INDUSTRIAL RELATIONS - LABOR RELATIONS

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    GROUP MEMBERS

    SNEHA

    ADITI GUPTA

    SUMIT EKKA

    NEHA RAJ

    RAVI KR. ANAND ADHIR ALBERT LAKRA

    PROMOD HEMBROM

    ACHINT CHABBRA

    RAVI BAA

    ROHAN IGNATIUS CHARLY

    POOJA RANI

    PRITY KUMARI

    PRIYANKA PRIYA

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    Defining Labor Relations

    This discipline covers the relationship of workers

    with the organization and with each other. Labor

    relations is concerned with anticipating,

    addressing and diffusing workplace issues thatmay interfere with an organizations business

    objectives, as also with resolving disputes between

    and among management and workers. It includes

    the processes of ensuring that relations withworkers comply with applicable central and local

    laws and regulations and resolving workplace

    disputes.3

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    JOURNEY : LABOR RELATIONS TO

    EMPLOYEE RELATIONS

    Labor Relation in India has been shapedlargely by principles and policies evolvedthrough tripartite consultative machinery at

    the industry and the national levels. The Labor Relations system of India has its

    origin in the colonial past.

    The movement for independence, influencedthe evolution of the Labor relations system inIndia

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    JOURNEY : LABOR RELATIONS TOEMPLOYEE RELATIONS

    The Historical evolution of the Labor Relationssystem can be categorized under six phases: The Protective Phase (1947-1956)

    The Consolidation Phase (1957-1965)

    The Conflict Ridden Interventionist Phase(1966-1976)

    The Directionless Phase (1977-1980)

    The Productivity efficiency, Quality-orientation phase

    (1981-1990) The Economic Growth Competitive Phase(1991-Onwards)

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    JOURNEY : LABOR RELATIONS TOEMPLOYEE RELATIONS

    The Current scenario points to a shift in the

    relative bargaining power in Labor

    relations, away from the workers to the

    employers.

    The current standing lays emphasis on term

    employee encompassing a larger section of

    working class than labor.

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    KEY DIMENSIONS OF TRADITIONAL IR

    AND EMPLOYEE RELATIONS

    DIMENSIONLABOR RELATIONS

    (I.R.)

    EMPLOYEE RELATIONS

    (SHRM)

    Psychological ContractCompliance Commitment

    Behavior References Norms, Customs, Practices Values, Mission

    Relations

    Low trust, pluralist,

    Collective

    High Trust, Unitarist,

    Individual

    Organizational Design

    Formal Roles, Hierarchy,

    Division of labor,

    Managerial Control

    Flexible roles, flat

    structure, teamwork and

    autonomy, self control

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    Relevance of Labor Relations in the

    field of SHRM

    In many industries (public or private)unionization is the norm. Managers andbusiness owners in these industries have nochoice but to be well versed on the laws that

    regulate the relationship with unionemployees.

    Competitors maybe unionized and settlementsin those organizations may impact HR

    practices, programs and policies needed toremain competitive in recruiting and retainingproductive employees.

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    Relevance of Labor Relations in the

    field of SHRM

    Organized labor presents a number of key

    strategic challenges for management

    When workers unionize, the power based

    within the organization is redistributed. The

    employers ability to mange workers at their

    discretion is severely curtailed.

    Unionization involves bringing in outsideplayers whose support must be gained for any

    new or ongoing management initiative

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    Relevance of Labor Relations in the

    field of SHRM

    Organized labor presents a number of key

    strategic challenges for management

    Unionized work setting greatly impacts the

    organizations cost structure particularly

    payroll expenses.

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    EMPLOYEE RELATIONS STRATEGY

    Like other business and HR strategies, those concernedwith employee relations can, emerge in response to anevolving situation.(Mintzberg 1987)

    Employee relations strategy define the intentions of theorganization about what needs to be changed in the waysin which organization manages its relationship with theemployees and their trade unions.

    Eg:

    1. Strategy- achieving competitive edge through innovation

    2.Strategy- achieving competitive edge through costreduction

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    BACKGROUND TO EMPLOYEE

    RELATIONS STRATEGIES

    Four approaches to employee relations have

    been identified by the Industrial Relations

    Services(1993)

    Adversarial

    Traditional

    PartnershipPower sharing

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    THE SHRM APPROACH TO

    EMPLOYEE RELATIONS

    Build stable and cooperative relationshipswith the employees that minimize conflict.

    A drive for commitment through employee

    involvement and communication processes. An emphasis on mutuality in achieving the

    organizational goals through the

    development of the organizational culturesbased on the shared values betweenmanagement and the employees.

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    THE SHRM APPROACH TO

    EMPLOYEE RELATIONS

    A shift from collective bargaining to individual

    contracts.

    Use of employee involvement teams such as

    Quality Circles, SDTs.

    Continuous pressure on quality- TQM.

    Emphasis on teamwork.

    Harmonization of terms and conditions for all

    the employees.

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    STRATEGIC IMPACT OF THE

    LEGAL ENVIROMENT

    The legal environment is a major consideration of strategic

    managers because of the potential exposure to liability,

    plant location concerns, productivity influences, and other

    impacts on cost structures. In future , strategic managers

    may need to become more proactive in the design oflegislation so that the laudable social goals can be

    obtained simultaneously with organizational growth and

    efficiency.

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    Labor Legislations in IndiaLAW IMPLICATION FOR EMPLOYERS

    The Minimum Wages Act, 1948 Set minimum wage standards

    The Payment of Wages Act, 1936 Regulate payment of wages in thestipulated wage period.

    The Equal Remuneration Act, 1976 Equal pay for equal work regardless of

    gender.

    The Factories Act,1948 Requires employers to provide a

    workplace free of hazards.It also provides with provisions for

    health, safety and welfare.

    The Industrial Disputes Act, 1947 Requires 60 days advance notice of plant

    closure.

    Compensation to workmen in case of

    closing down of undertaking.

    The Employee State Insurance Act, 1948

    And Employees Provident Fund Act, 1952

    Social Security.

    The Industrial Employment

    (Standing Order) Act, 1946

    Require employers in industrial

    establishments formally to define

    conditions of employment under them 16

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    Labor Legislations in India

    LAW IMPLICATION FOR EMPLOYERS

    Inter State Migrant Workmen Act,1979 Regulate the employment of inter-state

    migrant workmen and provide for their

    condition of service

    Payment of Bonus Act ,1965 Provides for the payment of bonus on the

    basis of profit

    Payment of Gratuity Act, 1972 Provides for payment of gratuity

    Trade Unions Act, 1926 Provides for registration of trade union

    Employees Compensation Act,1923 Provide for payment of compensation to

    workmen for injury by accident.

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    COMPARATIVE STUDY OF LABOR

    LEGISLATIONS

    Recognition of trade union in USA

    The NLRB is responsible

    for overseeing a particular

    union as the official

    bargaining representativeof a group of employees,

    and hearing allegations of

    violations of the act from

    employers, unions and

    employee groups.

    Recognition of trade union in India

    In the year 1957 code of

    discipline was formed for

    recognition of trade union

    but it was not mandated by a

    law. The recognition can be

    had by way of mutual

    agreement between the

    employer and the office

    bearers of registered tradeunion or by the orders of the

    Labor Court under certain

    conditions.

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    COMPARATIVE STUDY OF LABORLEGISLATIONS

    Establishment of union under NLRB

    Group of employeespetition the NLRB throughassistance of a unionrepresentative to conduct

    an election NLRB requires at least

    30% of the employees tohave signed authorizationcards, which indicate an

    expressed interest inhaving unionrepresentation from aspecific union

    Registration of union Trade Union Act

    An application forregistration of a trade unionis made to the Registrar ofTrade Unions.

    No registration unless at

    least10% or 100 of theworkmen (whichever isless), subject to a minimumof 7, engaged or employed inthe establishment orindustry with which it is

    connected are the membersof such trade unions on thedate of making suchapplication for theregistration

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    COMPARATIVE STUDY OF LABORLEGISLATIONS

    When the NLRB receives theauthorization cards anddetermined that there issufficient interest to conductan election, it determines

    whether the organizationshould have a bargainingunit that cover all theemployees or separatebargaining unit for differentgroups of employees

    Works committees are set bythe establishments withequal number ofrepresentatives of workersand managementfor

    endeavouring to composeany differences of opinionin matters of commoninterest, and therebypromote measure forsecuring and preserving

    amity and cordial relationsbetween the employer andworkmen.

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    Why Employees Unionize?

    Need to unionize Benefits

    Historical

    Background

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    Collective Bargaining

    Collective bargaining is the process whereby

    workers organize collectively and bargain

    with employers regarding the workplace. In

    a broad sense, it is the coming together of

    workers to negotiate their employment.

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    Scope of Collective Bargaining

    Wages fixation, increments and bonuspayment Hours of work and overtime

    Terms and conditions of work, safety,

    welfare and health care Grievanceprocedure labour productivity, labour

    standard and modernization Union

    Management relations including workers

    participation

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    PROSPECTIVE USERS

    Anyone who has a paid job or who employs

    other people in paid work

    Employers, employees and unions negotiating

    benefits such as wages, working conditions

    and related issues

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    Benefits to management

    Workers have a voice and an outlet in thecollective bargaining process that reducesuncertainty and instability in the workplace.

    Workers are often more motivated followingcollective bargaining as they have participatedin the process and the outcome.

    Collective bargaining aids in labour market

    flexibility by helping workers to understandand accept the need for modernization andrestructuring.

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    Benefits to workers

    Collective bargaining provides workers witha collective voice which may be moreeffective than dealing with managers one by

    one.Collective bargaining helps ensure adequate

    wages and working conditions and helpsworkers to receive a fair distribution of

    gains that might result from theintroduction of new technology.

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    Process of Collective Bargaining

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    Levels of Collective bargaining

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    D

    E

    C

    E

    N

    TR

    A

    L

    I

    Z

    A

    T

    I

    O

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    Collective Bargaining Committees

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    Steps in Collective Bargaining Process

    1. Preparing for negotiations through collective bargaininginvolves assembling and consulting extensive data such as:

    (i) Internal company data related to issues to be discussed (e.g.benefits, leave, work hours and overtime, grievance

    procedures, discipline, dismissals etc.)

    (ii) Labor practices employed by other companies or factories inthe same industry or region

    (iii) Relevant national legislation related to the issues to bediscussed.

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    Steps in Collective Bargaining Process

    2. Establishing bargaining teams composed of four to six

    representatives on each side of the negotiating table, including

    appointed chief negotiators for management and for workers.

    Try to have all types/level of workers/managementrepresented as well as all the different job categories so that

    that there will be good representation at all levels and types of jobs.

    The chief negotiators should not be the highest-level of staffmember in each team, as lower level management/supervisors and

    regular rank-and-file workers will have the most credibility to

    represent the interest of the groups they represent.

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    Steps in Collective Bargaining Process

    3. Members of the bargaining teams must consultthoroughly with all groups that they representprior to coming to the negotiation table. Thisconsultation process is key to building trust

    and buy-in to the collective bargaining process.It involves:

    (i) Explaining the steps of the negotiation process

    (ii) Learning the major issues

    (iii) Asking questions to understand and notewhat are the main concerns, interests andexpectations regarding these issues.

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    Steps in Collective Bargaining Process

    4. Conducting negotiations through collective bargaining:

    (i)Open the negotiations with a first meeting devoted to establishing the

    bargaining authority of the representatives of each side and todetermine

    the rules and procedures to be used during negotiations. Bargainingrights must be clearly defined for both management and for workers.

    (ii) List and prioritize issues for discussion and set up a meeting schedule.

    (iii) Submit, analyze and resolve proposals put forward by each side.

    (iv) In order to reach an agreement, proposals must be resolved. Theymay be withdrawn, accepted by the other side in its entirety, oraccepted in some compromise form. However all decisions must bemade by consensus of both sides.

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    Steps in Collective Bargaining Process

    5. Communication the outcome of collective

    bargaining:

    (i) Collective bargaining agreements must be put in

    writing in language that is acceptable to all parties.(ii) Copies of the agreement should be distributed to

    all supervisors, managers and workers and

    explained at a meeting (or series of meetings).

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    Failure to Reach Agreement

    When the union and the employee are

    unable to agree, worker have the right to

    strike.

    Economic strike

    Unfair labour practice

    Wildcat strike

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    Conclusion

    Unions have a long and deep history in the

    world.

    Traditional approaches to negotiation

    usually involved the union trying to gain

    concessions from management and winning

    the negotiation.

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    Conclusion

    However, to be successful in the futureunions must:

    Develop partnerships with employers

    Seek win-win outcomes to collective bargaining Enhance the performance of the organization

    Unions need to consider that the jobs oftoday and those of the future are quitedifferent from the jobs of the past

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    Conclusion

    Countries such as Japan and Germany haveextensive unionization and produce some ofthe highest quality, most technologically

    advanced products. Although employees clearly need to

    consider labor relations from a strategicperspective, union representatives must doso even more if they are to keep their unionsviable for tomorrows organizations.

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    Case study

    In July, 1994, United Airlines, the worlds largest airline,

    announced an employee stock ownership plan (ESOP) that

    would allow its unionized employees to acquire 55 percent of

    the companys stock in exchange for reduction in pay and

    benefit. The plan was immediately hailed as a breakthroughin labor relations in the airlines industry and applauded

    among investors, customers, employees, and management.

    Along the union members, united pilots were the biggest

    beneficiaries of the plan, receiving 25 percent of the companystock despite the fact that they constituted 10 percent of the

    workforce. However, the pilots had made the greatest

    financial concessions.

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    The initial result of the ESOP were overwhelmingly

    successful. Team were set up to analyze every aspect of the

    company operation, from fuel utilization to free-passpolicies to employee family members. The team developed

    numerous cost-saving and morale-boosting measures that

    significantly impact probability. In following three years the

    price of the United stock nearly quadrupled in response toits enhanced financial performance.

    CASE STUDY

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    CASE STUDY

    The positive result, however, were short lived. Flight attendants, whowere not included in the ESOP, became irritated at not

    being able to share in the companies success. As the employees with

    the greatest amount of public contract, their dissatisfaction and

    damaged morale affected customer service. In addition, the plan was

    only scheduled to operate for five year and nine months. Therefore, in2000, employees stopped receiving United stock, and pay level return

    to pre-ESOP levels. Consequently, empolees no longer had as

    significant a personal stake in the companys ongoing financial

    performance. New employees were also not able to participate in the

    plan. perhaps the biggest problem with the plan for employees is thatthey are not allowed to cash in their stock until they retired from the

    airlines.

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    United management, seeing the ESOP as an unqualified success,

    reports that it allowed the company to reduce its cost structure

    and strengthen its competitive position. However , since United

    stocks hit its peak in 1997,its value has declined by close to 50

    percent. Labor unrest with the pilots, who refused to flyovertime during contract negotiations, severely curtailed

    operations during the summer of 2000. United lost millions of

    dollars in revenue and the business of many loyal customers.

    Customers complaints about in-flight service rave skyrocketed.What initially appeared to be a strategic win-win approach to

    labor relations on the part of united has evolved into a longer

    term problem with no remedy in sight.

    CASE STUDY

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    What is ESOP? Its company shares given to employees for their service to

    organization. Employees are made owner of the company.

    ITS PROCESSAccording to SEBI(securities exchange board of India) the

    norms of ESOP are1. Shares issued must be from the stock already issued to

    investors in share markets.

    2. The company should have not made losses in previous 3years.

    3. It must be approved by shareholders in the AGM(Annualgeneral meeting) by passing special resolution.

    4. The shares must be given for consideration other thancash.

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    Why ESOP was chosen as a strategy by

    the United airlines?

    Reduction in pay and salary by making employees

    the owner of organization. Employees work for profit in organization.

    To have an competitive advantage in the market.

    The United airline had cost-saving by reducing

    pay and salaries. The employees were motivated which made

    company have more profits.

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    Limitation of the strategy

    Shares were not allotted equally. Pilots had

    25% out of 55% of company stock.

    Flight attendants were not included, theirdissatisfaction affected customer services.

    New employees were not included in plan.

    The employees were not allowed to cash in

    their stock until they retired from the airline.

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    Failure of strategy

    The shares were not allotted equally.

    It focus on the major player(pilots)of the

    organization.

    Organization politics.

    The strategy was implemented without any

    research.

    Non-flexibility of ESOP.

    Focus was made on short-term goal rather thanlong-term goal.

    Labor relations

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    THANK YOU