IR challenges & practices in India

1. IR challenges & practices in India Presented By:P. Dwarakanath Advisor – Human Capital 12th November 2013

2. IR in India: Content • Context Setting • Threats & Opportunities • India at a Glance • Evolution of IR • Current Landscape • Key Stakeholders • IR Challenges • Changing Expectations • Current IR Philosophy and Practices • Paradigms • Acknowledgements:

4. IR News: Headlines Sep 2008 CEO of Graziano Transmission India, an Italian auto component maker was clubbed to death by group of 200 workmen. Sep 2009 VP HR of Pricol was beaten to death by agitating workmen. Nov 2010 Asst. General Manager of Allied Nippon, an auto part maker was stoned to death by angry workmen. Mar 2011 DGM – operations of Powmex steel, a unit of Graphite India Ltd., was killed after setting his vehicle on fire. Jul 2012 Most recent is Maruti Suzuki India Ltd – GM (HR) was killed and left other 100 officials land up in hospital Mar 2013 Hero MotoCorp workers at the Gurgaon unit go on hunger strike demanding higher wages. April 2013 Domestic auto major M&M suffered a production loss of around 3,000 engines due to the "tools down" protest by workers . June 2013 The workers’ at Shasun Pharmaceuticals’ Puducherry plant began strike with workers in the casual payroll demanding they be made permanent employees. July 2013 Bajaj Auto approached the Pune industrial court to declare the on-going workers’ strike at its Chakan plant as illegal.

5. India : Land of Opportunity

6. Industrial Disputes in India

7. India at a Glance • 1. Largest Democracy – 1.2 billion people, Growing Middle Class • 2. 4th largest GDP (PPP) and 10th largest GDP (Nominal, USD 1.8 trillion) • 3. One of the fastest growing economies in the world • India’s average GDP growth rate: 7.3% over past 10 years • 4. 3rd Largest Investor base in the World • 5. Robust Legal and Banking Infrastructure • 6. Demographics Advantage – Youth driven economy • 7. Suburbanization & Rural to Urban Migration (140 million by 2020; 700 million by 2050) • 8. 2nd largest pool of Certified Professionals and highest number of qualified Engineers in the world • 9. Increasing investment in infrastructure to help growth going forward • 10. Robust and active judicial review

8. Labor Relations to Employee Relations The Present and the Future Mid-90s to 2010 • MNCs looking at standardization ; not adapting to local culture • More educated workforce; more value-adding nature of work • Work contracts becoming more ‘commercial’ • Focus on ‘policies’ instead of ‘principles’ • Focus on compliance and governance • Emergence of linkages with international unions • Growing influence of media / social activism • Professional language dominated by HR/HRD • Growing economy and ‘Good’ Wages • Thrust on service sector • Job security less of a concern (Gen Y) • Bargaining power of workers reduced • Management preferred to ‘avoid’ unions • Bipolar political set up Till Mid-90s • Ideology based Trade Unions ‘Vs.’ Approach between Management & Unions • Parent-Child, I am OK – You are not OK Approach • Struggle to balance ‘Productivity’ & ‘Security’

9. Do you know? GHERAO

10. Current Landscape… Environment Business Organization Structure Market Industry Future People Dynamic Fiercely Competitive Fluid Fluctuating Apprehensive Unpredictable Bewildered

11. Key Stakeholders • Seek decision making powers of management • Complete autonomy • in operations • Economic Growth • Industrial Harmony • Revenue Generation Judicial System Judicial System • Job Security • Living Wage • Welfare Amenities • Voice grievances • Flexibility in Operations • Low Conversion Cost • High Productivity

12. IR Challenges Management • Not seen as strategic • No participation of board / Top Mgmt. • Reactive rather than proactive approach • Lack of exp professionals • Improper hiring policies Government • Time consuming & cost prohibitive adjudication • Outdated Labor Legislation • Highly regulated, low governance • Sons of Soil - philosophy Unions • Political Interference • Emergence of radicals in few pockets • Role of international federations • Formation of unions of white collars in service sectors (Doctors, Pilots, IT /ITes etc.) • Role of NGOs and Social activists Employee • Contract labor • Wage differentiation • Lack of articulated exit policy • Managing Gen Y expectations • Booming Social media

13. Changing Expectations : Management Shift in perception 8 hours work Manpower Not just output Single product Good quality product Not just labour Employee Effective time utilization Optimum Utilization Speed of work Multiple product Zero defect…first time right Low cost labour resource

14. Changing Expectations : Workforce Shift in perception Basic Hygiene Food Transport Exploitation Safety standards Medical-not mere Health check Workers’ Right Not just Monetary increase in wage Cleanliness/ambience Dietary Self mode or better luxury mode Norms / laws / Respect Behavioral safety, extensive use of standard PPEs Mediclaim , better equipped Hosp. Respect / Recognition Now even looking for share in Co. by demanding shares (Bajaj Aut0, Pune)

15. Current IR Philosophy and Practices • Unions can be partners, they are not a burden • Few Organizations manage employee relations without unions through robust communication, grievance handling missionary and speedy conflict resolution • Appeasement comes with a long-term price and hence not the best way • Sometimes the cause of a dispute, is at management end itself, due to style, implementation issues, etc. • Communication on a continuous basis is a must, be willing to ‘listen’ and provide ‘ psychological air’ especially to the younger workforce • Union should not become the sole vehicle of communication with employees. They can facilitate but not be responsible • Escalating matters to third party is not the best approach. It should be only by exception • Linkages with external environment is very critical

16. Current IR Philosophy and Practices • Collective bargaining is through “Give and Take” approach • ‘Action – Reaction’ principle works - The more unfair, unjust, unethical, dominating and suppressive you are, the more violent can be the reaction • Unfair labor practices including engagement of Contract labor can be a ticking time bomb if misused • ‘ Community of Interest’ perspective rather than ‘ Conflict of Interest’ • ‘ Culture of Conscience’ • TRUST, CREDIBILITY AND TRANSPARENCY are three key requisites for successful employee relations “ Culture Eats Strategy for Breakfast”

17. Practices in Collective Bargaining

18. Proactive IR : In Action Robust Selection Process Inclusion & Diversity Source Recruitment Screen Test to Shortlist Pre-employment & Dexterity Training Pre-Employment & Trade-wise Training Test to Select ONBOARDING DEPLOYMENT Interview Antecedent Verification Creating Culture of values..learning Affirmative Action Medical

19. Paradigms Organized Vs. Unorganized Employability Vs. Employment Permanent Vs. Contract labor Internal Vs. External Union Local Vs. Non-Local workforce White collar Vs. Blue collar Gen X Vs. Gen Y Innovation & Productivity Vs. Cost Arbitrage Low Vs. High Wages Global Vs. Glocal “Survival of the fittest” Vs.“Welfare of the Weakest”

20. Acknowledgements: Few slides in ppt. were contributed by my professional colleagues namely Mr. L Prabhakar of ITC, Mr. Prince Augustin and Mr. Vijay Nair of Mahindra’s