Professional Documents
Culture Documents
S. Saini Source: Indian Journal of Industrial Relations, Vol. 42, No. 2 (Oct., 2006), pp. 170-189 Published by: Shri Ram Centre for Industrial Relations and Human Resources Stable URL: http://www.jstor.org/stable/27768064 . Accessed: 15/09/2013 10:08
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MANAGING EMPLOYEE RELATIONS THROUGH STRATEGIC HUMAN RESOURCE MANAGEMENT: EVIDENCE FROM TWO TATA COMPANIES
Debi S. Saini
The turbulence caused by theglobalisation syndromehas led management. global level inalmostall spheresof survivingat the This paper discusses thedynamics of changes thatare taking
place the corporate sector to discover new ways of operating and
resourcemanagement (HRM) strategy is being used in this regard. In doing so, it analyses the contribution ofHRM
in building "new IR" or ''strategic IR." Taking context. note in the Indian relations
in management
of employee
relations
philosophy
Two case studies of are HR employee strategy managing through being It to draw is conclusions. that presented argued building on cooperative employee relations continues to be high corporate a new is acquiring While priority; but paternalism meaning.
on the IR scenario
employee welfare still remainsa priority for promotingemployee and the engagement, focus on employee loyalty is satisfaction to diluted orientation/'Both give way to "performance getting used to realize thegoals of HRM. The paper also hints towards
convergence of Indian and western HR practices. Development
at a seminar Labour
"empowerment"
and
"instrumentalist"
HR
strategies
are
being
Dr. Debi
Gurgaon. Resource
S. Saini
An earlier Management
Institute,
on "Human Institute,
Ahmedabad, January 27-28, 2006. I thank theparticipants for their comments on theoriginal draft, especially Professors Promod Verma, Biju Varkkey, and Vidyut Joshi. I also thank Professor Cecil Pearson, Senior Research Fellow at Curtin University Business School, Perth,Australia forhis comments leading to change in
certain earlier positions. Of course, the usual disclaimers apply.
by Gandhi
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171
world
have been taking place in the developed as well the developing new economy employers are busy guarding against thechillwinds
of chaotic for the last 15 years or so. Such changes in the business turbulence by the increasing competition and the resultant are
It is evident
that substantial
changes
inworkplace
structuring
and more
of the their jobs. For example, era, earning profits in the pre-reform now a to the number (Kumar, category loss-making belongs large to and service sectors are attempting 2003). Both manufacturing more resource to with remain less achieve competitive. In'order companies industrial in environment business today's come out of the mindsets to of the hard trying to the realities of and acclimatize themselves economy to be successful are
companies
consequences
reveal that front (Saini, 2000). Researchers economy are so as to their intangibles busy in building running companies some of themost improve their long-term market value; significant in HR shared mindset, this include: talent, regard intangibles of and collaboration, accountability, speed, quality learning, the knowledge
leadership (Ulrich and Smallwood, 2003:14; Ulrich and Brockbank, 2005). Companies focus on policies of cooperation with employees
and unions for building In the architecture of these intangibles. talent and creation of future competencies In terms of Mackenzie's 7-S
stalwarts have been framework, most strategy gurus and corporate structure to staff, and from their focus strategy, systems shifting This focus has the values. exacerbated and shared style, skills, work new in HR of many themes more More and global development. people now focus on talent and competencies of increasingly companies in their attempt to develop "individuals" competitive advantage. Ghoshal and Bartlett (1997) refer this as individualized corporation. systems and strategy through adoption
importance.
and
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172 management
variable subsumed mentioned
The
This paper discusses the dynamics of changes that are taking management of employee relations and how HRM strategy place in is being used in this regard. Thus, it analyses the contribution of HRM philosophy in building "new IR" or "strategic IR." Taking note of theglobal developments in IR, thepaper focuses especially
on the IR scenario to draw in the Indian context. Two case studies of
managing
presented
employee
conclusions.
relations through HR
HRM
The
STRATEGY:
global
A CONCEPTUAL
FRAMEWORK
reveal that strategic success. It
HRM
is becoming
which at employee
developments speaks
the single
inmanagement
consultancy, oriented an
of its criticality
it is mainly seen as
vision, it is also
oriented to impliedly dilute collective labour power. HRM as understood in theBritish and European context seeks to intertwine
and as the perspectives also add
of personnel management and industrial relations cultural and related thus giving way interventions,
to initiatives assumptions, giving people-management line managers, and changing the levers of people management. As per the new strategic response, the agenda focuses on promoting attitude and behaviour customer commitment, changes, promoting beliefs
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173
are
Enhanced competition
Competitive Performance
Implications
of HRM
from
(Storey, 1995)
the author)
HRM philosophy is now getting largely accepted globally as a strategic tool for implementing business strategy, though with variable dimensions, through its practice by multinational corporations and other leading employers even in developing
countries. focus on Strategic HRM certain critical interventions, like themes among others, involve talent team-building, communication, involvement, competency management,
management, strategy,
reward diversitymanagement, employee development, flexibility, and leadership development. Each organisation may have itsown requirement about the requisite behaviour that is sought to be be broadly divided into two categories: 'Instrumentalist" (hard) and "empowerment" (soft) (Saini, 2000). Hard HR intervention
as as resisted by employees they view employees generally resource enhanced involve control often and other any managerial a greater on them. and degree of measurement They also envisage on interventions of people. seek cost-effectiveness Empowerment are shaped through HR interventions. Strategic HR interventions can performance management,
empowerment,
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and in the organisational working, as individuals. HR But in decision-making employees involving an are in actuality of hard and interventions generally amalgam are going all soft measures. Many organisations high-performing a out to build on the empowerment of HRM mode strategy. While claims of have been number of making adopting organisations large progressive HRM strategies and practices, research especially
ensuring
in
the West, however, explodes the myth of these claims (Mabey, et al., 1998). On paper, both sets ofHRM strategies have been found tobeing vogue. On thewhole, it appears that HRM is being used
in instrumentalist as well as exigencies HR has of the business come empowerment senses as per the strategy. an in case of important place even as the number of such But cases of de of pursuit few and far between. Many
to occupy
not be seen as pursuit should of a typical non-union however, India model. This was more of a case of incompetent management that was in India. But it is of cross-cultural realities ignorant successful
and Scooters India Ltd. (HMSI), Gurgaon (Saini, 2005a). This case,
support
as
happened
state ruthlessly often with covert in the recent case of Honda Motorcycles
of HR
their policies
RELATIONS
PARADIGMS
IN TWO
to understand,
through
two case
in some of the
studies,
discussed
and successful organisations in India. These managed show are that organisations soft HRM choosing but at the same time, some of the of values long-held are or are cases The getting diluted being redefined.
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175
is respected ethics, and
Delhi Vidyut Board (DVB) w.e.f. ailing Delhi-Government-owned as a devised between per arrangement privatisation July 1, 2002 shares in NDPL and the remaining immediate 49 per cent of its shares were concern of its chief executive eventually
The North Delhi Power Ltd. (NDPL) took over a portion of the
devised its vision the most of "becoming company As per the MoU with and admired energy Company." preferred was NDPL to reduce the Delhi the aggregate Government, technical and commercial been
Government by about
time of acquisition
had Rs.
(AT&C)
losses
from 53 per
cent at the
15 billion
slum class
to be repaid. Some of the key challenges that NDPL was facing since the acquisition included: dealing with rampant theftby
dwellers service as well as industrial/commercial through consumers; to consumers the use of information
NDPL; providing world changing the consumer perception of the technology (IT) and internalizing the company's culture to that termsof standards of theTata Business Excellence Model (TBEM) for of companies have adopted that the Tata Group
performance. of a neglected and semi-trained in Tata brand image establishing
benchmarking
So as
encountered, initiatives.
to deal with
Some
people
the problems
of NDPL
took several
initiatives
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176
included: payment of salary by crediting it in bank account of the employees rather than paying it in cash; installing 1200 computers in various offices of the company in place of just two computers that the DVB had; imparting training for 18000 mandays during a period of first two years of acquisition on
quality, provision physical training focus on the use of mobile
of computers for better customer service; to all executives, and junior engineers phones
in the
staff for
DVB.
of technology reduced the need formanpower and the complex meter to be of had readers corrupt problem an attractive the company devised retirement tackled, voluntary
As per theMoU (memorandum of understanding) signed at the time of acquisition, NDPL inherited 5368 employees from the
Since the use
scheme (VRS). Out of the totalDVB workforce, 1794 employees sought retirement under theVRS, which included some 90 per
readers. The
throughout. NDPL
with new and were
recognised
union
was
positions
service
involved
in
in organisational various initiatives restructuring, were all designations to reflect functional rather changed were than hierarchical from Thus importance. changed they assistant executive assistant etc. to manager, engineer, engineer, almost manager, designation succeeded The office work associate, aroused considerable that. attendant, resistance and so on. Re from most DVB
scheme employees
in overcoming
committed to quality that could be inferred company was read: 'To be themost from its mission, which preferred and admired we will to strive deliver energy company quality and cost-effective NDPL services...." welfare developed comprehensive employee was it schemes. Also, to have in India the first company supposedly
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177
this
understood National
was put inplace at thedistrict,circle of JointInteractionForum (JIF) were held regularly making; monthly and quarterlymeetings of JIF
at district The relations. pending employee: employees; and circle levels. CEO to the issue of union-management gave priority a HR took stand on three of the and chief He positive concern were to the common of grave issues which to widows of assistance of monetary disbursement employees' uniforms; time-bound promotions. This and corporate levels to promote employees' involvement in decision
affiliated union and seven staff Congress) union but did not recognise It recognized thisworkers' associations. some the minor disturbances, associations. the of staff any Except a The witnessed had process. concept company peaceful acquisition
(Indian
helped inbuilding cooperation inemployee relations.The intensity of such effortscould be gauged from the following incident: The payment of retirement benefits to employees for the period for which theyhad rendered service toDVB in thepre-takeover phase was the responsibility of the Delhi Government. When NDPL
announced the VRS even after more its responsibilities resentment This aroused than two years of privatisation. deep as the the as well retired the serving employees against among issued a circular to all the employees HR Chief The government. of the retirement to the non-receipt He also issued another employees. 2004 as a mark instances were of protest against scheme, the Delhi Government the workers' of paying dues could not meet
the
NDPL
cooperation-building
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178
Besides, two each batches
This helped
in changing
the
The HR
performance
department
culture.
It was
played
decided
appraisal (PA) system for the employees should be kept simple; the PA form comprised of only two pages. From year 2004, key
result areas
manager an
from
the level
of assistant
with
a view
to assessing
launched
Resource
Information
above-mentioned
the company The company attained better level performance. of performance and consequently in AT&C reduction gradual technical and The losses. AT&C loss commercial) (aggregate
initiatives,
taken
45 months
stood reduced from 53 in July2002 to 28 per cent on 31 March, 2006, which meant reduction of about 25 per cent in a period of
from the takeover. A reduction of one
AT&C NDPL
company's
loss roughly
additional
translated
revenue
earned a 'net profit after tax' of Rs. 570 million for the year 2004-05; in the firstyear itself it earned a profit of Rs. 220 million (for the year 2002-03). In fact, theCEO suggested to the Delhi Government in July2005 not to increase the tariffsfor the
consumers from as NDPL to transfer the benefits wanted resulting the reduced AT&C In relation losses onto the consumers. errors substantial to billing since the reduction taken place had time of takeover, but they were to be an area of still believed
to the
to a corresponding
tune of Rs.
per
cent
in
220 million.
gain
in
concern.
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179
came down
8000 to 2149, and the street lights in working conditions improved from 50 per cent to 99 per cent. Out of the 150 companies which Work in competed for theposition of "the Top 25 Great Places to
India"
in 2003, NDPL
A general
as per
a survey
conducted
by
the Grow
Talent
Company
30 per cent are fence-sitters; and about 20 per cent have not similar view. too endorsed somewhat at all." The CEO changed staff the mindset of the contractors' He also felt that changing on their A union office bearer appreciated focus training. required out that "employees but pointed the company's performance new in the their of fearful remained scenario, despite jobs losing about
manager
"The
company
has been
able
to
ethos;
signed at the
had been working hard since beginning to promote a of itsCEO and performance culture through sagacious leadership NDPL
various HR department
was no mention of the talked of usual HR interventionsbut there word union in it.A major uprising took place from theworkers' rankwhich successfully challenged the existing union leadership; and charged it of the union having an unholy alliance with the
management.
HR the company's interventions. Interestingly, vision. It an HR as well its own HR model devised
chief who was a fine HR strategist to another a new HR chief who had better expertise department and brought the firstHR
in employee relations and labour laws. Overall, the company
This
awakened
the management.
They
transferred
far better than its two competitor performed competitively were that supplying electricity to the remaining parts companies
of Delhi. has
The media,
government
ministers
and
the public
that could IR any major problem its vision. Of course, the company's
The company
at large
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180
sole recognised union
considerable
leadership by a rival group, but thatdid not cause any upheaval in the employee relations scenario (Saini, 2005), even as it caused
worries to the NDPL top management.
B. The Tata Steel Limited2 Tata Steel Limited is a one hundred year old steel producing Indian company, which played a pioneering role in industrial development of India. It is located in Jamshedpur in the state of
Jharkhand, and is one of most and HR
talked-about
Tata
organisations
in
practice
social care, corporate responsibility, employee and IR practices, and participatory management and industrial Like other companies in the post democracy. it also faced era, several globalisation which, challenges, among include: of chaotic others, coping with rigours competition, in terms of cost and customer-orientation technology, need for and reengineering managing rightsizing,
of adopting
ethical working,
as academicians;
a good
for many
line
its
degree
of
upgrading quality,
The company noted that its technology had become outmoded and needed tobe replaced by new rolling-mill technology ofhigher and It involved not just huge cost but a capacity greater speed.
transformational
leadership
the consequential
by
The company practiced values of paternalism and employee loyalty for a long time,which its founders had established and religiously nurtured. Itbuilt an industrial township in Jamshedpur looking afternearly all civic needs. Itnurtured employee loyalty
catering to their needs; worker's were relatives in new as a recruitment strategic priority. given It had
preference
trouble-free IR for more than 50 years. Russy Modi, itsCEO and chairman for a long time in the nineteen eighties, worked hard
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181
the practice
in performing the crucial role of building and strengthening in garnering support and concern of the common
helped in a
as well as the union in agreeing to the intended reforms, employee so as to survive. The reforms involved, it had to undertake which over a retrenchment of 35,000 employees others, among period took over as managing director after of ten years. J.J. Irani, who was in arousing the instrumental of Russy Modi, the retirement to the needed reforms. amongst sensitivity employees requisite For facilitating the efforts of and the internalization the company directors played his chairman of the reform agenda, besides at least two Ratan Tata,
big way
managing J. J. Irani
successor,
in
to focus on performance-orientation. This employee management and of the involved concept performance-related-pay enforcing on The hikes based the company pay seniority. undermining to new and employee allegiance loyalty and showed relationship in general that are being adopted in employee relations values to attract talent. It has shown multinational companies by the and competitively for younger higher pay employees, preference
considerably
diluted
its policy
of building
personalized
mai baap (parents) reflectinggradual erosion of thepaternalist their values that the company firmly upheld for so long. They are not
able to acclimatize themselves to the supposed Consequently, environment of performance-orientation Tata heritage
shift in focus has that the company's indications of a kind of insecurity and alienation amongst as who had all through seen the company employees,
policies.
themodernisation
story of Tata
Steel
the long-held value of building company loyalty by nurturing a run by the company itself.
corporate consisting departments all
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182
in improving performance, which resulted in it receiving have helped international rewards. The World Steel Dynamics rated Tata many in 2001-2002. By the year 2003 in the world. company for this success. in new it also became Several themost can cost-effective said
responsible
Among
include:
technology;
the nurturing
leadership
Model
and adoption
of the Tata
Business
Excellence
to give their best in employees For the of ensuring higher performance. example, implementation as the suggestion were which scheme, per employees' suggestions and awarded, in the quality led to improvement of accepted a and in the year 2002. The suggestions saving of Rs. 1.5 billion concern for to has focus as well, way process product quality given in higher are at costs. Efforts resulting quality competitive being tomake made the company leaner and more professional through ethic programme (PEP). A large number of employees performance were involved in was evolving Vision 2007, which formally launched
The company
is also moving
and proactive HR policies and the latter is concerned with dealing with issues resulting fromapplication of company policies such as
of impact of various initiatives, implementing voluntary scheme and (VRS) so as to promote cost-effectiveness, certain controls so as to promote a kind of discipline.
These two situations are analogous to softHRM and hard HRM as have been reported in the HRM literature (Saini, 2000).
While some
analysts
have
made
a case
for reversal
of the
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183
of
(Pandey et ah, 2005), it is important to note that in view of the would be very difficult to do so. Similarly, Indian competition it
are to focus guarantee policies rather than the employability in the pre-gobalisation followed
companies employment to be
situation. of either/or The demands of the global warrant to that relations have into be looked competition
involving practice
appears thatTata Steel has considerable scope for taking initiatives in the lattercategory of people empowerment model and shaping
IR through employee care as a way of organisational life.
rewards and training; cost, like personal touch, and empowering It style.
LESSONS
The are
are being built which, among others, include proactive of IR. Special focus is being put on communication management strategies noticeable core
cooperative pursuing philosophy to guide factors are being identified articulated HR strategy. New in the IR game. To this end, comprehensive HRM social partners
IR is
of such
flexibility.
is talk of the convergence from the increasing is resulting corporate practices. come would eventually of local As There thesis influence in management of globalisation which on
itwould cultures and indigenous be factors. No doubt, to completely wish away the impact of cultural influences simplistic run. The eminent in the short ormedium on working organisational
across the length and breadth of the globe, with reduced impact
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184
are and social?there three areas...? economic, good political reasons and that institutions the distinctive for thinking practices over the time cultural fostered by Asia's converge systems will seen in the West...Far from reinforcing Asian with the pattern exceptionalism, homogenizing the current in economic three crisis will accelerate by trends all areas." Going
social historian Francis Fukuyama (Ohtaki and Bucknall, 2005: 23) endorses the convergence thesiswhen he observes that "in all
the
in the two cases of NDPL and Tata Steel, it is developments becoming clear that they hint towards legitimating of the was the turnaround HRM; for theTBEM that convergence thesis in model for Tata Steel was built on edifice of western values of
performance was NDPL out rather than also trying in TBEM, though being that status. attaining The NDPL case a Tata company, loyalty focus. Being to benchmark set standards performance a new company itwas far away
from
involves managing
change
issues
in acquisition
substantially
use case, among others, strategic measures was as a key intervention adopted
or take to mend ways encouraged A manager "We do take care remarked, a partner in so as to become in good humour union HR Some of the instrumentalist process." strategy employees retirement. were schemes employees) to set standards of performance
acceptance and internalisation of the change agenda by theunion as well as the employees in general. Corrupt and indifferent
voluntary to the keep the change measures and
create
feelings of competition amongst all categories of employees. The adversarial industrial relations (IR) theory as enunciated in the classical Oxford School of IR discounts possibility of any
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185
peace
as between and workers management lasting cooperation they a zero-sum are in situation. And operating usually bargaining issues at hand. The theory postulates that such can be times It argues of recession. only during cooperation possible revert to adversarialism that parties would when recession is over. were cooperative industrial relations noticeable in the case on
bargaining
How
How
of the two companies under study? No doubt, the policies and interventionsdevised and implemented by theHRM department, and co-espoused and supported by the sagacious leadership of the CEO, helped determine industrial harmony. They worked towards adopting theTata culture in the company's IR issues that most. NDPL's decision not to bothered the common employee the celebrate the raising day, Puja and Diwali festivals in 2004 as a mark of protest against theDelhi Government not releasing the But itsoverall HR policies should be seen as fallingshortof a purely
paternalist agenda. retirement money for DVB-scheme retired employees reflected an care astute strategy of employee that facilitated the change agenda.
able
The lasting industrial peace at the Tata Steel that ithas been
to sustain since long But leading to its success changes as an Indian steel on HRM. the recent in this company's
policies show that thepolicy of paternalism was difficult to sustain any more in the present era. Despite difficulties the company could build an effective strategy for making the employees agree HR systems and leadership inhelping the VRS and used its for the
attainment
by 35000 and make Tata Steel competitive and the cheapest steel producing company in the world, which has the vision of
becoming an EVA. (economic value added) positive company.
of this goal.
Eventually,
it could
reduce
their workforce
CONCLUDING
REMARKS
in IR are getting In the post-globalisation issues scenario, as in IR is being of HRM. aspects merged Cooperation strategic and "empowerment" the "instrumentalist" built through both are also of HR Strategy. Often harsh measures dimensions adopted
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186
either as control measures
In India they by employers with covert supports of state agencies. or been pursuing have de-unionization union dilution either or in authoritarian articulated ways ruthlessly through carefully some HR as label the latter HRM scholars strategies; approach "propagandist HRM stands management. cooperative necessity The Some have policies." argued resource for human manipulation; However, unionism to cope with in the new more often competition. become are a means to administer pursuing union that in the new era, this is so considered strategy can be involving as a been
others.
successfully
concerns. In a situation of of employee indifference of increasing state apparatus are towards union rights, many employers using in successful violation ofminimum this opportunity labour standard; for state agencies to look the other way when have begun labour laws are violated are Such evidences from available by employers. Indian states of Rajasthan, Tamil Nadu, among others (Venkata Ratnam, time, HR interventions Kerala and even West 2001).
are in various being used like it happened in the cases cases have shown how the
is increasing in their from employees organisation's expectation efforts to survive and are to stay competitive. Employees expected at and services the lowest provide products high-quality possible Since employees are seen as drivers of higher prices. principal have been in corporate many performance, companies investing and HR strategy so as to well-articulated devising implementing support building relations peaceful employee to be an alternative considered high-performance IR. cooperative work In case also include systems, which these reform agendas lead to in an organisation, it should be model of industrial justice, with or
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187
higher degree of globally-testedHR practices as the pressures are also becoming global. Thus, as per the convergence thesis that is
inmanagement, being debated are to expected eventually dilute surely gives hints towards themanagement practices of MNCs the influence of cross-cultural realities as the company is clearly
competitive
adoption
withdrawing fromits professed values ofpure paternalism.The NDPL has also made effortstowards building a high performance work most modem practices reported in systemby adopting some of the
the HRM literature information involvement, including balanced score card, human resource system, knowledge performance management, management, reaping job re-design, employee and transformational
"empowerment"
NOTES
1. The NDPL case here ismainly based on facts and events from two cases: North Delhi Power Ltd.: Dynamics ofChange, a case by Saini and Bhatnagar (2005), and Cooperative Employee Relations atNorth Delhi Power Ltd., a case by Saini (2005). The Tata Steel case is shorter form of its larger version written by the author. This case was constructedwith the help of interviews from some
former senior
2.
Tata 3. As
internetand company website, analysis of academic literatureon Tata Steel, and interaction with Mr. B.Muthuraman, thepresentManaging Director of
Steel. revealed in a private discussion between the author and Mr. B.
managers
at Tata
Steel,
analysis
of
information
from
the
Muthuraman.
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Pre-takeover
August
S.No.
North Delhi Power Limited Forty hospitals were empaneled; no payment required to be made by the employee concerned; the employee had to just show the IdentityCard and avail treatment. NDPL
against a cover at
company's
employee Time-bound
A Joint Interaction Forum (JIF) launched at thedistrict and circle level;monthly and quarterly meeting of JIFheld.
Time-bound Promotion Scale cases
since
were updated. All employees who were eligible forTBP were allowed the same on 30th June and 31st
December was pending. every year? No case
Potable drinking water not available in many District/Zonal offices No giftwas given to employees
on any occasion
Proper drinking water available in all District/Zonal offices.Water purifierswere installed or filtered (bottled) water was provided.
A wrist work watch charge was and given contractual to every the
Raising Day on July 1, 2003. No functionwas ever held to celebrate the Labour Day on May
Labour
employee
to commemorate
1.
No
sports
meet
ever
organised
year by observing Industrial Harmony Week; it involved employee participation in it. Sports meets for employees and
dependents.
Day
was
celebrated
every
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