Building commitment towards organizations in the era of downsizing

Published by MBA Skool Team, Published on November 28, 2011

Technology is affecting organizations in a big way. The job that was earlier done by people can now be done easily by machines. This has led to a decrease in the size of labour-force. Also, the recent economic crisis has led the organizations to cut down on workforce. They now intend to minimize costs and hence maintain a lean workforce. Companies now try to utilize the people more. Many have reported losses and can’t afford to keep people idle. People have been offered VRS (Voluntary Retirement Schemes) by some humane organizations whereas some have simply fired people. This is certainly the era of downsizing.

This can always lower the level of commitment shown by employees to their organization. People realize that they may be fired or, in subtle terms, asked to resign when the company feels so. Many people saw their colleagues losing jobs during the downturn of 2008-09. This creates a different picture of an organization. There was a time when people would take up jobs for their life-time. People joined government sector and never thought of switching jobs. Even those in reputed private enterprises were supposed to work there for the entire duration of their lives. People had that unwavering commitment towards their organizations.

Times have changed now and many organizations are forced to downsize. A similar incident happened with Tata Steel. People working there had immense love for the organization. But the plant was compelled to downsize. Economic issues made it imperative that the workforce was reduced. The organization had always looked after its employees and cared for them but could no longer afford the big workforce. They, however, handled it very well and the people willingly took up alternatives. There has not been a strike there since 1958. This goes to show the efficient handling of the plant by the management. When we look at the multitude of labour issues in so many plants in India, we realize the commendable work that the management of Tata Steel has done over a long period. Workers in Tata Steel are committed to their organization. They have love and respect for the organization they work for. Not only that, the general public of Jamshedpur also adore Tatas and there are many who still bow before the statue of Jamshedji Tata. This is because of the policies of the organization. People realize the good work done by the organization for them. They connect with the Tatas and so are very committed to them. This is a classic example of maintaining a committed workforce even in this era. The reason for this unrequited love is the care and affection that Tata Steel has always bestowed on its employees.

This helps us to analyze how an organization can have a committed workforce even in these times. Many organizations make the mistake of not giving due importance to their people. People are intelligent and can discern good from bad. They can gauge the intentions of the management. You can buy loyalty only when you genuinely care for someone. Tata Steel gets that commitment because of its policies. Other organizations can learn from them. Labour unrest at Maruti is an example of the repercussions of the mistakes of the management. Unrest at HMSI (Honda Motorcycles and Scooters India Ltd) in 2005 was also caused by the insensitivity of the management. Registration of unions is backed by law and international conventions. Without getting into the details of the reasons for these unrests, we can establish that the supervisors must be sensitive to the needs of the workforce. Loyalty is difficult to buy and sensitivity is the first step towards establishing commitment. This is particularly true in manufacturing sector where life is very hard. People have breaks only on Sundays and work for long hours. Empathy is the minimum that they deserve. There have been cases when supervisors have declined leaves to workers even in case of emergencies. This creates discontent and workers can never be loyal to such organizations. On the other hand, we have people who would go to the hospital to enquire upon the health of their workers admitted there. This show of care and affection is what workers crave for. This human touch is missing in many places. Such gestures may be symbolic but go a long way in eliciting loyalty of the workforce.

An analogy can be established with the social conflict in Libya and other countries of the Middle East. There was exploitation of the most ruthless kind for a long time. This finally led to this unrest where people are up in arms against those very people they earlier feared or revered. Exploitation results in conflicts. Similar things can happen in an organization. Labour conflicts and issues with unions are often caused by such exploitation of the workforce. Human life has a dignity which no one should try to rob someone of. Even though the unions are supposed to protect the interests of the workers, the union leaders have often become political. They have political aspirations and ignore the needs of the workers. Again there are companies which do not allow the formation of unions but can still command the respect of workers because they care for them.

Resisting formation of unions has caused conflicts. There should be a proper grievance redressal mechanism as in Tata Steel.  Such mechanisms are not prevalent everywhere or are merely a token in some organizations. Tata Steel is a benchmark in matters of industrial relations. It has Joint Department Councils to look after the concerns of the workers. There are conflicts also because of a lack of industrial culture. Parts of Haryana have first generation of industrial employment. They were farmers and have recently joined the industry. This industrial culture is new to them and they are yet to establish that bond with the companies they work for.

It is very important to build a connect with the people. Respect for individuals is fundamental to building a committed workforce. Humans have this craving for respect. Organizations have to maintain discipline and are sometimes justified in working against erring workers. But the idea should be to penalize them and not harm them. People should be comforted at times. The organization should act as a father to the workers. People lose connect with the employers when this affection is missing. Japanese companies have had problems in India and this is often attributed to the communication gap they have with Indians. They don’t have direct contact because of language barriers and rely on interpreters.

A committed workforce is a result of the policies of the organization. Organizations command this trust when they have cared for their people for a considerable period of time. Companies have used variable components in salary, bonuses and ESOPs (Employee Stock Option Plans) to buy commitment from employees. They are used to link their salaries to the performance of the company and impressing upon them the need to advance the interests of the organization. But the employees can very well switch to another organization when they get better benefits there. Ultimately these are not enough to elicit commitment from the workforce. This commitment can only be built on trust which is a psychological contract between the organization and its employees.

This article has been authored by Rakesh Ranjan from MDI Gurgaon

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