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Managing Employee Relations through Strategic Human Resource Management: Evidence from Two Tata Companies Author(s): Debi

S. Saini Source: Indian Journal of Industrial Relations, Vol. 42, No. 2 (Oct., 2006), pp. 170-189 Published by: Shri Ram Centre for Industrial Relations and Human Resources Stable URL: . Accessed: 15/09/2013 10:08
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IJIR, Vol 42, No. 2, October 2006

Debi S. Saini

The turbulence caused by theglobalisation syndromehas led management. global level inalmostall spheresof survivingat the This paper discusses thedynamics of changes thatare taking
place the corporate sector to discover new ways of operating and

resourcemanagement (HRM) strategy is being used in this regard. In doing so, it analyses the contribution ofHRM
in building "new IR" or ''strategic IR." Taking context. note in the Indian relations

in management

of employee


and how human


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

on the IR scenario

of theglobal developments in IR, thepaper focuses especially

employee welfare still remainsa priority for promotingemployee and the engagement, focus on employee loyalty is satisfaction to diluted orientation/'Both give way to "performance getting used to realize thegoals of HRM. The paper also hints towards
convergence of Indian and western HR practices. Development
at a seminar Labour








Dr. Debi
Gurgaon. Resource

S. Saini
An earlier Management

is Professor of HRM, Management

version of this paper in the New Era" was presented organised

on "Human Institute,

Ahmedabad, January 27-28, 2006. I thank theparticipants for their comments on theoriginal draft, especially Professors Promod Verma, Biju Varkkey, and Vidyut Joshi. I also thank Professor Cecil Pearson, Senior Research Fellow at Curtin University Business School, Perth,Australia forhis comments leading to change in
certain earlier positions. Of course, the usual disclaimers apply.

by Gandhi

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Managing EmployeeRelations Through StrategicHRM INTRODUCTION



have been taking place in the developed as well the developing new economy employers are busy guarding against thechillwinds
of chaotic for the last 15 years or so. Such changes in the business turbulence by the increasing competition and the resultant are

It is evident

that substantial




being intensified In the environment. as more

and more

are under strain employees Indian companies that were

of the their jobs. For example, era, earning profits in the pre-reform now a to the number (Kumar, category loss-making belongs large to and service sectors are attempting 2003). Both manufacturing more resource to with remain less achieve competitive. In'order companies industrial in environment business today's come out of the mindsets to of the hard trying to the realities of and acclimatize themselves economy to be successful are


find it difficult to survive and prosper;

to save


reveal that front (Saini, 2000). Researchers economy are so as to their intangibles busy in building running companies some of themost improve their long-term market value; significant in HR shared mindset, this include: talent, regard intangibles of and collaboration, accountability, speed, quality learning, the knowledge

leadership (Ulrich and Smallwood, 2003:14; Ulrich and Brockbank, 2005). Companies focus on policies of cooperation with employees
and unions for building In the architecture of these intangibles. talent and creation of future competencies In terms of Mackenzie's 7-S

intangibles, managing has assumed critical

stalwarts have been framework, most strategy gurus and corporate structure to staff, and from their focus strategy, systems shifting This focus has the values. exacerbated and shared style, skills, work new in HR of many themes more More and global development. people now focus on talent and competencies of increasingly companies in their attempt to develop "individuals" competitive advantage. Ghoshal and Bartlett (1997) refer this as individualized corporation. systems and strategy through adoption


importance of developing softskills and building high performance

The long debate on HRM

UK, is tending to conclude


in the West, and especially in the

the concept of human resource

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172 management
variable subsumed mentioned

The Indian Journalof IndustrialRelations

in corporate within

(HRM) philosophy is getting articulated as a critical

survival and growth. It has taken in its strides of the above guided HRM (Saini, 2003b). In view that have premises in tune with labour

theconcept of industrial relations (IR), which isgetting increasingly

changes, concept the basic the


of seeking industrial justice faces serious challenges in the new


and are being re-defined adversarial approach

fundamental principles of IR thus farhave got shaken vigorously;

so as to be the new realities. of collective power as a method

This paper discusses the dynamics of changes that are taking management of employee relations and how HRM strategy place in is being used in this regard. Thus, it analyses the contribution of HRM philosophy in building "new IR" or "strategic IR." Taking note of theglobal developments in IR, thepaper focuses especially
on the IR scenario to draw in the Indian context. Two case studies of




relations through HR

strategy are being




reveal that strategic success. It


is becoming
which at employee

developments speaks

the single


consultancy, oriented an

HRM strategy is not just interventions should be understood that

welfare and empowerment; instrument of realizing

of its criticality

largest area of management

in business

of cost control and employee discipline. While

important company

it is mainly seen as
vision, it is also

it also has aspects

oriented to impliedly dilute collective labour power. HRM as understood in theBritish and European context seeks to intertwine
and as the perspectives also add

to "new industrial relations." The HRM model of Storey (1995),

can be seen in Figure 1, shows how employers are giving and

of personnel management and industrial relations cultural and related thus giving way interventions,

to initiatives assumptions, giving people-management line managers, and changing the levers of people management. As per the new strategic response, the agenda focuses on promoting attitude and behaviour customer commitment, changes, promoting beliefs

strategic response to enhanced competition by changing their

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Managing EmployeeRelations Through StrategicHRM

orientation, eventually quality intended focus to help and flexible deliver working; all these competitive performance.


Enhanced competition

Attitudeand behaviour changes Commitment Customer orientation Quality Flexibleworking

Competitive Performance


for Industrial Relations

Figure 1: Storey's Model

(Quoted with permission

of HRM

(Storey, 1995)
the author)

HRM philosophy is now getting largely accepted globally as a strategic tool for implementing business strategy, though with variable dimensions, through its practice by multinational corporations and other leading employers even in developing
countries. focus on Strategic HRM certain critical interventions, like themes among others, involve talent team-building, communication, involvement, competency management,

management, strategy,

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


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174 the other hand

transparency and

The Indian Journalof IndustrialRelations involve


and in the organisational working, as individuals. HR But in decision-making employees involving an are in actuality of hard and interventions generally amalgam are going all soft measures. Many organisations high-performing a out to build on the empowerment of HRM mode strategy. While claims of have been number of making adopting organisations large progressive HRM strategies and practices, research especially

trusting the employees,



the West, however, explodes the myth of these claims (Mabey, et al., 1998). On paper, both sets ofHRM strategies have been found tobeing vogue. On thewhole, it appears that HRM is being used
in instrumentalist as well as exigencies HR has of the business come empowerment senses as per the strategy. an in case of important place even as the number of such But cases of de of pursuit few and far between. Many

to occupy

professionally-run organisations unionisation in it. Some

organisations including leadingMNCs have been investingheavily

even attack unionism

organisations, is not too large. are not policies

not be seen as pursuit should of a typical non-union however, India model. This was more of a case of incompetent management that was in India. But it is of cross-cultural realities ignorant successful

and Scooters India Ltd. (HMSI), Gurgaon (Saini, 2005a). This case,




state ruthlessly often with covert in the recent case of Honda Motorcycles

important to ask what model

firms. And, are

of HR

their policies

strategy is being used by

in this respect changing?


This section seeks




the nature of shifts in IR that is taking place

progressively case studies strategies, paternalism

to understand,


two case

in some of the



and successful organisations in India. These managed show are that organisations soft HRM choosing but at the same time, some of the of values long-held are or are cases The getting diluted being redefined.

in Indian acceptance Both of competition.

also reflect the changes that are likely to findwider

as a incidence organisations higher they face these case studies are from one of the leading

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Managing EmployeeRelations Through StrategicHRM

industrial for pursuit employee A. North in India i.e. the Tatas. This group groups of corporate social responsibility, business as strategic welfare priorities. Delhi Power Ltd. :Dynamics of Change1

is respected ethics, and

Delhi Vidyut Board (DVB) w.e.f. ailing Delhi-Government-owned as a devised between per arrangement privatisation July 1, 2002 shares in NDPL and the remaining immediate 49 per cent of its shares were concern of its chief executive eventually

The North Delhi Power Ltd. (NDPL) took over a portion of the

theDelhi Government and Tata Power (which held 51 per cent

with theDelhi Government) to distribute electricity inNorth and

North-West the Tata Delhi. The

officer (CEO) was to facilitatestabilisation of the marriage between

Power a and the Delhi success. Government; and to see it becoming The lasting

devised its vision the most of "becoming company As per the MoU with and admired energy Company." preferred was NDPL to reduce the Delhi the aggregate Government, technical and commercial been

Government by about

time of acquisition
had Rs.

to 20 per cent by 30 June 2007. The Delhi

DVB subsidizing through "loans" every year for its losses that were never expected



from 53 per

cent at the

15 billion

slum class

to be repaid. Some of the key challenges that NDPL was facing since the acquisition included: dealing with rampant theftby
dwellers service as well as industrial/commercial through consumers; to consumers the use of information

NDPL; providing world changing the consumer perception of the technology (IT) and internalizing the company's culture to that termsof standards of theTata Business Excellence Model (TBEM) for of companies have adopted that the Tata Group
performance. of a neglected and semi-trained in Tata brand image establishing

the mindsets effect; changing and DVB-scheme workforce;


So as
encountered, initiatives.

to deal with


issues that the company immediately took on takeover

the top management of the performance

the problems

took several

that the company

strategic to in relation


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The Indian Journalof IndustrialRelations

included: payment of salary by crediting it in bank account of the employees rather than paying it in cash; installing 1200 computers in various offices of the company in place of just two computers that the DVB had; imparting training for 18000 mandays during a period of first two years of acquisition on
quality, provision physical training focus on the use of mobile

other field staff for better connectivity; improvement

infrastructure; sponsoring to different countries. and executive/field

of computers for better customer service; to all executives, and junior engineers phones

in the

staff for


of technology reduced the need formanpower and the complex meter to be of had readers corrupt problem an attractive the company devised retirement tackled, voluntary

As per theMoU (memorandum of understanding) signed at the time of acquisition, NDPL inherited 5368 employees from the
Since the use

cent of the meter employees

scheme (VRS). Out of the totalDVB workforce, 1794 employees sought retirement under theVRS, which included some 90 per
readers. The

the rightsizing process

to various

throughout. NDPL
with new and were




DVB-scheme employees continued tobe governed by theold DVB

pay-structure and retirement Besides as per the MoU, as per benefits also entitled the DVB structure. to pension



employed 482 new

conditions. The



in organisational various initiatives restructuring, were all designations to reflect functional rather changed were than hierarchical from Thus importance. changed they assistant executive assistant etc. to manager, engineer, engineer, almost manager, designation succeeded The office work associate, aroused considerable that. attendant, resistance and so on. Re from most DVB

scheme employees

in overcoming

including senior officers, but the company

committed to quality that could be inferred company was read: 'To be themost from its mission, which preferred and admired we will to strive deliver energy company quality and cost-effective NDPL services...." welfare developed comprehensive employee was it schemes. Also, to have in India the first company supposedly

started an employee helpline. Under this any company employee

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Managing Employee Relations Through StrategicHRM

could submit his/her grievance by e-mail or telephone, and


in processing welfare and observed

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

the grievance. performance in Table 1.

A comparative view of some of the measures can be DVB and NDPL by

understood National

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

the company's Union relationship with its union. It inherited Trade

was put inplace at thedistrict,circle of JointInteractionForum (JIF) were held regularly making; monthly and quarterlymeetings of JIF
at district The relations. pending employee: employees; and circle levels. CEO to the issue of union-management gave priority a HR took stand on three of the and chief He positive concern were to the common of grave issues which to widows of assistance of monetary disbursement employees' uniforms; time-bound promotions. This and corporate levels to promote employees' involvement in decision

affiliated union and seven staff Congress) union but did not recognise It recognized thisworkers' associations. some the minor disturbances, associations. the of staff any Except a The witnessed had process. concept company peaceful acquisition

the DVB workforce along with

its recognized INTUC


helped inbuilding cooperation inemployee relations.The intensity of such effortscould be gauged from the following incident: The payment of retirement benefits to employees for the period for which theyhad rendered service toDVB in thepre-takeover phase was the responsibility of the Delhi Government. When NDPL
announced the VRS even after more its responsibilities resentment This aroused than two years of privatisation. deep as the the as well retired the serving employees against among issued a circular to all the employees HR Chief The government. of the retirement to the non-receipt He also issued another employees. 2004 as a mark instances were of protest against scheme, the Delhi Government the workers' of paying dues could not meet

that theRaising Day would not be celebrated on July1, 2004 due

benefit circular by the 1,797 retired suggesting that



would not celebrate Puja and Diwali festivals in fraternity

quite significant agenda. These the Delhi Government. in internalizing the company's


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Besides, two each batches

The Indian Journalof IndustrialRelations

of union leaders were sent by the

for 10 days manufactured mindsets

company to theTata Steel plant in Jamshedpur in September, 2003

to observe in the world and learn how cheapest in a climate of harmonious steel was industrial

relations among 40,000 people.

of the union leaders.

This helped

in changing


The HR


It was



a key role in facilitating

that the performance

appraisal (PA) system for the employees should be kept simple; the PA form comprised of only two pages. From year 2004, key
result areas

manager an

individual performance. The joint interaction forum (JIF)proved

important platform of union there. as for performance improvement and management aired their respective An in-house named quarterly magazine in November 2003. The company set up System (HRIS). together with good

(KRAs) were developed to the top management


the level

of assistant


a view

to assessing

representatives issues of concern Navodaya its Human The was





the company The company attained better level performance. of performance and consequently in AT&C reduction gradual technical and The losses. AT&C loss commercial) (aggregate

strategy implementation, helped in bringing radical changes in



45 months

stood reduced from 53 in July2002 to 28 per cent on 31 March, 2006, which meant reduction of about 25 per cent in a period of
from the takeover. A reduction of one


loss roughly


earned a 'net profit after tax' of Rs. 570 million for the year 2004-05; in the firstyear itself it earned a profit of Rs. 220 million (for the year 2002-03). In fact, theCEO suggested to the Delhi Government in July2005 not to increase the tariffsfor the
consumers from as NDPL to transfer the benefits wanted resulting the reduced AT&C In relation losses onto the consumers. errors substantial to billing since the reduction taken place had time of takeover, but they were to be an area of still believed

to the

to a corresponding
tune of Rs.




220 million.




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Managing Employ?e Relations Through StrategicHRM

to its competitors. The number of transformer failures

came down

The company has been performing impressively in comparison

time the mean time taken to repair cable came faults came

In the same down

from 584 at the time of takeover to 37 in financial year 2004-05.

from 11 to 2 days. No-supply complaints down from

8000 to 2149, and the street lights in working conditions improved from 50 per cent to 99 per cent. Out of the 150 companies which Work in competed for theposition of "the Top 25 Great Places to

in 2003, NDPL
A general

as per

a survey


got the 27th rank.



the Grow



30 per cent are fence-sitters; and about 20 per cent have not similar view. too endorsed somewhat at all." The CEO changed staff the mindset of the contractors' He also felt that changing on their A union office bearer appreciated focus training. required out that "employees but pointed the company's performance new in the their of fearful remained scenario, despite jobs losing about

acclimatize about 50 per cent employees into theNDPL




has been




MoU the security provided to themby the tripartite

time of acquisition."

signed at the

had been working hard since beginning to promote a of itsCEO and performance culture through sagacious leadership NDPL
various HR department

was no mention of the talked of usual HR interventionsbut there word union in it.A major uprising took place from theworkers' rankwhich successfully challenged the existing union leadership; and charged it of the union having an unholy alliance with the

HR the company's interventions. Interestingly, vision. It an HR as well its own HR model devised

chief who was a fine HR strategist to another a new HR chief who had better expertise department and brought the firstHR
in employee relations and labour laws. Overall, the company



the management.



far better than its two competitor performed competitively were that supplying electricity to the remaining parts companies
of Delhi. has

NDPL. expressed happiness with theperformance of

so far been able march stall its towards to prevent realizing

The media,




the public

that could IR any major problem its vision. Of course, the company's

The company

at large

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sole recognised union

The Indian Journalof IndustrialRelations

witnesses an attempt of takeover of its


leadership by a rival group, but thatdid not cause any upheaval in the employee relations scenario (Saini, 2005), even as it caused
worries to the NDPL top management.

B. The Tata Steel Limited2 Tata Steel Limited is a one hundred year old steel producing Indian company, which played a pioneering role in industrial development of India. It is located in Jamshedpur in the state of
Jharkhand, and is one of most and HR

the country. It is also believed to be a rolemodel

managers as well






transparency, HRM proactive

social care, corporate responsibility, employee and IR practices, and participatory management and industrial Like other companies in the post democracy. it also faced era, several globalisation which, challenges, among include: of chaotic others, coping with rigours competition, in terms of cost and customer-orientation technology, need for and reengineering managing rightsizing,

of adopting

ethical working,

as academicians;

a good

for they admire

for many




upgrading quality,

flexibility, change management,


and effecting the company's

The company noted that its technology had become outmoded and needed tobe replaced by new rolling-mill technology ofhigher and It involved not just huge cost but a capacity greater speed.

realities. This meant changing themindsets of its nearly 80,000

employees, cope with and the internalisation of new promoting business environment. changing ideas so as to


that could manage

the consequential


The company practiced values of paternalism and employee loyalty for a long time,which its founders had established and religiously nurtured. Itbuilt an industrial township in Jamshedpur looking afternearly all civic needs. Itnurtured employee loyalty
catering to their needs; worker's were relatives in new as a recruitment strategic priority. given It had


trouble-free IR for more than 50 years. Russy Modi, itsCEO and chairman for a long time in the nineteen eighties, worked hard

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Managing Employee Relations Through StrategicHRM

commitment employee values. of paternalistic through further strengthening The heritage of these values

the practice

in performing the crucial role of building and strengthening in garnering support and concern of the common
helped in a

as well as the union in agreeing to the intended reforms, employee so as to survive. The reforms involved, it had to undertake which over a retrenchment of 35,000 employees others, among period took over as managing director after of ten years. J.J. Irani, who was in arousing the instrumental of Russy Modi, the retirement to the needed reforms. amongst sensitivity employees requisite For facilitating the efforts of and the internalization the company directors played his chairman of the reform agenda, besides at least two Ratan Tata,

big way

managing J. J. Irani


Thus the company shifted from its strategy of paternalism

i.e. the role of exemplary leadership, B. Muthuraman. the present CEO,


to focus on performance-orientation. This employee management and of the involved concept performance-related-pay enforcing on The hikes based the company pay seniority. undermining to new and employee allegiance loyalty and showed relationship in general that are being adopted in employee relations values to attract talent. It has shown multinational companies by the and competitively for younger higher pay employees, preference



its policy

of building


off (Pandey et al, 2005).

There resulted the senior are in arousal

mai baap (parents) reflectinggradual erosion of thepaternalist their values that the company firmly upheld for so long. They are not
able to acclimatize themselves to the supposed Consequently, environment of performance-orientation Tata heritage

shift in focus has that the company's indications of a kind of insecurity and alienation amongst as who had all through seen the company employees,

in the process in the company has resulted in a tangible decline

of human touch. The turnaround at the same



shows that it is difficult to simultaneously pursue both thepolicies

time. The in a big way large company in a large number fraternity has been resorting of new areas, which of different

story of Tata


the long-held value of building company loyalty by nurturing a run by the company itself.
corporate consisting departments all

to outsourcing also strikes at

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The Indian Journalof IndustrialRelations

in improving performance, which resulted in it receiving have helped international rewards. The World Steel Dynamics rated Tata many in 2001-2002. By the year 2003 in the world. company for this success. in new it also became Several themost can cost-effective said

The changes in people-management philosophy at Tata Steel

Steel as the best company in the world in 2000-2001 and thirdbest

steel factors others, be to be the role of these

of theunion inbuilding cooperation; involving families in thechange

process; and investment




Iraniand B.Muthuraman; JRDTata and Russi Mody furthered by J.J.

the development


the nurturing



off the transformation management

which paid (TBEM). As part of theTBEM, many initiatives

process included: continuous improvement initiatives enabled

and adoption

of the Tata



to give their best in employees For the of ensuring higher performance. example, implementation as the suggestion were which scheme, per employees' suggestions and awarded, in the quality led to improvement of accepted a and in the year 2002. The suggestions saving of Rs. 1.5 billion concern for to has focus as well, way process product quality given in higher are at costs. Efforts resulting quality competitive being tomake made the company leaner and more professional through ethic programme (PEP). A large number of employees performance were involved in was evolving Vision 2007, which formally launched

projects; quality circles; and six sigma. The changed people

on May 2, 2002 jointlyby the managing director and thepresident

of the union.

Muthuraman labels as "ambiance" HRM a the he former to concern refers for By

The company

is also moving

from the policy of what B.

HRM.3 "consequential" care, satisfaction, employee to

measurement retirement establishing

and proactive HR policies and the latter is concerned with dealing with issues resulting fromapplication of company policies such as
of impact of various initiatives, implementing voluntary scheme and (VRS) so as to promote cost-effectiveness, certain controls so as to promote a kind of discipline.

These two situations are analogous to softHRM and hard HRM as have been reported in the HRM literature (Saini, 2000).
While some

policies of Tata Steel towards "adoption of familial style of caring"




a case

for reversal

of the

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Managing Employee Relations Through StrategicHRM

exigencies of performance likely focus on as warranted by the era


(Pandey et ah, 2005), it is important to note that in view of the would be very difficult to do so. Similarly, Indian competition it
are to focus guarantee policies rather than the employability in the pre-gobalisation followed

companies employment to be

era. Going by the revelations of the HR literature,this issue appears

a case chaotic in the context of market HRM in the new scenario. But dynamics two has initiatives aspects: involving monetary of caring

situation. of either/or The demands of the global warrant to that relations have into be looked competition

empowerment investment monetary and those not communication,

like those related with

involving practice

appears thatTata Steel has considerable scope for taking initiatives in the lattercategory of people empowerment model and shaping
IR through employee care as a way of organisational life.

rewards and training; cost, like personal touch, and empowering It style.

The are


two case studies presented IR as a above show that companies a well through

are being built which, among others, include proactive of IR. Special focus is being put on communication management strategies noticeable core

cooperative pursuing philosophy to guide factors are being identified articulated HR strategy. New in the IR game. To this end, comprehensive HRM social partners

to facilitate these goals. Strategic approach of managing

at covert as well as overt levels. The pursuit values

IR is

of such

policies has thepotential of attracting individual employees to the

indulge to of the organisation and diluting their propensity in hostile unionism. This also helps promote organisational

is talk of the convergence from the increasing is resulting corporate practices. come would eventually of local As There thesis influence in management of globalisation which on

itwould cultures and indigenous be factors. No doubt, to completely wish away the impact of cultural influences simplistic run. The eminent in the short ormedium on working organisational

across the length and breadth of the globe, with reduced impact

per this thinking management close to becoming similar over

practices the years

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The Indian Journalof IndustrialRelations

are and social?there three areas...? economic, good political reasons and that institutions the distinctive for thinking practices over the time cultural fostered by Asia's converge systems will seen in the West...Far from reinforcing Asian with the pattern exceptionalism, homogenizing the current in economic three crisis will accelerate by trends all areas." Going

social historian Francis Fukuyama (Ohtaki and Bucknall, 2005: 23) endorses the convergence thesiswhen he observes that "in all


in the two cases of NDPL and Tata Steel, it is developments becoming clear that they hint towards legitimating of the was the turnaround HRM; for theTBEM that convergence thesis in model for Tata Steel was built on edifice of western values of
performance was NDPL out rather than also trying in TBEM, though being that status. attaining The NDPL case a Tata company, loyalty focus. Being to benchmark set standards performance a new company itwas far away


of an ailing government-run public utility by a public-private

partnership. which had were sagacious processes, employees NDPL It shows how the nexuses between partly led to the malaise by in the earlier interest groups, diluted a combination changes organisation, ofmeasures including in different systems and

involves managing



in acquisition


appropriate leadership, and efforts towards concerned so as

use case, among others, strategic measures was as a key intervention adopted

to survive in the chaotically competitive business scenario. In the

of employee welfare for facilitating a faster

of the the mindsets changing to build organisational competencies

or take to mend ways encouraged A manager "We do take care remarked, a partner in so as to become in good humour union HR Some of the instrumentalist process." strategy employees retirement. were schemes employees) to set standards of performance

acceptance and internalisation of the change agenda by theunion as well as the employees in general. Corrupt and indifferent
voluntary to the keep the change measures and

included appointment of change agents (in the formof new NDPL


feelings of competition amongst all categories of employees. The adversarial industrial relations (IR) theory as enunciated in the classical Oxford School of IR discounts possibility of any

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Managing EmployeeRelations Through StrategicHRM



as between and workers management lasting cooperation they a zero-sum are in situation. And operating usually bargaining issues at hand. The theory postulates that such can be times It argues of recession. only during cooperation possible revert to adversarialism that parties would when recession is over. were cooperative industrial relations noticeable in the case on

is brought about through the agreement reached through



far these formulations hold good in the era of globalisation?

of the two companies under study? No doubt, the policies and interventionsdevised and implemented by theHRM department, and co-espoused and supported by the sagacious leadership of the CEO, helped determine industrial harmony. They worked towards adopting theTata culture in the company's IR issues that most. NDPL's decision not to bothered the common employee the celebrate the raising day, Puja and Diwali festivals in 2004 as a mark of protest against theDelhi Government not releasing the But itsoverall HR policies should be seen as fallingshortof a purely
paternalist agenda. retirement money for DVB-scheme retired employees reflected an care astute strategy of employee that facilitated the change agenda.


The lasting industrial peace at the Tata Steel that ithas been
to sustain since long But leading to its success changes as an Indian steel on HRM. the recent in this company's

giant throughpractice of paternalism in IR iswell-known in Indian


policies show that thepolicy of paternalism was difficult to sustain any more in the present era. Despite difficulties the company could build an effective strategy for making the employees agree HR systems and leadership inhelping the VRS and used its for the

by 35000 and make Tata Steel competitive and the cheapest steel producing company in the world, which has the vision of
becoming an EVA. (economic value added) positive company.

of this goal.


it could


their workforce



in IR are getting In the post-globalisation issues scenario, as in IR is being of HRM. aspects merged Cooperation strategic and "empowerment" the "instrumentalist" built through both are also of HR Strategy. Often harsh measures dimensions adopted

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either as control measures

The Indian Journalof IndustrialRelations

for promoting performance and cost

In India they by employers with covert supports of state agencies. or been pursuing have de-unionization union dilution either or in authoritarian articulated ways ruthlessly through carefully some HR as label the latter HRM scholars strategies; approach "propagandist HRM stands management. cooperative necessity The Some have policies." argued resource for human manipulation; However, unionism to cope with in the new more often competition. become are a means to administer pursuing union that in the new era, this is so considered strategy can be involving as a been

effectiveness or throughpractice of unfair labour practices (ULPs)

due to the de-unionization

potential of soft strategy of people

era HR than not


substitutionpolicies of the type followed by IBM and Kodak, among

The number of such is increasing fast as they advantage through better employee others Many merely have built facades companies

is, can HRM key question industrial justice? Some companies


to reap seek competitive motivation and engagement.

concerns. In a situation of of employee indifference of increasing state apparatus are towards union rights, many employers using in successful violation ofminimum this opportunity labour standard; for state agencies to look the other way when have begun labour laws are violated are Such evidences from available by employers. Indian states of Rajasthan, Tamil Nadu, among others (Venkata Ratnam, time, HR interventions Kerala and even West 2001).

Bengal, At ways of NDPL

the same to promote and

change acceptance, These Tata Steel.

are in various being used like it happened in the cases cases have shown how the

is increasing in their from employees organisation's expectation efforts to survive and are to stay competitive. Employees expected at and services the lowest provide products high-quality possible Since employees are seen as drivers of higher prices. principal have been in corporate many performance, companies investing and HR strategy so as to well-articulated devising implementing support building relations peaceful employee to be an alternative considered high-performance IR. cooperative work In case also include systems, which these reform agendas lead to in an organisation, it should be model of industrial justice, with or

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Managing Employee Relations Through StrategicHRM

without companies Further, unions. have But it is certain that traditional paternalism


including employee appeasement is difficult to practice today if

to stay competitive. performance would warrant of a

higher degree of globally-testedHR practices as the pressures are also becoming global. Thus, as per the convergence thesis that is
inmanagement, being debated are to expected eventually dilute surely gives hints towards themanagement practices of MNCs the influence of cross-cultural realities as the company is clearly



as has been discovered by Hofstede (1980). The case of Tata Steel

such convergence

withdrawing fromits professed values ofpure paternalism.The NDPL has also made effortstowards building a high performance work most modem practices reported in systemby adopting some of the
the HRM literature information involvement, including balanced score card, human resource system, knowledge performance management, management, reaping job re-design, employee and transformational

leadership. Of course, itstillhas miles togo in fullyimplementingan

HR model and its fruits.


1. The NDPL case here ismainly based on facts and events from two cases: North Delhi Power Ltd.: Dynamics ofChange, a case by Saini and Bhatnagar (2005), and Cooperative Employee Relations atNorth Delhi Power Ltd., a case by Saini (2005). The Tata Steel case is shorter form of its larger version written by the author. This case was constructedwith the help of interviews from some
former senior


Tata 3. As

internetand company website, analysis of academic literatureon Tata Steel, and interaction with Mr. B.Muthuraman, thepresentManaging Director of
Steel. revealed in a private discussion between the author and Mr. B.


at Tata








Ghoshal, Sumantra, and Christopher A. Barlett (1997), The IndividualisedCorporation, Harper Collins Publishers, New York. Hofstede, G. (1980), Culture's Consequences: Software of the Mind, Sage, Beverley Hill.

This content downloaded from on Sun, 15 Sep 2013 10:08:11 AM All use subject to JSTOR Terms and Conditions

188The Indian Journalof IndustrialRelations

Kumar, Krishna (2003), "Has Indian Inc Failed inPlaying theLeadership Role?," Vikalpa, Vol. 28 No. 3 (July-September) Mabey, Christopher, Denise Skinner and Timothy Clark (1998) (eds.), Experiencing
Human Resource Management, Sage, London.

Asia: Human Resource Ohtaki, Reiji and Hugh Bucknall (2005),Mastering Business in Management, John Wiley & Sons (Asia) Pvt. Ltd., Singapore. Patil, B.R. (1998), "A Contemporary Industrial Relations Scenario in India with Reference to Karnataka," Indian Journalof Industrial Relations, Vol. 33

Pandey, S.N., JaiB.P. Sinha, J.S.Sodhi and S.Mohanty (2005), Tata Steel: Becoming World Class, Shri Ram Centre for Industrial Relations and Human
Resources, New Delhi.

Rao, T.V. (1990), HRD Missionary, Oxford & IBH, New Delhi. Saini, Debi S. (2003b), "Dynamics ofNew Industrial Relations and Postulates of Industrial Justice,"The Indian JournalofLabour Economics, Vol. 46, No.4. Saini, Debi S. (2005), Management Case: "Cooperative Employee Relations at North Delhi Power Ltd," Indian Journalof Industrial Relations, Vol. 41,

Saini, Debi S. (2005a), Management Case: "Honda Motorcycles and Scooters India
Ltd.," Vision? The Journal of Business Perspectives, Vol.9, No.4.

Saini, Debi S. and Jyotsna Bhatnagar (2005), Management Case: Power Ltd: Dynamics of Change," Vikalpa, Vol. 30 No.4. Saini, Debi

"North Delhi

S. and Sami A. Khan (Eds.) (2000), Human Resource Management: New Era, Response Books (A Division of Sage), New Perspectivesfor the Delhi.

Storey, J. (1995) Human Resource Management :A Critical Text, Routledge, London. Ulrich, Dave

and Wayne

Brockbank (2005), The HR Value Proposition, Harvard

Press, Boston.

Ulrich, Dave and Norm Smallwood (2003), Why theBottom Line Isn't?How to Build Value ThroughPeople andOrganization, John Wiley & Sons, Hoboken.
Venkata Ratnam, C.S. (2001), Globalization and

Dynamics ofChange, Response Delhi.

(A Division



of Sage Publications), New

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Managing Employee Relations Through StrategicHRM

Table 1: Some Major Employee Welfare Initiatives Undertaken by NDPL





Delhi Vidyut Board Medical


North Delhi Power Limited Forty hospitals were empaneled; no payment required to be made by the employee concerned; the employee had to just show the IdentityCard and avail treatment. NDPL
against a cover at

claim of indoor patient/

was being reimbursed

by DVB after the expenditure was incurred by the employee fromhis

pocket. A Insurance Janata cover value of Rs. Scheme 100 with a thousand

got every employee insured

work-related value accidents for of Rs. cost. 250 thousand

foraccident injuries; premium was paid by the employees. No



forum/platform for interaction

management representatives. Promotion Scale and

employee Time-bound

A Joint Interaction Forum (JIF) launched at thedistrict and circle level;monthly and quarterly meeting of JIFheld.
Time-bound Promotion Scale cases

(TBPS) was being allowed to the eligible employees after consider

able 1994 cases lapse of time. Many were onwards pending.


were updated. All employees who were eligible forTBP were allowed the same on 30th June and 31st
December was pending. every year? No case

Pathetic working conditions in

offices; hygiene no cleanliness and maintenance.

A number of buildings renovated;

hygienic conditions maintained.

Potable drinking water not available in many District/Zonal offices No giftwas given to employees
on any occasion

Proper drinking water available in all District/Zonal offices.Water purifierswere installed or filtered (bottled) water was provided.
A wrist work watch charge was and given contractual to every the

Raising Day on July 1, 2003. No functionwas ever held to celebrate the Labour Day on May


to commemorate







year by observing Industrial Harmony Week; it involved employee participation in it. Sports meets for employees and





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