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Managing IR

October 12, 2017

INDUSTRIAL relations (IR) in a factory environment is the most crucial part of human resource management. The role of an IR manager is not only to keep these relations workable but also to make consistent efforts to improve them through effective communication and efficient administration of labour welfare schemes.

There may be any number of labour unions in an organisation, but only one ‘collective bargaining agent’ union elected through a referendum by the existing unions is permitted to represent the workforce. A CBA has vast powers to nominate its representatives in various forums constituted under the law, negotiate its charter of demands with management and reach a collective labour agreement.

Raising a charter of demands, or an industrial dispute, and negotiating on it with management may become turbulent due to any reason caused by one party or both. When there is a lack of trust in IR, a CBA tends to exploit instances of management staff making mistakes or handling situations foolishly in order to foment labour unrest.

A tit-for-tat policy does not work in industrial relations.

In 1977, I had joined an American fertiliser company as an IR officer. The company had a manufacturing plant in Daharki, Sindh, that became operational in the late 1960s — a period in which Z.A. Bhutto founded the PPP, and a majority of Pakistan’s labour unions were inclined towards communism or socialism. Being a popular leader, the unions believed that when Bhutto assumed charge he would set up a socialist system and that workers would soon own the factories.

Immediately after the plant was commissioned, a maintenance manager asked his technician to perform a particular task, which the technician refused claiming it was not his job. When his manager insisted, the technician complained to the CBA. It instigated the workers to strike, but this illegal strike did not halt operations at the plant. The management staff assumed charge of all processes and ensured that output did not decline. Management took stern disciplinary actions against all those who were involved in prompting the workers to strike, and no such disruption occurred again.

Thereafter, I joined a British multinational company, which had a highly profitable soda ash manufacturing plant in Khewra, Punjab. Although the CBA was tough, there had been no major IR crisis since the plant began operating in 1939. In the mid 1990s, the residential colonies (built by the company for its management and non-management staff, ie workers) faced frequent power outages. So management installed a generator that alternatively supplied electricity to both colonies. The management colony, however, received power supply for longer hours — even though its population was far less than that of the workers.

One day, the union’s general secretary approached the generator operator and told him to switch the supply to the workers’ colony. The operator refused, management was informed — they did not yield to pressure — and the general secretary was suspended from service and disciplinary proceedings were initiated. The general secretary orchestrated an illegal strike, which management had prohibited by the National Industrial Relations Commission.

Nevertheless, this episode turned out to be unfortunate for management. The dispute lasted for 18 months, causing the plant’s output to fall by almost half, resulting in huge monetary losses to the company. Management had to endure frequent acts of sabotage by the workers, which would cause sudden stoppages at the plant. The dispute was finally settled after conceding to the union an unusually high increase in salary and benefits in exchange for the general secretary’s ouster.

When we compare these two examples, the American company succeeded and the British company failed — even though the management initiatives undertaken in both cases were practically identical. The circumstances leading to success or an ugly and damaging industrial dispute could be similar, but every IR situation is so volatile that it is hard to predict the results of management’s actions.

People who don’t have much IR exposure believe that difficult situations can be effectively handled by people who are considered tough (preferably those with an army background). This type of management practice may backfire, as taking rigid positions in IR can be disastrous. A tit-for-tat policy does not work in IR. People need to be separated from the problem. One should be soft on the people and hard on the problem. The interests of the other party should be explored; then, management’s focus should be on the interests and not on the positions.

As cited above, both managements of the US and UK companies took strong positions, which resulted in an intense IR crisis. Nevertheless, if a crisis situation is inevitable, management should only yield to principle and not to pressure.

The writer is an industrial relations professional.

Published in Dawn, October 12th, 2017