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ChangingParadigmofEmployeeRelations

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ChangingParadigmofEmployeeRelations
byVivekSPatwardhan14082015

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Thesubjectofthisblogis'ChangingParadigmofEmployeeRelations.'AsIthoughtaboutthissubject,Irealizedtherearefourkeyaspects
toit.So,letmebeginbysharingthesewithyouasI'settheapproach'.Iwillthenmoveontootherdetails.
SettingtheApproach
Firstly'EmployeeRelations'[ER]isabouttherelationshipbetweenanemployerandhisemployee,bothindividuallyandcollectively.This
relationshipbeginswiththecontractofemploymentorwhatwecallthe'AppointmentLetter,'andusuallyendswithhisresignationletter,
orwhatHRManagerscallthe'DisappointmentLetter'inalightervein.Betweentheexchangeofthesetwoletterswewitnesshighdrama,
justasinanyotherrelationship.
Thesecondaspectisabouttheword'paradigm.'Weknowthata'paradigm'isamentalmaporapatternofsomething(aspertheOxford
Dictionarydefinition).Wearegoingtodiscuss'changesinparadigm'.Itdoesnottakegreatintelligencetounderstandhowdifficultitisto
identifyachangeinparadigm,becausethesameisusuallyveryslow.Itissoslowthatoccasionalanomaliesarenotevennoticed.Iam
remindedofanexperiment,whichCollinWilsonhasdescribed.Apsychologistaskedpeopletowatchasheheldapackofcardsand
quicklystarteddroppingcardsonebyone.Theinterestingaspectwasthatinhispackofcardsthereweresomeredclubsandblack
diamonds.Asthecardsweredroppedrapidlynobodynoticedthisanomaly.Ashestarteddroppingthemagain,butabitslowly,inthe
secondroundpeoplerealizedthatsomethingwaswrongbutcouldnotsaywhatitwas.Thenhedroppedthepackagainevenmoreslowly.
Thistime,manyobserversrealizedwhatwaswrong.
WeasobserversofEmployeeRelationsareinthesameposition.Iamgoingtodiscusswhat,inmyopinion,aretheblackdiamondsand
redclubswhethertheymakeparadigmchangesornotisforallofustodiscusshere.
NowthethirdaspectIwouldliketopickupheretheword'relations'asitexistsinEmployeeRelations.Thedefinitionoftheverb'to
relate'hasnotchangedinthelastseveraldecades.Sowhatdowereallymeanby'changingparadigmofER?'Ibelievewearereally
referringtochangingparadigmofbuildinghealthyemployeerelations.
AndnowIcometothefourthandthelastaspect:Iftheparadigm,whichisapatternofemployeerelationsischanging,itisbecauseweare
behavingdifferently,anditmustbeobviouslybecauseweseeourroledifferently.SoIamgoingtodiscusswithyouwhetherthe
partiestotheemployeerelationsthinkthattheirroleshavechanged,andifso,whatarethetelltalesigns.Needlessto
saytheseareallmyimpressions.
TheBroadPicture:
1.Letmebeginwiththebroadpicturefirst.Ialreadymentionedearlierthatwearereallyreferringtobuildinghealthyemployee
relations.So,thenextquestionis'Whatwouldbethemanifestationofhealthyemployeerelations?'Needlesstosaythatallemployees
shouldfeelthatthisisagreatplacetowork,andtheyshouldfeelasenseofbelonging.Letusask'howdowefareasanation?Wheredoes
Indiastandtoday?'Thisquestionisrelevantbecausewearetrumpeting'MakeinIndia.'
2.EveryyearTheInternationalTradeUnionConfederation(ITUC)publishesGlobalRightsIndex.Itdemonstratestheworstcountriesin
theworldforworkingpeople,withtheerosionofrightsandincreasesininsecure,unsafeandinformalwork.Theprotectionof

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theworldforworkingpeople,withtheerosionofrightsandincreasesininsecure,unsafeandinformalwork.Theprotectionof
fundamentalrightsofworkingpeople,theysay,hasbecomemorecriticalthanever.Indiaranksasoneoftheworstcountriestoworkinit
isplacedatlevel5,whichmeansthatthereis'noguaranteeofrights.'Thisisonasixpointscale.'One'indicates'irregularviolationof
rights','Five'indicates'noguaranteeofrights'.Evenin2014Indiawasplacedatlevel5.WehavehereChinaandKoreaforcompany!
RoleofGovernment
3.Thisbringsustothenextquestionifweareoneoftheworstcountriestoworkforinthisworld,whathastheGovernmentbeen
doing?Letmesharemyexperienceandsomethoughts:
WeareawareoftheextremepartisanstancetakenbytheHaryanaGovernmentinthecaseofMaruti.Severalpeoplehaveopenly
criticizedtheroletheGovernmentplayedinsuppressingtheworkers'voice.PUDR[PeoplesUnionforDemocraticRights]published
areport[DrivingForce]afterinvestigatingtheviolenceattheMarutiplant.Iwouldliketoreadoutashortparagraph.
"Thisreport...revealshowtheunrelentingandseamlessnatureofthenexusbetweenpolice,theadministration,themanagementand
thejudiciaryisblatantlyservingtheinterestsofcapital.Theabsenceofanysemblanceofprotectionforworkersoftheautomobile
industry,themostadvancedindustrialsector,whichisheraldedbytheneoliberalregimeasitshallmark,bringstolightthegrave
challengesbeforetheworkingclasstoday.Thepossibilitiesforjusticeinthisscenarioappearverybleak."
InToyotaKirloskar'scase,theGovernmentofKarnatakawasmoreofanonlookerthananinterestedpartywhoserolewastokeep
thewheelsofindustryrunning.
IcancitemanyinstancesbutIwillquotefromthereport'CapturedbyCotton.'Itisareportonthe'SumangaliScheme.'
"ThisreporthighlightsseverallabourrightsviolationsfacedbygirlsandyoungwomenemployedundertheSumangaliSchemeinthe
TamilNadugarmentindustry.TheSumangaliSchemeequalsbondedlabour,onthebasisofthefactthatemployersareunilaterally
holdingbackpartoftheworkers'wagesuntilthreeormoreyearsofworkhavebeencompleted.Inaddition,workersareseverely
restrictedintheirfreedomofmovementandprivacy."
YouhavetoreadthereporttounderstandhowdraconianthewaysofthetextileindustryareinTamilNadu.
So,weonceagainaskourselves'whathastheGovernmentbeendoing?Whatisitsrole?'HRManagersofmygenerationwillrecallthat
theLabourCommissioner'sofficeusedtocalltheEmployersRepresentativestoattendPMSorPersonnelManagementServices
whichwasaprecursortoconciliationproceedings.ThoseHRManagerswillalsorecallsettlementsbeingsignedwiththeintervention
ofLabourCommissioneratunearthlyhours.MicoinNashikoncesignedtheirsettlementat3am.ItwasfacilitatedbytheLabour
Commissioner.Weseenosucheffortsnow,nomoresuchstories.
TheLabourMinistryissupposedtointerveneindisputesandfacilitateasettlement.Theyhavegivenupthisrole.Theyarealso
expectedtoplayanotherrolethatoflawmaking.Iwillnotelaborateonthisbecauseweareallwitnessingthenotsohappysituation
onthisfront.
heproblemwiththeGovernment'sconfusedresponseisthatithasmadethemanonlookeronemployeerelations'scenario,which
allowstheunscrupuloustogetawaywithmurder.Howelsewillyouexplaintheindiscriminateuseofcontractlabourandtrainees?
Letusreturntothetopicof'paradigmshift':TheGovernmenthasgivenupitsroletointerveneindisputeswheretheyexistoreven
apprehentionofexistance.Itusedtothinkthatithadtoprotecttheweakerparty,namelylabour,inemployeerelations.Itisnow
workingwithadifferentmindset.NowtheGovernmentseemstothinkthatindustrymustbepromotedbyallowingtheindustryto
haveitswayatanycost.

TheEmployers
7.LetusnowexamineiftheEmployershavealsochangedtheir'paradigmsofemployeerelations'.
8.Letusfirstexaminethecontextinwhichorganizationsareplaced.Thereiscutthroatcompetition.Ithasledtomergersand

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8.Letusfirstexaminethecontextinwhichorganizationsareplaced.Thereiscutthroatcompetition.Ithasledtomergersand
acquisitions.Ithasalsoledmanyorganisationtorethinktheirstrategies.SoPfizerhascloseddowntheirThaneunit,butisgettingthe
productsmadesomewhereelse.KotakMahindraandINGVysyahavemerged.Imentiontheseexamplesonlytounderscorethefactthat
thestrategiesadoptedforbusinesshavebroughtforthdifferentsetsofconcernsonemployeerelations'frontforthem.
9.Therearetwomorefactors,whichrequireourattention.FirstlymanyIndianorganisationshavenowgrowntobecomeIndianMNCs.
TheseincludegiantslikeTataSteel,TataMotors,andalsoincludeGodrej,AsianPaintsandMarico.Ihavenamedjustafew.

Automate,DoNotEmployPeople
10.ThesecondfactorisarticulatedverywellbyareportinTheEconomist.
"Theeffectoftechnologicalchangeontradeisalsochangingthebasisoftriedandtruemethodsofeconomicdevelopmentinpoorer
economies.Moremanufacturingworkcanbeautomated,andskilleddesignworkaccountsforalargershareofthevalueoftrade,leading
towhateconomistscall"prematuredeindustrialisation"indevelopingcountries."
Letmealsoreadoutaveryshortconclusionofaresearchstudy.Thisistitled"WhereHaveAlltheWorkersGone?PuzzleofDeclining
LabourIntensityinOrganizedIndianManufacturing"andauthoredbyKunalSenandDebKusumDas.Theyconclude:
"Withdecliningprotectionforcapitalgoodsovertime,thepricesofmachinesfellsteadilyrelativetothepriceoflabour,andincreasingly
madermsintheorganisedsectorsubstitutemachinesforlabour.Whilethefallintherelativepriceofcapitalmayhaveledtoan
increaseintherateofprivatexedinvestmentinmachines,andconsequently,economicgrowth,itchangedtheincentivestructuresof
rmstohirelabour,andenabledthemtoquicklyadoptmachinesintheirworkplaces."
EmployIndirectlyorOnFixedDuration
11.Thereisalotofuncertaintyaboutthefutureduetocompetitionandtheemployersalsodonotwishtoaddtotheirmanpower.This
hasresultedinindiscriminateemploymentofcontractlabourandtrainees.Notjusttraineesandcontractlabour,butthereisahuge
numberofemployeeswhoarecalledretainersandconsultants.Addtothatfixedtermcontracts,whicharenotreallyso.Theirnumberis
shocking,believemeitcanbeashighas40%oftheworkforce.Iwroteablogtitled'TrainingtoExploit'andpresentedthisstatistics,
whichhavegoneunchallengedsofar.
Company

PermanentWorkers

TraineeWorkers

TemporaryWorkers

Contractworkers

Total

BajajAuto

884

450

60

550

1994

Bosch

235

400

150

785

M&M

1800

700

250

1200

3950

Fiat

330

700

700

800

2530

PromoteCulturesansERPolicy
12.Anorganizationwhichemployedratherlargenumberofretainershad'experiencedathreatofunionization'.Iaskedaquestiontotheir
HRmanager:'Ifaunionrepresentativeasksyou'Sir,whatisyourERpolicy?'whatwouldbeyouranswer?'
13.Andthatbringsustothenextimportantquestion.Dowehaveapolicyonunionrecognition?Dowehaveapolicyonwherewewill
employandwherewewillnotemploycontractlabour?Dowehaveaclearpolicyonwheretoemploytraineesorretainers?Thesearethe
questionswhicharepreventingusfrombuildinghealthyemployeerelations.Addtothisthefactthatmostoftheunionshaveeitherno
powertoquestionortheyareconnivingwiththeemployersinengagingsuchpeople.PracticesthatweseerampantintheAutoIndustry.
14.Iwouldliketoinviteyoutoseethe'DeclarationofsocialrightsandindustrialrelationshipsatVolkswagen'whichtheysignedin2002
andrevisedin2012.VolkswagenstandsoutinPunebeltmainlybecausetheyhaverefrainedfrommalpracticesofengagingcontract
labourandtrainees.Whatmadethemdifferent?TheanswertomymindisthattheVolkswagenmanagersareaccountablefortheER
practicestosomebodywithin.Thequestionis,ifwewishtobeanMNC,arewegoingtoadoptpracticeswhichhelpusbuildhealthy
employeerelationshipineverycountry?Thisisanareawhereparadigmshifthasnothappenedbutisdesirable.
15.Thereisanincreasingtrendtoworkontheorganisation'sculturetopromotetherightworkethic.ITChasdoneagreatjobofthis,and
IhavedonesomeworkwithTataSteelattwooftheirplants.BothTataSteelatKalinganagarandITCinNepalhavetakeninitiativeto
workonworkethicattheinceptionstage.Thisisreallylaudable.IdonotknowiftheyhavewrittenERPolicies,butinboththese

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workonworkethicattheinceptionstage.Thisisreallylaudable.IdonotknowiftheyhavewrittenERPolicies,butinboththese
companiesalotofcollectivethinkinghashappened.Therearemanyorganizationswhichwanttoworkonworkethicwithoutdeclaring
theirERpoliciesandthatiswhytheyareunlikelytosucceed.Tryingtobuildculturewithoutdeclaringtotheworldwhatwestandfor
doesnotwork.
SMEsshowtheway:SharingWealth
16.IwillrefertothesettlementofBajajAutowiththeirPantnagarworkmen.Thesettlementgivesa'performancebased'increase.Ina
nutshellthisworksasfollows:[a]Allworkmengetuniformincreaseinallowances,[b]Buttheygetdifferingincreasesinbasicsalary.
ThoseratedAwillget100%oftheagreedincrease,Bratedwillget80%andCratedwillget50%.
17.MyhopestandsontheexperimentsinsomeoftheseSMEs.Polyhydronisonesuchexample.Theyhavedonepioneeringworkinthis
areainmyopinion.Butisitspreading?IsearchedfortheanswerandIdiscoveredit,whichIhavecapturedinmylatestblogpost,called
'WhenHyTechmeetsHiTouch.'HyTechisownedbyMrMondkarandheimplementedToyotaProductionSystem.Afterachievinggreat
results,hesharedthegeneratedwealthwithworkers.Soheshared25%ofthevalueaddedwiththeworkers.WhatMondkardidisasure
recipetopromotehealthyemployeerelationswithastrongsenseofbelonging.
18.Soweseetwoparadigmshere:Oneofincreasingsalarybutwithastrongsenseofcontrol,andtheotherofsharingwealthwitha
strongsenseofparticipation.Ileaveittoyoutodecideyourchoice.
19.IrecentlyreadDanPink'soutstandingbook'DRIVE:Thesurprisingtruthaboutwhatmotivatesus'Heargueswithlotofevidencethat
threefactorsplaythegreatestroleinmotivationofemployees.TheyareAutonomy,MasteryandPurpose.Hasanybodytriedtoredesign
jobsofemployeesemployingthisapproach?Idonotknow.MaricoandAsianPaintsdidsomegoodworkinthisarea,butitisdated.I
havenotheardofanyotherexample.Shouldthisbetheapproachforthefuture?
TheTradeUnions
20.Theadversarialroleoftradeunionsiswhatweareaccustomedto.Ihavehoweverseensomeverypositivechanges.
21.IarrangedaprogramforTataSteelunionrepresentativesandmanagerstowitnesschangesfirsthand.Ihavealsobloggedaboutit
[TradeUnionsasBusinessPartners:EmergingTrend]andithasbeenrepublishedonmanysiteslikePeopleMattersandBusiness
Manager.
TULeaderProfilehaschanged
22.TherearemanychangestakingplaceontheERscene.Thisofcourse,istrueofthePunebelt,whichIhavestudiedextensively.Imet
PradeepThakareofBoschwhosearchedmyprofileontheinternetbeforemeetingme.Thakarehasnotonlylaunchedveryimaginative
schemesforworkers,buthehasalsoproposedthattheunionwillownaproductionline.Theycarriedoutseveralchangessystematically
toreducerejection.PrakashDhavalechallengedtheMinisterMr.SachinAhirwhenM&MwantedtoclosedownAmforge,foughtwiththe
managementandgotworkersabenefithigherthanwhattheMinisterwantedtogive.Theyoungunionleadersaretechsavvy,fullof
confidenceandassertivetoo.
UnionsareProactivelyBuildingRelations
23.Herearesomeproactivechanges:BajajAutohasdefinedtheirpolicytowardstheCompany.Theyhavemadeclearstatementslike:
Theunionwilladheretoqualitystandards,noshortcuts.Theywillpracticetransparencyindealings.Theywillchampionmultiskilling.
Manyrepresentativesarethemselves'multiskilled.'Theywillpracticedatabasedmanagement.Theunionhasdatapertainingtoall
employees,andtheyoftentalkwithfactsandfigures.
24.TheThermaxunionhasaqualitypolicyandisperhapsthefirstuniontobecertifiedunderISO9000.
25.Buttheyareundertremendouspressure.Becausetheprofileofworkershasalsochanged.Gonearethedayswhenunionleaders
decidedwhatwasgoodforworkers,nowitistheotherwayround.Wehaveinsistentworkerswhotelltheleaderswhattheywant.
26.LetmereadoutalettersentinJulyrecentlybytheUniontoAutomotiveStampings&AssembliesLtd.IamtoldthatTatashold75%
stakeinthiscompany.Iquote:
Beforemovingforwardweexpectfewwordsofwisdomandinspirationfromyou.Wewouldliketoplaceonrecordthatwewillcreate
appropriateatmosphere,whichisconducivetoinvestmentandgrowth.
Sir,wehavedecidedtoadopttotallynewpath,whichwillnotcreatedistress,jealousy,enmity,divisionbetweenmanagementandunion,
etc.Weareintheprocessofdetailingontheaboveaspectsandpresenttoyouinduecourseoftime.Thistimewehavedecidednotto
demandwagerise,buttoearnwageriseandwithoutyourcooperationandsupportitwillnotbepossible.
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demandwagerise,buttoearnwageriseandwithoutyourcooperationandsupportitwillnotbepossible.
Weareseriousandwewillshowitthroughourbehaviorandattitude.Wewillsubmitourdetailedproposalintermsof
productivityimprovementsnotonlyinlabourbutalsomaterial,energy,capital.Wewillalsoproposewastagereductionplaninallthese
areassothatourCompanyshallbecompetitiveandsustainable.
[LetterofASALKamgarSanghatana,Pune]
InternationalinterestinIndianERscene
27.WhenMarutihadtheinfamousviolence,asmalldocumentwaspublishedcalled'MerchantsofMenace.'Marutirefusedtomeetthe
InternationalCommissionforLaborRightssotheywentaheadwiththeirinvestigationandpublishedthemonograph.Theyhave
subsequentlyalsopublishedonemorecalled'ShinyCars,ShatteredDreams.'Thisisaboutprecariousworkingconditionsofworkersin
theAutoIndustryinChennaibelt.ICLRisdoingitsbittoraiseawarenessaboutthelabourissuesinIndia.
28.IndustryAllUnionhassetupabaseinPunewheremanybigorganizationsinautoindustryarepresent.IndustryAllhasaveryhigh
affiliationbylocalunions.Localunionsinterestinglyare'employeesunion'butwewillnowunderstandthattheyhaveasolidbacking.
29.Theinternationalwatchdogsareheretostaywhetherwelikeitornot.Therefore,itistimetoupgradeourpractices.
Andfinally...
30.Lookingbackthereisenoughevidencethatparadigmsofemployeerelationsarechanging.Therealquestionisnotwhetherthe
paradigmsofemployeerelationsarechangingtherealquestionishowwecanchannelthemtobuildhealthyemployeerelations.There
aretwofactors,whichcomeinthewaythefirstistheextremelyhierarchicalattitudeofthemanagersandtheotheristhefearofopening
out,thefearofdisclosure.Unlessweactwithhopeandpracticetransparencyandopennesswewillnotbeabletobuildstrongrelations.
31.Finally,whatmattersintherelationshipistheconversation,thedepthandopennessofit.Conversationswherewetalktoothersas
ourequals,statushasnoplacethere.Whatmattersindevelopingrelationshipishowweresolveourconflicts.Unfortunatelytheseskills
arenottaughtinanymanagementschool,theyarelearntbytrialanderror,bypractice.Collectivereflectionsdonotseemtohaveaplace
inbuildingrelationsinourcorporateworld.Myorganizationfacedasixmonthlongstrike,andlateremployeescamebacktoworktotally
defeated.Ilearntabiglessonwhenwereflectedinameetingonwherewehadpossiblygonewrong,andifcouldwehaveavertedthe
strike.
32.Oneconcern,whichisbeingvoicedfrequently,isthattheERorIRskillislost.Forthelasttwodecadesweseemtobedoingwithoutit
andwehavenotdoneparticularlybadly.PerhapsDarwin'sLawisatwork.Onemessagefromthecurrentsituationcouldbethattheold
adversarialstanceisnowextinct,itisliketheappendixinourbodyitistherebutitisuselessandcanberemoved.Lookatthepositive
developmentswehavediscussed.Themessagecouldbethattheorganizationsoftodayandtomorrowmustbebuilton'unitary'stance,in
otherwordswehavetobedemonstrablyinclusive.ThissituationislikereadingtheTarotcards,andwearethereaders.
33.Letusunderstandonecriticalthingrelationshipisathingofpast,itishistory.Whatmattersis'relating'whichisthepresent,itisin
themomentwhichwearelivingin.Weneedtostopbeingshackledbythehistoryofrelationship,whatmattersisthespontaneityand
authenticityofresponsetothesituationonhand.
34.Itismypersonalviewthatthelasttwodecades,andtheinfluenceofITindustryhasmadeworkingpopulationmorealgorithmic.
EverythingmusthaveSOP,evenbuildingrelations!Relatingisnotalgorithmic,itisheuristic.Wemustexploreconcernsofothersfirst
andthenexplorepossibilitiesofevolvingasolution.ThisiswhatStevenCoveysays,thisispreciselywhatEdgarScheinsays.
35.Paradigmisapattern.Ourlanguagedisclosestheparadigm.Pleaserecallyourdiscussionwithamarketingorfinancemanager.He
useswords,whichindicateconflictingvalueslikemarketshareandhigherprofits.Hewantsboth,sothelearningisthatvaluesarebest
servedinpairs.
Whatarethewords,whichweareassociatingwithorlisteningfrequentlytowhenwesay'employeerelations?'Wesay'Control,
Indiscipline,Noncompliance,Performance,Welfare,Conflicts,Dispute.'Whatarethewordswhichweareassociatingwithwhenwesay
just'relations'?Wesay'empathy,care,togetherness,conversations,reachingout,doingthingstogether.'Tosummarize,whenwetalkof
employeerelationswetalkofwordswhichareeitherpaternalisticorwhichindicatecontrol,adversarialstanceshowever,whenwesay
relationsweusewordswhichintroducewarmth,greatertransparencyandopenness.Justintroductionoftheword'employee'canchange
thescenariosomuchissimplyshocking!Itmovesusfrominterdependencetocontrol.
SoasERmanageswemustlearntomanageboththevaluesControlandInterdependence.Wehavetodoawaywithourobsessionfor
control.Wehavetorecognizethateverymanagerisdependentonhisjuniorforsuccess.ThisiswhereEdgarSchein's'humbleinquiry'
comesin.

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Ifwewishtochangetheparadigmofemployeerelations,wemustchangethelanguageandwemustpracticehumbleinquirythatisthe
formulaforchangingthelanguage.

VivekSPatwardhan
References:
ITUCGlobalRightsIndex2015TheWorld'sWorstCountriesforWorkers(http://www.ituccsi.org/itucglobalrightsindex2015)
DrivingForce(http://www.pudr.org/?q=content/drivingforcelabourstrugglesandviolationrightsmarutisuzukiindialimited)
CapturedbyCotton(http://www.somo.nl/publicationsen/Publication_3673)
DeclarationofsocialrightsandindustrialrelationshipsatVolkswagen
(http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/2010/07/Verhaltensgrundsaetze_des_Volkswagen_Konzerns.bin.html/binarystorageitem/file/The+Volkswagen+Group+Code+of+Conduct.pdf)
TradeUnionsasBusinessPartnersEmergingTrend(http://hresonance.blogspot.in/2014/09/tradeunionsasbusinesspartners.html)
MerchantsofMenace(http://www.sacw.net/article4855.html)
ShinyCarsShatteredDreams(http://laborcommission.org/news/full/iclrreportreleasedshinycarsshattereddreams)

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