Kindly share your thoughts & practical experience on Employee Relations / Industrial Relations?†

A large corporate house with manufacturing operations in numerous locations with multiple unions, some with external connections and some with internal unions/works committees.

1. What would you consider about a centralized or decentralized employee relations team?
2. Why should it be centralized or decentralized? What are the benefits and drawbacks? How would it benefit the company and management in both cases?
3. How will technology play a significant role, and what aspects should be centralized and which should not?

What should be the ideal organizational structure in Employee relations?

From India, Pune

1 & 2. Both the centralised and unit limited ER/IR has their advantages and disadvantages. If the constituent units are separately incorporated then there is no need for centralisation as it is very difficult to have uniform service conditions across the units. Eg., the Tatas or Birlas or ITC groups has only individual unit based structures. But in case of multi location operation of single enterprise like banks, insurance, companies like SAIL, BHEL, NTPC etc., they have centralised ER teams with the Corporate Group dealing with major/policy/long term issues and the unit level structures dealing with local issues. This will help in standardisation of the employee practices across the organisation and prevent formation of differing practices within the organisation. This would help in containing local level discontent and help in developing rationalised rules which brings in better morale and motivation across the organisation.
3. The question as to how technology will play significant role, take communication for instance, the modern technology has rendered distances meaningless even across continents and the response time stands vastly reduced. These pandemic days, we have seen how online means of communication has helped organisation to deal with the work issues and cater to the business needs. The aspects to be centralised and decentralised would depend on the nature of the operations of the enterprise and would vary from one to another. However it can be stated that all aspects needing uniformity in approach and working across the units in an enterprise should be centralised and unit specific matters shall be decentralised.

From India, Mumbai
Dear member,

Is your query on "Employee Relations" or "Industrial Relations"? The reply would depend on your focus on either of the two. Anyway, the replies to your queries are as below:

1. What would you consider about a centralized or decentralized employee relations team?

Reply: - The centralisation or decentralisation is not an issue as such. The reply depends on the activities done under the head of employee relations and of course the budget allocated. The focus of employee relations is on the employee wellbeing then the organisation needs to create a mechanism of that across the organisation.

Secondly, to improve the relations with the employees, it is important to understand what do they think about the company. To improve their perceptions, the company can do the following:

a) Promulgate the values of the company and ensure that the managers and the top leadership live with the values.

b) Create a culture of rewards and recognition

c) Create a culture of justice and fairness

d) Conduct the Employee Satisfaction Survey and other organisational surveys

e) Create a culture of communication. There should be a free flow of communication - upward, downward and sideways.

f) All relations, whether employee relations or otherwise, depend on interpersonal skills. Therefore, the organisation must take the strong initiative to promote a healthy interpersonal environment.

g) Identify whether the employees are stressed and if yes, then identify the stressors.

2. Why should it be centralized or decentralized? What are the benefits and drawbacks? How would it benefit the company and management in both cases?

Reply: - The employee relations initiatives have to be across the organisation. Therefore, it needs a central authority who executes single-handedly all the initiatives. If the decentralisation is done, then there may not be a uniformity in the execution and the organisation could go into disarray. Secondly, ER initiatives cannot be executed only in one of the business units in isolation. That does not create the right impact.

3. How will technology play a significant role, and what aspects should be centralized and which should not?

Reply: - Yes, technology plays a vital role in improving employee relations. For example, conducting organisational surveys like ESS becomes much easier if these are assisted by modern IT software. The modern IT systems develop understandable dashboards and the graphs and charts give insight to the authorities concerned. Secondly, it becomes easy to identify the similarities and the differences amongst the various business units of the organisation. Lastly, the technology makes easier communication with the employees.

4. What should be the ideal organizational structure in Employee relations?

Reply: - The ER depends more on the organisation's culture than the structure. The ER is a byproduct of the culture. Therefore, the focus should be on building a suitable culture that promotes healthy employee relations. Secondly, whatever the organisation's structure may be, the organisation needs to have a dedicated team that is sufficiently empowered to take corrective actions. If the empowerment is missing, then the following challenges remain:

a) Notwithstanding the ER initiatives by the organisation, employee attrition remains high.

b) Notwithstanding the ER initiatives by the organisation, employees do not come forward to give suggestions for the process improvement.

Final Comments: - There are a large number of US MNCs that operate in hundreds of countries. These global companies have a uniform way of working across the globe. Information is shared globally on who stands where and on which factor of employee relations.


Dinesh Divekar

From India, Bangalore
Dear KK & Dinesh. Thank you for your profound expertise. It was really informative and clear.
From India, Pune
Dear colleague,

Your query is of vital practical importance, for the set up of your organization- Corporate office , with multi- location manufacturing units having multi - union external and internal presence.

Mr. KK!HR has brought to bear practical and workable insight on some of the broader policy issues raised .

Since ER/ IR Relations are dynamic in nature, there cannot be one size fits all to centralised or decentralised approach to emerging and evolving relationship issues . A sound blend of centralised and decentralised approach seem to have worked well . What approach has successfully worked in several large multi- location , multi - union manufacturing units is issues of wage settlements / service conditions applicable to bargainable employees and employee engagement activities are left to the respective local HR teams to deal with, with centralized expert IR/ ER resource who monitor the situation and ensure that harmonious and productive mutual relations are maintained. The Service Conditions of other non- workmen- VPs, Sr. Managers,Executives and supervisors are dealt by the Central HR resources and they are largely uniform across all locations to enable smooth transfer of any resource to other locations.

As regards org structure, at Central level HR / ER team will work on policy issues ,monitoring it's effective implementation at all unit levels, supported by able, experienced local teams to add local flavour.

Many multi- national companies like Unilever, ITC and Tata, Birla , Reliance seem to have used this approach to mutual advantage.Of course, no approach is foolproof for all the situations and all the time, and one has to adapt it to the changing scenario and governmental initeatives in labour laws governing ER scene in the country.


Vinayak Nagarkar

HR and Employee Relations Consultant

From India, Mumbai
Dear Colleague,
Employee Relations / Industrial Relations is a subject matter which is very vital success factor for any multi-locational organizations. A strong Industrial Relations Mechanism is important for the sustained business and growth. Now a days the focus on IR is missing comparatively unlike 2 decades back where lot of focus was given to IR and due to various socio - economic factors and Industrial Policies the focus to IR was not much in the recent past. But in some sector / region it is very strong.

Coming to the specifics :

1. What would you consider about a centralized or decentralized employee relations team?
In case of ER/IR a strong Local IR Team is what is required as each origination will have unique features in IR. The Trade Union, the Location Stake Holders, the Community Around all are important which can be more sensibly handled by a Location based IR Team. However on Policy Matters on IR there should be a Central IR Expertized Policy guidelines and Monitoring mechanism to ensure that the flow of IR goes as per Corporate expectations by and large. On local matters local decisions to be taken on IR which is more realistic.

2. Why should it be centralized or decentralized? What are the benefits and drawbacks? How would it benefit the company and management in both cases?

The Local IR Team can respond immediately and timely on decisions as IR is very dynamic and decisions are to be taken then and there. The Local IR Team has to follow the guidelines of Central IR Team and to be monitored / consulted as and when required. However on non-policy matters the Local IR Team has to be empowered in full to deliver their roles. In the case of totally Centralized system, the ground realities can not be understood and timely decisions may not be possible. It is more advantageous to have a local IR Team under the monitoring of Central IR Governing Expert Team. This will be more advantageous.

3. How will technology play a significant role, and what aspects should be centralized and which should not?

In IR there should be a Portal where in you need to ensure that all the IR challenges faced by the Local IR Team and how they had handled/ what was the solution & settlement arrived/ any financial impact all has to be uploaded by the Local IR Team for central level monitoring. All settlements entered, Pending disputes, Legal Cases pending, Contingent Liabilities involved, Potential IR challenges in the near future all to be uploaded local wise along with suggested solutions from the Location IR Team. This can be perused by Central IR Team / Expert and given approval then and there as an Apex Control mechanism. We followed in our group for a 21 Location Company PAN India and we are very successful till date.

4. What should be the ideal organizational structure in Employee relations?

Each location has to have IR Lead reporting to the HR Head or Unit Head as the case may be and has to have matrix reporting to the Central HR & IR Head. The Location IR Head has to have sufficient staffing depending on the size of unit, number of employees, number of Unions etc.

One more valuable work we followed in my past company was a concept called MAGCOM- Management Committee. In this committee the Top 5 Union Office Bearers and 5 Management Members like IR Lead+ Corporate Affairs' or PR Lead + Finance and Commercial Lead+ 2 more senior HODs are included. The decisions are taken collectively each month on all critical matters and in case of any escalation it goes to IR Head and Unit Head and resolves there itself. This helped for healthy bilateral discussion and several settlements reached successfully. The Labour Department Authorities are invited in some meetings as observers and to give their suggestions in our internal meetings and many times the meetings were well appreciated.

IR is a beautiful subject matter and a strong IR mechanism and Strategy will help industrial growth.

On all policy matters we framed a Central IR Manual called IR Blue Print comprising of all in all of IR covering each location in a digital form which helps the IR leads moving from one location to other location and gives a complete understanding of IR in the location. Thought of sharing these few thoughts out of 30 years of my past IR experiences in multi location/ multi union set ups and these systems gave us very good strength to handle IR very productive.
All the best.

From India, Chennai
Hi Very good topic and good discussion and presentations Dr. Sivakumar can you share your email Id? Thanks and best wishes Ram K Navaratna
From India, Bangalore
Dear Colleagues, My e-mail id is God Bless and very happy new year 2022
From India, Chennai
Dear Vinayak ji & Dr. P Sivakumar ji, Thanks a lot to both of you. Very informative, easy to understand, great ideas. Regards
From India, Pune

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