Managing worker dissatisfaction: R Gopalakrishnan

As the sentiment for business starts to improve in the future, I wish to reflect on just one unseen leadership challenge .

Managing worker dissatisfaction will be the next leadership challenge globally. Managements have enjoyed exceptional labour relations for two decades: industrial unrest (strikes and lockouts ) during 1992-2007 is drastically lower than 1977-1992 : by 80 percent in UK, S Korea, Japan, and 60 percent in India and US.
After three decades of Reagan-Thatcher super-capitalism , a new generation which has no experience of tough labour power is now leading enterprises. Unionists like Arthur Scargill in the UK, George Meany and Walter Reuther in US or Datta Samant in India have all been forgotten.

Many countries all over the world have experienced unprecedented growth in the last decade but skeptics doubt whether labour got its share. In the words of one union leader, “The time for corporate dictatorships is over. This is our time.”

Consider a sample of global events just in the last one year: In India, Jet Airways fired 1,900 employees to save the jobs of the balance 11,000. ET journalist Mythili Bhusnurmath observed, “The global financial crisis has finally invaded the middle class drawing rooms in India...... Jet layoffs are the first sign that the middle class is no longer safe from economic downturns.”

In May 2008, a trans-Atlantic merger was announced between United Steelworkers and Unite, UK’s largest union representing workers. President Leo Gerard said, “Now we have got globalisation running rampant over workers all over the world, and there is not a counterforce in the labour movement. We want this merger to be something that can deliver for workers.”

Andy Stern of Service Employees International Union, USA has expressed the view that “our world, is going through the most profound transformative economic revolution in history....the trade union movement has lost its way because it did not accept that the world has changed.” He has been campaigning loudly against private equity and sovereign wealth funds and is widely regarded as “the modernising face of America’s unions” although the Wall Street Journal dismisses Stern as a “drama king.”

A British newspaper reported these events on a single day in September last year, “France paralysed by a wave of strike action, the boulevards of Paris resembling a debris strewn battlefield....as unemployment rises, the Hungarian currency sinks to its lowest level against the euro....Greek farmers block the road in Bulgaria to protest the low prices for their produce....Revolt is in the air” Journalists used terms like “dawn of a new age of unrest” and “back to the barricades.”

In September, a strike shut down Boeing, which had customers’ orders for several years to come. The Machinists’ Association representing 27,000 Boeing workers halted the production of aircraft in Washington State, Oregon and Kansas. In Japan, with the slowdown, about 200,000 temps were to be fired. Tsuyoshi Takagi , president of Rengo, Japan’s biggest trade union confederation, said that temps are being treated “the same as robots and we need to go back to the old ways.”

Early this year, Waterford Crystal factory in Kilbarry, Ireland had to be shut down. The workers occupied the building and refused to leave. President Obama signed the astounding Liddy Ledbetter Fair Pay Act. Leaving the company in 1998 after poor job evaluations, Ms. Ledbetter
collected her pension. Then she went to court claiming that she had been the victim of gender discrimination 15 years earlier (yes, in the 1980s!) . The Supreme Court rejected her claim due to the statute of limitations , between 180 to 300 days, depending on the state. You know what Congress did? It legislated to throw out the statute of limitations with the result that a worker can now claim gender or race discrimination for 20 years after leaving the company!

Everywhere workers despair about the uncertainty and fear of being short-changed by managements. As millions of jobs vanish in the worst slump in eight decades, something new and strange is happening in relations between company employees and leaders. Employee dissatisfaction is becoming deeper and uglier. The ground is shifting in the labour-management model that has prevailed for the last thirty years of supercapitalism . Managers have to be more and more sensitive; they must shed any unconsciously accumulated arrogance of the last 25 super-capitalism years.

They must truthfully engage with workers, and not to deny or dismiss their concerns. There are many ways forward but one theme could be prominent, viz putting humanism back into businesses. Alongside the focus on cost-cutting , down-sizing , managers must find the space and emotion for softer inputs: they must be more sensitive, while actively and truthfully communicating with workers. How can leaders intuitively bring human values , communications and openness back into their relationships with workers? Through 3 Es: explicitness, empathy and emphasis.

In his New Year letter to employees, Mr Ratan Tata, Chairman of Tata Sons, was explicit and direct. “This economic crisis may well be the worst we have ever faced in living history.” He reached out to employees, saying, “The greatest strength that our Group has today is the spirit of its people....the environment over the next twelve months will require us to display, more than ever before, the strength of this spirit... a period of crisis brings out the spirit, and marshals the strength to tackle unbelievable challenges.” When the Taj Mahal hotel employees were devastated by the terror attack of November, the leadership visited every single affected family.

When the HR folks explained all that they had generously done for the employees, the leaders asked with empathy, “What else can we do?” The Taj management went on to set up a welfare trust for the benefit of all citizens affected by the attack—including the public, policemen and guests at other hotels, not just its own employees. The first beneficiary was a guest at a competing hotel!

The approach of Tata CEOs is captured by the in-house think tank, whose internal paper emphasizes the soft aspects, “Effective communication is necessary to portray the changes in a proper light to ensure that morale does not suffer....Simple communication is essential, urging employees to redirect their efforts to achieving the company’s new objectives....Creating a sense of togetherness and belonging can reduce the execution risk,” the paper said. This is no rocket science. Yet the penalty for ignoring these simple things in an increasing complex environment will be severe.

(The writer is executive director, Tata Sons. He is the author of The Case of the Bonsai Manager)

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