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FOR THE WEEK OF: January 14, 2002 Industrial Relations in Banks in India
Dr. K.V. RamakrishnaRETROSPECT
A Practical Overview: The post nationalization era of Industrial Relations in the banking Industry in India, particularly in the public sector, witnessed strong militancy and over protectionism of trade unions. There were highly volatile and sensitive conflicts that required proper tackling with utmost care and caution. While the work culture amongst the bank personnel deteriorated fast instead of improving, observation shows that such a situation prevailed, more or less, in other industries, including Government service. At the same time, one cannot be complacent particularly in a service-oriented system like banking. Though various other factors contributed to the present state of affairs, certain important areas related to human capital are focused on in this article that need due attention and care.
1. Trade Unions: The trade union movement in the banking industry dates back to pre-independence. It has crossed various milestones and gained rich experience. To safeguard its own position and retain power, the unions displayed their collective strength to the rank and file, with concerted actions, and a confrontational approach. In accomplishing their objectives, they contributed indirectly to the present deterioration. The power concentration enjoyed till yester-years by major trade unions/associations particularly after nationalization exerted influence/pressure on bank managements as well as the Government, percolated a strong notion amongst its employees to misuse their position. They were inclined to defy even lawful and reasonable orders of the management, or resist at every stage, at the cost of operational efficiency. Right from the top executive to the line manager, crisis management reigned which had long-term adverse effects including poor performance, conflict, and impediments to increased productivity and improved service.
2. Union Rivalry: Despite inter-union and intra-union rivalry, circumstances led to the emergence of United Forum of Bank Unions with the participation of nine major Unions/Associations in the recent wage negotiations. To prove its own bargaining capacity, multiple unions hitherto placed various demands, creating administrative inconvenience while a single majority trade union pressurized and outwit the management. Although the managements tried to take advantage of the divisions within the unions, they did not achieve the desired results because of the militancy of trade unions. It was then preferred not to encourage multiplicity of unions, but to invite the suggestions of major representative unions for examining their views. In any case, undue interference of unions in decision-making adversely affected the industry, leading to deterioration in discipline, efficiency and performance effectiveness.
To avoid multiplicity of unions the amendments to Indian Trade Unions' Act, 1926 is a welcome move that includes Section 4 enhancing the minimum requirement to register a trade union; from seven to one hundred, with at least 10% of the workmen must be the members of the union before it can be granted registration. Outside office bearers to be reduced in trade unions.
3. Collective Bargaining: Over a period, the unions enjoyed unfettered power at the expense of managements and even its own members. The basic concept of collective bargain itself was totally forgotten. Having gained power, the major unions did not play their appropriate role of improving productivity while simultaneously protecting the legitimate rights of employees.
The secret ballot system was not prevalent, union leaders were elected by a nominated panel and hence the interests of the majority of workers were not reflected. The interests of the union leaders and their close associates took precedence over the legitimate interests of the workers.
4. Threats Of Agitation: The All India Bank Employees Association (AIBEA) members have decided to go on a nationwide strike on December 12 2001. The strike is a protest against the government's move to privatize nationalized banks and make amendments in labor law and Industrial Dispute Act1.
A very regular feature in the industry was threats of agitation, non co-operation, stoppage of work, go-slow tactics, demonstrations, gherao, strikes etc. The employees very often resorted to such threats because powerful unions could bring the economy to a grinding halt and force managements to yield to unreasonable demands. While unions should be able to exercise their legitimate rights and protect the employees against victimization the method unions used has been coercion.
The existing legal and service provisions were adequate to contain unwarranted illegal agitations; however, management, trying to purchase peace, did not tackle the illegal agitations with will and determination.
The strong unity of employees backed by over protectionism of unions camouflage the misdeeds of certain employees. They misrepresent the facts making the in-charge a hapless victim or scapegoat.
Even the unions have realized that the common man is much disgusted with frequent agitations/strikes of bankmen. Amendments to Sections 22 & 23 of Industrial Disputes Act 1947, the Act being renamed as Industrial Relations Act stipulate that Unions should take strike decisions only by secret ballot, only if it is supported by qualifying majority workers and after obtaining permission from labor authorities. There will be a compulsory and mandatory notice of 30 days for any strike action by workers both in public utility and non public utility industries.
5. Bilateral Negotiations: In the recent past whenever negotiations took place, management would demand that unions discourage certain restrictive practices adopted by employees. However, these agreements were only on paper and the union failed to discourage restrictive practices. Employees continued to strongly resist the local managements by refusal and disobedience.
In extreme cases, such refusal of lawful and reasonable orders of the management would have been firmly dealt with by initiating drastic disciplinary action such as by charging employees under major penalty proceedings. Accountability, responsibility, work norms and completion of allotted days work, be it an employee or officer, could not be ensured. Unions were unable to support even a right cause for their own reasons including fear that employees might shift loyalty to other floor shops.
6. Overtime: Though overtime is almost extinct now, it is an interesting case because even the sudden drastic curtailment of overtime did not affect the industry. Banking being service-oriented and production intangible, the concept of overtime was misconceived as a way for employees to unduly gain additional pay. With the intent of gaining overtime, certain employees slowed down the day's work accumulating arrears on some plea or the other. If supervisors ensured a full day's work, and did not allow employees to fritter away office time, it would result in optimum utilization of available human resources.
In the present hi-tech environment, downsizing and redeployment are order of the day. Overtime can be totally eradicated and wherever employees are required to put in extra hours can be compensated by exception. Management was able to handle even the sensitive area of overtime without relying on any amendments to the existing statutes/ bilateral agreements. Similarly, they should be able to enforce better employee behavior in other areas, which will contribute to better customer service.
7. Frauds: Reserve Bank of India, central bank of the country has informed the Joint Parliamentary Committee (JPC) that the total amount involved in fraudulent cases has increased almost five times to INR 640.04 crore in 1999 from INR 132.37 crore in 1995. Employee reluctance to clear the backlog in arrears in balancing books and non-observance of systems & procedures can leave hidden frauds unearthed. Until new mechanization, through digital technology, is complete, including rural branches, the work force has to be educated on the necessity of up-keep of procedures for their own interest as well as the interest of the organization. Energizing human capital to equip themselves to tackle the new challenges in emerging e-frauds in the years ahead and strengthening computer audit will be another task for one and all.
8. Punctuality And Attendance: The directives of Government on punctuality and discipline and ritual "surprise" checking by controlling offices has had little effect on erring employees. Frequent absconding from the desk/counter was a common phenomenon hampering customer service. The entry of private and foreign banks with limited areas of operation is not enough to give effective competition to the wide spread network of public sector on whom majority of the clientele depend. Effective surprise checks would be one effective tool for combating attendance problems. Furthermore, if employees simply realized that organizational survival depends on customer satisfaction it would improve matters significantly.
9. Unauthorized Absence: Regular absence of members of the work force without any information to the bank is uncontrollable causing administrative dislocation of the daily routine. In the latest bipartite settlement, unions signed an amendment treating long unauthorized absence as voluntary cessation under the category of major misconduct. This is a move in right direction. To tackle chronic absence, the superior functionaries at the branch level could not initiate suitable action besides treating such absence as unauthorized without pay and allowances. It is hoped this action would have a deterrent effect on other erring employees.
10. Customer Service: When a customer enters the bank, the employee at the counter plays a vital role in reducing his dissatisfaction with courtesy and a customer friendly approach. The onus of transforming the generally negative impression of public against banker mainly rests with line staff. Very few customers lodge their grievances in writing so there is no point relying on statistical data on the number of complaints received.
Instead, top management and the unions have no alternative but to take a serious look at the ground realities and inspire the work force to march ahead at cyber speed to improve their customer base and product mix.
11. Productivity: There is no fixed yardstick to quantitatively measure services in a public utility sector like banking except by comparing profits and per employee business. To achieve industry norms many banks are struggling hard to adopt a flat lean organizational structure with empowerment and right sizing due to e-banking, optimize operational efficiency and productivity with more customer satisfaction.
12. Managerial Efficiency: Lack of commitment and accountability, a shortsighted approach in formulating policies and decisions, and administrative incapabilities right from top management through the various levels of hierarchy give scope for undue interference of unions. Honest decisions and conduct of higher officials would certainly set an example to the subordinates. At the same time, attributing total responsibility to the militant trade unions for eroding performance effectiveness cannot at all be justified; management cannot disown their own weaknesses. The management can be strong, firm, unbiased, kind, considerate, while setting new values, attitudes and beliefs leading to openness, mutual trust and participative management based on philosophy of Fair, Firm and Friendly. Management must ensure no victimization, have a fair labor policy, take just decisions and redress all legitimate grievances on time. This will gain the confidence of employees and enhance their involvement.
PROSPECT
13. Role of HRM: It is widely accepted that unless people working in organization are emotionally inspired with job satisfaction and job involvement, environmental relations cannot be improved for effective performance in the long run. Contractual agreements on basic financial and non-financial Maslow’s basic hierarchical needs are taken care of by mature trade unions at the apex level of the industry. Instead of blaming trade unions, management should long ago have initiated necessary steps to enable people to metamorphose the aforesaid negative traits to positive strengths. The internal and external changes led to the development of strategic human resource management (SHRM) reorienting 'push-oriented' HRM (reactive) to 'pull-oriented' HRM (pro-active). In the current new scenario of LPG liberalization, privatization and globalization, it is imperative to bring transformational change on the following unpalatable hard options to create net banking in the information age.
14. Government As Intermediary: To accelerate the pace and extant of economic reforms, the coalition Central/Federal Government, despite its own political constraints, is calculatedly marching ahead by bringing out suitable amendments to the outdated labor legislations/statutes at the same time protecting the interests of work force without giving blanket permission to hire and fire to the industry.
Important amendments include: Deletion of Chapter V B of ID Act, Severance package of one month, Role of industrial tribunals, Contract labor, Introduction of strike ballot, Time limit of 3 years for initiating industrial disputes, Minimum 10% or at least 100 employees to form and register a union, Reduce number of outside office bearers in trade unions are some major sectoral policy modifications. Employers hail these amendments as opening up the Indian economy with tremendous opportunities for industrial growth, whereas the unions oppose it as being anti-labor.
15. Downsizing/Right sizing Manpower Strength: To realign with present realities, transformational organizations need restructuring, operational specialization, and the infusion of electronic world into banking all of which have created a sense of job insecurity among the workforce and unions. To keep pace with technological revolution some excess workers could neither be re-trained to metamorphosed e-knowledge skilled worker nor could they be redeployed/fired.
Being unable to set the mind of such workers or unions to accept the dramatic changes in the information society, despite knowing fully well that lean structure will certainly result in better organizational efficiency; the top managements of some banks put forth their illusionary arguments of having no surplus manpower. In such a conflicting situation, the Central Government as apart of secondary economic reforms introduced the voluntary retirement scheme (VRS) taking care of the senior worker, which some top management implemented reluctantly though the unions vehemently opposed it, saying it was retrenchment. Despite unions canvassing against it, the scheme evoked unprecedented response and more than 100,000 bankmen, constituting an 11% reduction. However, this was still lower than the World Bank/IMF stipulated target of 25% to 35%.
16. Post-VRS Scenario: The unexpected exodus including even its own leadership, has created many challenges for the unions including the dilution of collective bargaining strength, erosion in membership affecting its Director representation on Bank's Board, fading image, and reduced revenue. On the other hand, the Organizations being unable to redeploy/relocate the remaining manpower to the deserted branches/offices nor evolve an acceptable transfer/relocation policy by convincing the unions simply pass on time during the temporary transition. The managements cannot satiate by just implementing the scheme once, rather they shall have to prune further by its reintroduction shortly to achieve the targeted gap that will definitely accelerate the organizational all round synergy.
17. Knowledge worker: The paradigm shift from management to governance, from managers to complete facilitators rather than leaders, from traditional worker to Drucker's 'knowledge worker', from lifetime employment to quick labor turnover, from bureaucratic organizations to networked organizations necessitated the need of relook at the organization policies. The systematic selection process during the last two decades attracted the cream of young talent having immense resources for growth given the opportunities. The traditional charisma and hero-worship to inspire today's knowledge worker with the magic spell of their platform rhetoric has vanished. Employees became more and more independent; attach high value for their individual competence and professional pride.
Management must not allow the available intellectual capital to rot from monotony for long years. The available skills (skills inventory) and possible potentials (potential inventory) from within can be identified and brought out by suitably modifying the policies and up-grading the potential appraisal system, develop career paths, change in promotion policy, empowerment, flexibility, decentralized decision-making, timely recognition of good performance, project need specialization and reorient training system etc. At this juncture, it is worth referring the recommendations of HRM committee constituted by Ministry of Finance inter-alia stated to
a) Reduce the time-span for career progression from Junior Management Grade Scale I to Top Executive Grade Scale VII from 25 years to 20 years and curtailing the number of scales in officers grade from seven to five, and
b) Introduce Fast Track Channel for promotion and making rural service as incentive oriented.
18. Training & Development: Training and re-training costs less than retrenchment. Training even the redundant employees in marketable skills and outplacement services including counseling offers opportunities to deal with workforce obsolescence and redundancy in a labor-friendly manner.
The training system has to be ready to train when called for any change and be able to bring attitudinal change in the employee reorientation. Without simply confining to skill development, the curriculum has to include an all-round development strategy in pace with the organizational goals, motivational and behavioral training, team building exercises etc. Instead of making training a ritual for statistical purpose, trainers have to adopt professionalism to inculcate interest in trainees and inspire them with the modern techniques avoiding slumber lectures. The Indian Banks Association (IBA) may launch Distance Learning programs for bankers through professional bank academic institutes of repute like Indian Institute of Bankers (IIB), National Institute of Bank Management (NIBM) interwoven with incentives to remodel 'concern' worker developed as 'enabled' worker.
19. New Role of Trade Unions: Being encircled by unavoidable changes, the matured bank trade unions can now spend some time on introspection and initiate corrective measures. They must change from confrontation to co-operation, from protectionism to professionalism and educate the employees. The omnipresence of unions is not a hindrance rather unavoidable dependency without losing independence. Both management and unions must work together in discharging their respective obligations for mutual existence, growth and organizational excellence.
20. Building Corporate Culture: The rapidly changing managerial profile of CEO from the traditional holy trinity of planning, organizing and controlling to that of strategist, aligner, change agent, visionary, team builder, living symbol, buck stopper is a paradigm shift towards integrated global economy. Creating mutual trust and confidence, transparency, bringing attitudinal change in employees and trade unions is the prime responsibility of the top management. People with self-motivation can drive themselves to incredible levels of excellence. At the time when the concept of 'cradle to grave' approach is fast assuming, 'environmental relations' are replacing traditional industrial relations, and at the click of mouse the information is pouring down; and to cater the needs of creative customer at this cut throat competition, the CEO cannot be a silent spectator lest he shall be on the brink of extinction.2
For example, in India employers like Tata (TCS, Telco, Tisco) have their own townships and take complete care before unions step into any employee grievance/welfare.
CONCLUSION
The concept of wages included economic, sociological, and organizational elements. In an industrial society, wages determine the workers way of life including his social position. A number of theories have been advanced attempting to explain different dimensions of wages. Wage theorists however have given much thought and devoted much research to attempting to discover an acceptable general theory of wages that would explain in all circumstances the way in which the levels of wages are determined.
Wages in banks are settled after long negotiations between the management and workmen unions/officer associations. The wage policy in banking is the best with national coverage of the entire industry. The DA is linked to the Consumer Price Index. A number of special/other allowances are additionally paid linked to specified duties. The fringe benefits are to the optimum with safer social security in old age. The latest VII Bipartite Settlement despite strong powerful trade unions/associations has not yielded any substantial increase in wages compared to earlier settlements that clearly indicates the wages are at the optimum vis-à-vis wages of other organized/unorganized sectors.
While financial and non-financial benefits are quite adequately taken care of by the well organized white collared unions, as analyzed hereinabove; to optimize operational efficiency and customer oriented approach, slim flat organizations have to bring attitudinal change and metamorphose the workforce to knowledge worker attaching high value to individual competence and professional pride to accelerate overall organizational synergy.
Endnotes
1 The Financial Express 24-09-2001 Delhi Edition.
2 Dr KV Rama Krishna: Central Bank Economic Bulletin Sept 1993 pp 8-11
Author Dr. K.V. Ramakrishnakattavrk@eth.netDr Katta V Ramakrishna is presently a practising Advocate in Hon’ble AP State High Court of Judicature India specializing in labor laws. Dr Katta is a retired Manager of Central Bank of India with three decades experience. He held various positions at different places as Dy.Chief Officer (HR), Bank Manager, Internal Auditor, etc. He worked as a Faculty Member teaching HR, Business Management, Banking in a reputed professional Bank Officers Training College and visiting faculty in a number of educational institutions. He was a college teacher prior to joining Central Bank. Dr. Katta has published many HR related stories in several national Indian newspapers and journals.
Dr Katta has a Doctorate/PhD in HRD and MPhil in Labor Management. He is MBA (Gold Medalist), winner of Employers’ Federation of India Award for 1997. He is also a Gold Medalist in Law.
He's an Accredited Management Teacher of the Indian Management Association affiliated to the American Management Association.
He can be reached via email at the following addresses:
kattavrk@yahoo.com
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