Moving away from feudal set-up

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If you create a disproportionate economic surplus, we will give you a disproportionate share of the economic surplus. Hence, differentiated bonus schemes arose. But fixed pay is still protected.

In the domain of employee relations, the old human resource (HR) practices need to be rediscovered. In most organisations, HR is being conducted by sitting in the room and through emails, computers and SMSes, says K. Ramkumar, Executive Director, ICICI Bank.

He feels that firms cannot be run if the people at the top are not socially-inclined and that conflict is embedded in the workplace.

An HR professional of nearly three decades standing, Ramkumar outlines his views on the importance of a liberal workplace, conflict in workplace, and trade unions in an interaction with Business Line.

How have HR practices evolved with the changes in the economy?

I do not believe that there is anything which dramatically happens to HR practices because something happens in an economy. There is a search for newness that we all suffer from. Then some of us end up having this illusion that newness is really being created. If such level of newness gets created everyday then it will be a very difficult world to live in because you will not be able to recognise the world of yesterday and the world of tomorrow and we will have a disoriented society. Changes take place once in 100 years, once in 150 years.

I think the big change in what we address as HR is a liberal workplace in which we move away from the feudalism which we inherited in the manufacturing or the organised area of labour. We believe what we see today is how it has been forever. No, that is not true. Even in India 60 years back and in the world about 120-130 years back, the terminology of an employer and an employee and where an employer is a professional and not an owner or a promoter was not so common.

So, to me, a liberal workplace is where the person who runs an institution need not be a promoter and need not be an owner, though there are still some of them. And also the aspiration even for a first generation promoter is to say that my son should not be a promoter only but he should be a professional-cum-promoter. That to me is the headline change in the world of HR.

What we call in today’s HR practice as performance differentiation and wage differentiation arose out this liberal economic-social principle. Unfortunately, most of us are forgetting that an organisation cannot be run if you are not a socially-minded person. When we sit in the Board, there is a social underpinning for anything which we do. If we lose track of it then we go to consultants, buy reports, and then implement without understanding why we are doing it.

What mindset change has taken place when it comes to sharing economic surplus?

Today, we have progressed to such an extent that we don’t even need a legislation to confer a share of the economic surplus on a person who comes to work for me because I’m also a professional, not a promoter (ok, I’m still an agent of the promoter because I’m managing it…there is a difference between the labour and an agent of the promoter because I’m on the Board and my job is to protect the interests of the shareholders). But even today our loyalty is more towards the labour than to the capitalists because for a large period of time, before we became agents, we were the labour.

In college, performance management system is taught. What is it? You get a fixed pay for the job value. On top of it, we recognise that there are some people who create disproportionate value even higher than the value of their job. If you create a disproportionate economic surplus, we will give you a disproportionate share of the economic surplus. Hence, differentiated bonus schemes arose. But fixed pay is still protected.

Is conflict embedded in workplace?

I’m not going to say unions are bad. My mentors are from unions. The idealistic view about the world, that social space can be created without conflict, is utopia. A social space is pregnant and embedded with conflict because there is no arbiter available in the social space to arbitrate upon the equitable distribution of either grief or joy, wealth or poverty.

We bring this great utopian idealism and say why is there conflict, why are unions there, why are they intimidating, why is a red flag (or whatever flag) out there, can’t they engage in a civil manner? Not possible. It is possible to resolve that conflict. To say don’t have that conflict is stupidity. Thousand years from now you will have it but the form will be different.

Conflict resolution is acknowledging the rights and the privileges, not gratuitously, with or without legislation. Like N.R. Narayanamurthy said before you ask I will give you wealth, conflicts get resolved.

How should employers handle dissenting employees?

One of the themes which we need to explore is ‘under what circumstances do unions arise, under what circumstances do unions get irrelevant’? That is an engagement we should have openly in society without fear or favour. I believe, you need responsible employers who says ‘not just through unilateral determination of your rights and privileges but even without a union I will engage in a conversation with my colleagues’. The greater good for the greater number of people is good public policy.

There will be a minority who will not get what they want and liberalism says that the minority has the right to disagree and express their dissent without fear. You will not punish them if they stood and said this policy is wrong, it is impacting me in a detrimental way. If they start engaging in a manner which disrupts the greater public good then I will intervene and first choose to restrain you, should I not be able to do it then I will choose whatever legitimate means in my power to punish. This is the bedrock on which public policy in liberal democracies have grown.

Is there a need to re-discover the old HR?

I think in this domain of employee relations we should re-discover the old HR. It is not always necessary that newness is good. Sometimes, going back and resurrecting the forgotten old is good. The good old HR practice says that we do not conduct HR sitting in the room, through emails and SMSes. Today’s HR is conducted like that in most organisations. In most places the only contact somebody has with HR is when they recruit you and next contact is when you go. You bring a person onboard and forget about him. In between we don’t have contact with the people.

If you sit in the canteen you will listen to people. Because everyday you will sit with a different group and you pick up conversations, you get the pulse of what is happening in the factory, who is saying what, what is happening, who is unhappy, who is happy, is there some hot-button issue coming up. How do you pick the smoke signals otherwise?

The first principle, I believe, HR has to learn is to reach out, stay in touch with people. The good old practice says don’t be afraid of the union and do not wait for a demand to come to you. If you are sensitive, if you know what is just demand and in your engagement with people you find that this is agitating greater number of people then remember the good old public policy — greater good for greater number of people. Don’t stand on prestige. You just cannot say “so many agitated…let them go and jump.” You have to recognise that great many people are agitated about something. I am not saying every time this happens you concede and mollycoddle. But you have to ask ‘why are you all agitated, can we talk about it’.

(This article was published on January 17, 2013)
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Budget 2015 highlights

  • Following are the highlights of the Union Budget 2015-16 presented by Finance Minister Arun Jaitley in Parliament today:
  • No change in personal Income Tax * Health Insurance Premium deduction hiked from Rs 15,000 to Rs 25,000; for senior citizens to Rs 30,000
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  • To achieve fiscal deficit of 3% of GDP by 2017—18
  • Fiscal Deficit target 3.9% in 2015—16, 3.5% in 2016—17
  • Revenue Deficit to be 2.8% in 2015—16
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