Following is the article by Sri R. Gopalakrishnan, ED, Tatasons published in Economic Times.. Worth reading..
P E R S P E CT I V E S
Reincarnation of the humane leader
R Gopalakrishnan
SOMETHING new and strange is unfolding in many societies around the world. ILO estimates that global unemployment could touch 230 million in 2009, up from 165 million in 1998. Sometime ago in France, workers in an engine components company wired up the factory with dynamite, threatening to blow it up if the auto companies would not place more orders on their company. Last year, CEO Lalit Kishor Chaudhary of Graziano Transmission (India) had terminated a few factory workers. He was hammered to death. The police chief said: “It was a violent outburst…it was not planned….a violent mob mentality took hold.” Corporate India was devastated because such an event had not happened since the troubled 1970s.
When I began my career in India in the 1960s, everyone was greatly preoccupied with the issue of unequal prosperity — the lack of capital, rich versus poor, management and labour unions. This atmosphere resulted in public policies, which have later been regarded as autarkic and inward-looking. Foreign businessmen were very critical of India’s practices. Banks were nationalised, corporate honchos’ salaries were limited by government and had to be made public. Top income tax rates were 95%. Unions would protest and agitate through a ‘gherao’. In the last thirty years, these practices have mercifully vanished.
In the evening of my career, I find it bewildering that Americans and Europeans are rapidly adopting India’s now abandoned policies. Banks have effectively been nationalised. Corporate salaries have to be approved by shareholders. CEO incomes are being capped selectively. Income tax rates of 90% on certain types of managerial income are being considered. The White House is getting involved in the choice of some American CEOs, their mode of travel and their bonus amounts.
Since the second half of 2008, the ground seems to have suddenly shifted. Millions of jobs have been lost. With the deepening financial crisis, people are getting very short-fused because the human consequences are getting grimmer by the day. Employee dissatisfaction is strong and could well be the next surprise crisis.
International co-operation among unions is increasing. In May, a trans-Atlantic merger was announced between United Steelworkers. 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.”
In Japan, a third of the manufacturing workforce is temporary, helping Japan to stay somewhat competitive. 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.”
In March this year, the US Congress introduced the Employee Free Choice Bill, which is the most significant pro-union reform since 1935. After replacing the top management of General Motors, quite surprisingly, the Obama administration is looking for ways to overhaul the contracts that GM and Chrysler had signed with unionised workers.
The trade union movement as we knew it was essentially a by-product of the industrial revolution. In 1871 with the formation of the Trade Union Congress in Britain, labour power started to get recognised. Simultaneously the movement in Europe got energised. Across the Atlantic, there was the Chicago March of 1886; the AFL-CIO, American Federation of Labour and Congress of Industrial Organizations, followed.
Around the 1970s, trade union activity was at a peak all over the world. The membership of trade unions was highest in the UK and Europe in 1980. The names of unionists like Arthur Scargill in the UK, Walter Reuther in US or Datta Samant in India are etched clearly in the memory of my generation of managers.
During the last three decades of Reagan-Thatcher super-capitalism, managements have enjoyed exceptionally good labour relations: industrial unrest (strikes and lock-outs) during 1992-2007 has been drastically lower than 1977-1992 — lower by 80% in the UK, S Korea, Japan, and 60% in India and the US. Since then, trade union membership everywhere has steadily declined to the lowest level since the Second World War. Further, the emergence of the knowledge industry has allowed corporate leaders to take labour for granted.
Even as workers despair about the uncertainty and fear being short-changed by managements, another dynamic is at play. New people are coming into the labour force and the profile of labour is also changing. Recruitment in traditional industries like mining and manufacturing has started after a long time. “It is a proper job, hard work you can take pride in,” says Adam Fletcher, 23, an apprentice in Britain’s privatised coal industry. Paradoxically while there is a resurgence of labour, a new generation of corporate leaders with no experience of tough labour power is now leading enterprises.
Workers everywhere are desperate to know the truth, howsoever hard it might be. In such a situation, managers cannot be focused only on hard aspects like cost cutting, reducing layers, inventory cutting, etc. They must find the space and emotion for softer aspects; they must actively and truthfully communicate with workers. Managers have to be more and more sensitive; they must shed the unconsciously accumulated arrogance of the last 25 super-capitalism years. They must engage with workers, and not dismiss their concerns.
William J Holstein, author of Why GM Matters, has rightly observed: “As it looks to micro-manage an entire industry, let us hope that the US administration does not lose sight of the human side of things.” The management of human relations and resources will inevitably return to centre stage again. A new avatar of leaders will emerge out of these developments: a natural leader with a high affiliation orientation, a warm person. In the week of his 105th birth anniversary, I recall JRD Tata who spoke of a leader as one “who can lead with affection.”
