There has been an intellectual debate, both in the academic circles as well as in the industry, on whether the industrial relations function and the human resource management function have virtually merged in the present day or will soon merge in the future. This debate has been triggered by several socio-economic factors like the improved training and knowledge of the industrial worker, the fall in unionisation over rank and file in the industry, the improvement of the bargaining power of the individual workman as well as the trend towards general easing of the labour laws to make countries more investment-friendly. The literature on the issue has been largely in favour of such a merger, fostered by the growing trend towards Human Capital Management. However, with great deference to such views, we humbly submit that IR and HR are fundamentally different disciplines of people management, with largely different objectives and different strategies that are difficult, if not impossible, to reconcile. It is very difficult to analyse the situation with respect to the entire world, with extremely diverse labour conditions, therefore we have restricted ourselves to the Indian context while putting forward our views.
Before we can answer a question on vanishing of lines between HR and IR, we need to first understand and define the scope of the two terms. Human resource management (HRM, or simply HR) is a function in organizations designed to maximize employee performance in the service of their employer’s strategic objectives (Collings & Wood, 2009). Whereas IR is defined as those aspects of collective relations between management and workers’ representatives which are normally covered by collective bargaining and prevailing governmental regulations (Collins English Dictionary, 2003). The definitions show that even though the final objective of both HR and IR is management of the people in a firm for its smooth functioning and ultimately in increasing the shareholder’s profit, in reality they address very different aspects of employment relations. HR primarily is associated with the terms and conditions of employees which relate to the individual contract of employment and employee lifecycle management, whereas IR deals with the terms of collective bargaining between employers and employees within the regulative framework of the State. These are fundamentally irreconcilable areas of employment relations with little overlap. Yet, there has been a debate that certain macroeconomic factors is increasing the individual bargaining power of a workman therefore rendering the IR functions redundant. However, such notions are, in our opinion, both simplistic and over optimistic given the economic, socio-political and legal realities of our country.
If the fundamental contrast between HR and IR is defined as, HR being a business function which manages individual employment relations whereas IR is a business function which manages employment relations at a collective level under regulatory framework of the State, (Sriyan de Silva, 1997) then for IR to render itself redundant or merge with the HR function, the prerequisite macroeconomic condition needs to be for all employees to have individual bargaining ability with respect to their employer. This is the myth that Human Resource theorist play at, while prophesising the demise of IR in twenty-first century. However, before embarking on this fanciful tour de force, one must do a bit of reality check of the macroeconomic conditions prevailing today in India. India has an abysmal rate of per capitia income (Rank 140, IMF 2013), productivity (Ranks 60, WEF 2013) and skill level (Rank 99, Sasikumar, 2010) in the industrial sector. For an individual industrial worker to be able to successfully negotiate a deal with his/her employer, he/she needs to have knowledge/skill which is difficult to find in the industry and also find available alternative destinations of employment. The facts are, however, industrial workers in India are mostly semiskilled or unskilled (Sasikumar, 2010) and its more of a supply-side labour market, which renders such individual negotiations virtually impossible. Under the given macroeconomic and sociological situations for the Indian labour to successfully negotiate a better deal with an employer based solely on his/her contract of employment is a far-fetched dream. Therefore the only way employees in India can secure a better deal with its employer is to negotiate collectively and also resort to collective action in instance of strikes, go-slows etc. In its worst form such collective action may turn violent, examples of which are not too rare, given the inherent militant trends of industrial labour in our country (All India Organization of Employers, 2008).
The second argument which is put forward with respect to unionisation is that the general level of unionisation has fallen in India and in other parts of the world (OECD Statistical Extracts, 2014), however this could be a misleading statistics as it does not indicate the ascendency of individual bargaining at all. Conversely, what it indicates is a bend towards an unhealthy laisse faire neoliberalism, under which the average growth in the industrialised world fell from 3.2% to 2.1% between 1981 and 2011 (Bagchi, 2014), accompanied by increased job insecurity and scaling down of social services. It is interesting to note some of the most prosperous social democracies like Sweden, Finland, Norway and Denmark have in fact more than 70% unionisation of its total workforce (Nation Master, 2000). This might point to, the central position of collective bargaining in the smooth functioning of the demand and supply situation in developed labour markets. All this probably also indicates, that the job of the employer’s representative in the collective bargaining process (IR manager) stands secure, in the foreseeable future in India. The theories of human capital management cultivated in developed economies, falls flat on its face when faced with the unstable, restive and often violent labour conditions existing in India, today.
India had been one of the founding members of the ILO and has since then enacted no less than 50 central legislations as well as several state legislations to govern and regulate almost every aspect of employment relations when it comes to industrial labour. Important aspects like wages, health and safety as well as regulatory issues have been brought under the direct purview of law and a sound industrial jurisprudence has been developed. These laws have stood the test of time, requiring only superficial amendments from time to time. With the boom in the service sector, most in the HR community have comfortably turned a blind eye to the importance of this factor in the Indian labour context. With most companies in the service sector hiring knowledge workers who do not fall within this regulatory framework either directly or indirectly, the perception has sunk in, that the laws have made themselves redundant. However, one must keep in mind that with the recent slump in the service sector and the present government’s aim of boosting the manufacturing sector, these laws will play a crucial role in the days to come. We cannot expect sweeping labour reforms anytime soon, the present pending amendments to Factories Act, Apprenticeship Act and IDA are mostly cosmetic in nature. Regulated by Article 19 and 20 of the Fundamental Rights of the Constitution and guided by Articles 38, 43 and 43A of the Directive Principles of State Policy in Part IV, coupled with the above mentioned macroeconomic conditions in India, it would be undesirable and difficult to implement labour reforms in the way China and some of the Southeast Asian countries have. This is the aspect where the role of the IR manager true blossoms, he is the sole representative of the employer when it comes to a dispute with regards to employment, non-employment, terms of employment or conditions of labour. The bipartite and even more so, the tripartite nature of collective action in the India, gives special relevance to the job of an IR manager. An IR manager is expected to be thorough with the labour legislation and the corollary rules when it comes to taking decisions and framing policies. There are vicious provisions like 33(1) (b), 33(2) (b) and 33C of IDA, which can land an employer in no small trouble if contravened. An ordinary HR concerned with employee lifecycle management is not expected to have this specialized knowledge, and therefore renders himself ineffective while handling a critical IR situation, like a closure or a strike (Labour Bureau Shimla, Ministry of Labour and Employment, 2014). In fact the entire IDA, which deals with such important issues like strikes, lockouts, layoffs, retrenchments, dismissals and closures, is a perfidious minefield, that demands special attention, thereby making the job of IR managers different and critical for the smooth sailing of a company’s fortunes in India.
As in any other walk of Indian life, politics and politicians have made the industrial situations messy. There are two conflicting political interests at play which makes labour relations extremely problematic- the political parties are financed by corporate houses and the labour unions are a steady vote bank. The politicians, depending on the situation, take somersaults between the two interest groups. What is important to remember however is that an organised labour force is always in the interest of the political parties, they would not sacrifice a vote bank to favour sweeping economic reforms any time soon. The political class thrives on industrial disputes to mobilize these vote banks. They are today the key instruments of unionization in the industrial sector. Most of the organized unions in India today form a part of some political outfit either at a national or at the local level. The trade union leaders are also affiliated to some political party or the other (Sinha, Bala and Shekhar, 2012). This situation is not likely to change and any hopes to the contrary are unrealistic. Again, an IR manager needs certain key skills to understand, assess and negotiate with such a political class, which is not possible for a HR manager, whose knowledge and skills, in the present context, are limited to such transcendental expressions like “talent acquisition” and “talent management”, and who is preoccupied with daily chores generally which include activities like “creating training modules” and “budgeting for employee engagement activities” etc. Most of these activities do not extend below the first-line of managers, which means that the substantial part of the workforce, which creates wealth for the organisations is outside its scope. In striking contrast, the skill level of a typical IR manager is of a higher order in that he is capable of performing not only in the above activities relating to managerial personnel, but is also an expert in handling productively the problems raised by the more explosive and highly unpredictable operatives. Thus, an IR manager is better placed to assess the externalities than a HR manager. The former needs to keep a tab on the political pulse of the locality, needs to be able to work with the administration and the law and order authorities in a way which is beyond the job description of the latter. As already mentioned, these are the hard realities of the Indian labour situation and they need specialized people to handle them. The bonhomie between the employer and the employee as postulated by the past 25 years of western theories on HR simply cannot be lifted out of context and made to fit in India. Likewise, it is equally unrealistic and short-sighted for the manufacturing organisations and several other industries in the service sector to take the IT sector as the benchmark in moulding their personnel policies. The ground realities in India are acutely different as compared to the US. To handle cases of rampant industrial violence, like in Maruti’s Manesar plant (July, 2012), require customised attention and consummate skill and ability on the part of the IR managers. As long as, situations remain so, the line of merger seems difficult between the HR and the IR functions.
The movement towards Human Resource Management and Human Capital Management in the US and other western countries was not accidental. This movement of taking care of individuals and treating them as capital was a fall out of the innumerable lawsuits that employers had to face in the wake of welfare laws enacted during the era of the New Deal and subsequently in the mid-1950s, i.e. the SSA, CRA etc. (Rao E M, 2008). The economy of US was booming in the post-war days and job alternatives were easily available. This led the HR community to rethink the ways in which it was dealing with its employees. HRM and more so HCM was born, which postulated that the higher needs of the employees be kept in mind, that they be “rewarded” and not “compensated”, the process of “recruitment and selection” be reengineered to “talent acquisition” and that “personnel management” be recast as “human capital management”. By such copy-cat changes in nomenclature, HR was suddenly transformed from a cost centre into a profit centre! Indian CEOs lost no time in joining the bandwagon with the result being Personnel Managers became Human Resource Managers overnight and, now, Human Capital Managers, with no real change in the content or import of the function, and unmindful of the ground realities. With the minimum wage in India standing at Rs 311, Rs 343 and Rs 377 per day (under $6) for unskilled, semiskilled and skilled workers respectively workers (Labour Department, Delhi Government, 2013), the principles of self-actualization and Maslow’s higher-order needs probably is a distant dream. The average Indian worker lives in a state of semi-destitution. With large dependent families, the basic 2700 Cal of energy requirement is something to be bargained for, and achieved, in our country. The conditions are even more abysmal in the unorganized sector which accounts for 86% of the labour force (Datt, 2013). The realities are that the glitz and glamour of the Indian IT sector do not reveal fully “the Indian story”. The manufacturing sector which employs 24.7% has far more depended households (33.1%) than the service sector which employs 28.1% of the workforce but has only 17.2% of the dependent households (Quandl, 2013). Several manufacturing organisations of repute like HUL, ITC and IDL chemicals have realised the shallowness of the HR tenets at least in so far as blue-collar workers are concerned, and quickly reverted to status quo ante. The “Learning and Development” departments cater generally to executives but hardly ever to labour. Not much literature is found on “Career Planning” for industrial labour.
The fact of the matter is under the prevailing socio-economic conditions, Human Resource Management in the true sense is extremely difficult to implement in manufacturing sector or, for that matter, even in the non-IT service sector industries engaged in banking, insurance, surface transport, electricity generation and supply, etc. This is the essential difference between IR and HR in practical terms, and as long as the aforesaid factors persist, IR will not, and cannot, be replaced by the HR philosophy of kind predicated and propagated for the past two to three decades.
With the above mentioned economic, social and political analysis of the labour situation in our country certain inferences can be made. The fundamental among which is, IR and HR apply to different constituencies of an organisation. HR may be equipped to handle the conditions prevailing in service organisations, which are characterised by unique features such as high salaries and high employee turnover, huge demand and huge supply, flexitime, phenomenal increase in new organisations, and so forth, none of which are shared either by manufacturing or non-IT service sector industries. HR pales into insignificance when faced with the “us vs them” situation prevailing in the operative employees who enjoy statutory protection under the Trade Unions and Industrial Disputes legislation. Given how society is structured, even though “all men are created equal” yet “some are more equal than others” (Orwell, 1945). A highly-educated, tech-savvy IT professional with global ambitions, and unlimited opportunities can negotiate higher package at “individual” level with his employer, whereas a shop-floor technician cannot; he can only seek refuge in the trade union of which he is a member. How is it possible that the managers, who are required to manage such diverse human beings operating at different levels of the hierarchy – where quite a large number enjoy statutory protection, including job security (workmen) and others (managers/supervisory staff) bereft of any such protective cover, in which the former are not mobile while the latter have greater mobility, and in which, the former can unionise while the latter cannot – may merge so easily?
Rajdeep Chakraborty
Author Information:
Rajdeep Chakraborty is a second year student pursuing his Master’s Degree from Xavier Institute Of Management, Bhubaneswar.
Priyanka Gupta is a second year student pursuing her Master’s Degree from Xavier Institute Of Management, Bhubaneswar.
