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3. Nature of
Industrial Relations:
Traditional & Changing
Debi S. Saini
Professor of HRM
Management Development Institute, Gurgaon
This presentation focuses on the following issues:
Changing world of work and emergence of new thinking
New developments in industrial relations
Emergence of neo-unitarisn through union-substitution strategies
Companies practicing developmental agenda for pursuing new goals
Re-orienting top mgt., middle mgt., unions, & workers
Changes in
World of Work
and new pointers in IR
New Developments
Industrial Relations
Shifts from
IR to Employee Relations
1. Changing role of state
2. Unions in crisis (bldg. cooperation)
3. New actors in IR: e.g. Consumers/society
4. Emergence of Cooperative bargaining
5. Emphasis on performance-related pay
6. Pressures on labour law rigidity
7. Changing role of ILO: Decent work
8. Employers Primacy on flexibility
9. IR impacted by HR philosophy
New Developments in Employee Relations
1. Changing Role of State
Welfare state: inefficient
Government as facilitator
Social justice tomarket & trickle down
Changed labour policies of states:
2. Union-dilution is Major Agenda: Causes
Shift: adversarial tocooperative IR:
Also called Individualized IR
States primacy toproductivity
Service orgs.: white/gold-collar WM
Declining core; rising periphery WM
Influence of HRM Philosophy
Employment of labour law consultants
Country 1970 1980 1990 1997 2003
Austria 63.6 59.6 56.2 46.6 35.2
Denmark 62.6 87.8 88.9 89.9 75.5
France 21.0 17.1 9.2 8.6 5.8
Germany 37.7 40.6 38.5 33.4 22.2
Italy 38.5 49.0 39.2 38.0 47.1
Netherlands 39.8 39.4 29.5 28.9 23.9
Norway 57.9 64.4 70.3 71.3 63.0
Spain - 13.8 16.8 15.1 11.5
Sweden 66.6 78.2 82.4 86.4 78.0
UK 48.5 54.5 38.1 30.2 25.9
Tab. 1: Percentage of Trade Union members among Total
Workforce in Selected Industrialized Countries
Source: Accessed on 12 January, 2006 from Cornell Institute of Industrial Relations (IR) Statistical Record on Trade union
Membership at http://www.ilr.cornell.edu/library/downloads/FAQ/UNIONSTATS2002.pdf
3. New Actors in IR
1. Multilateral IR: consumer/society
2. New issues:
Customer Creation and sustenance
Protecting environment
Gender issues
Safety promotion
Child labour abolition
3. Medias role in new issues
4. Emergence of Cooperative Bargaining
1. Shift: industry level to unit level CB
2. Squeezing of bargaining zone
3. Pressure: fear of corp. incompetence
Earlier: fear of corporate power
4. New clauses: Productivity linkage
Wage/benefits cut
5. Emphasis on Performance-related Pay (PRP)
Flexible pay
Cost saving: a bigconcern
Competencies & results are imp.
Knowledge pay inhigh-tech. industries
6. Pressure on Labour Law Framework
Pressure on Legislature
Do not allow union militancy; co. have tocompete globally
Flexible workforce: withdrawCh-VB of IDA
Keep awaylaw of Employee Participation
Respect sanctity of managers rights
7. Change in ILOs Agenda
ILOs desire for adaptation, renewal, change
Fromadversarial C.B. tosophisticated compromise
Securing decent work for women and men everywhere
Common purpose
For all three social partners
8. Flexibility: Key in New Era
What is labour flexibility?
The ability toadjust the size and
mix of labour inputs
inresponse to
changes in product demand
so that organization doesnt have
excess labour
Hard and Soft issues in Flexibility
9. HRM Philosophy & Psychological contract
It is a philosophy of people-mgt:
Identify & enforce behaviour
Aims: Competitive advantage
Focus on new interventions
PM & IR merged to produce positive energy
HRM strategy is theSingle most imp. Consultancy Area
Practicing of
a Developmental Agenda
for promoting New IR
Neo-Unitarism through Union Substitution
Substitution attempts
Through Progressive
Emp Emp Involvement, Involvement,
empowerment empowerment
Attractive Attractive
Reward strategy Reward strategy
Cul ture Cul ture
Bui l di ng, fl exi bi l i ty Bui l di ng, fl exi bi l i ty
Indi vi dual di versi ty Indi vi dual di versi ty
Maximize Maximize
opportunities opportunities
Design Design
satisfying jobs satisfying jobs
Strategic Strategic
Selection Selection
Investment in Investment in
HRD for WM HRD for WM
& managers & managers
Make workpl ace Make workpl ace
funful funful & i mpl ement & i mpl ement
Fai r standards Fai r standards
What Should HR Do to Promote Cooperative IR
--Context & challenges of newIR
--Key new principles affectingemployee relations
--New Practices neededtoimplement theseprinciples
--Do thethings that leadtosustainable cooperation
Integrated agenda
--Integrate theagenda of SHRM&IR mgt together
Towards Developing Strategic IR
Two main dimensions
I. Competency-building amongst mgt. & union
Management (at different hierarchical levels)
II. New Approach to Developing Processes (fostering OCTAPACE)
Re-orienting the Top Management
CEOs personal predisposition is critical
His beliefs about unionPeople policiesIR policiesMgt.
De-humanization often seen especially in larger bureaucracies
Top mgt. shapes org. culture: Through: beliefs, actions, styles
Development of top management shouldaim at:
Becomingaware of biases & prejudices
Learning totreat IR asimportant managerial business
Developing Middle Management
I. Its competency-building will include:
1. Knowledge about new issues in IR
2. Understanding customs/practices in dealing with WM/union
3. Knowledge about the legal framework of IR
4. Knowledge of history of union & its leadership
5. Knowledge about new economic environment/practices
II. Skills
1. Skills indiagnosing theproblem
2. Skills in grievance resolution
3. Skills in negotiation
4. Skills in communication and inter-personal relations
III. Attitudes
1. Orientation to positive problem-solving
2. Positive belief-systemabout existence of union (if one exists)
3. Faith in participative decision-making
Development of Union Leadership
This requires sensitizing them to various issues:
General economic and industrial environment
New technology
Competitors and their HR practices
New compulsions of mgt. & need for flexibility
Need for democratization within trade unions
Implementing HR Agenda for Workers
Creatingdevelopmental climate ingeneral
Communication & internationalizationHR values/goals
Involve unions incooperation with workers
Continuously communicating theHR action areas: EI
Create HR architecture to implement intentions
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What can one learn from this presentation?
New order is emerging in IR: called employee relations
IR shifting from adversarialism toneo-pluralism or neo-unitarism
Shift fromshenanigans totrust & cooperation
Along withtraditional issues, new issues have emergedin IR
Flexibility is one of the most salient concerns of cos.
Governments new eco. agenda is moving fromsocial justice to growth
New world of work has led tounion-substitution strategies
HRM strategy: for top mgt.middle mgt.unionworkers