploit and manipulate their subordinates.

6. In ______________ style of leadership, the leader gives maximum freedom to his subordinates.

EO of a company. Note down the traits of the leader you think are worth emulating? Identify the leadership style a

4.4 Communication Let us discuss what communication is and about its different types. Communication is a process of exchange of information between people. Organisational communication includes the symbols, messages, interactions, discourses, and campaigns within an organisation. Organisational communication can also include public relations, advertisements, investor relations and other external communications. Effective Communication is essential for an organisation to succeed. Let us now consider the different forms of communication in an organisation.
4.4.1 Types of Communication Communications in an organisation can be formal or informal. Formal communications follow certain rules and guidelines. Informal communications are unofficial communications and are influenced by the culture of the organisation. Effective communication has both transmission and feedback phase. The feedback phase helps in clear understanding of the communication. The different forms of communication in an organisation are as follows: Passive Communication: This is an ineffective form of communication. People using this form of communication avoid confrontation. They do not communicate their wishes or desires. This style of communication can cause alienation, anger, frustration and depression. One-Way Communication: This communication travels only in one predetermined direction. This is common in formal organisations and in military structures. In this form of communication, messages are issued by organisations and their managers without any regard for whom the messages are addressed to. The subordinates are not given an

opportunity to communicate their opinions to their superiors. Examples of one-way communication are edicts, rules and procedures. One-way communication enhances feelings of alienation. Two-Way Communication: This form of communication encourages dialogue between the employees and their superiors. Consistent communication between employees and their managers helps in building trust and loyalty. Employees are given an opportunity to clarify their doubts, seek support, and express their opinions. Active Communication: In this form of communication, messages which everyone can understand and respond to are issued. The employees raise issues and respond to any problem without any fear. Misunderstandings are clarified easily. Non-Verbal Communication: In this form of communication, people communicate their attitudes without using words. G.W. Porter classifies nonverbal communication as follows: Physical: This includes facial expressions, gestures, tone of voice, body motions, touch and so on. Aesthetic: This includes creative expressions like playing instrumental music, dancing, painting and sculpturing. Symbolic: This makes use of religious and organisational symbols. Props and Settings: These are used to put others at ease or to put someone in a position of disadvantage. Not providing a seat to a person can make a person uncomfortable and feel annoyed. Signs: This is a mechanical means of communication and includes signalling flags, gun salutes, horns and sirens. In the next section we will see why communication is important in organisations. 4.4.2 Importance of Organisational Communication Communication is essential in an organisation for better co-ordination and for maintaining good inter-personal relations. Organisations establish good communication channels for the following reasons: Good Working Relations: Effective communication is essential in an organisation to establish good working relations with peers,

subordinates and superiors. Good working relations ensure a friendly and conflict-free environment. Problem Solving: Good communication skills help employees convey their problems and issues in an effective way. This helps in preventing problems from escalating. Problems can be resolved quickly. Enhance Production: Effective communication is necessary to keep employees informed about the rules, policies and procedures. This helps employees understand their duties better and perform their work in a better way. This increases the productivity and accuracy of the work done.

Engaging Employees: Effective communication makes employees feel that their opinions and suggestions are being considered. This increases employee involvement and commitment. Loyalty for the organisation increases and this enhances employee engagement. 4.4.3 Methods to Improve Organisational Communication Now that you know why communication is important, let us discuss how to make communication effective. Certain etiquettes and rules are followed while communicating in the organisation. These help to improve the quality of communication and ensure effective communication. The following guidelines ensure better communication: Be Clear and Transparent: Communication has to be unambiguous, clear and transparent. All rules, policies and procedures need to be communicated clearly so that the employees have a clear understanding of them. Be Comprehensive: Ensure that the communication includes all the points to be communicated. Review to check if additional changes to the matter to be communicated are to be made. Ensure that the communication is accurate. Be Precise and Concise: Communication needs to be concise and not elaborate. Simple words are used in order to avoid misunderstandings. Use short sentences. Be Generic: Ensure that discussions are generic. Successes and failures need to be discussed in a generic manner. This helps in avoiding conflicts. Use we more than you in discussions.

 Be Assertive: Communication needs to be assertive and positive. This helps in making decisions and arriving at conclusions. Be Attentive: Develop listening skills. Verbal communications can only be clearly understood if the parties involved are attentive. Encourage Two-Way Communication: Two-way communications help improve employee relations as this considers the opinions and views of both parties involved. In this section you learned how effective communication can influence employee relations. In the next section we will see how decision making is an important aspect of behaviour with respect to employee relations. Self Assessment Questions 7. _____________ communications follow certain rules and guidelines. 8. In _____________ form of communication the subordinates are not given an opportunity to communicate their opinions to their superiors. 9. In ___________ form of communication, people communicate their attitudes without using words.

4.5 Decision Making Let us first understand what decision making is. Decision Making is a mental process which results in the selection of an option from many alternatives. Decision making is both a logical and emotional process. We will now examine the different types of decision making tactics employed by managers and supervisors.
4.5.1 Types of Decision Making Different kinds of decisions are made by organisational leaders at different times according to the prevailing situation. The decisions made have to ensure that the organisation is moving in the right direction. The decisions taken are broadly classified as follows: Authoritative: In this form of decision making, the manager makes all the decisions and the subordinates follow them. The manager faces the consequences of all the decisions made. Facilitative: In this form of decision making, the manager and the subordinates together make the decisions after discussing the options. The subordinates need to have the expertise to make decisions. Easy

access to information is enabled. Such decisions are taken in situations of low-risk. This form of decisions involves the employees in the business operations. Consultative: In this form of decision making, the managers consult their subordinates, but make decisions by themselves. Good leaders consult their subordinates, if they believe that the subordinates have the right expertise. Delegative: In this kind of decision making the managers pass on the responsibility of making decisions to their subordinates. The managers trust their subordinates to make the correct decisions.

4.5.2 Models of Decision Making There are different kinds of decision making models. A model that guides the decision making process is normative as it suggests a set of rules to be followed. A model which describes the decision making process is descriptive. Let us now examine the popular models of decision making. Rational Model Figure 4.3: Rational Decision Making Model This is a normative decision making model. This model is used for complex 3. Analyse the situation: Analyse the alternative courses of action that are decisions. Find out theaways in which the data can be interpreted. finds an available. It provides structured approach to decision making. It optimal solution to problems. It assumes that all the components of the 4. Develop options: Generate all possible optionsalso assumescreative and problem and the various alternatives are known. It and try to be that the positive. makers have all the expertise and unlimited time to make the decision decision. It outlines a sequence of steps toevaluate the options for feasibility, 5. Evaluate options: Choose criteria and rationally find a solution. Figure 4.3 outlines the rational decision making model. The steps involved in acceptability and desirability. Try to determine which option helps achieve making a rational decision are as follows: the objectives. 6. Select an alternative: Determine the possible consequences of the preferred option and evaluate the risks involved. identify decision based the 1. Identify the problem or opportunity: Firstly, Make a and understand on this observation. problem. Then examine the useful opportunities. 7. Act on information: Formulate a plan which is relevant to the problem 2. Gather the Decision:Gather informationto implement the decision. Determine the resources needed. Find if the and which helps in making the right decision.people involved accept and support the decision. The main advantage of this model is it imparts a structure and logic to the process of decision making. The disadvantages are it does not consult all stakeholders and uses a lot of time.

Carnegie Model This model was formulated by Richard Cyert, James March, and Herbert Simon. This is a model of decision satisficing and adopts a bounded rational approach. Decision satisficing is selecting the first alternative that meets a given need or selecting the alternative that addresses most needs. Satisficing is chosen for consensual decisions when the group finds a solution everyone can agree on even if it is not the best solution. This model of decision making is less costly and less time consuming. The CEO of General Electric (GE), Jack Welch, had to make a decision on whether the company had to invest in its washing machine division or outsource it. The mangers used the bounded rational approach of the Carnegie decision model and decided to invest 70 million dollars in the washing machine division. Incremental Model This model was developed by Henry Mintzberg. Here decision makers choose actions that are related to their past actions as this reduces risk. Decision makers move forward in series of incremental steps. Decision makers identify familiar solutions and choose alternatives that only slightly differ from the status quo. The three phases in this form of decision making are identification, development and selection. Typical decisions made using this model are deciding the aircraft to buy for an airline, identifying a new market for a perfume, introducing a new form of treatment in a hospital. The Gillette Company uses incremental decision making to improve the design of its razors like Mach3 Turbo or the Fusion shaving system. Garbage Can Model This model was developed by Michael D Cohen, James G March and Johan Olsen. This model considers organisations to be uncertain about the problems and solutions. According to this model the process of decision making begins with solutions. Organisations generally produce solutions which are not appropriate for the problem and hence get discarded. But these discarded solutions can be used to solve other problems. The garbage can model disconnects problems, solutions and decision makers from each other.

When Netscape was introduced in 1994, Bill Gates the founder of Microsoft had to quickly harness his resources and develop an alternate web browser for the market. Bill Gates used the Garbage Can Model to make the decision to develop Internet Explorer working back from the identified solution of developing a new browser. Figure 4.4 depicts the garbage can model of making decisions.

Figure 4.4: Garbage Can Model

The streams of events identified by this model are as follows: Problems: These arise from within the organisation and due to external factors.

 Solutions: These are considered to be distinct from problems. Important solutions may be prepared without knowledge of the problem. Choice opportunities: These are conditions in which organisations make decisions. Participants: They are people who are involved in the problem or in the solutions. Participant store knowledge of different problems and solutions. This can be made use of to arrive at decisions. Decision Matrix Model Safety Risk This model was invented by Stuart Pugh. It is a quantitative technique and Inflation ranks the different options of the Risk set based on certain criteria. It is option Rate of Return used to make design decisions in engineering. This model can also be used Compatibility with Current Business to rank investment options, product options, and vendor options. Table 4.2 Total shows a sample decision matrix. Real Estate
9 7 Table 4.2: Sample Decision Matrix 5 9 81 Web Designing 7 5 5 6 64 Retail Convenience Store 4 4 3 9 46 The steps to constructTravels matrix are as follows: a decision 1. Make a list of the options. 6 7 2. Identify the evaluation criteria and select the criteria that are most 7 important. 9 3. Give a relative weight to each criterion based on its significance. 75 4. Draw an L shaped Weight matrix with the criteria and the weights as rows and 4 the options as columns or vice-versa depending on which is lesser in 3 number. 3 1 5. Evaluate each option against each criterion and assign a score or a rank.

6. Multiply the score of each option by the weight of the criterion. Add the points for each option and find the option which has the highest score. We have discussed the different models of decision making and the different styles of decision making. We will next discuss how employees with power and authority impact employee relations in an organisation. Self Assessment Questions 10. _______________ is a mental process which results in the selection of an option from many alternatives. 11. In _____________ kind of decision making the managers pass on the responsibility of making decisions to their subordinates. 12. ____________ model of decision making is a quantitative technique which ranks different options based on certain criteria.

ions such as the food items to be included in the menu, the chefs to be hired, the groceries to be ordered and so o

they control decisions of awarding bonus, promotion and task allocation of their subordinates. Power is generally used when conflicts of goals occur. Now that we know how power affects employees, let us see what authority is. Authority is a special form of power and the legal right bestowed to a person to make decisions and to direct others. For example, a manager has the authority to give approval for new projects. Weber classified authority in the following way: Traditional: This form of authority is given to someone by virtue of tradition or custom. For example, a son or a daughter succeeds a parent in a dynastic organisation. Charismatic: This form of authority arises due to the personality and inherent qualities of an individual. These qualities generate strong feelings of loyalty and commitment in the followers of that individual. Many union leaders, managers and department heads are able to carry out their duties due to their charisma. Rational or Legal: Weber associates this form of authority with bureaucratic organisations. The person has authority due to the position the person occupies. Rules and norms justified by law and customs enable the selection. Legitimacy of the authority arises from the manner in which the person is selected for the position. For example, the legitimacy of an official 4.6 Power andbelief that fair methods and criteria were the basis for the arises from the Authority appointment of that official. The authority of the relations, let be undermined To understand how power influences employee official would us first if fair processes power is. Different theorists define understand whatwere not adopted for the selection. power differently. Max Weber defines power as the probability that one actor within a social relationship will be in a position to carry out his own will despite resistance.4 According to this definition, power is the potential or capacity to do something. All employees in an organisation have some form of power. The When a person has authority, then the orders of that person are carried out power an employeebargaining. Butproportional to the skill and expertise of a without any implicit has is directly there are limitations to authority. When the employee. unreasonable demands, the authority of the person gets person makes undermined. According to Robert Dahl, A has power over B to the extent that he can get Self Assessment Questions B to do something that B would not otherwise do. According to Dahl, power is the control a person has over another person. Power is relational in 13. According to Dahl, ___________ is the being more powerful or less nature. We always talk in terms of a person control a person has over another than another person. Managers powerpower in legal right bestowed powerful person. 14. _____________ is a special form of have and the an organisation as to a person to make decisions and to direct others.
4

plato.stanford.edu/entries/feminist-power/

15. In ____________form of authority, the authority arises due to the personality and inherent qualities of an individual.

4.7 Summary The behavioural aspects to be considered in employee relations management (ERM) are motivation, leadership, communication, decision making, power and authority.
Employee motivation is the intensity of vigour, commitment, and resourcefulness with which employees do their jobs. The different theories of employee motivation include Likerts System 4 Theory and Herzbergs Hygiene Motivation (Two Factor) Theory. Motivation affects employee achievement and employee relations. Money in the form of wages paid, bonuses and performance incentives can affect motivation. Leadership is the process of influencing people in the organisation. The nature and style of leadership plays an important role in employee relations, motivation, conflict resolution, and creation of overall organisational vision and direction. The different theories of leadership include the Trait Theory and Behavioural theory. Trait theory of leadership deals with the character or capabilities of a leader while Behavioural theory focusses more on what leaders actually do. Effective communication is essential for an organisation to succeed. The different kinds of communication that exist within an organisation are passive, active, one-way, two-way, verbal and non-verbal communication. Decision Making is a mental process which results in the selection of an option from many alternatives. The different models of decision making include the Rational model, Carnegie model, Incremental model, Garbage Can model and Decision Matrix model. Power is the potential or capacity to do something or the ability to control others. Authority is a special form of power and it is the legal right bestowed to a person to make decisions and to direct others.

4.8 Terminal Questions 1. Explain Likerts System 4 theory of employee motivation. 2. Explain the role of motivation in employee relations.

3. Explain the different traits which help in identifying a leader. 4. Explain the different styles of leadership according to the Managerial Grid Model. 5. What are the different types of organisational communication? 6. Explain the rational model of decision making. Contrast it with the incremental model. 7. Differentiate power and authority.

4.9 Answers Answers to Self Assessment Questions 1. Employee motivation 2. Exploitative authoritative 3. Motivators, Hygiene 4. Leadership 5. Opportunistic 6. Laissez-faire 7. Formal 8. One-way 9. Non-verbal 10. Decision making 11. Delegative 12. Decision Matrix 13. Power 14. Authority 15. Charismatic
Answers to Terminal Questions 1. Refer section 4.2.1 2. Refer section 4.2..3 3. Refer section 4.3.1 4. Refer section 4.3.2 5. Refer section 4.4.1 6. Refer section 4.5.2 7. Refer section 4.6

4.10 Case Study

form varying functions like drilling for oil in the North Sea, developing legal agreements and so on. The skills and orkers on what to do. For example, the Offshore Installation Manager (OIM) is responsible for the safety of all empl ers and then arrives at a decision. opmental needs of the employees. ontribute to their career development. Employees are enabled to choose their career paths. Employees are given

4.11 Glossary

erised by an appreciation of beauty or good taste

r hostile; becoming withdrawn or unresponsive; isolation or emotional dissociation

y of being independent

on; friendly and sociable; suited to one's needs or nature; agreeable affairs of others

loyees of an organisation receive a share of the net profits of the business

es the value of another variable

until a most attainable or reasonable solution with adequate level of acceptability is found; Aiming to achieve only satisfacto ultimately leads to maximising one's abilities and determining the path of one's life; the desire for self-fulfillment

airs at a particular time; References as it currently exists the situation

1. Meta-cognitive, social, and emotional intelligence of transformational leadership: Efficacy and Effectiveness. Chemers, M. M. (2002). 2. A Garbage Can Model of Organizational Choice Administrative Science Quarterly, Vol. 17;Cohen, Michael D., March, James G. & Olsen, Johan P; (Mar., 1972). 3. Professional development for leaders and managers of self-governing schools; David T Gamage, 2006. 4. Organisation Theory and Design; Richard L Daft; 2007.

Unit 5 Human Resource Information System (HRIS)

Structure 5.1 Introduction Objectives 5.2 Overview of Human Resource Information Systems Guidelines to Select Human Resource Information Systems Examples of Human Resource Information Systems 5.3 Importance of Human Resource Information Systems 5.4 Features of Human Resource Information Systems 5.5 Common Applications of Human Resource Information Systems Planning Staffing and Employment Training and Career Development Performance Management Compensation and Benefits 5.6 Summary 5.7 Terminal Questions 5.8 Answers 5.9 Case Study 5.10 Glossary

5.1 Introduction The first unit of Employee Relations Management (ERM) familiarised you with the concept of managing human resources with the help of software applications. In this unit, you will learn more about the features of Human Resource Information Systems (HRIS) like payroll, training, performance record, and benefits administration. Human Resource Information Systems (HRIS) include systems and processes which combine the functions of Human Resource Management (HRM) and the tools of information technology. HRIS helps organisations to carry out their Human Resource (HR) administrative functions in an effective manner and reduces the manual work to be done by the HR personnel. HRIS helps in reducing costs and saves time.

In the following section, we will see an overview of Human Resource Information Systems. Thereafter, we will discuss the features of HRIS and the importance of implementing HRIS in organisations. Learning Objectives After reading this unit, you will be able to: Define Human Resource Information System. Explain the importance of HRIS. Explain the features of HRIS. Assess important of HRIS applications.

5.2 Overview of Human Resource Information Systems Human Resource Information Systems is a software application that caters to the human resource information needs of the organisation like monitoring employee attendance, payroll and benefits administration, career development, employee information, performance management, and training. HRIS is a collection of components which work together to gather, process and store information that the HR department can use to make decisions, to coordinate and to plan its activities. HRIS facilitates easy access and management of employee related information.
For example, Terasen Pipelines, a Canadian company was using a manual system to maintain its records. But when its workforce increased, it began to use an HRIS to maintain accurate employee records. Initially, mainframe computers were used by organisations to manage human resource management functions. A large amount of capital was needed to operate these systems. The advent of client-server architectures and Software as a Service (SaaS) models has lowered the maintenance costs of HRIS. HRIS comprises of the following modules: Payroll: This module of HRIS keeps track of the pay grades and positions of the employees. Pay raise details are also recorded. This module gathers information on employee time and attendance. It calculates the deductions and taxes and generates pay slips and tax reports. Cheques get automatically deposited in the employee bank accounts. Inputs for this module are obtained from HR and time keeping

modules. This module integrates with the current financial systems of the organisation. Benefits Administration: This module tracks and administers employee benefits programmes. The benefits programmes include insurance, reimbursements, profit sharing and pension programmes. HR Management: This module covers many HR aspects which range from employee recruitment to retirement. It records employee details like addresses, training programmes undergone, skills, position and so on. The functions addressed by this module are recruitment, placement, evaluation and career development of the employees. Job sites on the Internet are increasingly being used for recruitment. This module tracks job applications. Interviews and selection details are also maintained. Training: This module administers and tracks employee training and development programmes. Records of employee education, qualification, and skills are maintained. It also outlines the training courses and training materials (CDs, books, web based learning programmes) which help employees develop their skills. Courses can be planned and scheduled using the data stored. Managers can approve training and budgets.

Performance Appraisal: This module evaluates the job performance of employees in terms of quality, time and cost. This helps in analysis of employee strengths and weaknesses and suitability for promotions. It gives feedback to employees on performances and identifies employee training needs. It also documents criteria which can be used for organisational rewards. Work Time: This module helps to track the work done by the employees. This module merges the functions of work management and time management across a wide range of activities that include project, tasks, requests and deployment. This module maintains attendance and leave details of employees which are exported in various formats for further processing. Employee Self-Service: This module permits employees to update their personal details, query HR databases and perform HR transactions. Employees are allowed to apply for leave, raise purchase requests, file expenses, view their salary details and keep track of their project related

activities. Employees use this to update their tax savings details and bank related information. Table 5.1 outlines some of the applications that are used in HRIS.
Table 5.1: HRIS Applications

plication nction ample ernet Portal rges data from several sites in a single site. Users can customise data. e state of West Virginia (USA) uses an enterprise portal to offer timely information and e-government services to it ared Service Centres nsolidates different functions at one location. This eliminates redundancy and reduces administrative costs. ied Signal combined different functions of finance and HR at a shared service centre. plication Service Providers (ASP) mpanies pay rent and use a remote computer system to manage their HR activities MG uses an ASP for implementing its employee learning programmes. siness Intelligence vides information on business trends and practices and enables accurate decision making otel franchise uses business intelligence to gather data about average occupancy rates and predict revenue.

will best suit their needs. The following guidelines help management to choose the correct HRIS: Find the degree of flexibility and scalability that the HRIS offers. The HRIS has to allow importing of data from varied sources like spreadsheets, databases and documents. The HRIS has to enable interfacing with different kinds of system and data. Find whether the HRIS incorporates the rules of the company. Find if the HRIS is able to grow as the company creates new employee records, new benefit details and new rules. The limits of this capability to grow have to be assessed. Find whether the HRIS is able to integrate with different systems. Information in one system needs to be shared with other systems. For example, the payroll module and the benefits module need to share employee details. Determine the level of training and technical expertise required to use the HRIS. Costs of training have to be assessed. Resolve issues of ownership of data. Companies need to be able to transfer their data to any Application Service Provider (ASP). If the data is stored in the server of the HRIS developing company, the company may charge fees for transferring data to another ASP. Determine the type of maintenance required. Plan the method of updating technologies. Determine how secure the HRIS is. Find if the service provider (carrier) ensures backups if the HRIS is being implemented online. Find the systems and procedures which will safeguard and protect the data. The HR of the organisation has to have the absolute authority to determine the access permissions of the information in the HRIS. In table 5.1 we have outlined some of the applications that are used in HRIS. Now let if employeesthe guidelines which help in the selectiontime. HRIS. Find us examine can update their personal details in real of an Employee-self service must be enabled and employees have to be able to access the HRIS at anytime and from anywhere through the Internet. 5.2.1 Guidelinesto be guided on how to use the system. Employees have to Select Human Resource Information Systems Human Resource Information Systems have become very essential for Find the reporting capabilities of information and administer formats organisations to manage employee the HRIS. Multiple reportingbenefits (PDF, HTML, spreadsheets) will discuss how organisations. The HR effectively. In this section, weare necessary for managers decide which HRIS personnel have to be able to assess changes in employee data and make decisions.

 Determine the features that help HR save time. Batch processing, selfbilling and self-notification are features that save time. Find if the HRIS enhances employee communication. The HRIS has to offer flexible means of communication like mass e-mail, electronic bulletin boards and filtered communication based on departments, designations, location, insurance plans, retirement status and so on. Find if the HRIS provides checks and balances which enable the HR personnel to audit carrier bills, assist the enrollment of employees, judge the eligibility of employees for benefits schemes. Find how information is exchanged with the carriers and the type of connection which will enable this exchange. Managers need to select carriers who offer clean and accurate transfers. Determine the level of customer service offered. Online-help, onlinechats, telephone help, direct conversations, etc. aid customer service. Assess the costs and the benefits of the HRIS. Assess all one-time, monthly and annual charges. Consider factors like time savings, accuracy and convenience. Thus, we see that it is very important to assess and weigh the advantages and disadvantages of the HRIS before making a choice. In the next section, we will examine some examples of HRIS. 5.2.2 Examples of Human Resource Information Systems There are many HRIS software available in the market today. Some of them are listed below: Sage Abra HRIS: It has modules for benefits enrollment, benefits messenger, recruitment, employee self-service, payroll, HR features and training features. It simplifies routine employee management tasks, ensures compliance with government regulations, keeps track of employee attendance, makes recruitment more effective, automates employee training and updates employees on benefit programmes. Oracle HRMS: This has different modules for Human Resources, payroll, training administration and time management. Oracle Human Resources supports application processing, employee profiling, career development, and management of compensation and benefit plans.

 SAP HR: This has modules for personnel administration, recruitment, training, time management, payroll, compensation management, budget management, travel management and personnel development. Peoplesoft: This has modules for payroll, benefits administration, Employee and Manager Self-service, talent management, learning management and HR Business Intelligence. iVantage HRIS: This is a web-based talent management and HR management suite which offers modules for recruitment, candidate selfservice, performance management, work flow with conditional routing, salary planning, alerts, notification, compensation management, and reporting.

Kronos: This web-based HRIS offers various solutions for time and attendance, scheduling, absence management, labour analysis, hiring, HR and payroll. Now you are familiar with some of the HRIS applications available for organisations to choose from. In the next section, we will understand the importance of using human resource information systems. Self Assessment Questions 1. __________ merges the functions of Human Resource Management with information technology. 2. __________ on the Internet are increasingly being used for employee recruitment. 3. _____________, self-billing and self-notification are features which save time.

Figure 5.1: HRIS

You know that human resources play a very important role in all organisations. The Human Resource department is involved in formulating the company policies and streamlining the business processes. Efficient and new applications like HRIS make the human resource department more effective. HRIS assists the human resource department in decision making, employee recruitment, benefits administration, payroll, and employee training and performance analysis. HRIS simplifies the HR processes. It organises company and employee data in a better way. By using HRIS, confidential information can be protected. HRIS integrates the financial and the human resource aspects of a business.

The four main functions of a HR department are payroll, time and labour management, employee benefits and HR management. The advantages of implementing HRIS in these functions are as follows: 5.3 Importance of Human Resource Information Systems Payroll:is a diagrammatic the entire payroll process by collecting anda Figure 5.1 HRIS automates representation of the activities and data of maintaining payroll data. It collects information such as employee HRIS. attendance, computes the deductions and taxes and generates pay-cheques automatically and periodically. Time and Labour Management: HR personnel can collect and assess employee time and work information. HRIS helps in analyses of employee performance. It helps employees to perform better through efficient career planning.

 Employee Benefits: Employee benefits are very important because they help in motivating employees. Employees log in to the system and find the benefits they can avail. Organisations use HRIS to keep track of the benefits employees avail and inform employees of the advantages of various benefit programs. The HR personnel use relevant data and statistics to compute benefits and compensations of the employees or their dependants. Employee performances are tracked and incentives are computed. Employees can view the details of the incentives. It helps in planning and monitoring employee training. Costs of training are computed. For example, IBM uses a web-based employee benefits enrolment system which enables employees to access the system and view their benefits at any time and any place. HR Management: HRIS reduces the manual and paper work of the HR personnel in performing their routine tasks. The HR personnel can thus focus on more important duties. HRIS provides data support to HR decisions. HRIS helps in succession planning. It helps to integrate employee performance, development and payroll modules and thus retain key employees who can ensure organisational success. HRIS helps in career management and talent management by identifying the skills of the employees. It helps in monitoring the productivity of employees. HRIS helps in assessing why employees leave organisations.

From the above section you learned that by automating the HR processes, the HRIS provides time and cost savings, makes work processes more effective, adds strategic value to the organisation and makes the organisation more competitive. Businesses view HRIS as a big asset and invest in it. In the next section we will discuss some of the features of HRIS. Self Assessment Questions 4. The four main functions of a HR department are _______, _____________, ____________ and ______________. 5. __________ are very important because they help in motivating employees. 6. HRIS makes work processes more effective, adds ___________value to the organisation and makes the organisation more competitive.

7. HRIS helps in ___________ and ____________by identifying the skills of the employees.

of an organisation and have to implement a Human Resource Information System. Note down the factors that wil

5.4 Features of Human Resource Information Systems You have seen that HRIS helps an organisation to keep track of employee related information. Let us now examine the features of a good HRIS. The important features of an HRIS are as follows:
Job and Pay History: The HRIS documents details and salary of past jobs. The education details of the employee are also recorded. The HR personnel are able to view salary details including bonusses awarded and deductions made. They can view job details like positions held and the period of employment in that position. Salary changes of the employee are recorded. Ability to Import and Export Data: The HRIS scans images of resumes, employee photographs, employee signatures, job applications and accident reports. The HRIS is able to link to multiple file formats like PDF, Excel and Word. Exporting data in HTML or XML formats is also supported. Employee information is exported to programs like Visio or OrgPlus and graphical organisation charts are produced. Ad-Hoc Report Writing: Powerful reporting tools like Crystal Reports are used. Users select the reporting criteria such as department, location or position. Customised reports are created and saved using report generators. Information that needs to be included in reports can be selected. Lists such as staff directories, lists of offices, lists of positions are generated. Such lists can be sorted or filtered. Reports include tables and charts. Reports can be formatted as PDFs for printing. Time-stamps are also included in reports.

Automated Reminders and Alerts: Reminders are set for important dates and deadlines. HR personnel schedule reminders for birthdays, anniversaries, company events, performance reviews, training,

probation periods, and promotions. HR personnel can e-mail important reminders to employees. User-Defined Fields: Users define the organisation structure according to individual organisations. Users can include company policies for recruiting, salary structure, promotions, increments, appraisal, transfers, confirmation and other areas. Users specify the business rules and logic which are applicable to their company. Attendance and Leave Tracking: Employee vacations, leaves and absences are tracked and documented. Company policies on leave and vacation are documented. The number of days of leave available is computed based on the years of service of the employee and the leave taken. Employee Self-Service: Employees are allowed to record and update their personal details like name, gender, nationality, address, marital status, passport number, date of birth, number of dependants, education, and contact phone numbers. Employees have the facility to record notes in a log. Employees can apply for leave and view their leave details. Employees can change their bank account details and view their pay-slips. Employees manage their inboxes, personal calendars and service requests. Employees are able to view their work schedules. Employees are allowed to file their expense reports. Employees can view and enroll in various benefit plans. Employees are permitted to sign up for training and view their training schedules. Employees are allowed to create purchase requests and confirm receipt of goods. For example, mySAP HR has more than 80 ready-to-use Employee Self-Services.

Benefits Administration: The HR personnel defines the benefit plans for each employee and track details like eligibility, premiums paid and beneficiaries. Organisations can analyse the impact of their benefits administration policies and track employee enrolment. For example Cisco is providing an on-line benefits administration package for its UK and Ireland employees called i-Benefits@Cisco to help them understand their full rewards package and the benefits that they are eligible for. The staff can view the benefits online and select their perks. This package includes information about life assurances, group income protection,

holiday and voluntary benefits. Cisco uses National Insurance Savings to provide health assessments of staff. Performance Management: The HR personnel or supervisors can track all employee performance reviews. Details of past reviews are maintained. Managers can include their comments about each employee and schedule future reviews. Employee performance in training is also tracked. The performance management system helps set goals for the employees, evaluate employee performance, improve employee performance, and promote employees to the right position. HRIS allows managers to set goals for their unit and assign the goals to individuals and teams. The people planning module assists managers to assess and track progress.1 The performance management feature streamlines performance appraisals and makes them more transparent. Management use reporting and analytics tools to identify top performers and non-performers.

Payroll: The HRIS system manages all aspects of payroll functions like payroll processing, reimbursements, salary statements, insurance payments, income tax and so on. The pay structure can be configured as per company policy. Employees can choose their benefit plans. Arrears are calculated and e-mails are sent to employees on arrear payments. Loan policies and prerequisites are configured. Employees are allowed to generate pay-slips, loan statements and tax statements. Employees can use the tax calculator to calculate tax. Final settlements of employees are also computed.

Security: Access to confidential information is strictly controlled. Different levels of employees have different access permissions. Password protected logins ensure authorised access. The passwords are regularly changed by the system administrator. Data integrity is ensured. A log is maintained of user name, date and time of data access for auditing purposes. Firewalls are created to prevent hacking. Data is replicated on different servers at different sites to act as standby. Data is backed up on a regular basis.

 Document Library: The HRIS includes templates of letters and forms such as offer letters, welcome letters to new employees, termination letters, exit interview forms, employee surveys and so on. You now know the features of a good HRIS. In the following section, we will explain the applications of Human Resource Information Systems. Self Assessment Questions 8. Customised reports are created and saved in HRIS using _____________. 9. The ________________ helps set goals for the employees, evaluate employee performance, improve employee performance, and promote employees to the right position. 10. ___________ logins ensure authorised access. 11. The _______________ of HRIS includes templates of letters and forms.

5.5 Common Applications of Human Resource Information Systems

An HRIS is an integrated approach to acquiring, storing, analysing and controlling the flow of information throughout an organisation.2 A welldeveloped HRIS is useful in many HR applications and can enhance the efficiency and time-of-response of many HR activities. Some of the common applications of HRIS are as follows: Planning: The HR activities implemented by this application are personnel and succession planning, labour relation planning, target analysis and organisational charting. Staffing and Employment: This application handles recruitment activities. It ensures compliance with employment equity. Training and Career Development: This application deals with analysing training needs, training administration, and career planning. Performance Management: This application deals with performance appraisals, and monitoring time and attendance of employees.
Human Resource Systems and Technology: Focus on the Organisation Michael J Kavanagh, Hal G Global InformationInformation Systems: Development and Application by and its Functional Areas by Guental and Scott Tannenbaum, 1990. P.Candace Deans Iand Kirk R Karwan, 1994.
2 1

 Compensation and Benefits: This application deals with employee compensation and benefits administration. Let us now discuss each of these common applications in details. 5.5.1 Planning Planning is a very important activity of HR management. Planning identifies and implements the activities that ensure that the organisation is moving in the right direction. Planning is concerned with implementing the business strategy of the organisation. The components of planning are as follows: Environmental Scanning: It identifies the business opportunities and threats after reviewing the external factors that affect an organisation. Business Plan Analysis: It reviews the business plans and strategies. Manpower Planning: It reconciles any imbalance between HR supply and demand. Program and Policy Review: It ensures that the HR policies and programmes are aligned with the organisational needs. The components of HRIS which assists in planning are: Work Force Profile Review: It assesses the demand and supply of workforce by analysis of employee data elements like age, wage, performance rating, position and organisational data elements like employee turnover. Work Force Dynamic Analysis: It examines the employee movement in the organisation by analysing historical data like service, promotions, performance ratings, and salary. Various reports which provide information on lateral transfers, promotions, new recruits and turnover are generated. Succession Planning: It identifies potential successors for critical positions. Employees are scored and assessed for suitability of pre-defined job profiles. The staff details (job history, competencies, assessments) is analysed to find which position the individual can fit into. Employee databases are searched to retrieve profiles of employees who fit certain criteria. Reports are generated of individual competencies. Figure 5.2 depicts the employee details window of the Succession Wizard of Peoplesoft.3

Figure 5.2: Screenshot of PeopleSoft Succession Planning Wizard

Strategic HR Planning: It analyses HR data and compares it with performance benchmarks. It is used to evaluate policy compliance and impact of new programmes. 5.5.2 Staffing and Employment Staffing refers to the process of attracting candidates, interviewing them, and negotiating a compensation package with them. The process of staffing is very important as organisations have to recruit the right candidates who will help in realising the organisational goals. The components of HRIS which assists in staffing and employment are: Applicant Tracking: This helps in identifying competent candidates quickly and effectively. It organises information about applicants and their availability and helps in automating the recruitment process. Resumes are imported from job portals. Candidates are short-listed by pre-screening their profiles. It helps to match applicant capabilities with job openings. It compares candidates applying for the same job and helps in scheduling and tracking interviews. The tracking component also generates employment letters. For example, Bell Helicopter 3 Illustration Source: www.succession-wizard.software.informer.com/screenshot/11723/

Company uses its HRIS to recruit technical staff. MCI Telecommunications uses a resume tracking system called SmartSearchTM to spot eligible candidates. Employment Equity Compliance: Employment Equity is a process which helps organisations to identify and eliminate barriers in their employment policies and procedures in order to have representation of women, people with disabilities, and minorities at all levels. Employee personal data (gender, sex, and group) and reports of employees hired and employees promoted are used to make decisions to ensure fair employment practices. 5.5.3 Training and Career Development Employee training and career development is very essential for motivating employees. HRIS is a very important training and career management tool. Training: Organisations need to measure costs of training and their effectiveness. HRIS helps in scheduling and monitoring training programmes. Employees use the self-service module to apply for training. Employee data like skills, goals and performance rating are used to evaluate training needs of an employee. Based on this analysis, the HR personnel or managers grant training approval. Training budgets are fixed using HRIS tools. Career Development: HRIS can be used to monitor employee career trajectories. Many organisations seek to fill vacancies from within the organisation. HRIS informs employees about the current vacancies and the requirements of those positions. HR personnel are also able to identify employees who fit the requirements for vacant job positions by using employee data. For example, the company 3M has implemented a job information system which lists the jobs available companywide. All employees can view this listing and apply for the desired position. 5.5.4 Performance Management Employee performance management is essential to ensure that employee performance is monitored. This makes the organisations more productive and profitable. Performance Appraisals: Performance appraisal results are used to make administrative decisions like promotions, salary increments and so on. Feedback of performance appraisals improves employee

performance. Performance management of HRIS uses data like position, supervisor, date of appraisal, performance rating, appraiser comments, history of performance, and date of next appraisal. Performance appraisals help in identifying the strengths and weaknesses of employees and their training needs. Time and Attendance: Information on attendance and time worked is very important as absenteeism results in considerable loss to the organisation. Time and attendance module analyses information like time spent on a job, start date, end date, total time taken and reason, and leave details. Overtime calculations are also performed. Some HRIS also manage attendance details of multiple shifts. Time sheets are created for different categories of employees. Time sheets can also be configured for each project. Off-time information is also captured. Time sheets can be approved. After approval, time worked and leave details are exported to payroll module. Department-wise reports of absenteeism with reasons are generated.

5.5.5 Compensation and Benefits Attractive compensation packages and good benefits programme help motivate employees and retain skilled employees. The University of Michigan uses HRIS to manage pay, benefits and pensions of its current and retired faculty members. Compensation Management: All organisations have to offer a competitive compensation package, maintain payroll costs and comply with government laws. Employee compensation is determined by examining jobs and determining their relative worth to the organisation. Compensation Management function of HRIS uses data like salary basis (hourly, commission and so on), bonusses, hours worked, types of increment (annual, biannual, promotion) and interfaces with the payroll system. It interfaces with the performance management system to ensure correct pay based on performance ratings. Benefits Administration: Employees use the HRIS to enroll in various benefit programmes. For example, the employees of Apple Computers enroll in benefit plans using the HRIS of the company. Employees can also change their enrollment plans. HRIS determines benefits by using employee data like date of enrollment, type of insurance plan opted

(Health, Life), memberships availed (health clubs), loans and beneficiary details. HRIS automates the computation of flexible benefits. Employees are also educated about the various benefit plans they are eligible for through HRIS. Self Assessment Questions 12. ___________ refers to the process of attracting candidates, interviewing them, and negotiating a compensation package with them. 13. ______________ is a process which helps organisations to identify and eliminate barriers in their employment policies and procedures. 14. ______________ results are used to make administrative decisions like promotions, salary increments and so on. 15. ______________ module analyses information like time spent on a job, start date, end date, total time taken and reason, and leave details. 16. __________________ is determined by examining jobs and determining their relative worth to the organisation.

ce personnel in an organisation. You are assigned the task of recruiting new employees. List out how you use the H

The important features of a good HRIS are job and pay history, ability to import and export data, ad-hoc report writing, automated alerts and reminders, user defined fields, attendance and leave tracking, benefits administration, employee self-service, performance management, payroll, document management and security . Some of the common applications of HRIS are planning (personnel and succession planning, labour relation planning, target analysis and organisational charting), staffing and employment (recruitment, employment equity), training and career development (analysing training needs, training administration, and career planning), performance management (performance appraisals, monitoring time and attendance), compensation and benefits.

5.7 Terminal Questions

1. What are the different modules of a Human Resource Information System (HRIS)? is the importance of HRIS? 2. What 3. Explain the features of HRIS. 4. Explain any two HRIS applications.

5.8 Answers
Answers to Self Assessment Questions 1. Human Resource Information System (HRIS) 2. Job sites 5.6 Batch processing 3. Summary 4. payroll, time Information System (HRIS) is a software application that Human Resourceand labour management, employee benefits, HR management. caters to the human resource information needs of the organisation like employee attendance, payroll and benefits administration, career 5. Employee benefits development, employee information, performance management, and 6. strategic training. 7. career management, talent management 8. report generator HRIS is very important for organisations as it streamlines and automates the 9. performance management system HR processes. HRIS provides time and cost savings, makes work processes 10. Password adds strategic value to the organisation and makes the more effective, protected organisation more competitive. 11. Document Library 12. Staffing 13. Employment Equity

14. Performance appraisal 15. Time and attendance 16. Employee compensation Answers to Terminal Questions 1. Refer section 5.2 2. Refer section 5.3 3. Refer section 5.4 4. Refer section 5.5

5.9 Case Study

althNet Plan had no dedicated Human Resource Information Solution (HRIS). The HR personnel depended on sprea he employee data. It ensures that only authorised personnel access confidential data. When BMC HealthNet Plan rt was posted on the intranet of the company and the employees of all departments could easily view it. t required by the provider. This simple process saves staff more than four hours every week, time earlier spent m

ccessfully, BMC HealthNet Plan decided to implement the rest of the modules of Sage Abra HRIS, including Emp

e Abra HRIS benefit BMC HealthNet Plan. lthNet Plan to benefit from Employee Self Service (ESS) and Benefits Connect modules of Sage Abra HRIS?

5.10 Glossary

ual intervention.

nd analysing business data.

ork acts as a client or a server. Servers are powerful computers or processes which manage disk drives, files, printers, or netw

access to or from a private network

World Wide Web documents.

ary range. A lateral transfer can be within a department, or between departments.

e format that preserves most attributes (including colour, formatting, graphics, and more) of a source document no matter w

are or software) to maintain its performance when it (or its environment) is changed in size or volume. The computer applica

e Internet. create structured documents.

References 1. Global Information Systems and Technology: Focus on the Organisation and its Functional Areas; P.Candace Deans, Kirk R Karwan; 1994. 2. Fundamentals of Human Resource Management; Noe, Hollenbeck, Gerhart, Wright; 2007. 3. Human Resource Information Systems: Development and Application; Michael J Kavanagh, Hal G Guental, Scott I Tannenbaum; 1990. 4. Human Resource Management; John M Ivancevich; 2007 5. http://succession-wizard.softwar

Unit 6

Organisational Discipline

Structure 6.1 Introduction Objectives 6.2 Overview of Organisational Discipline Definitions of Organisational Discipline Objectives of Organisational Discipline Progressive Discipline 6.3 Types of Organisational Discipline Preventive and Corrective Discipline Positive and Negative Discipline 6.4 Types of Disciplinary Problems 6.5 Disciplinary Procedure Factors to Consider when Disciplining Guidelines to an Effective Disciplinary Process Common Disciplinary Procedure 6.6 Summary 6.7 Terminal Questions 6.8 Answers 6.9 Case Study 6.10 Glossary

6.1 Introduction By now you must be familiar with the concepts of Employee Relations Management (ERM) and how it is facilitated by tools like Human Resource Information Systems (HRIS). In this unit you will learn what organisational discipline is and the need for organisational discipline.
Discipline is derived from a Latin word meaning to teach. Discipline is essential for organisations to succeed and to stay competitive. Discipline fosters self-control, character, and efficiency. Discipline does not destroy individuality, it rather builds character. Organisational discipline entails strict observance of rules or policies for the orderly coordination of effort and the benefit of the organisation. Organisational discipline aims to train and control the workforce in order to attain common goals.

You will learn about the types of problems normally encountered in organisations. Thereafter, you will also learn about the procedure involved in disciplinary actions in this unit. Learning Objectives After studying this unit, you will be able to: Explain the objectives of Organisational Discipline Compare the different types of Organisational Discipline Differentiate between the different types of disciplinary problems Describe disciplinary procedures of organisations

organisational goals. If an organisation has no discipline, then chaos prevails and the organisation finds it very difficult to attain its goals. Let us now analyse the purpose of enforcing organisational discipline. 6.2.2 Objectives of Organisational Discipline The objectives of organisational discipline are to correct, educate and reform the workforce. Organisational discipline aims to correct wrong behaviours, discipline offenders, prevent inappropriate actions, and maintain standards.

The main objectives of organisational discipline are as follows: To obtain voluntary acceptance of rules, regulations and policies of the company: Members of the organisation have to voluntarily comply with the 6.2 Overview of Organisational Discipline rules, regulations and policies of the company to enable easy attainment of Discipline is essential for the smooth functioning of an organisation. the organisational goals. Discipline improves harmony and prevents conflicts in an organisation. Let us To provide direction management experts define discipline. now see how some and leadership: Discipline guides the workforce in the right manner so that they act in the right way and achieve their goals. 6.2.1 Definitions of Organisational Discipline1 W. R. Spriegel and Edward Sohelge define discipline as the force that To promote co-operation and to observe rules, workforce is disciplined, prompts an individual or groups unity: When the regulations, and they voluntarily co-operate with each otherthe attainment of an objective. procedures that are deemed necessary to and work as a united team. Ideas are shared for attaining common goals. Individual ambitions make way for team achievements. Michael J Jucious defines discipline in the following way. Discipline means that workers willingly abide by company rules and executive orders. To set To improve employee relations: When employees work in a disciplined right the indiscipline or improve its causes provided punishment provisions way, they respect one another. Thus the work atmosphere becomes are known is discipline. pleasant and conflicts are avoided. To improve efficiency and productivity: Organisational affairs by the Ordway Tead defines discipline as the orderly conduct ofdiscipline brings the best performance out of the who adhere to its necessary core issues members of an organisation employees. Concentration onregulations improves efficiency to cooperate harmoniously in forwarding the and because they desireof the processes. This maximises productivity end which minimises costs. the group has in view, and willingly recognise that, to do this, their wishes must be brought into a reasonable unison with the requirements of the group in action.2 These definitions make it clear that discipline is necessary for the orderly and efficient functioning of an organisation and for the attainment of
1 Industrial

Labour in India by Rajendra Kumar Sharma, 1997 2 Professional Growth and Staff Education by Irene Robertson; The American Journal of Nursing, Vol. 36, No. 10 (Oct., 1936)

procedure for progressive discipline. Termination of employment is done only as a last resort.

Figure 6.1: Progressive Discipline Procedure

The steps involved in progressive discipline are as follows: Step 1: An oral warning is given to the subordinate by the supervisor. The supervisor explains the violation of the rules or procedure committed by the subordinate and warns the subordinate of stricter action for future violations. Step 2: A written warning is issued to the employee for a repeat violation and it becomes a part of the personal record of the employee. Written warnings are used as evidence during grievance procedures. Step 3: Employees who do not correct themselves with oral or written warnings are suspended from work. Step 4: Indiscipline over an extended period of time or major offences result in demotion. Employees lose pay and status. Step 5: Very serious offences result in the employee being dismissed from the organisation. In this section we have clarified the purpose of organisational discipline. In the next section, we will examine the different types of organisational discipline. Self Assessment Questions 1. __________ about progressive discipline, a discipline format to observe Let us now learn is the force that prompts an individual or groups usually rules, regulations, and procedures that are deemed necessary to the adopted by organisations. attainment of an objective. 6.2.3 Progressive Discipline 2. In ________________, stronger penalties are imposed for repeat Most organisations follow a policy of progressive discipline. Stronger offences. penalties are imposed for repeat offences. This gives employees an 3. Organisational Discipline promotes co-operation and unity. State opportunity to correct inappropriate behaviour. Management counsel true or false. employees and try to correct their behaviour. Figure 6.1 shows the

6.3 Types of Organisational Discipline Organisational discipline enforces organisational standards. The nature of organisational discipline has a great impact on its employees. Organisational discipline can be ensured in the following ways:
Compliance with the rules because the employees want to please the management Compliance with the rules because the employees fear the management. Different organisations follow different styles of discipline. Now let us compare the different types of organisational discipline. 6.3.1 Preventive and Corrective Discipline Discipline can be classified as preventive and corrective on the basis of the methods of implementation of disciplinary measures. Preventive Discipline: This form of discipline encourages employees to follow rules and standards to avoid contravention. Employees are educated on the company policies and procedures. Preventive discipline emphasises employee self-discipline. Managements want employees to voluntarily follow the rules and regulations and they avoid imposing them on the employees. Policies and standards are explained to the employees. Employees follow these policies and standards when they have a clear understanding of the reasons behind them. Employees also voluntarily follow standards that they have helped to create. Corrective Discipline: This form of discipline is the action taken to correct employees who have violated organisational rules or procedures. It aims to discourage future violations and encourage compliance with standards. Usually a penalty like suspension with or without pay is imposed.

6.3.2 Positive and Negative Discipline Organisational discipline tries to regulate employee behaviour through rewards and punishment. On this basis, we can classify organisational discipline as positive or negative. Organisations need both positive and negative discipline in order to function effectively. Positive Discipline: Positive discipline makes employees voluntarily follow rules. It emphasises co-operation and focuses on positive employee behaviour. It teaches employees to become more responsible

and resourceful. Positive discipline focuses more on counselling than penalising. Positive discipline requires employee self-regulation. The Union Carbide plants have adopted the positive discipline model. The supervisors want the employees to co-operate and improve their behaviour. Negative Discipline: Negative discipline emphasises on punishment. Discipline is enforced by threats and warnings. Employees are informed about the nature and quantity of punishment in advance in order to deter wrong behaviour. Negative discipline requires intense supervision. Now you can differentiate between the different types of organisational discipline. Let us next examine the different types of disciplinary problems that occur in organisations. Self Assessment Questions 4. _______________ aims to correct employees who have violated some organisational rules or procedures. 5. Organisational discipline tries to regulate employee behaviour through ____________ and _____________. 6. ____________ emphasises punishment.

company, absence without leave for a period of more than a month, and committing any offence punishable by the law of the land Let us now analyse these disciplinary problems that managers have to deal with in their line of work. The main types of disciplinary problems are explained as follows: Excessive Absenteeism: Absenteeism occurs when an employee does not report to work due to time off, illness or any other reason. Excessive absenteeism results in loss of productivity. Absenteeism is corrected by employing progressive discipline. Employees need to be aware of the absenteeism policy of the company. They also have to be aware of the fact that the company monitors employee absence. Employees need to take responsibility for their absenteeism and substantiate their absenteeism with valid records like medical certificates in case of health related absences.

Poor Timekeeping: Reporting late to work, leaving early, indulging in extended tea or lunch breaks, doing personal work during office hours, and other time-wasting practices reduce the time spent doing productive work. Poor timekeeping disrupts business and creates a bad atmosphere. These habits have to be curbed and employees need to know that it is mandatory for them to spend certain fixed hours at their workstations or premises doing productive tasks. 6.4 Types of Disciplinary Problems Discipline is essential for organisations to regulate employee behaviour and channel employee efforts in realising organisational goals. Management to Improper Personal Appearance: Dress codes are enforced in organisations acts of indiscipline or misconduct according safety reasons. deals with all to project a professional appearance or for to the Employees arerules and policies and the consequences of their inappropriate organisational to be made aware of the nature of the indiscipline. attire. For example,classified as minorcanmajor on the basis of the impact Indiscipline can be synthetic clothes or catch fire easily. Company policy also have on describe situations where the employee has to dress formally. they needs to the functioning of the organisation. Minor acts of indiscipline include absenteeism, late coming, negligence at Substance Abuse: Alcohol and drug abuse can lower employee work, failure to be present when required, inefficiency abuse also results in concentration and decrease performance. Substance and acts of omission. Management correct minorworkplace and inappropriate behaviour. absenteeism, accidents at indiscipline with written or oral warnings. Organisational policies on substance abuse need to be communicated with Major acts of indiscipline haveaddicted to alcohol or and they include theft, the staff. Employees who are to be dealt seriously drugs have to be fraud, breach of contract, acceptinglikegiving bribes or gifts, drunkenness, counselled or helped in other ways or therapy and detoxification violent or disorderly behaviour, insubordination, sleeping while on duty, programmes. disclosing confidential information, sabotage or misuse of company equipment, inciting other employees to act against the interests of the Defective Performance: Defective performance results when a task is not completed on time, or is of sub-standard quality, or the task is not

done according to requirements. An employee may perform poorly either due to lack of interest or due to lack of capability. Managers need to assess poor performances individually, determine the constraints and take corrective actions. Poor Attitudes: Sleeping on the job, being careless while working, fighting with co-workers, gambling in the work place, insulting supervisors, being rude to customers and colleagues, and such practices reflect poor attitudes. These actions can adversely affect other employees. Thus, these attitudes have to be corrected to maintain a good and productive work atmosphere. Violation of Health and Safety Rules: Smoking in unauthorised places, failure to use safety devices, not following safety rules regarding fire safety, dealing with hazardous chemicals, electrical and mechanical equipment and radiation protection are serious violations and have to be dealt with immediately and effectively. Insubordination: Insubordination can take the form of refusing to perform a legitimate task that has been assigned, ignoring the instructions of managers, criticising or challenging the orders of a superior, using abusive language or making disrespectful gestures like rolling the eyes. Insubordination can affect the morale of the entire team. Organisations need to spell out their policies on insubordination. Managers have to be equipped with proper procedures to deal with insubordination.

Workplace Violence: Companies need to have training programmes to its security personnel so that they recognise warning signs and know how to deal with violent behaviour of employees. Employee handbooks need to clearly state that violent behaviour will not be tolerated and will result in termination. Harassment: This behaviour causes discomfort to the co-workers and reduces employee morale. Making crude and sexual remarks or forcing another co-worker to do certain non-legitimate tasks constitutes harassment. For example, a manager may repeatedly ask an unwilling subordinate for a date. Companies need to have in place a clear sexual harassment policy and employees have to be trained on what constitutes harassment.

 Theft and Sabotage: Sometimes employees steal money, equipment, supplies or confidential information belonging to the company. Some aggressive employees may damage or destroy organisational equipment and facilities. Some employees may falsify records and accept bribes and indulge in actions that are detrimental to the organisation. Organisations have to strictly deal with such problems. In this section, we identified the different kinds of disciplinary problems that exist in organisations. Let us now examine the disciplinary procedure commonly followed in organisations. Self Assessment Questions 7. _______________ occurs when an employee does not report to work due to time off, illness or any other reason. 8. ___________ are enforced in organisations to project a professional appearance or for safety reasons. 9. _________________ results when a work is not completed on time, or a sub-standard work is done or the work is not done as per requirements. 10. Refusing to perform a legitimate task that has been assigned to the employee is classified as ________________. 11. Classify the following as major or minor offences. a. Sabotage of company equipment. b. Failure to be present when required c. Theft, fraud, dishonest or breach of contract

of the rest of the team. You find that he reports late to work regularly and clears his desk half an hour before clos

just decisions. A disciplinary procedure includes a formal system of documented warnings and hearings, with rights of representation and appeal at each stage. Disciplinary procedures have to be fair and transparent in order to avoid legal complications. Caution has to taken as disciplinary procedures have to be directed against the employee behaviour rather than the employee themselves. Let us now examine some factors which need to be considered when disciplining. 6.5.1 Factors to Consider when Disciplining All disciplinary actions have to be fair and impartial. The nature and the impact of the misconduct have to be analysed before any disciplinary action is taken. The following factors have to be considered while analysing a disciplinary problem: Seriousness of the Problem: Consider the severity of the problem. Insubordination is more severe than reporting late to work. Duration of the Problem: Analyse if there have been any past violations and the period over which it is happening. First time violations are dealt differently than violations repeated for the third time. Frequency of the Problem: Examine if the current problem is a part of a pattern of disciplinary infractions. Continual violations require more severe punishments. Extenuating Circumstances: Examine if there are any external factors which are leading to the indiscipline. Reporting late to work due to the illness of a family member has to be dealt more leniently than reporting late to work because of oversleeping. Degree of Familiarisation: Find if the employee causing the problem has been familiarised with the rules and procedures of the organisation. Consider if the violator knows the organisational standards of acceptable behaviour. Organisations that have formalised written disciplinary rules are more justified in enforcing discipline than organisations that only have informal and unwritten rules. History of the Organisations Disciplining Practices: Find how similar 6.5 Disciplinary Procedurewith in the past. Find if the organisation has misconducts have been dealt Disciplinary procedure practices. Impartial treatment of violations requires consistent disciplining is a step-by-step process which an organisation follows benchmarks. with indiscipline of any kind. It is a good practice for certain while dealing organisations to establish a proper disciplinary procedure in order to ensure

 Management Backing: Ensure that the higher authorities back the disciplinary process. Disciplinary actions are not effective if they are overridden by the upper levels of the management. Now that we have learned the factors to consider in disciplining, next let us get familiar with the guidelines to make a disciplinary procedure effective. 6.5.2 Guidelines to an Effective Disciplinary Process Disciplining delinquent employees is a very difficult process and can cause resentment. The Red-Hot Stove rule of Douglas Mc Gregor highlights the principles which guide the process of discipline in organisations. Red-Hot Stove Rule The four characteristics of an effective discipline procedure according to this rule are: Immediacy: If you touch a red hot stove, your hand gets burnt immediately. Likewise, all disciplinary problems have to be handled immediately. Only then will the employees understand the reason for the disciplinary action. Forewarning: When you approach the red hot stove, you feel the heat and you are warned not to touch it. Likewise, employees have to be warned beforehand of the consequences of unacceptable behaviour. Consistency: Any person who touches the red hot stove will always get burnt. In a similar way, all employees who perform the same undisciplined act must be given the same form of punishment. Impartiality: All persons who touch the red hot stove get burnt. In the same way, all disciplinary actions must be impartial. An effective disciplinary process ensures that all employees conform to the standards and regulations of the organisation. All managers need to be aware of the guidelines to administer discipline. The guidelines to an effective disciplinary process are as follows: 1. Interview as many witnesses as possible during investigations. Use sufficient documentary evidences. 2. Keep the length of time between the misconduct and the disciplinary action very short. Discipline rationally and do not involve emotions. 3. Forewarn the employees about the consequences of repeat violations before any disciplinary action is taken. Suggest ways to correct

inappropriate behaviour. Specify the disciplinary rules in the employee handbook or in a separate booklet. 4. Give the same punishment to misconducts of the same nature. Inconsistencies in the disciplinary process lower employee morale. For example, if one employee is fired for being late three times, but another employee is let off with just a written warning for the same misdemeanour, then this indicates discrimination. 5. Conduct an impartial disciplinary process. The disciplinary action has to be for the misconduct and not for any bad relation between an employee and the supervisor. There has to be no feelings of anger while administering discipline. For example, the director general of CSIR (Council for Scientific and Industrial Research) punished two scientists for plagiarism in a paper published in an international journal by demoting them.

6. Discipline employees in private. Only serious violations should be reprimanded publicly. 7. Document in sufficient detail and accurately all disciplinary actions taken. Inform higher authorities of the violation and the action taken. 6.5.3 Common Disciplinary Procedure Different organisations follow different disciplinary procedures. The discipline procedure followed in many organisations usually has the following steps:

1. Issuing a Letter of Charge: The manager issues a charge-sheet to the employee committing the misconduct. The charges are precisely and clearly stated in the charge-sheet. The charge-sheet also asks the employee to give an explanation for the misconduct. Sufficient time is given to the employee to prepare a reply to the charge-sheet. 2. Consideration of the Explanation: Once the reply is obtained from the charge-sheeted employee, the explanations are considered. If the explanation is found to be satisfactory, then no further action is taken. But if the management does not find the explanation satisfactory, it decides to issue a show-cause notice. 3. Show-Cause Notice: This is issued by the management when there is sufficient evidence of the misconduct of the employee. This gives the employee another opportunity to provide an explanation for the charges made. Enquiry can also be initiated by issuing a notice of enquiry

detailing the name of the enquiry officer, the time, date and place of enquiry. 4. Conducting a Full-Fledged Enquiry: The employee is given an opportunity for justification. The findings of the enquiry are recorded and the enquiring officer suggests the disciplinary action to be taken. 5. Making a Final Order of Punishment: The punishment for the misconduct is decided after considering the nature of the indiscipline, the past record of the employee, the precedents, and the effects of the disciplinary action on other employees. 6. Appeal: When the employee feels that there has not been a fair hearing, the employee is given a chance to make an appeal. 7. Follow up: The consequences and the impact of the disciplinary action are noted. Self Assessment Questions 12. _______________ is a step-by-step process which an organisation follows while dealing with indiscipline of any kind. 13. The four characteristics of an effective discipline procedure according to the Red Hot Stove rule are ___________, _____________, ____________, and ______________. 14. Organisations that have ______________disciplinary rules are more justified in enforcing discipline than organisations that only have informal and unwritten rules. 15. When the employee feels that there has not been a fair hearing, the employee is given a chance to make an ___________.

ty 2: n organisation and find the disciplinary procedure followed by the organisation. Illustrate the steps involved using

standards. Most organisations follow a policy of progressive discipline in which stronger penalties are imposed for repeat offences. Discipline can be classified as preventive and corrective on the basis of the methods of implementation of disciplinary measures. Preventive discipline encourages employees to follow rules and standards. Corrective discipline is the action taken to reform employees who have violated some organisational rules or procedures. Organisational discipline can be classified as positive or negative on the basis of the manner it regulates employee behaviour. Positive discipline makes employees to voluntarily follow rules. Negative discipline emphasises punishment. The different kinds of disciplinary problems in organisation are excessive absenteeism, poor timekeeping, improper personal appearance, substance abuse, defective performance, poor attitude, violation of health and safety rules, insubordination, workplace violence, harassment, theft and sabotage. Depending on the nature and impact, acts of indiscipline are classified as minor or major. Minor acts of indiscipline are corrected by oral or written warnings. Major acts of indiscipline are dealt with more severely. The four characteristics of an effective discipline procedure according to the Red Hot Stove rule are immediacy, forewarning, consistency, and impartiality. Factors like the severity, frequency, duration, and external factors of the problem have to be considered while analysing a disciplinary problem. Charge-sheet and show-cause notices are issued before conducting a full disciplinary hearing. The punishment for the misconduct is decided after considering the nature of the indiscipline, the past record of the employee, the precedents, and the effects of the disciplinary action on other employees. The employee is also given a chance for making an appeal and all disciplinary actions are documented.

6.6 SummaryQuestions 6.7 Terminal Organisational discipline isof organisational discipline? 1. What are the objectives the process by which employees conform to the rules and regulations of the organisation in order to achieve the 2. Explain the steps involved in progressive discipline. organisational goals. Discipline is essential for the smooth functioning of an 3. Differentiate between the different types of organisational discipline. organisation. The objectives of organisational discipline are to correct wrong 4. What are the different types of prevent inappropriate actions, and maintain behaviours, discipline offenders, disciplinary problems that are found in organisations?
5. What are the factors to be considered when disciplining?

6. Explain the guidelines for effective disciplining. 7. Explain the common procedure for disciplining.

6.8 Answers Answers to Self Assessment Questions 1. Discipline 2. progressive discipline 3. True 4. Corrective Discipline 5. rewards, punishment 6. Negative discipline 7. Absenteeism 8. Dress codes 9. Defective performance 10. insubordination 11. (a) major (b) minor (c) major 12. Disciplinary procedure 13. Immediacy, Forewarning, Consistency, Impartiality 14. formalised written 15. appeal
Answers to Terminal Questions 1. Refer section 6.2.2 2. Refer section 6.2.3 3. Refer section 6.3 4. Refer section 6.4 5. Refer section 6.5.1 6. Refer section 6.5.2 7. Refer section 6.5.3

6.9 Case Study

nsibility of motivating their employees and disciplining them fairly and in a timely manner. up of the review revealed that minority groups were subjected to three times the disciplinary actions when compa ere very lengthy in the IRS and the managers felt it easier to avoid confrontation. Managers did not address poor sciplinary practices and documentation. An employee was frequently late, had extended breaks and long lunches. eprimands and written warnings.

in labour relations, disciplinary counselling and documentation.

g within 30 days of assumption of the managerial position.

al training as and when needed to update managers on the changes in the rules, regulations and the disciplinary

act of the disciplinary process on minority groups.

ployees on the rules and the disciplinary measures within 90 days of joining duty.

rs regularly meet with the employees and discuss issues and the rules of conduct.

he IRS undertook the following initiatives to introduce positive discipline:

strict, a labour relations specialist discussed the most common violations of rules by video.

Rules of Conduct lesson plan was prepared for managers.

nagers were educated about the differences between absence without leave and leave without pay.

ts and videos informed employees about security violations, criminal activities and the disciplinary action taken.

ale, managers were educated on working in a multi-cultural environment.

ment conducted periodic reviews of line managers to ensure that they were implementing the disciplinary process

changes made in the disciplinary process of the IRS helped in achieving its goal of maximising employee success.

findings of the internal task force of the IRS?

recommendations made by the review task force?

initiatives taken by the IRS to introduce positive discipline?

6.10 Glossary

eement.

ch details the charges against the person accused of committing certain violations.

gramme for alcohol or drug addiction designed to remove intoxicating or addictive substances from the body in order to over

demeanour which usually attracts less severe forms of punishments like fines.

operty or obstruction of normal operations.

o explain or to show cause why disciplinary action should not be taken for the actions committed or omitted by the individu

References 1. Industrial Labour in India by Rajendra Kumar Sharma, 1997 2. Professional Growth and Staff Education by Irene Robertson; The American Journal of Nursing, Vol. 36, No. 10 (Oct., 1936) 3. Organisational Behaviour: Human Behaviour at Work by John W Newstrom, 2008 4. Professionalism in Human Resource Certification by Anne M Bogardus, 2007 5. Industrial Indiscipline in India, A.K. Mohapatra, D.V. Giri and B.S. Murthy, 1992

Unit 7 Grievance Handling

Structure 7.1 Introduction Objectives 7.2 Grievance Reasons for Grievances 7.3 Needs for Grievance Redressal Types of Grievances 7.4 Steps in Grievance Redressal Procedure Formal Grievance Redressal Informal Grievance Redressal Collective Bargaining Types of Grievance Policy Grievance Policy in Indian Industry 7.5 Essential Pre-requisites of Grievance Procedure 7.6 Grievance Interview 7.7 Precautions in Grievance Handling 7.8 Conflict Resolution Methods of Conflict Resolution 7.9 Summary 7.10 Terminal Questions 7.11 Answers 7.12 Case study 7.13 Glossary

7.1 Introduction In the previous unit you learnt about organisational discipline, the need for organisational discipline and the types of disciplinary issues that arise in organisations. And in this unit you will learn about the concept of grievance. Grievance is defined in several ways by the experts in the field of management. According to Michael Jucicus1, 'a grievance is any discontent or dissatisfaction. Whether expressed or not, whether valid or not, arising out of anything concerned with the company which an employee thinks, believes or even feels to be unfair, unjust or inequitable.

Human Resource Management: Managing People at Work Mrs. Y. L. Giri

Thereafter, you will also learn about the causes of grievance and effective grievance redressal procedure. You will also be familiarised with the concept of mediation, arbitration and compromise and understand how important it is for organisations to address grievances. Learning Objectives After studying this unit, you will be able to: Define Grievance Explain the causes of grievance in an organisation Describe the need to redress grievance of employees Describe the different steps towards grievance redressal Identify the methods of conflict resolution

Organisations ought to be efficient in handling employee grievances and ought to have appropriate dispute resolution and grievance handling procedures. However, experience shows that most organisations only pay lip service to the concept and never actually implement it. To start with, let us understand why grievances occur i.e. what are the common reasons for grievances. 7.2.1 Reasons for Grievances There are a number of causes of employee grievances. Some of the reasons why employee dissatisfaction leads to grievances are the following: Economic: Issues related to wages like wage calculation, overtime, and bonus. Employees often feel that they earn less than what they deserve. Working Environment: Issues related to the employees work environment like poor working conditions, defective equipment and machinery, tools, 7.2 Grievance materials. Grievance may be defined as a complaint or resentment against any unjust or unfair act. Grievance is any issueof the boss towards organisation or its Supervision: Issues like behaviour associated with an the employee, management like employee discrimination or harassment by managers. perceived ideas of partiality, discrimination, preferential treatment, prejudice. Grievance may also be any alleged violation of employee contracts or Work Group: Issues with co-workers like stressed peer relations or settlements or violation of any laws, or on race, age or sex discrimination. inaptness with peers. The International Labour Organisation (ILO2) defines a grievanceand a Work Organisation: Issues related to the organisation like rigid as unfair complaint lack of recognition. rules and of one or more workers with respect to wages and allowances, conditions of work and interpretation of service, condition covering such areas as overtime, leave, transfer, promotion, seniority, jobThere are times It is not always the case where the organisation is at fault. assignment and termination of service. due to the employees. Some of the instances when the grievances are where grievances of management are against its employees are the following: Our society has police stations,employees and NGO that handle grievances Disobedience on the part of panchayats of the public.leave withoutway, organisations have grievance redressal Going on In the same prior permission, absenteeism committees where aggrieved employees present their unresolved issues. Indiscipline generally provide a quality work environment to boost Organisations Illegal strikes and enhance employee performance to help the employee morale organisation achieve its goals. Employee grievances are one of the factors wrong conclusions that impedetactics Go slow establishing appropriate work environment. To establish good work atmosphere and to assure employees, grievances handling is important Improper methodsIn this unit we will learn the different techniques of for any organisation. adopted by the trade unions in dealing with management grievances handling. Arrogant behaviours of the employees Reckless charges by the employees. trade unions leaders against the 2 ILO - s a specialized agency of the United Nations that deals with labour issues. Its headquarters are in supervisors or management Geneva, Switzerland.

Whatever the cause of grievances are, effort must be put in to find out the best possible solutions or methods of settling grievances and for that purpose, there should be an effective grievance redressal procedure. Self Assessment Questions 1. A __________ is any alleged violation of the employment contract. 2. ________ may be defined as a complaint or resentment against any unjust or unfair act. 3. One of the reasons for employee grievances is employers treating employees equally, showing no partiality or discrimination. State true or false.

locking an average of more than 50 hours a week, regardless of weekends and holidays. Employees have request

7.3 Needs for Grievance Redressal Organisations have to create a favourable work environment for employees where grievances are handled promptly and appropriately. Improper or lack of proper grievance handling leads to the following:
Employees losing interest in work and consequently lacking morale Lack of commitment from the employees Poor quality of work Lowered productivity Increase in resource wastage leading to increasing company costs

From the above example it is evident that effective grievance handling is an essential in maintaining good employee relations and in keeping with the goals of an organisation. Organisations may consider the grievances procedures as mentioned below: It should Be in writing Be made known to all Ensure a speedy and fairly resolution of the problem

Pilots of Jet Airways went on a nation-wide strike resulting in air-travellers throughout the country suffering as most of the flights had to be cancelled. One of the major reasons for the strike was the ineffective grievance redressal system employed in Jet Airways. Pilots faced problems ranging from pay and allowances to hectic work schedules. Since the issues of the pilots were never resolved, the problem escalated and led to the nation-wide strike. This led to a loss of millions of rupees for Jet Airways.

The aggrieved employee approaches the supervisor to find resolution. If the organisation is unionised, the employee also addresses the union steward. If the issue is not resolved at this stage, the matter is forwarded to higher authorities in the organisation and the union. To understand better how to handle grievances, let us look at the various types of grievances that need to be addressed. 7.3.1 Types of Grievance Displeasure or disappointment is not a grievance. They initially find expression in the form of a complaint. When a complaint remains unattended Figure the employee concerned procedure of grievance handling. fair play, to and 7.1 represents a general feels a sense of lack of justice and the dissatisfaction grows and assumes the status of grievance. The grievance procedure can be categorised are formal grievance and informal grievance procedure. Formal grievance procedure follows a formal method involving application forms. Informal grievance procedure, on the other hand, is more informal and simpler in dealing with resolving grievances. The next section discusses in detail the two types of grievance procedures. Self Assessment Questions 4. Grievance procedures can be categorised are ______ grievance and _____ grievance procedures. 5. An aggrieved employee first directly approaches the head of the organisation to resolve issues. State true or false. 6. The informal method of resolving grievances is time consuming and complex. State true or false.

Figure 7.1: Grievance Handling

7.4.1 Formal Grievance Redressal There are three formal stages to redress any grievance. Each stage has a form which is numbered according to the stage it belongs. First, it has to be noted that the grievances have to fall under one of the following categories to be considered as one: Amenities Compensation Conditions of work Continuity of service Disciplinary action

7.4 Steps in Grievance Redressal Procedure Organisations (whether unionised or non- unionised) are legally bound to provide in a written statement of terms and conditions of employment, details of the person to whom any employee who has a grievance may apply. A grievance procedure sets out how such an application is made and how it is dealt with. The procedure aims to settle the grievance as quickly, fairly, and as near to the point of origin as possible. In practice this means that the issue is more often settled by the employees immediate supervisor or line manager. The grievance procedure describes about what happens if the grievance cannot be resolved at this level. The different types of grievances procedures are discussed below.

The recommendations of the Unit Grievance Redress Committee are considered unanimous and binding on the employee, if no objections are raised by either the management or the union. If objections are raised, the matter is sent for further consideration to the resident director who discusses it over with the president or the deputy president before arriving at a definite conclusion. Figure 7.2 depicts the formal flow of grievance procedure.

Stage I of Grievance Redressal An employee who has a grievance meets the shift-in-charge and discusses it. If necessary, the employee obtains a copy of grievance form 1. It is done within a week of occurrence of the aggrieving incident or when the employee became aware of the situation. In case of promotion, a time limit of six weeks from the date of the promotion is permitted. The employee fills up the particulars and hands it over to the shift-in-charge and obtains an acknowledgement receipt in return. The shift-in-charge Figure 7.2: Grievance Handling Procedure within an Organisation makes the necessary enquiries and returns the form to the employee with remarks filled inGrievance Redressal 7.4.2 Informal the form within two working days from the date of receipt of the form. In cases where reference to employee directly or to anotherthe In the informal method, the aggrieved higher authorities approaches department is necessary, head (in caseprovided. grievance). They engage shift-in-charge or section more time is of a major in a direct consultation and resolve the grievance amicably in stage I itself. This way, the employee saves a lot of time and also avoids going through Stage II of Grievance Redressal the psychological tension and pressure that comes with a long and formal If the matter is not resolved at Stage 1, the employee obtains grievance form procedure. 2 and submits it to the next senior manager. The senior manager arranges a meeting within three working days. The department head discusses the issue employees agree that the informal method of resolvingreturns the Most with the concerned supervisor and the employee and grievances grievance form to thethe supervisor isremarks. better and less complicated directly approaching employee with a much A unionised member may assist the employee at this stage of grievance redressal. the formal system method to redress grievances. Most employees feel that was too tiresome and time consuming. Stage III of Grievance Redressal 7.4.3 Collective Bargaining If the employee is not satisfied with the reply of the departmental head, the It is important to differentiate individualhis Unit Grievance Redress employee appeals to the Chairman of grievances from group grievances. If the issue involves seven working days of the receipt ofitreply at Stage II. The Committee within one or a few individual employees, is handled through a grievance procedure. But of grievance form 3 from policy implications and employee obtains a copy when the issue involves the shift-in-charge. wider interests, they are resolved by the method known as collective bargaining.

Collective Bargaining is a grievance handling process where a large number of employees are involved and their issues are handled collectively. Unions typically represent the employees during the process of collective bargaining. The primary role of trade union is to protect the interests of its members. Collective bargaining is a negotiation method undertaken by the union with the objective of resolving labour issues while protecting employee interests.

Grievance procedure can be categorised in another way depending on the policy adopted by an organisation. The policies are Open Door and Step Ladder Policy. You will learn in detail about the two policies in the next section. 7.4.4 Types of Grievance Policy Grievance procedure is a communication between an employee and the management intended to resolve a grievance. Grievance procedures are different in different organisations. It depends on the policy adopted in the organisation. In the previous section, you learned the two different policies followed by organisations: Open Door Policy In this policy, the distressed employee is free to meet the top executives of the administration and get his grievances redressed. This policy normally works well only in small firms where the management is more transparent and approachable to all employees. In larger organisations, top management executives are usually very busy and have no time to spare on individual employee grievances. In addition, it is believed that open door policy is suitable for executives as operation employees may be hesitant to approach the top management. Step Ladder Policy

If, even the committee is unsuccessful at resolving the grievance, it is then presented to the chief executive. If the chief executive also fails to find solution, then the grievance is presented to voluntary arbitration where the decision of authority is binding on both the organisation as well as the aggrieved employee. 7.4.5 Grievance Policy in Indian Industry Let us look at the grievance policy as adopted by Indian industry. The Indian Labour Conference has adopted a Model Grievance Procedure. It is consists of six steps to follow in order to redress a grievance. First the aggrieved employee approaches the foreman and presents the grievance orally. If the employee is not satisfied with the redressal, the supervisor is approached. The supervisor provides an answer in two days. If still the employee is unsatisfied with the redressal, the head of the department is approached, who gives an answer in three days. The next level is the Grievance Committee that consists of representatives of the employee and the employer. The grievance committee gives an answer within a week. The next level for redress grievance if the employee is still not satisfied is the manager who responds in three days. If no agreement is reach till this step, the grievance is referred to voluntary arbitration where the decision is binding to both the employee and the employer.

Even though the legislation spells out the Model Grievance Procedure, organisations do not always follow the procedure. Sometimes, organisations follow procedures similar to the legislated grievance procedure. Self Assessment Questions 7. Formal grievance redressal procedure consists of three formal stages for redressing employee issues. State true or false. 8. The primary role of trade union is to _______ the interests step In this policy, the distressed employee has to follow a step by of its method to members. get the grievance redressed. In this process, whenever an employee has a grievance, the problem is presented to the employees immediate supervisor. 9. Collective bargaining is done when a single employee has unresolved If the employee is not happy with resolution stated by the superior, then the issues. State true or false. grievance is discussed with the departmental head. The crisis is generally discussed III a joint grievance committee. 10. In stagewithof formal grievance redressal, the recommendations of the ________________ are considered unanimous and binding on the employee.

rporation. She found her manager to be very rude towards her as well as all women employees. Identify the griev

7.5 Essential Pre-Requisites of Grievance Procedure Every organisation needs a methodical grievance procedure in order to resolve grievances effectively. Unresolved grievances may end in the form of aggressive conflicts later on. We have learnt about the various steps of grievance procedure and the policies associated. Now we will get familiar with the essential pre-requisites of grievance procedure for it to be sound and successful:
Conform to Statutory Provisions Due thought must be given to the laws of the land while scheming the grievance handling procedure. Clarity Every aspect of the grievance handling procedure has to be clear and definite. All employees have to know whom to approach first when they have a grievance, whether the grievance is to be written or oral, and the maximum time in which the redressal is guaranteed. The redressing spokesperson also has to know the limits within which the employee can take the required action. Simplicity The grievance handling procedure has to be simple and short. If the procedure is complex it may discourage employees and they may fail to make use of it in a proper manner. Promptness

The grievance of the employee has to be quickly handled and essential action must be taken at once. This is good for both the employee and the management because if action is delayed or deferred, it may affect the confidence of other employees as well.

 Training The manager and the union representatives need appropriate training in all features of grievance handling beforehand or else it will complicate the problem when mishandled. Follow up The personnel department needs to keep track of the efficiency and the performance of grievance handling process and make necessary changes to improve it with time.

7.6 Grievance Interview In the previous section you learnt about the essential prerequisites in grievance handling. In this section you will learn about a well known methodology for handling grievances i.e. interviewing.
The solution to good grievance management is correct investigation. It begins with interviewing the aggrieving employee. Interviewing the aggrieved employee requires three critical skills, namely, interviewing, listening and writing. Based on the result of interview, you will make a number of significant decisions such as what to do with the problem, whether to investigate it further, and how to resolve the issue. The following are the different questions, commonly know as the five Ws, which need to be asked during the interview: Who Is involved Names of the employees and the essential work information about the associates such as division, shift, job title, superiority, worker number. Most of this information needs to be filled in the grievance form. Witnessed the occurrence or who else was involved Management was there? When Did the occurrence or incident happen? Get dates and time as precisely as possible. What Happened or didn't happen? Did the employees do? Did management do or not do? Occurred in the past?

Where Did the occurrence take place? Why Did the event occur? In answering this question, you may have to sift contradictory opinion to get the right facts. Asking the five W's may not be difficult. The supervisor needs to speak with the member and take the complete information. It is mandatory to take down notes. This conveys to the employee that the issue is taken seriously. This way anyone associated in the case so takes it seriously and supply more evidence and fewer opinions if their words are being written down. Some facts may not seem significant at first, but written documentation is important. Further analysis makes all the information critical to the case. The Grievance Form helps conducting a complete enquiry during the interview. The worksheet is stored in the union files so that if the complaint is appealed to the next level of the grievance process, the investigation results are conserved for the next-level union grievance officers. There are two other types of questions that have to be kept in mind while conducting the interview. They are the following: What else Is there a need to perform an appropriate investigation? What additional information is essential? What are the other sources of information? How

Self Assessment Questions 11. The five Ws in grievance interview are_______, _______ ,____, _______and _________. 12. The solution to good grievance management is a correct investigation and that procedure should begin with interviewing the aggrieved employee. State true or false. 13. The grievance handling procedure should be complex and lengthy. State true or false.

7.7 Precautions in Grievance Handling Maintaining a good work life for employees is an important worry for any organisation. The grievance handling procedure of an administration can influence the pleasant atmosphere of the management. The management has to take care of following aspects to raise a culture of belief and assurance upon the employees whenever handing grievances:
Always make sure that the managers concerned in the grievance handling events have a quiet place to meet with the complainant. Always ensure that managers have sufficient time to be dedicated to the complainant. Explain the role of the manager, the strategy and the events clearly in the grievance handling procedure. Completely explain the situation to the employee to avoid any misunderstanding and encourage better acceptance of the circumstances complained. Let the employees present their issues without anticipation or interruptive comments. How should the topic be resolved? Use a positive and friendly way to resolve the crisis than corrective steps, An explanation tosystem. which upsets the the problem or complaint may occur in the course of the interview. Give the employee a chance to help resolve the issue. Use the Stay quiet, cool, composed during the course of the meeting. information to guide the worker by making sure the employee understands theAlwaysof any recommended of the grievance rather than deviating to effect focus on the subject solution. related issues. Never make allegations fir grievances must be handled with restraint. In All the steps and methods against others. the section we employee concerns to the possible can be taken of raising a Be aware of will understand the precautions that consequence while handling grievances. grievance.

 Do not become angry, aggressive or destructive during grievance handling procedure. Pay attention to the main point of arguments. Listen and respond delicately to any suffering exhibited by the employees. the source of the anger or discomfort. Remove Assure the employees that the managers are neutral and show no bias. Make sure successful, responsive and secret communication between all is involved. Take all possible steps to ensure that no one is ill-treated as a result of the grievance being raised. The researcher or decision maker acts neutrally, which means they must rule themselves out if there is any partiality or conflict of interest. All parties are heard and those who have complaints against others are given a chance to respond. Try to look upon the problem from different angles for better understanding. there is proper analysis of the facts and figures related the Ensuring that problem. Consider all important information in the research process. Ask the staff member their favourite decision option, although it is significant to make it clear that it may not be a possible outcome. Be aware of the limits of power of the person who is anxious in the grievance handling procedure. If the manager feels that the employee is not the suitable person (senior manager) to deal with the issue, refer the complainant to the appropriate person as soon as possible.

7.8 Conflict Resolution Conflict involves the struggle of a person with another person, or a thing. It is a problem or disagreement, a situation that needs resolution. Every employee faces an issue of conflict at work. Conflicts can be resolved if dealt the right way. Conflict resolution is the process of finding a solution to a conflict.
Resolving conflicts effectively helps in increasing understanding of the conflicting people, increased team work as members develop stronger bonds and increased mutual respect, and improved self-knowledge as a testing time like a conflict helps examine oneself. On the other hand, if conflicts are not effectively resolved, it results damaging to the parties involved. If team members have conflicting goals and no solution is attained, it can lead to breaking the team. Employees with conflicting goals ultimately start disliking one another personally. Conflicts within the workplace that are not effectively and timely resolved, affect the organisation in the long run. 7.8.1 Methods of Conflict Resolution There are several methods of conflict resolution. Some result is win-lose solutions, while others result in a win-win for the two parties involved in the conflict. The three methods commonly adopted are discussed in the next section. Mediation

To a great extent, the industrial problems of organisations depend on approach adopted by the manager and outlook in efficient treatment of employee grievances. Care should be taken in the way managers approach the problem and recognise the pros and cons of the situation. Conflict management policy include the win-win approach that helps in healthy organisational practices It in turn reflects strong organisational culture. Collaboration from all disputing parties is a pre-requisite in handling the problem and in effectively resolving the grievance.

third-party representative can mediate between unions and organisations. When workers of a union go on strike, a mediator (in some cases the government) is used to attempt settling the dispute and reaching an agreement between the union and the organisation. Arbitration In this method, a third party called the arbitrator is involved and is typically a private judge. The conflicting parties agree in advance the choice of arbitrator and certify that they will abide by the arbitrator's decision. The arbitrator reviews the case presented by both sides of the disputing teams. The arbitrator then imposes a decision that is legally binding for both sides. Arbitration offers a faster resolution than through a judicial system. It also avoids the costs of lengthy and costly legal expenses. Thus arbitration is a legal form of conflict resolution outside the courts. Compromise It is a method in which conflicting parties voluntarily engage in basic negotiation. Both parties give up something that they want to attain something they want even more. Compromises usually occur in win-lose situations, that is, in such situations, neither side gets everything they want. They lose something in order to gain something. Each party makes concessions to reach an amicable agreement that is acceptable to both. Self Assessment Questions 14. The three methods of conflict resolution are _____, _______and In this method, a mediator who is a third party facilitates the resolution _________. process. mediator suggests a resolution called thetypically called the 15. The The mediator may suggest a resolution, _____________. mediators proposal. The mediator cannot impose a resolution on the 16. The solution offered by the arbitrator cannot be imposed on the conflicting parties. conflicting parties. State true or false. 17. mediator involves in structuring negotiation between the conflicting The Compromise involves voluntarilythe meetingsof the disputing parties. State true or false. parties. A final decision is based on the facts presented through the discussions. Mediation is not a legal process, so if one of the conflicting parties is not satisfied with the process, they can approach a court of justice to further resolve their case. Mediators use appropriate techniques to improve talks between disputants. The aim of the mediator is to help the parties reach an agreement on the disputed matter. The conflicting parties view the mediator as impartial. A

Aggrieved employees in an organisation result in lowered productivity, lack of commitment and loss of interest to work. This in turn affects the organisations in terms of increased costs and wasted resources. Thus, organisations adopt suitable grievance redressal procedures. The grievance policy adopted by an organisation can either be open door policy which is more effective in smaller organisations, and step ladder policy mostly for larger organisations where grievance handling is a step by step process. Grievance redressal can be formal or informal in the way it is tackled. It is considered formal if an employee approaches the management by filling up and submitting grievance forms. If the issue is directly taken up verbally by the supervisor of the employee it is considered as an informal procedure. Grievance procedure has set pre-requisites binding with the legislature of the region, the process has to be clear, simple and prompt in its response. These pre-requisites are to ensure effective grievance redressal. Grievance interviews have to be thorough examination of the situation. The case is probed by essentially asking the five Ws who, when, what, where and why. The people involved in the grievance handling procedure have to deal with the case sensitively, following certain guidelines. Collective bargaining is a form of collective grievance redressal of the issues of a large number of employees. It is normally taken up by unions whose primary interest is to protect employee rights. Conflict resolution is the method of reaching an agreement between disputing parties when a conflict arises within an organisation. Three types of conflict resolutions are discussed in this unit. Mediation is a method where a mediator assists the disputing parties reach an agreement. Arbitration involves an arbitrator whose decision is followed by the disputing parties. Compromise involves a voluntary negotiation between the two conflicting parties, both desiring to settle the conflict in an amicable way.

7.10 Terminal Questions 7.9 Summary 1. Explain the reasons for grievances. Grievance is any discontent or dissatisfaction or violation of employee 2. What or the needs for violation redressal? contractsare settlements or grievanceof any laws, or on race, age or sex 3. Explain the Reasons for grievances discrimination. term conflict resolution. include unsatisfactory wages, poor work conditions or issues withinvolved in formal grievance handling. 4. Describe the three stages the supervisor or management. 5. Describe the different methods of conflict resolution.

7.11 Answers
Answers to Self Assessment Questions 1. Grievance 2. Grievance 3. False 4. Formal/Informal 5. False 6. False 7. True 8. protect 9. False 10. Unit Grievance Redressal Committee 11. Who, When, What ,Where, Why 12. True 13. False 14. Mediation, Arbitration and Compromise 15. mediators proposal 16. False 17. True Answers to Terminal Questions 1. Refer section 7.2.1 2. Refer section 7.3 3. Refer section 7.5 4. Refer section 7.4.1 5. Refer section 7.5.1

7.12 Case Study

en in every region and in most job categories; that the salary gap widens over time even for employees hired into

2 million workers are women and only 14 percent of the store managers are women. None of the facts presented than unlawful prejudice. They argued that the female employees were not interested in or not capable of the high

ation?

7.13 Glossary

on e ple do not act on their words, the commitments are hollow and empty. bargaining

ess between employers and employees to reach an agreement regarding the rights and duties of people at work. ant ho files a complaint. It is usually the aggrieved employee.

within the organisational hierarchy of a labour union. gement nking executives. Example CEO nagement management in an organisation whose primary job responsibility is to monitor activities of subordinates while reporting to upp

References 1. Human Resource Management : Managing People at Work by Mrs. Y. L. Giri 2. http://www.referenceforbusiness.com 3. www.industrialrelations.naukrihub.com/collective-bargaining.htm 4. http://www.beyondintractability.org/essay/compromise/

Unit 8 Industrial Relations

Structure 8.1 Introduction Objectives 8.2 Overview of Industrial Relations Objectives of Industrial Relations 8.3 Composition of Industrial Relations The Actors in the Relationship The Processes and Procedures The Legislations 8.4 Importance of Industrial Relations 8.5 Perspectives of Industrial Relations Unitary Perspective Pluralistic Perspective Marxist or Radical Perspective 8.6 Summary 8.7 Terminal Questions 8.8 Answers 8.9 Case Study 8.10 Glossary

8.1 Introduction By now you must be familiar with the concepts of Employee Relations management, Human Resource Information systems and grievance handling procedures. Now let us discuss the issues related to Industrial Relations (IR).
Industrial Relations, in a broad sense, refer to the relations between employers and employees within an industry. In particular, Industrial Relations is concerned more with the relations between the management of an industry and the union of employees, which represents the interests of the employees. Originally, Industrial Relations incorporated all aspects of employer-employee relationships, including the functions of Human Resource Management. Now, it has become restricted and pertains to the study and practice of collective bargaining, trade unionism, and labourmanagement relations. Now, as you already know, it is Employee Relations Management (ERM) which deals with all non-union employment relationships and the personnel practices and policies of the organisation.

The following section gives you an overview of Industrial Relations. Learning Objectives After studying this unit, you will be able to: Define Industrial Relations. Describe the Industrial relations system. Explain the importance of Industrial Relations. Compare the different perspectives of Industrial Relations.

industrial laws were introduced by the British. The Factory Act of 1881 and the Mines Act of 1923 aimed to regulate child labour, working hours, safety and sanitation conditions in factories and mines. After independence, the Indian government has introduced many laws that regulate industrial relations like the Industrial Disputes Act of 1947, Minimum Wages Act of 1948, Employee Provident Fund Act of 1952, Apprentice Act of 1961 and so on. In 1958, John Dunlop equated the Industrial Relations system with an economic system. John Dunlop viewed Industrial Relations as a separate 8.2 Overview of Industrial Relationsrules of employment, the actors like discipline whose main focus was on the Industrial Relations refers to government, who formulatedby which relations employers, employees, and the processes and systems and administered with employees are managed and includes trade unions, employer Industrial Relations, and the external influences like technology, economy, associations, labour legislations, collective negotiations and agreements. It and politics. refers to all relations that emerge in a workplace and includes relations between individual employees, relations between the employer and the But in the 1970s, the influence employers. It also includes the relations, the employees, relations between of the trade-unions decreased. Organisations began to focus more on replacing collective organisations, enhancing employers and the employees have with thebargaining with which promote employee involvement and commitment. Nowadays, Human Resource their respective interests. According to Lester, "Industrial relations involve Management has overtaken Industrial Relations. The changes in the attempts at arriving at solutions between the conflicting objectives and composition of the workforce like inclusion ofgain; between discipline and values; between the profit motive and social part-time workers, increasing women employees, and reduction of manual labourersbetween bargaining freedom, between authority and industrial democracy; has reduced the influence of unions. Generally, educated workers and those having high and co-operation; and between conflicting interests of the individual, the occupational status are more good industrial relation system is one that group and the community.1 Alikely to assert their interests individually rather than through collective bargaining. Professionals like exist within the promotes harmony in all forms of relationships, whichdoctors, lawyers, engineers, scientists, and middle good industrial relations because organisation. The Japanese havemanagers prefer to act through of the occupational associations rather than through broad-based unions. teamwork and co-operation among workers, government, and employers.

You have learnt the meaning of Industrial Relations and a brief history of Industrial Relations. Let us traced back to the industrial revolution when Industrial Relations can be now learn the objectives of an industrial relations system. many large scale organisations employed thousands of workers. But bad working conditions, low wages, and abusive treatment from the employers 8.2.1 many labour problems. Thus, Industrial Relations evolved in the mid led to Objectives of Industrial Relations nineteenth century to overcome these labour System The approach to The main objective of an Industrial Relations issues. is to maintain industrial relations influenced the U.S. governmentthe introduce the National harmonious relations between the employers and to employees. The other Labour Relations Act and the Fair Labour Standards Act. In India, the first objectives are to: Protect the interest and the rights of good-will among thosethe workforce. Promote mutual understanding and the management and involved in the industrial process.
1 Labour Policy and Administration by Balwant Singh; 1996

Minimise industrial conflicts.

 Regulate production and increase productivity. Improve worker participation and involve them in decision making. Eliminate or minimise the number of strikes and lockouts. Enhance the economic status of the workers by means of good wages and benefits. Establish and maintain industrial democracy. Self Assessment Questions 1. ___________ refers to the processes and systems by which employment is managed and includes trade unions, employer associations, labour legislations, collective negotiations, and agreements. 2. Industrial Relations can be traced back to the _____________. 3. Nowadays, _______________ has overtaken Industrial Relations. 4. The main objective of an Industrial Relations System is to maintain _______________ between the employers and the employees.

8.3 Composition of Industrial Relations Now that you know the objectives of Industrial Relations, let us next examine the components of an Industrial Relation System.
The major components of an Industrial Relations System are the actors in the labour relationship, the processes (collective bargaining, workers participation) involved, and the legislations governing it. These components interact in different ways and are influenced by many societal variables. Let us now examine each of these components in detail. 8.3.1 The Actors in the Relationship The following are the main actors, who are directly involved in Industrial Relations: Employers: Are those who engage a worker and pay the worker a fixed salary on return for services rendered. Employers have the right to employ and fire employees. Their decisions like relocation, introduction of new technologies, mergers and acquisitions affects their employees. Employee: Is an individual who is hired by a person or a business and is remunerated for the services rendered. Employees need a good working environment. They have a right to voice their opinions and convey their

grievances. Employees generally form a union in order to obtain their rights from the management. Employees expect the union to support them on all issues. Government: They influence employee relations by means of laws, rules, regulations, and policies. The government establishes the legal framework for management-trade union interaction. The government also helps in settlement of industrial disputes. They also regulate incomes and establish minimum wages. For example, in Australia, the Commonwealth has enabled employers under their jurisdiction, to bypass unions and negotiate directly with individual employees. But the individual states have reaffirmed the collective bargaining process and the role of unions.

Trade Unions: They promote and protect employee interests. Trade unions help in making decisions by following the process of collective bargaining and negotiations, with the management. Good trade unions improve communication between the management and the employees. Trade unions also help in settling of industrial disputes. For example, the United States has low levels of unions compared to the European Union. Hence, the companies in the United States hire and fire employees at will, while their European counterparts have to consult the trade unions. Employer Associations: They help in enhancing the performance of enterprises. Employer Associations represent employers in collective bargaining, depose before tribunals and courts, and engage in public and media relations. They also provide a forum for discussions and debates on specialised subjects. Employer Associations advise, educate, and assist members in industrial disputes. They also lobby with the government for industrial reforms. Courts and Tribunals: These help in resolving industrial disputes. Labour courts examine the legality of orders passed by the employers, the discharge of employees, withdrawal of concessions or privileges, matters relating to lock-outs and strikes. Industrial tribunals deal with matters related to wages, compensations and other allowances, bonuses, rules of discipline, retrenchment, and closure of organisations. For example, the Australian Industrial Relations gives great importance to courts. The courts give quick binding decisions thus, minimises economic losses.

Figure 8.1 shown below represents all the above actors who form a major component of Industrial Relations.

Figure 8.1: Actors Involved in an Industrial Relations System

The influence of each actor varies in different industrial systems. In some systems, the government dominates the relationships and in some others, it only plays a minor role. Some industrial systems emphasise employee interests while others emphasise employer interests. Employees usually interact with their employers through representative unions. Some countries facilitate these trade unions, whereas some countries discourage them. Hence, the goals and actions of the trade unions vary from country to country. 8.3.2 The Processes and Procedures Disputes occur whenever there is a conflict of interests among the parties involved. The Industrial Disputes Act of 1947 defines industrial disputes as any dispute or difference between employers and employers or between employers and workmen, or between workmen and workmen, which is

connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person.2 Industrial disputes take different forms such as protests, strikes, demonstrations, lockouts, retrenchment, dismissal of workers, and so on.

The dispute prevention and resolution processes aim to help parties in the employment relationship to settle their grievances or disputes peacefully and with minimum disruption of work. Dispute settlement procedures are usually established in government legislations. Some organisations have their own procedures. These procedures involve conciliation and mediation, arbitration and adjudication through a tribunal or labour court. Model Standing Orders, joint management councils and collective bargaining help in settlement of industrial disputes. Model standing orders accurately define the conditions of employment. Joint management councils help in facilitating mutual consultation between employers and workers over many important issues which affect industrial relations.

Collective Bargaining has been the most important process of resolving industrial disputes. But now, more emphasis is given to worker participation. Collective bargaining can be centralised or decentralised. It can also be done in a random or orderly manner. The other processes in an Industrial Relation include dispute settlement, communication procedures, discipline and grievance procedures, and systems for formulation of agreements. The nature and importance of these procedures is influenced by various external factors. Let us now analyse some of these processes. Collective Bargaining: The term Collective Bargaining refers to the negotiations concerning pay and conditions of employment between trade unions and either an employer or an employers association.3 The out come of collective bargaining is called as Collective Bargaining Agreement (CBA). Collective Bargaining agreements can be procedural agreements or substantive agreements. Procedural agreements deal with the procedures

2 pblabour.gov.in/pdf/acts_rules/industrial_disputes_act_1947.pdf

Industrial Relations by Michael P. Jackson; 1977

that are used to resolve individual or group disputes. Procedural agreements are included in the company hand book and provide information on the overall terms and conditions of employment and codes of behaviour. A substantive agreement deals with specific issues like basic pay, overtime and bonus payments, holiday privileges, working hours and so on. Collective agreements have a fixed time frame and have to be periodically reviewed.

The different activities involved in collective bargaining can be classified as follows: Distributive Bargaining or Conjunctive Bargaining: It involves negotiations of the distributions of surplus. It also discusses economic issues like wages and bonus. Here one party involved in the negotiation gains, while another party loses. For example, when the management and union are in conflict with respect to the employee bonus. The settlement of such issues results in a situation where one of the party involved must either win or loose. Integrative Bargaining or Co-operative Bargaining: It involves negotiations where both parties gain and neither loses. For example, employees may bargain for better performance evaluation or training methods. Attitudinal Restructuring: It involves negotiations for changing attitudes and ensuring harmony in the work place. It creates trust and co-operation between the parties involved. Intra-Organisational Bargaining: It involves building consensus between workers and management in order to avoid conflicts. For example, skilled workers may feel that they are being neglected and the trade union negotiates to resolve this issue. Collective bargaining operates at the following three levels: National Level: It involves negotiations among union confederations, employers associations, and government agencies. Bargaining is done for realisation of macroeconomic goals. Sector or Industry Level: Here negotiations standardise terms of employment within one industry. Bargaining is done in terms of industrial activities that can be divided among the sub-units.

 Company or Enterprise Level: It is a supplementary form of bargaining that involves the company or the enterprise. Here agreements cover the workers in one workplace. Characteristics of Collective Bargaining: The characteristics of the collective bargaining process are as follows: It is a group process wherein the employees are represented by one group and the employers by another. It involves negotiations, discussions and compromises. It is a very formal process governed by specific rules and regulations. It is procedural and involves a number of steps starting from the presentation of demands to the acceptance of the agreement. It is a bipartite process and always involves two parties. It is a democratic process and involves co-operation and consensus. Importance of Collective Bargaining: Collective Bargaining is very important for both the employees and the employers due to the following reasons: It makes the employees more responsible. It increases the morale of the employees. It prevents the employers from taking unilateral action against the employees. It enhances employee involvement as employees can voice their opinions to the management. It also helps employees to take part in the decision making process. It assists in prompt settlement of disputes and grievances. It enhances the feeling of job security and reduces employee turnover.

management. Here, the workers manage the industry through workers councils and management boards. Workers councils take decisions regarding investments and achievement of economic goals. The management boards prepare monthly operative plans and resolve issues related to discipline, wages, promotions, and welfare schemes. The system of industrial relations in the European Union (EU) is influenced by the aspects of national systems of the member states. For example, employee representation is determined by the member states labour laws on trade unions and representation of workers, the different organs of the workplace, and corporate structures. Promotion of collective employee representation is now being emphasised in the EU. Dispute Settlement: An atmosphere of mutual trust and co-operation helps in dispute settlement. Industrial disputes are classified as economic and noneconomic disputes. Economic disputes arise due to issues relating to wages, bonus, allowances, leave without pay, and retrenchments. Non-economic disputes arise due to issues relating to discipline, ill-treatment of employees, and safety measures. The following outlooks help in resolving disputes: Mutual accommodation: Employees have to avoid uncompromising attitudes. They have to recognise, the unions right for collective bargaining. Management need to avoid threatening the workers and have to co-operate with them. Sincere Implementation of Agreements: The management needs to implement all agreements reached with the trade-unions, both in letter and in spirit. Non-implementation of agreements creates an atmosphere of mistrust and uncertainty. Sound Personnel Policies: Personnel policies have to be formulated after consultations with workers or their representatives. Personnel policies Workers Participation in Management: Workers participation in have to be stated clearly and the psychological needs of the management decisions meetsimplemented in a fair manner. workers and bridges the gap between management and the workers. Workers Progressive Outlook: Managementindustrial relationships. Work outlook participation enables workers to shape needs to have a progressive and be aware of their responsibilities of employers and employees committees with equal representationand duties. Managers have to recognise workers participation. Workers protect the improves encouragethe workers unions, which aim to participationinterests of the workers. organisational communication, enhances employee commitment, and increases productivity. One form of workers participation is self-

The dispute settlement machinery which help in resolving disputes are as follows: Conciliation and Mediation: The conciliation and mediation machinery consists of personnel trained in the art of conciliating disputes. The aim of the conciliator or the mediator is to break the deadlock by explaining the perceptions of one party to the other, conveying messages and generally keeping the negotiations going. The conciliators or the mediators make suggestions, but it is the parties who ultimately decide the issues.

Arbitration or Adjudication: When strikes and lock-outs appear to be against national or public interest, the government may decide to refer the dispute to adjudication and force the parties to abide by the judgement of the adjudicator and also prohibit the parties from stopping work. In India, The Labour Court and the Tribunal can be established both by the central and state governments. But the National Tribunal is established only by the central government to adjudicate disputes which relate to issues of national importance or are of such a nature that industries located in more than one state are likely to be interested in or affected by them. The Labour Court adjudicates disputes relating to the propriety or legality of standing orders, discharge or dismissal of workers, strikes or lock-outs. The Tribunal and the National Tribunal generally deal with subject-matters like wages, bonus, profit-sharing, nationalisation, provident fund, gratuity and so on.

the functioning of the trade unions. Schemes were also introduced for the participation of workers in public sector companies. The 1980s labour laws of the British government led to the decrease in the influence of the trade unions. The Canadian government has Industrial Relations legislations for governing the functioning of trade unions, employment standards, employee health and safety, workers compensation, equality in the workplace, and globalisation. Now that you have understood the components of Industrial Relations, let us examine its importance. Self Assessment Questions 5. _______________ promote and protect employee interests. 6. ___________________ refers to the negotiations concerning pay and conditions of employment between trade unions and either an employer or an employers association. 7. _____________ collective bargaining involves negotiations among union confederations, employers associations and government agencies. 8. ________________ in management decisions meets the psychological needs of the workers and bridges the gap between management and the workers.

9. ________________ arise due to issues relating to wages, bonus, allowances, leave without pay, and retrenchments. 8.3.3 The Legislations The legislations governing Industrial Relations vary from country to country. Differences can be found in the kind of protection granted to employers and Activity 1: employees, the freedom to form associations, the right to bargain List some of the legislations that govern Industrial Relations in your country and analyse their scope and imp collectively, and the concepts of fairness in legislations. Some laws, which are not directly connected to Industrial Relations can also impact it. In some cases, government intervention is required for settling disputes between the management and the employees. For example, the Indian government has the following legislations to govern Industrial Relations. The Industrial Disputes Act of 1947 has provisions for settlement of industrial disputes and protection of the rights of the workers. Amendments were made to the Trade Unions Act in 2001, which regulates

ensure harmony and progress. Good Industrial Relations is important not only for the employers and employees but also for the entire society. Unhealthy Industrial Relations are harmful to the industry and the nation. It results in wastage of resources, reduction of productive working days, and reduction of the national output. The creation and maintenance of Industrial Relations promotes industrial peace. It is important to ensure good Industrial Relations for the following reasons: Uninterrupted Production: Good Industrial Relations ensures continuity of production. Resources are fully utilised and production is maximised. All employees of the organisation are assured continuous work. Uninterrupted production is very important for organisations as some products act as inputs for other organisations; some products are exported, and some products are very essential for consumers. Reduction in Industrial Disputes: Good Industrial Relations help in reduction of industrial disputes. Resolution of disputes promotes harmony and co-operation within the organisation. Enhancement of Morale: Good Industrial Relations improve the morale of the employees. It increases employee involvement and commitment. Workers display more interest in achieving the organisational goals. Transformation of Attitudes: Good Industrial Relations enable employers and employees to view themselves as partners in the industry. Employees and employers recognise the rights and interests of the other. Reduces Wastage: Good Industrial Relations enhances co-operation. Wastages of time, resources, and materials are minimised. This in turn increases production. Increases Profit: Good Industrial Relations maintains competitive labour costs, increases production and thus increases profits. 8.4 Importance of Industrial Relations Industrial Relations is the process of managing individual and collective relationship between the workers and the management in organisations so that, the needs of both the parties are met.4 Healthy Industrial Relations

Industrial Psychology: Fresh Perspectives by Roelien Theron, A Moerdryk, A Schlechter, P Nel, A Crafford, C ONeill; 2006
4

the role of unions, and job regulations differently. The three main perspectives of industrial relations are unitary, pluralistic, and Marxist. Marxist perspectives are also called radical perspectives. Let us now examine each of these perspectives. 8.5.1 Unitary Perspective The unitary perspective views the organisation as an integrated and a harmonious system. This perspective assumes that organisations have a single source of authority and that all members of the organisation have the same objectives, interests, and goals. Management is viewed as having the sole rights to manage the organisation. This perspective expects total loyalty from the employees. Any opposition to management is not tolerated. Employees try to increase production, in order to share rewards. Trade unions are viewed unfavourably and conflicts are viewed as disruptions. Conflicts are believed to be caused by employees and not by management. Managers use their power and either dismiss, discipline or transfer troublemakers to resolve conflicts. Trade unions are considered to direct the loyalty of the employees away from the management.

Unitary perspective from the viewpoint of the employee implies the following: Employees need to improve processes. Employees need to have multiple skills and be efficient. The role of the unions is to improve the means of communication between the staff and the management. Employees seek good relations and good terms of employment. Employees participate in workplace decisions. Teamwork, innovation, problem-solving, and quality improvement are emphasised. Managers need to support their skills and expertise. Unitary perspective fromIndustrial Relations isemployer implies the following: Thus, we see that good the viewpoint of the very important for the success of an organisation. Lethave staffing policies different perspectives of Employers need to us now examine the that motivate employees. Industrial Relations. Organisation objectives have to be communicated clearly to all employees.

8.5Rewards systems have to enhance employee loyalty and commitment. Perspectives of Industrial Relations Industrial Relation have to be responsibleperspectives about workplace Line managers experts have different for their teams. relations. Hence, each perspective interprets issues like industrial conflicts,

 The personal goals of all employees have to be aligned with the organisational goals. Conflicts arise due to improper interpretations of the company policies. 8.5.2 Pluralistic Perspective The pluralistic perspective views the organisation as a collection of different powerful sub-groups, each having its own loyalties, goals, and objectives. The main sub-groups are the management and the trade unions. Organisations have to manage competing claims from these sub-groups. This perspective views workplace conflicts as normal and inevitable. Trade unions are considered to represent the employees. Trade unions recognise the role of the management in the organisation. Conflicts are resolved by collective bargaining. Conflicts, if managed properly, are considered to be helpful in bringing about changes.

Pluralistic perspective implies the following: The services of industrial relations specialists help managers in matters related to staffing and union negotiations. The expertise of independent external arbitrators is used to resolve disputes. The representatives of trade unions need to be encouraged to carry out their duties. The management and the trade unions need to negotiate comprehensive agreements. 8.5.3 Marxist or Radical Perspective This perspective is based on the works of Karl Marx. This perspective focuses on the fundamental differences between capital and labour. Marx considered a socialistic system to be better than a capitalistic system. Karl Marx presented the following arguments in his theories: Industrial conflict is inherent in a capitalistic economic system. Capitalism encourages monopolies. Conflicts arise due to divisions in society between those who own and manage production and those who only sell labour. Working class do not have sufficient access to educational, political and other economic institutions.

 Capitalists constantly try to keep wages to the minimum and workers constantly try to increase their wages. Trade unions are an inevitable response to a capitalistic system. Trade unions protect employee interests and act as a means of communication. The main aim of the management is to increase profit. Collective bargaining only helps to draft in trade unions into a capitalistic system. Self Assessment Questions 10. The _____________ perspective views the organisation as an integrated and a harmonious system. 11. The __________ perspective views the organisation as a collection of different powerful sub-groups each having its own loyalties, goals and objectives. 12. The __________ perspective focuses on the fundamental differences between capital and labour.

sation and find the perspective it has regarding industrial relations. Enumerate the advantages and disadvantage

bargaining, workers participation) involved and the legislations governing it. These components interact in different ways and are influenced by many societal variables. Good Industrial Relations is important not only for the employers and employees but also for the entire society. Unhealthy Industrial Relations are harmful to the industry and the nation and result in wastage of resources, reduction of productive working days and reduction of the national output. Good Industrial Relations is necessary to ensure uninterrupted production, reduce industrial disputes, enhance employee morale and reduce wastages. The three main perspectives of industrial relations are unitary, pluralistic and Marxist. The unitary perspective views the organisation as an integrated and a harmonious system. This perspective assumes that organisations have a single source of authority and that all members of the organisation have the same objectives, interests and goals. The pluralistic perspective views the organisation as a collection of different powerful sub-groups each having its own loyalties, goals and objectives. The Marxist perspective focuses on the fundamental differences between capital and labour and considers a socialistic system to be better than a capitalistic system.

8.7 Terminal Questions 1. What are the objectives of Industrial Relations? 2. Explain the composition of Industrial Relations. 3. Why is it important to have good Industrial Relations? 4. Explain any two perspectives of Industrial Relations. 8.6 Summary Industrial Relations refers to the processes and systems by which 8.8 Answers employment is managed and includes trade unions, employer associations, Answers to Self Assessment Questionsand agreements. The main labour legislations, collective negotiations 1. Industrial Industrial objective of anRelations Relations System is to maintain harmonious relations between the employers and the employees. The other objectives 2. Industrial revolution include increasing production, resolving conflicts, and increasing worker 3. Human Resource Management participation. 4. Harmonious relations 5. Trade unions The Collective bargaining an Industrial Relations System are the actors in 6. major components of the labour relationship (employers, employees, government, trade unions, 7. National level employer associations, courts and tribunals), the processes (collective 8. Workers participation

9. Economic disputes 10. Unitary 11. Pluralistic 12. Marxist Answers to Terminal Questions 1. Refer section 8.2.1 2. Refer section 8.3 3. Refer section 8.4 4. Refer section 8.5

8.9

Case Study

workers who were willing to work for 3.57 Euro per hour. The Crew workers were represented by the Seamen's Uni e largest trade unions in Ireland and brought the Dublin city traffic to a standstill.

ers who wanted to remain with the company. Red-circling implies retaining the Irish workers at their existing rate

MV Normandy, an IF passenger ship with more than 100 passengers sailing from Cherbourg in northern France. Th orkers who had opted to remain and continue to pay them their existing wages. The two unions signed a three-yea

estions What caused the Irish Ferries Trade Dispute of 2005? How was the Irish Ferries Trade Dispute of 2005 resolved? What were the losses suffered by Irish Ferries due to th

8.10 Glossary

and distribution are privately or corporately owned and progress depends on the reinvestment of profits obtained in a free m

s the functioning of a national economy, and the interrelationship among different economic spheres.

the market for a given type of product or service as the company operates without competition.

ortant and desirable.

very individual has to surrender their class rights in a socialist system. The socialist system caters to the needs of the poor as

r settle claims or disputes.

References 1. Labour Policy and Administration by Balwant Singh; 1996 2. Industrial Relations by Michael P. Jackson; 1977 3. Industrial Relations by Arun Monappa; 1985 4. Employer Relations and Industrial Relations Change: Catalysts or Captives by Peter Michael Sheldon; 1999 5. Industrial Relations, Trade Unions and Labour Legislation by P. R. N Sinha, Indu Bala Sinha and Seema Priyadarshini Shekar; 2006 6. http://www.scribd.com/doc/18961201/Industrial-Relations

Unit 9
Structure 9.1 Introduction Objectives 9.2 Trade Unions Objectives of Trade Unions Activities of Trade Unions 9.3 Reasons for Joining Trade Unions 9.4 Functions of Trade Unions 9.5 Types of Trade Unions 9.6 Advantages and disadvantages of Trade unions 9.7 Trade Unions in India 9.8 Summary 9.9 Terminal Questions 9.10 Answers 9.11 Case Study 9.12 Glossary

Trade Unions

9.1 Introduction In the previous unit you learned about the concept and importance of industrial relations. In this unit, you will learn the concept, functions and importance of trade unions. A trade union is an organisation that consists of workers and union leaders created to improve working conditions and other work-related issues of its members and to regulate employer relations. Whether the issue is salary, sick time or medical benefits, trade unions discuss with employers on behalf of union members.
Before the advent of trade unions, the living and working conditions of the working class were poor and deplorable, and the operational hours were long. In addition, the workers were paid very low wages and the economic conditions in industries were poor. Capitalists in those times were only concerned with productivity and profitability. They did not concern themselves with the matters of the working class. Once trade unions started establishing, the living and working conditions of labourers were elevated considerably. Trade unions helped control the working hours and working

conditions of labourers, apart from bettering the other workforce related issues. In this unit, you will learn about the reasons employees join trade unions. This unit also introduces you to the various types of trade unions. Trade unions in India developed rather slowly compared to the western nations. Now, there are many trade unions in India which monitor the aspirations of the operational classes. The oldest trade union is the All India Trade Union Congress (AITUC). Later in the unit, you will learn about the evolution of trade unions in India.

Learning Objectives After studying this unit, you will be able to: Define Trade Unions. Explain the reasons for employees joining Trade unions. Explain the functions of trade unions. Compare the different types of trade unions. List the advantages and disadvantages of trade unions. Identify some of the prevalent trade unions of India.

9.2 Trade Unions Let us first understand what a trade union is. A trade union or labour union is an administration of workforce grouped together to attain common goals such as enhanced operational circumstances. The Trade Union Act of India 19261 defines a trade union as an organisation, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive condition on the conduct of any trade or business, and includes any federation of two or more trade unions.

Trade unions are created with the key goal of protecting the rights of the labour force. The Indian labour market consists of three sectors: The rural workers, which comprise 60 per cent of the labour force Organised sector, which employs 8 per cent of the labour force

1 http://industrialrelations.naukrihub.com/

 The urban informal sector (includes the IT industry and other services) which comprises the remaining 32 per cent of the workforce

representative. Unions achieve their objectives through collective action and group effort. The objectives of trade unions are the following: To improve the economic conditions of employees by securing better Trade unions bargain with employers on behalf of union members and wages for them negotiate labour contracts with employers. This includes negotiation of To provide better working procedures, rules governing hiring, firing and wages, work rules, complaintenvironment for the employees promotion of workers, benefits, workplace profit of thepolicies. Negotiation is To secure employee bonuses from the safety and organisation a passive technique adopted by trade unions. The terms negotiated by the To resist schemes of the management which reduce employment, such union leaders are binding on the rank and file of the union and the employer as rationalisation and automation and in some cases on other non-member workers. To secure social welfare of employees through group schemes which benefit every employee Seldom, when trade unions do not attain their goals through passive To protect the interests of employees by actively participating in the methods, they take drastic steps. Trade unions resort to forceful or organisational management aggressive means like resistance to lockouts and strikes to achieve their To Many disagreements stability, growth, and leadership goals. provide organisationalin multinational and domestic companies are a direct result of these aggressive actions of trade unions. The Indian 9.2.2 Activities depends a lot on the service sector, is affected by such economy, which of Trade Unions In this section, we will discuss unions. disruptions organised by trade the activities of the trade unions. Trade unions involve in various activities to accomplish their mission of safeguarding employee rights and interest. They engage in activities like negotiating or representing In India, pilots of Jet compromising on nation-wide strike For example,aggrieved workers or Airways went on aissues related to allfor union members. The following the activities that of millions of domestic and five days. This disrupted the air travel schedulesunions generally engage in: international passengers. The strike also resulted in huge monetary loss and bad reputation for the airlines and its employees. Representation The Indian labour law stance is towards protecting the interests of the Trade unions represent labourers when they have crises at favourable comparatively powerless employee community with quite a few work. If employees feel they are Trade unions in turn they can ask their in the amendments over the years.being unduly treated, take active interestunion representative to help in example, labour unions the manager or economy of the country. For solving their issues with welcomed the planned employer. Unions (HMTL) with Heavy Engineering Corporation This is union of HMT Limited also offer their members legal representation.(HEC), normally to mutual entity could potentially become one of the high stating that the help people get monetary reimbursement for work-related injuries public sector undertaking (PSU) of India. performing' or to assist people who have to take their employer to court. Negotiation Now that you are familiar with trade union, you will next learn about the objectives of trade unions. 9.2.1 Objectives of Trade Unions The primary objective of any trade union is to protect and promote the interest of its members. Trade unions are permanent workforce bodies within an organisation so that workers have constant access to their

organisation which states that the union has the right to negotiate with the employer on behalf of the employees. Member Benefits Trade unions provide a variety of benefits to its members. They insure members against unemployment, ill health, old age and funeral expenses. Providing qualified training, educating the workforce and giving legal advices are some important activities of trade unions. Collective Bargaining This is a process recognised by employers. In collective bargaining, union representatives hold discussions and reach an agreement with the employers on employee rights and duties. Unions are popular at collective bargaining. Industrial Action Trade unions enforce strikes or resistance to lockouts to attain specific goals. Political Activity Trade unions endorse legislation favourable to the interests of their members or workers. They follow campaigns, undertake lobbying, or monetarily support individual candidates or parties contending for public offices. For example, Indian National Trade Union Congress (INTUC) undertakes lobbying for the Congress party of India. Self Assessment Questions 1. _______ may endorse legislation favourable to the interests of their members or workers 2. In________actions trade unions enforce strikes or resistance to lockouts to attain specific goals. 3. Trade unions represent labourers when they have_______at work 4. One of the objectives of a trade union is to protect the interests of Unions discuss with employers issues which influence people working in employers by taking active participation in the management. State true or an organisation. There may be differences of opinion and interest false between organisation and union members. Trade unions bargain with the 5. management ofof INTUC is _________. to find a solution to these The expansion the organisation and try differences. Pay, working hours, holidays and changes to working practices are the issues that are commonly negotiated. In many organisations, there are correct agreements between the union and the

tion. One of the labourers in the organisation met with an accident while on duty. Write down the different means

9.3 Reasons for Joining Trade Unions In this section we will learn why workers join trade unions. Trade union is an organisation formed by and for employees and there are a number of the factors that make workers join unions. Some of the reasons are as follows:
Greater Bargaining Power Employees have very little bargaining authority with the employer. If employees are not satisfied with their salary or some other issue of their employment, the options employees have is to quit their jobs. It is not realistic to frequently change job when employees are dissatisfied. It imposes great monetary and emotional problems on workers. It is better to join a union that can take precise action against the employer. The threat or reality of a strike by a union is an influential tool that often causes the employer to accept the demands of the workers for better conditions of employment. Minimal Discrimination Decisions regarding pay, work, transfer, and promotion are highly subjective in nature. There are chances of prejudice and discriminations as managers can be partial or discriminate against few employees. Trade unions compel managements to set up workforce policies that propose equal treatment and fair chances for all workers. All labour-related decisions made by the management are closely inspected by the labour union. This helps minimising partiality and discrimination within the organisation. Sense of Security

Trade unions secure retirement reimbursement of workers and compel the management to invest in welfare services for the benefit of workers. Employees join unions as they believe trade unions ensure compensation for various types of occupational and personal hazards such as accidents, injury, illness and unemployment.

 Sense of Participation Employees can take part in discussing issues affecting their security only if they join trade unions. Trade unions influence employee related decisions of the management through collective bargaining and negotiation. Sense of Belonging Many workers join unions because their friends or co-workers are members. At times, they join unions under group pressure, that is, if workers do not join union, they may face difficulties at work. On the other hand, workers who join unions feel that they gain more respect from their co-workers. Platform for Self-Expression Workers can voice their problems with union leaders. Trade unions provide a medium for workers to express, discuss and broadcast their work related issues. These issues are then given due consideration when the management decides on workforce policies. Betterment of relationships Employees feel that unions fulfil their needs for a proper balance of employer-employee relations. Unions help in enhancing industrial relations between management and workers by solving the issues peacefully. Self Assessment Questions 6. Employees feel that ________fulfil their needs for a proper balance of employer-employee relations 7. Employees have very little________ authority compared to that of the employer.

relations. Based on the activities undertaken by trade unions, their functions are classified into the following two classes: Militant functions Fraternal functions Militant Functions Trade unions work toward improving work conditions of the members, ensuring sufficient wages and better treatment from employers. Under extreme circumstances, when unions fail to attain these aims by means of collective bargaining and discussions, they change their approach and put up a fight with the management in the form of go-slow tactics, strike, boycott and so on. These functions of trade unions are known as militant or fighting functions. The radical functions of trade unions are performed to attain the following: Higher wages and better working conditions Rise in the status of workers as a part of industry Protect labourers against victimisation and injustice Fraternal Functions Fraternal functions of trade unions aim at representing its members in times of need, and improving worker efficiency. Trade unions try to promote a spirit of teamwork, encourage friendly industrial relations and spread education and culture among its members. They organise legal support to their members, carry out welfare measures for their members like schools for children, library, reading-rooms, games, and other recreational amenities. Some trade unions even publish magazines or weekly journals. These activities that the trade unions involve in are known as fraternal functions. Their activities depend on the availability of finances which they raise through contributions from members and aids from outsiders. The fraternal 9.4 Functions ofunions are performed to achieve the following: functions of trade Trade Unions In the earlier sections you learned about the objectives of trade and the activities unions involve in to achieve these objectives. Unions are a major factor in maintaining effective communication between the workers and the Encourage welfare measures to improve self-esteem of workers management. It means that unions are able to communicate worker needs to Generate self confidence among workers employers through collective bargaining and negotiations. They also provide Encourage sincerity both discipline among workers differences of view do advice and support to and the parties to ensure that Provide opportunities for promotion and growth not turn into major conflicts. Hence, you can see that trade unions also play an important role workers against discrimination Protect women in promoting and maintaining good industrial

Some of the basic services availed by members of trade unions are the following: Education and training: Most unions provide training courses for their members on employment rights, health and safety and other issues. Some unions also help members by offering courses on basic skills and courses leading to professional qualifications. Legal assistance: Unions recommend legal advice on employment issues, some unions help with personal matters, like housing, wills and debt. Financial discounts: Employees can get discounts on mortgages, indemnity and loans from unions. Welfare benefits: Some of the older unions offer monetary help to their members when they are sick or out of work. Self Assessment Questions 8. ________ensures sufficient wages and better treatment from employers 9. ____encourages welfare measures to improve the self-esteem of workers. 10. In _______and ______ most unions start training courses for their members on employment rights, health and safety and other issues 11. ___________ protect labourers against victimisation and injustice

ions and analyse the functions of these trade unions and the employee benefits offered by each union. Tabulate t

9.5 Types of Trade Unions In the previous section, you studied about the two different kinds of union functions based on the nature of their activities. You now know that the vital purpose of a trade union is to represent people at work. Trade unions are differentiated based on the type of people they represent.
There are four types of trade union as given below: Craft of Skills Union: These unions represent skilled workers like Musicians Union (MU)

 Industrial Unions: These unions represent members of one particular industry such as Fire Brigades Union (FBU) General Unions: These unions represent workers from all types of industries and with any level or range of skills. For example, Amicus the Manufacturing Science and Finance Union (MSF) White-Collar Unions: These unions represent office workers, such as National Union of Teachers (NUT)

General unions declare that their broader variety of members allows more opportunities for harmony action and better management in general strikes. Detractors claim that the broader dispatch means they tend to be more technical and respond less effectively to events in a single industry. An example of a general union in Australia is the Australian Workers Union. White-Collar Unions White-collar worker refers to a salaried person, who either works as an Craft of Skills Union performs semi-professional office, administrative or educated worker who sales union is an arrangement of labour unions that joins workers within the Craft coordination tasks, or works in any service industry like a teacher, a software engineer or a a skill. Some examples are typographical unions, same part of a craft or customer care executive. White-collar workers, as opposed to blue-collar workers, perform no manual labour. White-collar unions for carpenters, stoneworkers, iron molders, boilermakers, railway union is a and of on. engineers type so union that represents white-collar workers. These craft unions Questions Self Assessment have substantial power in the workplace and generally resist others controlling their work processes and standards of training as their members have essential knowledge and physical and theoretical skills. 12. A ________is a type of trade union that represents workers from all industries. 13. ________refers Industrial Unions to a salaried person, who either works as an educated worker who performs semi-professional office. Industrial unionism is a labour union organising method through which all workers in the same industry are grouped into the same union, regardless of skill Advantages and Disadvantages of Trade Unions 9.6 or trade. This gives workers in all industries more leverage in bargaining or when workers go on strikes. Advocates2 of industrial unionism value its In this section, we will get familiar with the advantages and disadvantages of contributions in promoting unity. They describe the solidarity of these unions trade unions. First, we will discuss the advantages of trade unions. They are with slogans like, an injury to one is an injury to all and the longer the picket as follows: line, the shorter the strike. Increased Wages: Organisations that have trade unions tend to offer higher wages compared to non-unionised industries. An example for an industrial union is a union for oil workers. Members of Counterbalance Monoposony: In the case of monopsonistic employers, such an industrial union would include people who are involved in trades unions can bargain to raise wages and increase employment. exploration, extraction, refining, transport and all the other areas associated Monopsonistic gas industry. with the oil andemployers are those who have market authority in fixing salary and employing staff. An example of monopsony is an organisation that is the only buyer of labour in an isolated town. Such an organisation would General Unions be able to pay lower wages than it would if other firms were present. A general union is a type of trade union that represents workers from all industries. Unlike craft unions or industrial unions where just a particular sector forms a union, general union, as its name suggests, is for any worker Represent Workers: Trades Unions defend employees from exploitation irrespective of organisation or sector. by their employers. They also help to support fitness and safety legislation. Trades unions also represent workers facing legal action.
2www.en.wikipedia.org/wiki/Industrial_unionism

 Productivity Deals: Trades unions discuss with employers about wages for efficiency deals. This means they help the organisation enhance employee productivity by which it enables the organisation to pay higher wages to its employees. Trades unions play a significant role in setting up new operational practices that improve productivity. Earlier in the unit we learned that trade unions, through their militant functions, organise and conduct strikes and boycotts. This is considered a general problem for the society as it disrupts routine life of the whole community. We will now discuss the disadvantages of trade unions. They are as follows: Unemployment: It is an irony to consider that trade unions cause unemployment. In their quest to achieve their goals, unions bargain and fight for higher wages, quality work conditions and so on. Such demands are either not accepted by the management of organisations or does not help sustain the organisation. Organisations that do not accept union demands could then opt for cheaper labour from elsewhere. Organisations that accept these demands could end up being bankrupt. Either way results in employees losing their jobs. Ignore non-Members: More often than not, unions tend to consider only the needs of its members. They often overlook the issues of those who are members of other unions or people who are associated with any unions. This is one of the reasons workers are forced to join unions. Lost Productivity: In the rare circumstances where unions go on strikes or organise a work-slowdown the production of the organisation is affected. It can in turn result in low or no sales. Wage Inflation: If unions become too influential, they can negotiate for higher salary. This can causein price rise of essential goods and services. For example, union workers of the oil industry of India wanted a rise in their wages. So they decided to boycott work and stop functioning in every aspect of oil and gas refining and production. Once their demand was accepted by their employers, the rise of fuel increased. This in turn led to an increase in the price of essential commodities.

9.7 Trade Unions in India Industrial revolution brought about profound changes in the social structure in the 18th and 19th century. While capitalists reaped the fruits of machinebased fast-paced industrial production, the working class bore its brunt. The social and economic conditions of the working class, which were already harsh, became worse. The dirty living conditions, the long and strenuous work hours, and insufficient wages immensely affected the psychology of the working class. Even though the growth of trade unions in India was slow, the working class found relief in the form of child labour abolishment and regulated working hours for all. The trade union movement in India can be divided roughly into three phases, namely:
Beginning of unions, when they first established in India Development of organised trade unions Rise of trade unions post-Independence

In the next section we will learn the history and growth of trade unions in India.

By the time India gained independence, there were four central trade union organisations. They were the following: All India Trade Union Congress Indian National Trade Union Congress Hind Mazdoor Sangh United Trade Union Congress Post-independent India saw the growth of unions. Many trade unions that have come into existence after 1947 have political affiliation. For example, AITUC is the trade arm of the Communist Party of India, while INTUC is affiliated to the Congress Party. At present there are twelve Central Trade Union Organisations recognised by the Ministry of Labour: All India Trade Union Congress (AITUC) Bharatiya Mazdoor Sangh (BMS) Centre of Indian Trade Unions (CITU) Now, let us look at these growth and evolution of the Indian trade union Hind Mazdoor Kisan Panchayat (HMKP) movement in detail. In 1881, the Indian Factory Act was enacted to regulate Hind Mazdoor Sabha (HMS) the working hours and other issues of the Indian textile labourers. Even though, there were no properTrade Unions (IFFTU) workers organised Indian Federation of Free unions to guide them, strikes in the following two decades in all industrial cities. They started Indian National Trade Union Congress (INTUC) realising the importance of combined action and that coordinated and united National Front of Indian Trade Unions (NFITU) efforts resulted in bettering their circumstances. Bombay Mill-Hands Association Labouris a small association was established during this period. National which Organisation (NLO) Trade Unions Co-ordination Centre (TUCC) the 1900s, Indian industry saw (UTUC) and organised trade unions. In United Trade Union Congress the growth of Madras Labour Union Congress - organised union in India. United TradeUnion was the first Lenin Sarani (UTUC - LS)This was followed by the creation of a large number of unions in all the industrial hubs during 1918 and 1923. Occupational unions were formed under the guidance of Mahatma Gandhi in Ahmadabad. These were later united to form an industrial union known as the Textile Labour Association in 1920. The All India Trade Union Congress (AITUC) was also formed in 1920. Many of the leaders in AITUC were leaders of the Indian freedom fighting movement. The working class also started involving in political activities, mainly in relation to freedom-fighting.

The Trade Union Act was formed in 1926. The act legalised registered trade unions in India which until then was considered as illegal bodies. It also protected unions from civil and criminal cases.

Table 9.1: Membership in Indian Trade Unions

At present, the Indian workforce consists of 430 million workers, growing 2% annually. Self Assessment Questions 14. The Trade Union Act was formed in _______. 15. The __________was enacted to regulate the working hours and other issues of the Indian textile labourers. TheOne of the disadvantages trade unions and memberships in India 16. statistics of the growth of of trade unions is that they ignore _________. between 1991 and 2002 is tabulated in Table 9.1.

y 3: ew organisations and conduct a survey on the trade union affiliation of their employees and the factors that affec

trade unions came into existence, the labour force worked in harsh conditions with low wages. Unions lent a voice to the plight of workers. The main aim of trade unions is to represent its members at work and protect their rights and interests. Unions achieve their goals through activities like representation, where unions represent workers at their workplace, and negotiations over issues like pay, working hours, work practices. Union representatives hold discussions with employers and reach an agreement on worker issues through the process called collective bargaining. Under extreme circumstances, unions conduct strikes to attain their goals. Trade unions activities are classified into two categories. Through their militant functions, trade unions achieve their goals of protecting workers interest by means of force. Trade unions use peaceful and cooperative methods to attain goals of helping members in times of need and to promote healthy industrial relations. Workers join unions for reasons like unions have better bargaining power than individual worker. Unions regulate discrimination at the work place, and provide a medium for workers to voice their grievances. Unions provide members with basic facilities like training, education, legal advice and other welfare and monetary benefits. Trade unions are divided into four types, namely, craft of skills union, industrial unions, general unions and white-collar unions. The trade union movement slowly began in India around 1880s when the Indian factory act was formed to regulate working hours of textile workers. Between 1918 and 1923, many organised trade unions were formed. All India Trade Union Congress was formed in 1920 and it was led by leaders of the national freedom fighting movement. The trade union act of India was passed in 1926 which legalised trade unions. After gaining independence, many more trade unions were formed. There are 12 Central Trade Union Organisations that are recognised by the Labour Ministry of India.

9.9 Terminal Questions 9.8 Summary 1. Explain the two types of trade union unions as an organisation formed Trade Union Act of India defines trade functions. 2. Name to regulate the relations between workers and ministry of India. primarily the 12 trade unions recognised by the Labour employers. Before

3. What are the reasons for joining trade unions? 4. List the advantages and disadvantages of trade unions. 5. What are the different types of trade unions?

9.10 Answers Answers to Self Assessment Questions

1. Trade Unions 2. industrial 3. crises 4. True 5. Indian National Trade Union Congress 6. Unions 7. Bargaining 8. Trade unions 9. Fraternal functions 10. education and training 11. Militant Functions 12. general union 13. White collar workers 14. 1926 15. Indian Factory Act 16. non-members Answers to Terminal Questions 1. Refer section 9.4 2. Refer section 9.7 3. Refer section 9.3 4. Refer section 9.6 5. Refer section 9.5

9.11 Case Study

MCL had peaceful labour relations for the first few years after it was set up in March 2003. In March 2005, the wor ty of the management to deal with it effectively resulted in huge losses for the company. This was due to a fall in specifying the work conditions for workers.

9.12 Glossary

ntatives and the management of an organisation. The representatives are usually trade union leaders.

of hire, express or implied, oral or written where the employer has the power or right to control and direct the employee in th

nt relationship. Industrial relations is increasingly being called employment relations because of the importance of non-indus

ntury. This was due to the introduction of machinery in industrial production

n enlist the aid and support of others in the accomplishment of a common task. It includes use their expertise as a starting po

duce an contract upon courses of action, to bargain for individual or group advantage

ent the majority of the organisations workforce

es to perform work. A strike usually takes place in response to employee grievances. Strikes are sometimes used to put pres

References 1. http://industrialrelations.naukrihub.com/objectives-of-trade-unions.html 2. http://en.wikipedia.org/wiki/Trade_union 3. tutor2u.net/business/gcse/people_trade_unions.htm