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GROUP MEMBERS
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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 that
may interfere with an organization’s business
objectives, as also with resolving disputes between
and among management and workers. It includes
the processes of ensuring that relations with
workers comply with applicable central and local
laws and regulations and resolving workplace
disputes.
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JOURNEY : LABOR RELATIONS TO
EMPLOYEE RELATIONS
• Labor Relation in India has been shaped
largely by principles and policies evolved
through 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, influenced
the evolution of the Labor relations system in
India
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JOURNEY : LABOR RELATIONS TO
EMPLOYEE RELATIONS
• The Historical evolution of the Labor Relations
system 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 TO
EMPLOYEE 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
LABOR RELATIONS
(I.R.)
EMPLOYEE RELATIONS
(SHRM)
Psychological
Contract
Compliance
Commitment
Behavior
References
Norms, Customs, Practices
Values, Mission
Low trust, pluralist,
Collective
High Trust, Unitarist,
Individual
Formal Roles, Hierarchy,
Division of labor,
Managerial Control
Flexible roles, flat
structure, teamwork and
autonomy, self control
DIMENSION
Relations
Organizational
Design
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Relevance of Labor Relations
in the field of SHRM
• In many industries (public or private)
unionization is the norm. Managers and
business owners in these industries have no
choice but to be well versed on the laws that
regulate the relationship with union
employees.
• Competitors maybe unionized and settlements
in those organizations may impact HR
practices, programs and policies needed to
remain competitive in recruiting and retaining
productive 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 outside
players 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
organization’s cost structure particularly
payroll expenses.
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EMPLOYEE RELATIONS
STRATEGY
• Like other business and HR strategies, those concerned
with employee relations can, ‘emerge in response to an
evolving situation’.
(Mintzberg – 1987)
• Employee relations strategy define the intentions of the
organization about what needs to be changed in the ways
in which organization manages its relationship with the
employees and their trade unions.
Eg:
• 1. Strategy- achieving competitive edge through innovation
• 2.Strategy- achieving competitive edge through cost
reduction
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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
Partnership
Power sharing
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THE SHRM APPROACH TO
EMPLOYEE RELATIONS
• Build stable and cooperative relationships
with 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 cultures
based on the shared values between
management 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 of
legislation so that the laudable social goals can be
obtained simultaneously with organizational growth and
efficiency.
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Labor Legislations in India
LAW
IMPLICATION FOR EMPLOYERS
The Minimum Wages Act, 1948
Set minimum wage standards
The Payment of Wages Act, 1936
Regulate payment of wages in the
stipulated 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 Employee’s 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
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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
Employee’s 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
Recognition of trade union in India
• The NLRB is responsible
for overseeing a particular
union as the official
bargaining representative
of a group of employees,
and hearing allegations of
violations of the act from
employers, unions and
employee groups.
• 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 trade
union or by the orders of the
Labor Court under certain
conditions.
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COMPARATIVE STUDY OF LABOR
LEGISLATIONS
Establishment of union under NLRB
Registration of union Trade Union Act
• Group of employees
petition the NLRB through
assistance of a union
representative to conduct
an election
• NLRB requires at least
30% of the employees to
have signed authorization
cards, which indicate an
expressed interest in
having union
representation from a
specific union
• An application for
registration of a trade union
is made to the Registrar of
Trade Unions.
• No registration unless at
least 10% or 100 of the
workmen (whichever is
less), subject to a minimum
of 7, engaged or employed in
the establishment or
industry with which it is
connected are the members
of such trade unions on the
date of making such
application for the
registration
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COMPARATIVE STUDY OF LABOR
LEGISLATIONS
• When the NLRB receives the
authorization cards and
determined that there is
sufficient interest to conduct
an election, it determines
whether the organization
should have a bargaining
unit that cover all the
employees or separate
bargaining unit for different
groups of employees
• Works committees are set by
the establishments with
equal number of
representatives of workers
and management for
endeavouring to compose
any differences of opinion
in matters of common
interest, and thereby
promote measure for
securing and preserving
amity and cordial relations
between the employer and
workmen.
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Why Employees Unionize?
Need to unionize
Historical
Background
Benefits
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 bonus
payment Hours of work and overtime
Terms and conditions of work, safety,
welfare and health care Grievance
procedure 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 the
collective bargaining process that reduces
uncertainty and instability in the workplace.
Workers are often more motivated following
collective bargaining as they have participated
in the process and the outcome.
Collective bargaining aids in labour market
flexibility by helping workers to understand
and accept the need for modernization and
restructuring.
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Benefits to workers
Collective bargaining provides workers with
a collective voice which may be more
effective than dealing with managers one by
one.
Collective bargaining helps ensure adequate
wages and working conditions and helps
workers to receive a fair distribution of
gains that might result from the
introduction of new technology.
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Process of Collective
Bargaining
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Levels of Collective
bargaining
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Collective Bargaining Committees
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Steps in Collective Bargaining
Process
1. Preparing for negotiations through collective bargaining
involves 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 in
the same industry or region
(iii) Relevant national legislation related to the issues to be
discussed.
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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/management
represented 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 staff
member 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 consult
thoroughly with all groups that they represent
prior to coming to the negotiation table. This
consultation 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 note
what are the main concerns, interests and
expectations 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 to
determine
the rules and procedures to be used during negotiations. Bargaining
rights 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. They
may be withdrawn, accepted by the other side in its entirety, or
accepted in some compromise form. However all decisions must be
made 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 future
unions 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 of
today and those of the future are quite
different from the jobs of the past
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Conclusion
• Countries such as Japan and Germany have
extensive unionization and produce some of
the highest quality, most technologically
advanced products.
• Although employees clearly need to
consider labor relations from a strategic
perspective, union representatives must do
so even more if they are to keep their unions
viable for tomorrow’s organizations.
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Case study
In July, 1994, United Airlines, the world’s largest airline,
announced an employee stock ownership plan (ESOP) that
would allow its unionized employees to acquire 55 percent of
the company’s stock in exchange for reduction in pay and
benefit. The plan was immediately hailed as a breakthrough
in 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 company
stock despite the fact that they constituted 10 percent of the
workforce. However, the pilots had made the greatest
financial concessions.
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CASE STUDY
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-pass
policies 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 to
its enhanced financial performance.
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CASE STUDY
The positive result, however, were short lived. Flight attendants, who
were 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, in
2000, 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 company’s ongoing financial
performance. New employees were also not able to participate in the
plan. perhaps the biggest problem with the plan for employees is that
they are not allowed to cash in their stock until they retired from the
airlines.
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CASE STUDY
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 fly
overtime 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.
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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 PROCESS
According to SEBI(securities exchange board of India) the
norms of ESOP are
1. Shares issued must be from the stock already issued to
investors in share markets.
2. The company should have not made losses in previous 3
years.
3. It must be approved by shareholders in the AGM(Annual
general meeting) by passing special resolution.
4. The shares must be given for consideration other than
cash.
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Why ESOP was chosen as a strategy by
the United airlines?
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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
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Shares were not allotted equally. Pilots had
25% out of 55% of company stock.
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Flight attendants were not included, their
dissatisfaction affected customer services.
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New employees were not included in plan.
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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 than
long-term goal.
•Labor relations
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THANK YOU
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