A good settlement is never the outcome of a good negotiation, but of the investment made in the process

The peculiarity of a factory is that many people work in a common place and hence there are multiple aspirations and demands. In order to ensure that everyone works in symphony, it is essential to have industrial peace in the factory. In any unionized factory, settlement is the only legal tool to achieve industrial peace.

The objective of any settlement reached between the union and management is to ensure that issues related to employment, non-employment, terms of employment and conditions of labour of workmen are settled for a period of time. This document gets legal mandate when the Labour Authority registers it. The Memorandum of Settlement settles all issues detailed in the document and cannot be challenged by the union, management and the Labour Authority during the period of settlement.

There are many stakeholders to the settlement such as the trade unions, factory management, workmen, engineers & supervisors, government authorities, trade union’s affiliation body and business leadership. What is intriguing is that the stakeholders have diverse needs. The trade union wants to maximize the hike in pay and benefits through the settlement. The workmen see the settlement from the lens of “What’s in it for me”. The factory management wants to close the deal within the approved budget and sets ambition to get some savings in this. The Labour Department wants industrial peace to prevail and to ensure that management does not indulge in high handedness. The business leadership wants its principles to be followed and compliances to be met. The trade union’s affiliation body wants their broad agenda to be driven in the settlement.

We, practicing negotiators, have grown with the mindset of Mazdoor-Malik divide highlighted in the books of Personnel Management as also in films like ‘Namak Haram’. There is also trust deficit among the stakeholders: Workmen do not believe the Union, Union and Management do not believe each other, the government reserves its trust and parties need to demonstrate its commitment to compliance to statutes.

In such a context, the management’s claim of maintaining fairness and equity in negotiation is not believed by the Union. The negotiation process becomes tripartite and “industrial peace” is thrust upon the parties. In between there are instances of strikes, gheraoes, gate meetings, media coverage and the stakes of the parties gets bigger. The outcome leaves a bad taste, which nobody intends but which none could avoid. This is the fate of most of settlements that we have witnessed in India in the recent past.

Now let us see the picture-perfect. Think of a settlement signed on date of its expiry, with no Industrial dispute, with no media coverage, with Business as usual, with competitive hike in salary and benefits, with raising the bar in variable pay by making the productivity levels more stringent, with Union making affirmation to deliver on all “business requirements”.

While there might be factories in India that might have painted this perfect picture, we would like to highlight the process that needs to be followed to achieve this desired outcome. We have put the practice in the form of a model as we believe that the model can be replicated for doing a “Win-win settlement”.

A good settlement is never the outcome of good negotiation, but of investment made in the process.

Credibility of Factory Management: People follow what you do and not what you say. For example, we speak of discipline in the factory, but discount instances of unauthorized absenteeism. There is a telling doing gap. Factory management needs to have credibility both personally as well as collectively.

Statutory compliance: It is a rule of thumb that more than 90 per cent of the industrial disputes in a factory can be avoided if statutory compliances are maintained. This agenda, though simplistic, is a tall order. An employee feels proud to work in a statutorily compliant company. An employee also feels assured that the company will provide him/her whatever is legally due.

The above two agenda should be taken as a minimum mandate and should be mandatorily complied.

High level of engagement with workmen: This is the most repeated but least respected agenda in a factory and often left to be driven by the local HR team. Engaging with the workmen should be the key agenda of line managers, also called the “People Managers”. Engagement with workmen is an area where HR professionals must compete with the Union and outsmart them. We need to build platforms to engage with workers to resolve their issues. High levels of engagement with workmen build emotional bonds, which delivers huge payout during negotiation.

Engagement with government authorities: It is always beneficial to proactively engage with these authorities at regular intervals and update them about the compliances and new initiatives that the factory has undertaken. Through these actions, one can build the stature of the company before these authorities.

Engagement with Union’s affiliated body: Almost all affiliated bodies be it INTUC, CITU or BMS have the philosophy of co-existence of industry-labour and development of labour. This thought is in sync with the management’s initiative of workmens’ welfare & development. Hence, we will have enough options to build alignment with the affiliated body of the Union to get their support for negotiation.

Ring-fencing the factory through external connect: This is the unsaid “bread and butter” role of a Factory HR professional. The external stakeholders range from local politician, media, local administration, NGOs, panchayats to District Administration. We need to map these stakeholders and have action plans to build connect with them regularly. The objective of this initiative is to ring-fence the factory operations from external factors. We also need to network with the HR professional of the nearby industries to understand their IR dynamics. This knowledge provides inputs to build tactics for negotiation.

Pillars III to VI should be treated as the ground work for settlement’s negotiation.

Stating the expected outcome to the Union: Unlike the common belief of being vague and unpredictable to the Union, it helps both parties to the negotiation if the intended outcome is clearly communicated beforehand. This also helps in building trust with the Union.

Maintain the rigor in negotiation process: Once the intent of the Management is made known, it is only natural to have rigor in negotiation process. The negotiation should be treated as a project with the target date of completion. This helps demonstrate management’s intent of being fair and committed to the process.

Depending upon the maturity and knowledge level of the Union, it always helps to share the basics of negotiation like wages and the fact that wage negotiation is for the revision of fair wages. It also helps to educate the Union about the capacity of the employer to pay by looking at its profitability. Competition in the market is also another relevant factor to be considered while conducting the negotiation for pay hike. Wage settlements can be harbinger of improved morale and productivity and can be safely closed within the four walls of the factory.