[Type text]

A Conceptual Paper on Industrial Relations and Performance Management

Submitted By :
Sudarshan Bose H13054 Sumit Kumar H13055 Susheela S H13056 Seetharam H13057 Sourik Syed H13053

Table of Contents
Abstract ......................................................................................................................................................... 2 History .......................................................................................................................................................... 2 Literature review ........................................................................................................................................... 2 Challenges associated with the implementation ........................................................................................... 3 Role of Trade Union in PMA implementation.............................................................................................. 4 Impact of trade unions on PMA systems in place ......................................................................................... 5 Conclusion .................................................................................................................................................... 6 References ..................................................................................................................................................... 7

Industrial Relations and Performance Management

Abstract
A group of individuals make an organization and it is incumbent on the management that the individuals are motivated to perform and sustain the performance in the organization. In the given setting, performance management becomes of prime importance, which is the topic of analysis in the paper. Given the fact that there are different stakeholders in the industry striking a balance between the needs and requirement of one without offsetting the requirements of the other becomes of prime importance. Through this paper we have found that the workers would prefer having a not-so-rigid performance evaluation and the management wants it otherwise. The times are changing and the performance is given the prime importance. The trade union is another stake holder which tries to bring in parity and social equity. How the stakeholders try to maintain a balance is the main point of analysis in the paper.

History
There has been a great realization that it is more important to focus on defining, planning and managing performance than merely appraising performance (Pareek and Rao, 2006). According to the IOSR Journal Of Business Management paper,From Performance Appraisal to Performance Management(LeenaToppo and TwinklePrusty , 2012), The New York City Civil Service in USA introduced a formal appraisal program before First World War in 1800s. However, full formal appraisal of employees performance is believed to have been started for the first time during the First World War, when US Army adopted Man to man system for evaluating military personnel. During 1920s, industrial units adopted relational wage structures for hourly-paid workers and each worker was rated in comparison to others for determining wage rates. In the 1960s development of self-appraisal by discussion led to specific time and opportunity for the worker to evaluate their performance in the discussion. In the 1990s, 360-degree appraisal developed, where information was sought from a wider range of sources and the feedback included groups appraising the performance of line managers. Therefore,the philosophy of performance appraisal and management has undergone tremendous changes

Literature review
Gwendolyn M. Combs, Rachel Clapp-Smith and SuchetaNadkarni (2010) states that there is a significant positive relationship between levels of hope and performance of Indian service workers in the BPO.This highlights the importance of measuring and managing employee hope to maximize employee productivity and performance. MossamadParveen (2013) in another study about textile workers from Dhaka talks about performance management of workers talks about job satisfaction. A person with high level of job satisfaction holds positive attitude toward his job while a person who is dissatisfied with his job holds negative attitude towards his job. This is how an organization gets satisfaction from their workers in order to get their commitment to perform well. Kuppusamy, S., E. Deepa, and M. Stella (2012)Studies in another textile industry showed that Industrial Relations and Performance Management 2

workers performance must be appraised using the appropriate appraisal methods and the productivity can be maximized by providing incentives, training program and a quality of work life balance. Jed DeVaro (2006)One other paper studied about promotion schemes as human resource management strategies by which the firm can realize strategic goals by motivating workers to higher levels of effort and performance speaking about structural model of promotion tournaments that simultaneously accounts for worker and firm behavior and how the interaction of these behaviors gives rise to promotions. The results are consistent with the prediction of tournament theory that workers are motivated by larger spreads.

A performance management and appraisal system can be defined as a system used to improve the organizational performance by ensuring that the individuals and teams goals are aligned with the organizations goals. The reasons why a PMA system should be there are: 1. Determining eligibility of employees for promotion, discharge, transfers and salary increase. 2. Measure and evaluate employees/teams contribution to the company over a period of time. In a performance appraisal, the individuals accomplishments and behavior in particular time period is assessed. 3. Increasing the employees effectiveness through adequate feedback and improving performance through training and development programs. 4. Help employees make decisions regarding career path and set direction for their time and effort.

Challenges associated with the implementation

In an industrial setting, the management and the union is at loggerheads due to conflicting interests. The management is interested in making profit while the workers want to maximize the benefits that they receive by putting in minimal effort possible. In todays scenario, performance management becomes even more difficult given that temporary workers are employed to battle the constraints of revenue management and cost cutting. The management generally has no appraisal system for the workers cadre of temporary workers. They tend to extract the most work out of them for a period of year or two and moves on with the next set of employees. Secondly, it is also a challenge to appraise the workers when the workers input is does not directly result in revenue generation. Because there are different kinds of businesses, every business requires a different standard of measurement and cannot be employed across all departments and locations. The primary problem that the management encounters is considering output alone as the performance metric to judge employees while they might have been constrained by several other factors such as location, season, business cycle, unforeseen factors etc. Hence appraisal brings with it a whole lot of other issues which need to be considered. We generally categorise workers in terms of their skill levels as skilled, semi skilled and unskilled and pay them according to their potential. The outputs are considered as a factor but it is the duty of the manager to get the work out of the employee was told by the production manager in a leading car manufacturing unit in Uttarakhand. Hence only taking outputs as a measure is a wrongful measure of performance in any industry. Finally, the management claims that unions are another hindrance to creating a robust performance management system. The Industrial Relations and Performance Management 3

unions garner the support by claiming welfare of the employees. Equitable distribution is the most preferred form of appraisal in the worker cadre.

Role of Trade Union in PMA implementation

One of the primary functions of a trade union is to secure fair wages for workers and try to enlarge opportunities for promotion and training. In a research carried out by Madheswaran and Shanmugam (2003), they estimated that workers within the union sector earn 19% more than the workers in the non-union sector. A trade union can influence policy making with regard to PMA by entering into collective bargaining with the management. The union primarily engages in two discussions with regard to pay, the first one being the pay hike based on performance and the second one being the number of promotions. In large industries where trade union activities are mostly funded by political parties, trade unions generally influence PMA systems by leveraging their political connections outside the organization. However, more often trade unions, if recognized by the management, take the legal route of collective bargaining to pursue the interests of the workers with regard to pay. To do so, the union must have control over the total labour supply in the industry. In the present day, we may see unions getting into bilateral negotiations with employers for increasing the real wages ahead of inflation. Though employers insist on increment in wages to be performancerelated, trade unions try to negotiate for increasing the base salary of the workers since all other components of pay shall increase proportionately. The trade union leader of AIBA says The rate of unemployment in the labour market is an important determinant of negotiations. Whenever there is a shortage of skilled workforce, the balance of power in a bilateral negotiation shifts towards the union. For firms that enjoy a monopoly position or firms that are enjoying exorbitant profits due to inelastic demand for their products, the unions tend to draw in a larger share from the financial resources of the employer thereby boosting the total earnings of the workers. However, with the demand for almost all products becoming elastic in todays global world, the ability of unions to drive real wages has declined. Negotiations are generally initiated by trade unions at the end of a financial year. The management, after taking into consideration the rate of inflation, the firms profit and the labour market conditions takes a final call, shared Ms. Ankita Bagchi, an IR manager at Tata Steel, Jamshedpur.

Industrial Relations and Performance Management

Impact of trade unions on PMA systems in place

A study of the impact of trade unionism on performance management systems should begin with a study of the performance management cycle, which in turn will help identify the stages where the trade union may make possible interventions. The performance cycle (Taylor, 2013) has been depicted below:

Planning Performance

Reviewing Performance

Supporting Performance

The performance cycle

The purpose of the first stage is to establish clear goals and expectations. The second stage involves identifying information sources and providing constructive feedback. The third stage mainly comprises the performance appraisal process. It must be noted that the purpose behind such evaluation is to drive continuous performance improvement. Armstrong & Baron (2005) emphasise that the aim should be the positive one of maximising high performance although he conceded that this does involve taking steps to deal with under-performance although they should be constructive in nature. However using forced ranking measures like the bell-curve to generate appraisal scores defeats the purpose by targeting under-performers. Trade unions frequently make an intervention post the performance review stage of the performance cycle, often in the form of strikes. Discontent arises when employees are hitting their targets or believe they are doing so, but are categorised as underperformers at their appraisal (Taylor, 2013).An example of the aforementioned would be the protest by the NTPC 5

Industrial Relations and Performance Management

Executives Federation of India (NEFI) sparked by the introduction of a similar performancelinked-reward mechanism which deprived the bottom 10% of any performance-linked pay. There were examples of new recruit engineers whose performance was more than 90% on an absolute scale but in the overall average, it figured in the bottom 10%. (The Hindu Business Line, October 8, 2013). Interventions may also be made at the planning stage. There is scope for union representatives to raise objections to what may be considered excessive or unachievable targets (Taylor, 2013).An example of the same would be the national one-day strike staged by the staff at British Telecom and organised by the CWU at their call centres.The union was highly critical of what it saw as insufficient staffing and rigid performance targets, including the imposition of unreasonable callhanding times (Hall, 1999).The strike was successful in coercing British Telecom into developing a model of best practices for the call-centre industry besides adopting a stress management programme and relaxing performance criteria, thus addressing issues in the second stage. Thus, evidence suggests that trade unions have managed to organize effective collective response in instances of performance management systems synonymous with top-down target-driven work.

Conclusion
One of the main challenges faced in implementation of PMA is that the goal of the management and the union are conflicting. Appraisal is difficult when performance of workers isnt directly related to the revenue generation of the organization. Trade unions influence the PMA system either by leveraging their political connections or through legal proceedings such as collective bargaining (if recognized). TUs objective is always for the welfare of the employees of the organization and in case, the PMA system is designed in a way which exploits them, the trade union needs to ensure that the necessary steps are taken in favor of the workers.

Industrial Relations and Performance Management

References
1. http://jir.sagepub.com/content/44/3/335.short

2. Kont, Kate-Riin, and Signe Jantson. "Library Employees Attitudes Towards the Measurement and Appraisal of Their Work Performance: Study in Estonian University Libraries." Library Management 34.6/7 (2013): 9-9. 3. Shasthry, KaipaRaghuram, and VimalaSanjeevkumar. "A STUDY ON IDENTIFICATION OF CONTEXTUAL KEY FACTORS IN PERFORMANCE APPRAISAL IN PUBLIC SECTOR ENTERPRISES IN INDIA."International Journal of Research in Computer Application & Management 2.1 (2012). 4. PARVIN, MOSSAMAD, et al. "LEVEL OF JOB SATISFACTION OF GARMENTS WORKER: A CASE STUDY ON SAVAR AREA IN DHAKA DISTRICT." International Journal of Research in Commerce, IT & Management3.5 (2013). 5. Kuppusamy, S., E. Deepa, and M. Stella. "PERFORMANCE APPRAISAL SYSTEM IN TEXTILE INDUSTRY WITH SPECIAL REFERENCE TO TIRUPUR-AN EXPLORATORY STUDY."International Journal of Research in Commerce, IT & Management 2.3 (2012). 6. Amba-Rao, Sita C., et al. "Comparative performance appraisal practices and management values among foreign and domestic firms in India." International Journal of Human Resource Management 11.1 (2000): 60-89. 7. Mayer, Roger C., and James H. Davis. "The effect of the performance appraisal system on trust for management: A field quasi-experiment." Journal of applied psychology 84.1 (1999): 123. 8. Combs, Gwendolyn M., Rachel ClappSmith, and SuchetaNadkarni. "Managing BPO service workers in India: Examining hope on performance outcomes."Human Resource Management 49.3 (2010): 457-476. 9. DeVaro, Jed. "Strategic promotion tournaments and worker performance."Strategic Management Journal 27.8 (2006): 721-740. 10. Ghosh, Piyali, ShefaliNandan, and Ashish Gupta. "THE CHANGING ROLES OF TRADE UNIONS IN INDIA: A CASE STUDY OF NATIONAL THERMAL POWER CORPORATION (NTPC), UNCHAHAR." Asian Academy of Management Journal 14.1 (2009).

Industrial Relations and Performance Management

11.http://www.tutor2u.net/economics/content/topics/labourmarket/unions_wages.htm 12. P.Taylor, (2009). Performance Management and the New Workplace Tyranny :A Report for the Scottish Trades Union Congress. 1st ed. Scotland: University of Strathclyde 13. http://www.eurofound.europa.eu/eiro/1999/12/inbrief/uk9912143n.htm

14. http://www.thehindubusinessline.com/companies/ntpc-employees-protest-overperformancelinkedpay/article5213516.ece?utm_source=vuukle&utm_medium=notification_emai l&utm_campaign=vuukle_referral 15. http://iosrjournals.org/iosr-jbm/full-issue/vol3-issue5.pdf

16. ToppoLeena ,Prusty Twinkle , From Performance Appraisal to Performance Management , ISSN: 2278-487X Volume 3, Issue 5 (Sep,-Oct. 2012), PP 01-06 17. Pareek, Udai, Designing And Managing Human Resource Systems, 3/E. Oxford and IBH Publishing, 2006.

Industrial Relations and Performance Management