THE HUMANE RELATIONS BUSINESS: India’s unique position

5th July 2010, ECONOMIC TIMES

Following a recent strike at an air carrier, a company executive is reported to have said, “Half our company’s problems are because there are no clear directions from HR.”

5th July 2010, ECONOMIC TIMES

Following a recent strike at an air carrier, a company executive is reported to have said, “Half our company’s problems are because there are no clear directions from HR.” If half of any company’s problems emanate from HR, that company deserves an entry in Ripley’s Believe it or Not! Practising HR and being humane are the essence of any manager’s job, and certainly not HR’s prerogative.

Never before in human history are so many young people entering the work force of their economies in such a short time in so many countries in Asia, Africa and South America. Employee discontent has emerged as a key issue in many countries. The unprecedented challenges require innovative responses.

There are three types of societies. Rich and low-growth capitalist democracies are experiencing a re-emergence of new form of union activities, aided by the internet and modern communications (like US, Japan and Europe). High growth and authoritarian countries with state-directed capitalism are responding by pedalling harder on the growth treadmill (like China, Russia, and the Middle East). The few emerging and high growth democratic economies like India have to focus on employee connect with far more passion than ever before.

Rich and low-growth capitalist democracies: These have evolved by first unleashing unbridled capitalism. With the need for order, liberalism and democracy developed subsequently. Low growth and ageing population are both key issues. The share of population above age 60 in Japan and Europe would have moved from the early teens in 1950 to over 40 percent by 2050. Generous retirement benefits are no longer affordable as fewer workers have to support increasing pensioners. This issue has been around for some time, but like global warming, it seems to have suddenly burst forth into public attention.

In March 2009, the head of Sony France was shut up overnight inside the factory by the workers, reminiscent of gherao, invented and exported by the Bengal communists during the 1970s. During the last three years, companies like France Telecom, Renault, Peugeot and EDF have experienced increasing suicides among workers. Even in America, the rate of suicides has increased by 28% in the last two years.

In these nations, employees are offended that they are expected to offer loyalty to their employer, but they do not receive an equal commitment from the employers to protect their jobs. Employees everywhere say that they are “in distress” or that they are “stressed out.” A certain degree of confrontation is inevitable in the years ahead.

Emerging and high growth authoritarian capitalist economies: These countries have authoritarian political regimes with overt policies of capitalism–China, parts of Africa and Middle East, for example. Apart from China whose population has peaked, others have a growing population. In 1950, Africa accounted for 9 percent of the world population, but by 2050, it will account for 20 percent. In Iraq, Iran, Afghanistan and Pakistan together, 66 million will be added to the work force within the next decade.

Even in China labour unrest has begun in recent years. Permanent workers are unhappy with their migrant conditions and heavy work schedule; temporary workers are unhappy due to insecurity. Such trends are seen with Honda automotive and Foxconn electronics and may have accelerated since workers were permitted to voice their discontent.

Author Stefan Halper argues that a new model will dominate the 21st century, that is, authoritarian capitalism—an oxymoron to students of capitalism. Halper points out in The Beijing Consensus that the absence of liberties in China may appear transitory or even unacceptable to western eyes. Yet more Chinese people are grateful for their jobs and improving standards than those who are unhappy about their political rights. For an authoritarian capitalist society to thrive, the economy must somehow continue to grow.

The Chinese government is therefore doing the reverse of what it did in the past that is, encouraging an upward wage revision. This could maintain the Chinese growth through an orderly transit from an export-dependent economy to promoting domestic consumption. If successful, China would have addressed three problems in one stroke: reducing employee discontent, achieving continued growth and a natural adjustment to the exchange rate, rather than one which is forced by another nation!!

Fast growing, emerging, democratic economy: India is among a few emerging, high growth emocracies.
Employee discontent will manifest as union activity and as a political force. India’s response cannot resemble the rich democracies or the authoritarian capitalist economies.

India has experienced some hyper cases of industrial action in recent years. In September 2008, an Italian company’s Indian CEO was killed in an auto-components factory in Gurgaon. During April and May last year, M&M had a stoppage of production at Nashik, Hyundai faced problems at its Chennai factory, Nestle had a closure of its foods factory in Uttaranchal, and the Wockhardt Hospital in Goa had to be shut down. In 2009 a company executive was killed at Pricol in the south. Strikes have occurred at Gurgaon-Manesar, Chennai and Coimbatore. In Chandigarh, an unemployed BPO employee used his I.T. skills to post nude pictures of his female boss on a network site, a novel way to protest about not having his job or compensation. The formation of UNITeS (Union of IT enabled services) to represent BPO workers is a reincarnation of industrial labour unions of yesteryear but with a modern twist.

In India managements have been sympathetic to workers, partly due to the general social conditions and also due to paternalism. However management’s approach has to shift to empathy for the rising aspirations of employees. It is not as easy as it sounds. It would be opportune to deregulate industrial relations as was done for industrial licensing 20 years ago. This will help managements and employees to be more engaged through dialogue rather than through laws, rules and confrontation.

People connect has to have an emotional component, a meeting of hearts than only minds. Technology, globalisation, demography, societal trends and low carbon will work together to shape the future of work as pointed out in a May 2010 study by Lynda Gratton of LBS. However these rapid transformations in technology-enabled communications should not diminish the quality of person-to-person connect.

The art of conversation as well as the ability of leaders to invest emotional time in people relationships are diminishing. Spending clock time on people transactions is not enough. Managers must relearn to be intuitive as much as they are analytical. Leaders have to invest in relationships. Emotion is not bad. Leaders have to anticipate a lot more about employee needs and reactions by talking to their people and listening to their people. To be successful, it is important that the manager is perceived as authentic and genuine. The latest research has revealed that managers who are more inclined to appreciate people sensitivities are likely to be more successful than others and it may not be surprising to see more and more successful leaders are either from social sciences background or those who are sensitive to human emotions.

During my IIT days, I witnessed how two hostel wardens dealt with student complaints of poor quality food in the canteen. One professor listened patiently and set up a student sub-committee to survey the food quality compared to other hostels and to suggest measures for improvement. It was a perfectly valid response, but emerged from the professor’s head. The other professor decided to join the students for a meal on three unannounced occasions to ‘taste’ the problem himself. He responded from the heart. Both problems were solved but which solution do you think was perceived as effective and memorable?

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