Building Effective Labor Relations in China

November 18, 2009
  • Pei Bin

    Former Director, China Partnership Development, BSR

On a recent cold and windy day, a select group of labor relations practitioners (LRPs) in China's city of Qingdao gathered for the first of a series of salons BSR has organized with the Federation of China Trade Associations and Chambers of Commerce to discuss "hot topics" in labor relations.

We looked at a variety of questions: How can practitioners get top management support for labor relations management? How can human resource managers deal with labor relations when there are conflicts between a supervisor or manager and an employee? What is the role of HR managers or labor unions in labor-relation management?

This salon gave the companies a chance to share and discuss their cases, which are on the rise across China. In 2008, nearly one million labor disputes were filed (with more than 693,000 litigation cases and more than 237,000 labor arbitration cases), representing an increase of 93.93 percent over the disputes filed in 2007. What makes it even worse is that the economic crisis has made labor protection give way to employment, and human rights give way to environmental protection and climate change. Many companies sourcing in China are shifting from labor protection to environmental protection, though some of their suppliers are paying their workers only 60 percent of the minimum wage. Keeping a focus on the protection of labor must remain a priority.

Most labor disputes resulted from the termination of labor contracts, layoffs, companies neglecting to buy social insurances for workers as required by law, and compensation for overtime. However, a lot of labor disputes were caused by poor communication or poor management of labor relations. The rising trend of filed labor disputes underscores the need for more professional labor relations practitioners to be trained to prevent and to handle labor disputes fairly and effectively.

Normally BSR would organize such events at a hotel, but this time the Hua Ou Company Group in Qingdao invited us to conduct the salon inside their factory, with participants from neighboring companies. As the rapidly growing Hua Ou Company Group transitions from a state-owned enterprise into a private enterprise, it is facing various risks and challenges in managing labor relations. One of the group’s major challenges is that it comprises several branch companies, each of which manages labor relations in its own way. Some branches have violated the law, others do not know how to manage labor relations, and others make some simple mistakes. BSR has discovered a need for the Group to establish a standardized employment regulation and communicate it clearly to all branch companies.

One of the cases at the event illustrated the need for effective communication. In this instance, a supervisor at an electronics company wanted to fire a worker because she was talking back to her supervisor. Then the human resources manager stepped in. After patiently listening to the worker’s story, the human resources manager found value in the worker’s character: The worker is honest, straightforward, and very capable. She could become a very good supervisor herself. Rather than firing a potential asset, the human resources manager explained that if the worker communicated with her supervisor more effectively, she might achieve better results. The worker acknowledged that she was wrong and apologized to her supervisor.

This simple example underscores the need for a human resources manager to resolve labor disputes with fair judgment. In this case, the human resources manager effectively employed skills such as listening, interpersonal communication, and balance. Listening to the voices of workers is especially important, for they are normally not in a decision-making position and are at the mercy of their supervisors.>

One of the training modules for the LRP program is how to prevent labor disputes by building a healthy corporate culture, complete corporate employment regulations, effective communications systems, and grievance mechanisms for workers to address their concerns. In future salons (to take place in Qingdao, Hubei, Guangdong, and Jiangsu), as in this one, BSR will emphasize peer learning to consolidate the skills developed during BSR’s LRP program. To facilitate inter-regional peer sharing among trained LRPs, BSR has launched an LRP website.

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