Understanding the situation effectively

Hello Everyone,

First of all please excuse me for a lengthy composition that is to follow, my brakes fail easily when driven by my flow of thoughts.

I would first like to understand the situation and the repercussions of the incident with which Darrell Hair's letter is connected. It started with Hair ruling that the Pakistani team was involved in ball tampering during the test match with England on August 20, 2006. Eventually the Pakistani team did not take to the field in protest and Hair declared England the winner by forfeiture. Now this action was affirmed to be in accordance with the laws of cricket by ICC, ECB and PCB.

From Hair's perspective, we cannot really say whether the decisions he took on the field were biased by any reservations that he may have had but here is a person doing something which on the books are in accordance with the laws of his profession. Now, what makes things complicated is that this is International Cricket with thousands of people witnessing the game and then well known cricketing professionals and whole nations forming opinions about the events. So the pressure created on Hair is of a magnitude that very few of us will be able to understand properly. While there is scope that (may God forbid) we face such situations in our professional lives, chances are limited that we will be facing a situation of such magnitude. Individually such a situation may not even lead us to forwarding a "Non-negotiable offer" to forfeit a professional contract in the first place since we will definitely have the argument backing us that we have done "everything in accordance with the laws of the profession".
What took place between ICC and Darrell Hair within the walls of ICC is not clearly known but Hair had revealed this - "During an extended conversation with Mr Cowie, I was invited to make a written offer. The figure in the e-mail correspondence was in line with those canvassed with the ICC." So excuse me if I am wrong but it seems more out of external pressure rather than internal mechanisms that Darrell Hair or ICC had to get into such negotiations about forfeiting the umpiring contract in the first place.

Now what gives Darrell Hair the bargaining power that he is able to make such a non-negotiable offer to the ICC? First of all, its Darrell Hair, a high profile International Umpire whose name is not unknown to thousands of people who follow the game religiously and why so? The reason is that he is definitely one of the best in the world in his profession to have got a place in the ICC's Elite Panel of umpires. Secondly, he was an independent contractor with the ICC and had his contract till March 2008. Now the contract may have some clauses relating to his removal from duties but here he has not done anything that is against the books (which ICC itself has confirmed) to make those clauses applicable. So, if ICC is asking him to discontinue based on whatever grounds (I call it external pressure here) then by the laws of that should prevail in any fair country (with my limited legal understanding the contract comes under UK's jurisdiction) the ICC has to pay some kind of compensation to Darrell Hair if they are to forfeit a legal (I assume) and professional contract. Otherwise Darrell Hair I believe has the rights to sue ICC for asking him to discontinue before his tenure without compensating.

Having worked in the IT Industry for quite sometime, such pretty much "non-negotiable" offers are not uncommon to me. "Send me on-site or I am moving on" or "Give me a hike/promotion otherwise bye bye" is something that I have witnessed among colleagues who used to be backed by 2 major weapons -
1. A better opportunity knocking the doors (it need not necessarily be boom time, some people manage opportunities even in recessions while other hopeless ones are not lucky enought to break the shackles even when GDP is shooting through the roof)
2. A high amount of dependence i.e. often its only these people who hold the key to certain specific knowledge areas or are efficient at a particular part of the job which is extremely vital for the project or tasks that are being executed.
What's interesting in this case is that Darrell Hair had neither. He was already in the best that his job could offer and though very good, he is definitely not irreplaceable given the number of other high profile efficient umpires available with ICC.

As an employer (of sorts) ICC is in a hot soup no doubt. On one hand they have international media tearing them apart (while some are supporting them as well) and on the other they have a legal (again I assume) and professional contract with a person whose actions they themselves have publicly affirmed were in accordance with the profession. The only way out as I see it, if ICC does not like paying US$500,000 for nothing, is to send Darrell Hair for some sort of "training and development" based on some measures of performance that they may be able to argue that Hair has not been able to match up to. This could be done for a time until things cool down. ICC did something in these lines. The ICC said Hair would undergo a development programme over the next six months seemingly with the goal to place him back into top level matches. During these six month period continued to officiate in second tier ICC associate matches. The ICC restored Hair to the Elite Umpiring Panel on 12 March 2008 while Hair resigned on August 2008 in pursuance of a coaching career.

Again from the IT company's perspective (it being the one I am familiar with), its a golden rule for the management (both line and top) to make sure strong dependencies are not created on any single person and at least one more person knows how to take care of critical work. Now as long as both the person and the backup are not conspiring to quit at the same time (which may happen if you are too good at being a terrible employer like many IT companies), there is some room for flexibility. Companies anyway have great lawyers who make sure that whatever legal contracts they get into with anyone are pretty much water tight with little room for anyone to take advantage in most cases except a few (like this case with ICC). Thus when two such things are taken care of, the employer too has some power to negotiate for something that it can afford to offer without really going out of the way. The only point of concern at that time may be, if the employee actually decides to leave, the employer may be losing a high performer or one with rich experience to one of its competitors.

This is where I will apply the brakes, again please excuse me for the length of it and please provide comments highlighting flaws in the way I thought about it.

Thanks for reading


Reference for Events, Dates and Quotes-
http://en.wikipedia.org/wiki/Darrell_Hair

The Problem with Professors and Lawyers...

Dear Prof. Priyanka,

I think there is nothing wrong in addressing you as Prof. Priyanka as your analysis heavily relies on the text book article “Regulating Employment Relations: The Analytical Framework”.

No offence meant really. I was just kidding. I guess who have started your preparations for ER Quiz I meticulously. But a bit more seriously! All the best for your performance in quiz madam!

I thought only professors are allowed to think theoretically and almost vaguely given an interesting situation like this for discussion. Going by the recent posts on this forum, it appears to me that what b-school education can do to creativity and objectivity to hundreds of young minds. The post by Priyabrata is an apt example for this as he has succeeded in diverting our attention to severance compensation related laws and regulations. Let's all thank Lawyer Priyabrata for opening our eyes.

Yet, it is my sincere duty, which also means punishment to self, to fight the battle with sword when the opponent is armed with the sword. Hence, I would try to analyze your postings using concepts and theories to reply your analysis by assuming the role of a lawyer temporarily.

Point No 1. Your reading and understanding of Employment Contract is fundamentally wrong. What makes you to assume that because Hair’s employment contract specified that he would retire in 2008, ICC can’t terminate his services during the employment period?

Point No 2. Even if you assume that legal action can be taken against ICC, what makes you to assume or rather predict or even pass a judgment that the case is strongly in favour of Darrel Hair?

Point No. 3. This is something which may appear to be irrelevant to you. But many executives and organizations go through this dilemma in the globalized world. Even if Hair decides to sue ICC, should he go to court in Australia as he is originally from there, or U.K. since he has migrated there, or Dubai where ICC headquarters is? You think this question is silly, right?

Point No. 4. The power of unions. How is this relevant for our discussion? Is it relevant because you assume that Darrel Hair would form the union of umpires to protest against ICC and thereby have better bargaining power to negotiate a deal? But going by his mail, it appears to me that as such he enjoys a significant bargaining power, without any support of union, so that he could demand, if not command, such a deal from ICC for his exit.

Point No. 5. The substitutability of capital or feasibility of outsourcing. Again, how would you position this in the context of Darrel Hair’s story madam? BTW, are you aware that Darrel Hair was an outsourced employee of ICC meaning “independent contractor” and not the employee of ICC? Do you think this matters at all when negotiating a deal like this?

Point No. 6. “If the employee is highly qualified and experienced such that it is not feasible for the organisation to replace him then this power vests with the employee.” This point is also raised by Sushma in her posting. So, you mean to say that Darrel Hair was not so qualified and experienced so that ICC could contemplate of firing him easily?

Point No. 7. “Government Support to Labour”. So expect the Govt. of Australia to Darrel Hair or the Govt. of U.K. or the Govt. of UAE or the Govt. of Pakistan? Which government madam as there are lot of governments involved in this story directly or indirectly? First of all, why should government be interested in safeguarding the interest of Mr. Hair? Your example of “Jet Airways” case is misplaced and may not be appropriate for our discussion. We would definitely take up the case of Jet Airways later in the class.

Last but not the least, thanks for your “Four Point Something” advice at the end of your posting which would open the eyes many illiterates like me. But eagerly looking forward to your input on the above questions. Sorry, If I had sounded too much of a lawyer during the “Seven Point Something”.

Thanks.

With Regards,

Ganesh

P.S: I hope Priyanka's posting helped us to think critically about various issues and chalk out a different path for subsequent postings by others. Hope, she would take my comments and questions in the right spirit. All in the game!

Ethics vs Profit Making - PART 1

Hi participants,

Throughtout the last class, I had one ear on the lecture about the bargaining power of either parties engaged in a relationship, the role of market forces and institutional forces, employment models and other issues related to Theme 01 and 02.

But my mind was constantly wandering if I would have done the same had I been an employer and, if I would have differed in my actions, how and under what circumstances. The Organisational Structure and Design sessions are to racy for me to grasp the organisational skeletons that determine the form and flow of a decision making process, but I certainly think that there is one question that would help us if not solve, understand better the decision making behind HR decisions like retrenchment eulogized as a regular Performance Review process, deferred job offers and even regret letters, etc.

The question is:- What would have compelled the managers to take such decisions ? If the flow of a decision is top-down then, aren't we naive enough to think that the decision makers were oblivious to the possible repercussions as discussed in the case?

• I think they certainly would have, but they had very limited choices. May be, the limited number of alternatives was a sap of their own misgivings in the past or could be that the competitive forces were too rude to allow them a better one!
• But, when profit making is one of the primary functions of a company, can it always go by ethics ? It certainly has to go by laws, though ! Vexed by such thoughts, I sometimes wish the Business law had been taught to us.
• And, if each one of us, concentrate for a minute and simulate such a situation, put yourself in the employer's shoes, I am pretty sure that we would first double check if the pay-off are a reconciling positive figure AND then check(I know not how many times) and affirm if the loopholes in the law system has been pinned down.
• So, " Think like a manager, not like a lawyer" is something around which I jump hither and thither, contemplating how would I have avoided a marriage between the two in my oblate skeptic mind.

So, meanwhile I did dig some information relating to Retrenchment Issues, discussed that with some of my friends studying and practicing HR (funny their first line of thinking is how the law books would treat a decision!) and prepared a 2-page write-up(a rough one). In fact, I did carry it to the class, but never got enough space to park my car!

1. It discusses when should a company by law, pay retrenchment compensation,
2. When and under what circumstances can a company retrench an employee,
3. The difference between "Workman" and "non-workman" , since protection against unjustified retrenchment is offered to only workman cadre employees.
4. How IT companies enjoy a free ride in the absence of a specific law pertaining to the sector?,
5. And, certain sections of the ID Act 1947, the definition of "industrial establishments" and can IT services companies be classified as "industrial establishments"

Here is the attachment

Awaiting some responses or comments regarding the issues discussed in the 1st part of this post.

Hope, it does make sense.

Bargaining Power

observations:
Both employer and employee can enjoy a bargaining power at different points of time. This bargaining power can be a result of any of the following:
1. The prevailing market conditions (as already pointed by sushma)
2. The knowledge and experience of the employee.
3. The employment contract (as in this case)
4. The power of unions in the economy.
5. The substitutability of labour by capital in the economy or feasibility of outsourcing.
6. Support of government to the labour.

The first two has been rightly explained by Sushma. I would like to focus on the rest.
1. The employment contract: As highlighted by this case, the bargaining power of Darell hair was mainly because of the employment contract. He was supposed to retire in March 2008 but was asked to resign in 2006. So, in case he does not resign, ICC cannot fire him. In case it does, legal action can be taken against it and the case would strongly be in favour of Darell Hair. Similarly, an organisation can also enjoy this bargaining power arising from any crucial clause of the employment contract.
2. The power of unions in the economy: If the power of unions in the economy is very high, then the employee has the bargaining power. Any wrong move by the company can have undesirable consequence like strikes, shut down etc.
3. The substitutability of labour by capital or feasibility of outsourcing: If it is possible for the organization (depending upon employment contract etc), the organization may substitute highly demanding labour with capital or may even outsource to other countries where labour situations are favourable. In such cases, employer enjoys a bargaining power. But again, the knowledge and skill set of the employees play an important role. If the employee is highly qualified and experienced such that it is not feasible for the organisation to replace him then this power vests with the employee.
4. Support of the government to the labour: If the focus of the government in an economy is to employment or safeguarding the interest of labour and/or the position of government is highly dependent on labour (as in when elections are near etc), then the bargaining power of employee increases. Example: Jet airways and firing and re-hiring of 1100 employees.
Yes, I may be able to make a similar non- negotiable offer if my employment contract or any other condition (as above) allows me to.
If I receive a similar non-negotiable offer from any of my employees then I would do the following:
1. Check the employment contract to determine the veracity of the stated period of employment.
2. Check employment contract for any statements/clauses that specify the conditions under which I can fire the employee or terminate the contract. If found relevant to the current situation, I will enforce them.
3. Consult my lawyer for any situation in which I can make the case favourable for me if I do not accept the offer.
4. If I can do nothing then I will accept the offer but make the working conditions such that he will voluntarily resign.

Negotiating Power

The power of negotiation is dependent on two factors:-

a) The prevalent market conditions

b) The skill set of the individual

From the individual's or the organization's point of view, both the above mentioned factors are very important. If we see from the individual's perspective, we can say that in very good market conditions, when the industry is in an expansion mode, then everything seems fine. Any company would be hiring more people, and hence, prospective employees could negotiate based on other "offers" that they get. But, here we should remember one thing. The individuals get offers only based on the skill sets they have, and hence, they should keep honing them.

From the organization's perspective, we can say that, since it expects future growth, it hires many people to meet its prospective demand. But, when the growth rate falls down, then it begins to fire people. But, it almost never fires those people whom it thinks are very critical to the functioning of the organization. Hence, we can say that, even in very bad market conditions, a few people still retain their bargaining power. Though the market conditions do have a huge say in this matter, it is up to the individual to make himself indispensable to the organization (not the job).

Power of Negotiation

During the period of rising economy, abundant jobs are available in the market. The bargaining power of the employees is then high. The employer has to offer not only a lucrative package, but also loads of other benefits. The employees are seen shifting jobs more frequently. In short, they have a lot of "power" in their hands.

During times of economic recession, like the one we have experienced very recently, there are a lot of job cuts. During this period, the power of negotiation is seen to be shifting from the employee to the employer. Then, the employer dictates most of the terms of the employment.

We can safely state that the power shifts, and both parties enjoy it for some time. Who ever has the power in hand tries to get the maximum out of the deal. When the power is in the hands of the employer, the offer they make are mostly "non-negotiable". When the employee is enjoying the power, then there are situations such as that of Darrel Hair arising.

Non-Negotiable Offer

Dear Participants,

So far, we have attempted to decode the themes "Contracted or Connected?" and "At Will, So Will" through Short Stories, Role Plays and Visual Episodes. These two themes helped to us to get inputs in the conceptual and knowledge part especially on the process of both "intent of offer" as well as "offer".

While discussing the story of IIT, Mumbai, some participants, like Saurabh Pandey (Section B), raised the issue related to "bargaining power" in the individual - organizational relationship context using the terms like "who is at the receiving end?".

Do you think the individual is always at the receiving end and the "bargaining power" is always shifted in favour of employer? If that is the case, go through the following one time "Non-Negotiable Offer" given by Darrel Hair, one of the high profile umpires, to his employer "International Cricket Council" following the ball tampering controversy in the fourth test between Pakistan and England in August 2006.

Based on the email, what are your observations on "bargaining power" in the context of individual - organizational relationship? Would you be able to make similar non-negotiable offer to your employer in any point of time in your career? Also, if you were to receive a similar one time non-negotiable offer from your employee, how would you handle this issue?

Your contribution on this interesting episode with reference to the above issues, but not limited to, is welcome!

With Regards,

Ganesh

From: Darrell Hair
Sent: Tuesday 22nd August 2006
To: Doug Cowie
Subject: The way forward

Doug, just to firm up what we discussed earlier this evening. I appreciate the ICC may be put in an untenable position with regards to future appointments and having taken considerable time and advice, I make this one-off, non-negotiable offer.

I am prepared to retire/stand down/relinquish my position on the elite panel to take effect from 31st August 2006 on the following terms:

1 - A one-off payment to compensate the loss of future earnings and retainer payment over the next four years which I believe would have been the best years I have to offer ICC and world umpiring. This payment is to be the sum of [US dollars] 500,000 - details of which must be kept confidential by both parties. This sum to be paid directly into my account by 31st August 2006.

2 - ICC may announce the retirement in any way they wish, but I would prefer a simple 'lifestyle choice' as this was the very reason I moved from Australia to settle in the UK three years ago.

3 - No public comment to be made by me as to possible reasons for the decision.

4 - This offer in no way precludes me taking legal action and/or instigating libel suits against various sections of the electronic and print media for comments made either previously or in the future.

5 - This in no way precludes me taking civil action (and exercising my rights as a resident of the UK in any court of law and by any other avenue open to me) against any organisation or persons currently part of ICC and in particular, members of the Pakistan cricket team and the Pakistan Cricket Board.

I reiterate this is a once only offer and if I fail to obtain your agreement I shall continue to be available under the terms of my current contract till March 31 2008 to fulfil umpiring appointments as and when ICC sees fit in any country at any time in any series or matches involving any affiliated teams.

I would also insist that my ongoing contracted employment continue in its current form until such time as an ICC performance assessment deems me to be no longer able to perform the duties to the high class expected of an international umpire.

Would you please let me know at your earliest convenience of your acceptance or otherwise of this offer.

Sincerely,

Darrell Hair.