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Industrial Relations as a strategy for enhancing organizational productivity & performance.

Industrial Relations is a sign of congenial relations. When good understanding prevails between employee and management each party "tries to serve the other to the best of their ability. Employee tries to improve productivity when grievances and conflicts are resolved in an amicable manner. In this case study of Rashtriya Ispat Nigam Limited, Visakhapatnam, the author examines how IR affects productivity.

Introduction

It is commonly held that the field of industrial relations deals with the people at work place. In industries, collaboration of men having diverse interests often leads to tensions and conflicts. Each interest group tries to maximize its share from the enterprise. Their orientation towards work is also bound to be different from another. Establishment and maintenance of harmonious relations between employee and management is a pre-requisite for the organization's performance. When good understanding prevails between them, each party tries to serve the other to the best of their ability. Employee tries to improve productivity. In a realistic sense, complete harmony can be elusive. Trade unions, to safeguard their interests, would try to register protest in an organized way. In the absence of sound industrial relations in an organization, it is reasonable to expect employees to face many serious disputes. Employment conditions in industry are not regulated merely by employees and employers, though both have a major role in it. State intervention in the regulation of employee- management relations has been on the increase and therefore, the role-played by the state and its interaction with employers and employees legitimately forms part of industrial relations.

Need & Significance

The most important benefit of industrial relations i$ that this ensures continuity of production and also the resources can be fully utilized, resulting in the maximum possible production. It reduces the industrial disputes. Strikes, lockouts, and grievances are some of the reflections of industrial unrest which do not spring up in an atmosphere of industrial peace. Good industrial relations improve the morale of the employees leading to enhancement in productivity. Wastages of men, materials and machines are reduced to the minimum. Do industrial relations influence organizational performance? Literature has explored the industrial relations impact on organizational performance, especially on the productivity dimension of performance. More recent studies state that performance is determined by IR practices. This study examines the impact of industrial relations strategies on organizational productivity and performance. The effects of trade unions, grievances, collective bargaining & participative management on Rashtriya Ispat Nigam Ltd performance are tested here.

Literature Review

First, we refer to the studies on industrial relations effects. The ways in which industrial relations can impede economic performance of a firm are by imposing restrictive work practices or by impeding the introduction of new technology. There is some evidence from the 1970s showing that such practices had harmful effects (Elbaum and Wilkinson, 1979). Such practices were common in India in that period until the mid and late 1980s, but were mostly removed by the new industrial relations system. Then began restructuring for nearly two decades of enterprise bargaining through strategic industrial relations. As to whether industrial relations restrict the introduction of new technology, while there were some cases of this, the evidence even from the 1980s was that, in general, industrial relations did not substantially restrict new technology. Still, it was generally thought amongst conventional economists that industrial relations had a negative impact on economic variables until the emergence of the 1980s (Freeman & Medoff, 1984). This showed that industrial relations could have a positive effect on the performance through two mechanisms. One was the 'bargaining' effect: higher wages lead employers to resort to labor-saving technology. This leads to higher labor productivity. The second mechanism was the 'grievances' effect: employees express their voice through industrial relations and this leads to lower covert conflict at work and to improved techniques of production. A positive relationship was found between industrial relations and productivity at workplaces where unions are active (Wooden, 2000). Collective bargaining coverage was associated with higher levels of self-claimed productivity (Fry, Jarvis & Loundes, 2002). Firms with high rates of union membership were more productive than firms with no union members (Tseng & Wooden, 2001). Another study from the 1990s showed that the intensity of collaboration between management and employees (through industrial relations) had a positive effect on workplace performance (Alexander & Green, 1992). A study of 'excellent workplaces' by researchers from the Indian corporate sector found that there had been a positive impact on workplaces which could achieve excellent performance (Hull & Read, 2003).

Methodology

Out of 8,603 floor level employees of Rashtriya Ispat Nigam Ltd , 4.0 per cent (350), and out of 4,113 supervisors around 3.7 percent (150) have been taken as a sample size for the study. A quota sampling technique has been used to collect the response. The data analysis was done with the help of simple percentages and ranking method etc. If a comparison is made between a government integrated steel company and a private integrated steel company it could have provided more insights into the industry.

Perception of Shop Floor Workers & Supervisors

Industrial Relations (IR) is concerned with people at work and their relationship with each other. IR in the organization designs a set of programs, functions and activities to maximize productivity and performance. In this context the researcher has attempted to know the importance of IR in the Rashtriya Ispat Nigam Ltd (RINL). Here the researcher used a scale of five ranks. For the reason chosen as first, five points are given, for the second, four points and the same descending order is followed.

It is observed (Table 1) that the IR in the RINL is meant for creating 'good environment between management and trade unions for bargaining process' occupied first place with 1621 points and it was ranked 1st by 129 workers and supervisors (26%), 2nd by 111 workers and supervisors (22%), 3rd by 89 workers and supervisors (18%), 4th by 72workers and supervisors (14%) and 5th by 99 workers and supervisors (20%). Establishment of IR in RINL 'Settles disputes more amicably' occupied second place with 1582 points. It was ranked Is1 by 134 workers and supervisors (27%), 2nd by 102 workers and supervisors (20%), 3rd by 79 workers and supervisors (16%), 4th by 82 workers and supervisors (17%) and '5th by 103 workers and supervisors (20%). It is found that IR in the RINL 'Work as liaison officers between employees and management for participation process' got third place with 1509 points. It was ranked 1st by 119 workers and supervisors (24%), 2nd by 98 workers and supervisors (20%) 3rd by 84 workers and supervisors (17%), 4th by 71 workers and supervisors (14%) and 5th by 128 workers and supervisors (25%).

It is observed that the IR especially is to 'provide better advisory services for the welfare of employees' occupied fourth place with 1437 points. It was ranked Is1 by 76 workers and supervisors (15%), 2nd by 86 workers and supervisors (17%), 3rd by 122 workers and supervisors (25%), 4th by 131 workers and supervisors (26%) and 5th by 85 workers and supervisors (17%). 'IR does not pay sufficient attention for cordial relations between workers and supervisors, TU and management' got fifth place with 1363 points. It was ranked 1st by 42 workers and supervisors (8%), 2nd by 103 workers and supervisors (21%), 3rd by 126 workers and supervisors (25%), 4th by 144 workers and supervisors (29%) and 5th by 75 workers and supervisors (17%).

In fact the IR is playing a decisive role in RINL. It has been providing a variety of services to its workers and supervisors. This helps in maintaining congenial relations in RINL. Thus, IR has been the cause for productivity enhancement.

Counseling, Collective Bargaining & Conflict Resolution Mechanism

Every employee in the organization has certain expectations which they think must be fulfilled by the organization he is working for. When the organization fails to do this, employee develops a feeling of dissatisfaction. It shows adverse impact on organizational efficiency and effectiveness. In such cases organization should setup a systematic mechanism to resolve and prevent disputes. At this juncture, a system of counseling, collective bargaining and conflict resolving machinery helps the organization in maintaining congenial relations. In RINL 500 workers, including supervisors, are interviewed to collect data on the need for counseling, collective bargaining and an effective system of dispute redressal machinery. In the case of individual problems 38.20 per cent of the workers expressed that these problems should be solved through proper counseling in RINL. About 32 per cent viewed that workers' individual problems should be resolved through collective bargaining (Table 2). In their view, trade unions should play an important role in solving individual problems through collective bargaining process. About 29.80 per cent believe that critical individual problems should be settled through conflict resolving machinery at a very fast pace without any delay. Similarly 234 workers out of 500 felt that group problems should be solved through collective bargaining and at the time of negotiations these problems should be placed as first priority. About 46 per cent of the workers feel that conflict resolution machinery should solve group problems. But 7.20 per cent view that counseling gives better results in solving the problems.

In the case of employee work related problems, the workers are confined to three choices of counseling, collective bargaining and conflict resolution. These are given equal importance in resolving problems which arise between the workers and the management. A system of counseling (33.60 per cent) and collective bargaining (34.60 per cent) are the only ways to solve group problems. About 31.80 per cent supported a system of conflict resolution.

It is observed that the problems relating to wages should be resolved through collective bargaining as expressed by 51.40 per cent. Conflict resolution will definitely help in the settlement of wage problems in RINL as expressed by 43 per cent of the workers. Very few i.e., 5.60 per cent expressed the feeling that counseling may be helpful. Similarly, a system of conflict resolution is found desirable to settle promotion problems in an amicable manner. About 201 workers out of 500 think that trade unions put the promotion problems as the main agenda while negotiating with the management. Nearly 11.20 per cent agreed that counseling is helpful in the settlement of promotion problems. Workers' participation issues pertaining to workers collective are being discussed at various forums with recognized and ether unions. At present, 92 bipartite committees are functioning with equal participation from management and workers representatives to discuss issues at the shop level and plant level on welfare, safety, production and productivity. There are 4,779 QC projects implemented in the organization and 21,479 suggestions generated across the organization.

Labor Productivity

Labor productivity is an important indicator for measuring the organization performance. In fact labor productivity will also be influenced by a number of factors like available technology, skills of the workers and availability of inputs. As these are qualitative factors quantification of the changes in these is very difficult. So, the researcher restricted himself to calculate labor productivity by dividing the total output with the number of employees. It is observed that the productivity increased by 176 percent in a span of 11 years or at an annual average growth rate of 16 percent due to congenial industrial relations in RINL (Table 3). It is forecasted that the productivity will be enhanced by another five percent in the year 2014-15..

The company has taken up a number of measures to improve the productivity of labor. It has provided several incentives to the work-force so that they work hard and better to enhance the productivity. Incentives are provided in the form of additional one-day wage for those who are not absent even for a single day in a month. If this trend is continued by a worker for quarter of a year, he is provided an extra one-day wage. Night duty allowances, subsidized canteen food, low-rent quarters, petrol allowance for own transport, yearly bonus based on the work turned out etc are some of the important incentives provided to the workers so that they can work with commitment and sincerity and help in the improvement of productivity for the firm. All these are implemented through collective agreements between management and trade union.

Regarding its financial performance, RINL became a debt-free company in 2003 and wiped out all the accumulated losses in 2006 and the company was accorded the Miniratna status for its performance. The RINL is supplying a wide variety of saleable steel products to its customers in the local and international markets. It is observed that the sales increased by 167 percent in a span of 11 years or at an annual average growth rate of 15 percent. The sales value in 2014-15 would be Rs. 14,671 crores. RINL management has initiated some IR strategies to improve the financial performance of the company keeping in view the competitive environment. Since 200203 RINL has earned remarkable sales and profits continuously. It may be implicit that the IR policies made RINL harness the forces of change and emerge as a winner in the global steel market.

Conclusion

As per the IR policy RINL provides a congenial work environment that makes its manpower committed and motivated for maximizing productivity. Efforts are made by the management to generate an emotional binding of the worker with the organization. Occasional meetings are held by the superior authorities to know the problems of the workers and to take necessary steps to overcome those problems. These meetings acted as a source of support to the workers to work hard and produce more. Thus the organization has developed a productive work culture through participation in management, collective bargaining, amicable settlement of conflicts and friendly relations with trade unions to improve the productivity of its manpower.

References

Alexander, M. J. & Green, R. (1992), "Workplace Productivity and Joint Consultation", Australian Bulletin of Labor, 18:. 95-118.

Bertone, S., Marshall, S. & Zuhair, S. (2008), "What Impact Has Work Choices Had on the Wages, Working Conditions, Working Lives, and Wellbeing of Victorian Nonunion Members?", 22nd Conference of Association of Industrial Relations Academics of Australia and New Zealand, Melbourne, February, http://www.mngt. waikato.ac.nz /departments/ Strategv%20and%20Human%20 Resource% 20Management/airaanz/proceedings/melbourne2008/ref/S.%20 Bertone,% 20S.%20 Marshall,%20S.%20Zuhair.pdf

Elbaum, B. St Wilkinson, F. (1979), "Industrial Relations and Uneven Development: A Comparative Study of the American and British Steel Industries", Cambridge Journal of Economics, 3: 275-303.

Freeman, R. B. & Medoff, J. L. (1984), What Do Unions Do? New York, Basic Books.

Fry, T. R., Jarvis, L. K. & Loundes, J. (2002), Are IR Reformers Better Performers? Melbourne Institute Working Paper No 18/02, Melbourne Institute of Applied Economic and Social Research, University of Melbourne.

Hull, D. & Read, V. (2003), Simply the Best: Workplaces in Australia. Working Paper No. 88, ACIRRT, University of Sydney.

Tseng, Y.-P. & Wooden, M. (2001), Enterprise Bargaining and Productivity: Evidence from the Business Longitudinal Survey, Melbourne Institute Working Paper No. 8/ 01, Melbourne Institute of Applied Economic and Social Research, University of Melbourne

Wooden, M. (2000), Union Wage Effects in the Presence of Entefprise Bargaining, Melbourne Institute Working Paper No 7/00, Melbourne Institute of Applied Economic and Social Research, University of Melbourne.

B.S.N. Raju is Head of Department & Associate Professor, Department of Management Studies, M.R.P.G College, Vizianagaram, Andhra Pradesh. Email: hod.management2012@gmail.com,
Table 1 Perception of Shop Floor Workers & Supervisors
on the Role of Industrial Relations in the Organization.

Factor                  1st rank    Points    2nd rank    Points

IR creates a good       129 (26)       645    111 (22)       444
environment between
management & TU for
'bargaining' process

IR works as 'liaison    119 (24)       595     98 (20)       392
officer' between
employees and
management for
participation process

IR provides better       76 (15)       380     86 (17)       344
'advisory' services
for the welfare of
employees

IR 'settles' disputes   134 (27)       670    102 (20)       408
more amicably

IR doesn't pay            42 (8)       210    103 (21)       412
sufficient attention
for cordial relations
between employees, TU
and management

Total                        500                   500

Factor                  3rd rank    Points    4th rank    Points

IR creates a good        89 (18)       267     72 (14)       144
environment between
management & TU for
'bargaining' process

IR works as 'liaison     84 (17)       252     71 (14)       142
officer' between
employees and
management for
participation process

IR provides better      122 (25)       366    131 (26)       262
'advisory' services
for the welfare of
employees

IR 'settles' disputes    79 (16)       237     82 (17)       164
more amicably

IR doesn't pay          126 (25)       378    144 (29)       288
sufficient attention
for cordial relations
between employees, TU
and management

Total                        500                   500

Factor                  5th rank    Points        Total    Rank
                                              weightage
                                                 points

IR creates a good        99 (20)        99         1621       1
environment between
management & TU for
'bargaining' process

IR works as 'liaison    128 (25)       128         1509       3
officer' between
employees and
management for
participation process

IR provides better       85 (17)        85         1437       4
'advisory' services
for the welfare of
employees

IR 'settles' disputes   103 (20)       103         1582       2
more amicably

IR doesn't pay           85 (17)        75         1363       5
sufficient attention
for cordial relations
between employees, TU
and management

Total                        500

Note: A scale of five ranks is used. For the reason chosen as
first, five points are given and for the reason chosen as two,
four points and the same descending order is followed.

Table 2 Perception of Shop Floor Workers and Supervisors on
Counseling, Collective Bargaining & Conflict Resolution Mechanism

Problem                 Counseling    Collective      Conflict   Total
                                      Bargaining    Resolution

Employee individual    191 (38.20)   160 (32.00)   149 (29.80)     500
  problems
Group problems           36 (7.20)   234 (46.80)   230 (46.00)     500
Employee work related  168 (33.60)   173 (34.60)   159 (31.80)     500
  problems
Problems related to      28 (5.60)   257 (51.40)   215 (43.00)     500
  wages
Problems related to     56 (11.20)   201 (40.20)   243 (48.60)     500
  promotions

Figures in parenthesis are percentages to total.

Table 3 Labor Productivity with Reference to Output in RINL,
Visakhapatnam

S. No   Year               Labor    Index           Sales    Index
                    Productivity              performance
                    (000 tonnes)             (Rs. Crores)

1       2002-03              253      100            5058      100
2       2003-04              262      104            6169      122
3       2004-05              398      157            8181      162
4       2005-06              414      163            8482      168
5       2006-07              413      165            9151      181
6       2007-08              425      167           10443      208
7       2008-09              383      151           10543      208
8       2009-10              405      160           10635      210
9       2010-11              406      160           11517      227
10      2011-12              412      162           14462      285
11      2012-13              435      171           13553      268
12      2013-14              446      176           13489      267
13      2014-15 *            460      181           14671      290

Source: Rashtriya Ispat Nigam Limited Annual Reports,
* Projected
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Author:Raju, B.S.N.
Publication:Indian Journal of Industrial Relations
Geographic Code:9INDI
Date:Jul 1, 2015
Words:3097
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