CASE STUDY: Disruptive Collective Bargaining Model

Unique Collective Bargaining Model

( Innovative and Disruptive one, first time in India)

........ the trailblazer to Organization Transformation and

to ORGANIZATIONAL PROSPERITY

History

India's labour scene was turbulent in 1960s through 1980s and 1990s. Kerala too. It was the hot bed of industrial strife during 1960s through 1980s. Binani Zinc, a Division of Binani Industries (other business being Cement, Glass Fiber, Pultrusions, Alloys, Chemicals), slightly off Cochin, Kerla, India across 103 acres across the navaratna fertilizer PSU giant, Fertilizers & Chemicals, Travancore (FACT).

Employs the hydrometallurgical route of zinc extraction, in its state-of-the-art plant replacing the old plants in 10 years (1985-1995) investing Rs. 100 crores. Technology, automation (DCS & PLCs) was employed, people numbers drastically brought down to 1/3rd in 10 years, partially due to autoamtion and infusion of technology in operations, productivity gains, surpassing national benchmark in zinc smelter operations in 1997 and crossing European benchmark later.

Result: McKinsey concept "LESS FOR MORE" a reality in Binani Zinc, Binanipuram, Ernakulam district, Kerala, India.

It is noteworthy that these business successes and exemplary performance were amidst the multiplicity of trade unions and inter-union rivalry and competing demands, equally or more strong management, coupled with all-around militant trade unionism, modernisation of plants, automation across all manufacturing operations etc. We were the first company in Kerala to be certified by Ernst & Young (India) under Corporate Sustainable Reporting (G3 Guidelines, UNEP) in 2005, 17th in the country; besides doing with internal capability and self-gained and developed/generated expertise.

Kerala IR ecosystem co-existed with the IR history of Binani Zinc; lost a solid period of 58 man-months in the first 25 years (1966-1991) whereas the second half of 25 years (1991-2016) witnessed zero mandays lost, yet concluded successive productivity-based Long Term Settlements and & 'sharing the gains of productivity'.

The first Zinc smelter in the country set up in 1964/started production in 1966 had chequered Industrial Relations history. Collective Bargaining (CB) is the most complicated in a 8-11 trade union enviornment in the 1970s and 1980s.

Baseline of all these was peaceful industrial relations after 1991. A team of IR-HR strong Professionals were inducted in 1995. Transformed " Personnel Function to HRD and later "HRD & EOHS: CEO's Agenda" (per Michael Beer etc 1992), among other HR and OD initiatives and interventions. HRD initiatives and few OD interventions added traction. Productive industrial relations was symbiotic; each contibuting and gaining. Of this, the unique, innovative and disruptive Collective Bargaining Model is noteworthy. It was during these peaceful times of post-1991, could we think, contemplate, design and re-imagineering of new processes and methods. It was under constant experimentation. Lot of support from academia by way of surveys and research, tentative models, experimentation/hypothesis formulated/"outside-tunnel" view and assistance taken; noteworthy among was Rajagiri College of Social Sciences and the pivotal role played by Prof (Dr) K Anil Kumar of RCBS, Kakkanad, Kerala, India in co-architecting the movement for close to seven years.

Parties

It was around the contemporary of about 11 to 14 unions across Kerala; whereas, in Binani Zinc it was 7 to 8/11 at a time. Recognition of trade unions forming part of LTS (only those having 20% as "collective bargaining agent") limited participating unions in collective bargaining to 2 or maximum 3.

Loss of mandays across industries in India and Kerala too suffered 20-25% due to personal vendetta/personal ego (revealed through a deeper study, at unit level - several studies/disseratations under guidance from Faculty members of B-Schools); not necessarily that of IR or Collective Bargaining, per se .

Self Renewal Process (with internal self affirmation, capacity development, capabilty development)

No magic can come from academia. Change has to happen from inside. Deliberate and conscientious decision of Management to appoint a retired Professional, first-time-in-the-history-engaged-from-retired and outside, Paul P Paliath (PPP), from Aluminum Industries (ALIND), Mananr, Alapuzha district did the wonder. Management hesitantly, mandated him to 'experiment' a new IR Model and evolve a new Collective Brgaining model (CB Model). In the 28 years compoany historyt, he concluded for the first-in-the-history, a bi-partite productivity-based Long Term Settlement (P-based LTS) in 1994. No loss of mandays. One-man Management 'Team' (PPP) [as against 8-9/12 in the past 28 years] and 6-member (2 representatives each * 3 Trade Unions), [as against earlier 10-15].

1991 had an 11-month strike, wage settlement was first time, settled with "muscle-force". Long Term Settlements (LTS) to wage composition 'agreed-in-principle' @ 33:33:33 (wages 33%, production incentive 33% and attendance incentive 33%).

Work Study (pursuant to LTS provision) in mid-1980s by Kerala State Productivity Council (KSPC) was the magna carta. Very few companies follow up/implement a Work Study. Binani Zinc faithfully and religiously inplemented with union cooperation.

This 1994 P-based LTS changed the fate of the otherwise bad image of Binani Zinc in the corporate world: കാടാറു മാസം നാടാറു മാസം (meaning "6 months 'forest'/strike and 6 months working) so far.

The following were the new sub-processes jointly evolved by internal trade union leaders:

(i) Daily 5-minute (post-lunch & within lunch recess) communication platform in Personnel Manager's cabin

(ii) 'Influencing, persuading, coercing' each other happened slowly every day

(iii) 'Behavioural mirroring' was happening in tits an bits

(iv) Learning and reverse learning happened in the 7 people (1 Personnel Manager and 6 reps: Internal Trade union leaders

(v) Unknowingly, a new wonder happened; 'Internal trade union leaders' stepped-into-the-shoes on daily operational issues; eg: they represeted before KS Pollution Control Board, State Electricity Regulatory Commission on tariff recvision petition and submission/personal hearing.

(vi) Empowered internal union leaders on day-to-day operational issues, as days and months passed; external TU leaders were in the LTS.

(vii) Capacity building abd Capability building through data and information-sharing, training by Education Officers of Central Board of Workers Education, Study Mission to other industries, sharing copies of annual Economic Survey, annual Budget (Union and State Governments) >>> >it took more than 3 years for this change and transformation to start happening

(viii) Slowly, 'external' leaders were only as "Leaders" from signing tri-partite Long Term Settlements before the Labour Commissioner

(ix) The internal leaders decided to 're-look' / 'review' every aspect of IR processes and collective bargaining processes

(x) New set of CB processes as below:

(a) Jont Charter of Demands was desired to be submitted at least 6 months before expiry of existing P-based-LTS

(b) Decided 2 representatives each in the Negotiating Team will be fixed and nominated

(c) Management representative and Internal Trade Union leaders attending CB process will remain static; evenif one is not well/inconveniencd, no substitution (no chance for 'unsettling' already 'settled issues')

(d) Internal TU leaders were asked to keep external TU leaders posted at major and minor milestones before committing/agreeing.

(e) Management will provide a state-of-present and propect/future of Business for information of TUs

(f) Decided to first, offerings of productivity to come from employees/TUs: starting with removal of rigidity, "flexibility-at-work', removal of 'restrictive work practices', 'remlval of work quota/restriction' if any, and thereafter, workstation-wise, how lesser/fewer people will carry out same/more output, resort to technology adoption etc.

(g) Consequential "sharing-the-gains-of-productivity" at 33:3:33 was agreed after 2 P-based LTSs (hypothetical model of 33% to labour, 33% to Management and 33% to shareholders) was agreed as the braoder framework for wage increase: the ILO model.

(h) Process of implementation and "employee-participation and engagenent" of Management Systems ISO and Business Optimisation Techniques: TQM, TPM, TCM, CSR and Corporate Sustaiability Reporting etc.

(i) Next step is offer of "traditional wage increase" comparable to regional and local pattern.

(j) Management and TUs decided to conduct regualr and separate data collection of regional and local wage surveys, besides and industry Best Practices in those Companies, permitted Study Missions to TU leaders

(xi) Negotiation Table/Room

(a) CB process between Management and 2 reps each per TU to start 3 months before the expiry of existing P-based LTS

(b) CB discussions on all Mondays, Wednesdays and Fridays between 2 pm and 4 pm

(c) No communication, phone calls nor sharing of information to outsiders

(d) Periodically exchange summary of "Productivity gained" first and subsequently, 'Wage increase'

(e) Draft P-based LTS shared and signed as bi-partite P-based LTS

(f) Labor Commissioner invited to tri-partite under Sec 12 (3) of ID Act, making it applicable to existing and future employees

(ix) Signing of the P-based LTS: Formal signing of P-based LTS with Management and external and internal TU leadership

(x) Deciding on the schedule for (A) Implementation of P-based LTS provisions (B) Revised salary payment (C) Monthly Review of P-Based LTS provisions on the last day of every month

(xi) Trust and mutual confidence palted the foundatuion steps. Education, awareness and training focussed on change and transformation was another. Data and information updaton and sharing also made wonders.

(xii) Shared Best Practices to NIPM, NHRDN, KMA, CII and Academia

(xiii) Prof Biju Varkkey of IIMA expressed interest to do a Case Study on this CB Model for his next/latest edition text book on HRM (Biju Varkkey & Gary Dessler) for sucessively concluding ZERO MANDAYS LOST during the second half/25 years (as compared to 58 manmonths lost during the first hald/25 years (1966-1991)