People management fiasco @ hmsi by Prem Giri


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People management fiasco @ hmsi by Prem Girir

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People management fiasco @ hmsi by Prem Giri

  1. 1. Presented by: Group Ameet Kr. Sinha(12PT-005) Prem Kumar(12PT-026) Maneesh D Singh(12PT-021) Gaurav Kr. Singh(12PT-018)
  2. 2. Honda is headquartered in Minato, Tokyo, Japan. It is the world's largest manufacturer of motorcycles. It has more than 120 manufacturing units in across 30 countries for two- wheelers production. It‘s the world's largest manufacturer of internal combustion engines measured by volume, producing more than 14 million internal combustion engines each year. Honda spends about 5% of its revenues into R&D Also involved in F1 racing and other segments of the automobile industry.
  3. 3. Established in 20th October 1999 in Manesar (Haryana). It is a wholly owned subsidiary of HMCL Japan. The company aims to manufacture world class scooters and motorcycles from this plant. The plant had a initial capacity of 0.1 million which was to be raised to 0.6 million by 2005. The company in India wants to become the vehicle of change. Apart from a focus on good quality the company also wanted to keep a reasonable price.
  4. 4. 2000 1000 Workforce in HMSI Workers
  5. 5. 1300 700 700 300 Workforce Breakup Confirmed Workers Contract Workers Trainees Apprentice
  6. 6. The trainees generally had a certificate from some or the other (ITI). All trainees were generally taken by the company. 15% of apprentice use to get the job after the apprenticeship period was over. The company was believed to be a good paymaster. In October 2005 salaries of workers ranged from Rs 8150 for unskilled to Rs 11200 for skilled workers including Rs 2000 for house allowance. Also apart from these the workers were entitled for bonuses in the Diwali season.
  7. 7. Subsidized canteen facilities Transport facilities to and from workers‘ residences at subsidized rates Sports club for employees ‗ use at Sukhrali village in Gurgaon with indoor games facilities • Football, volleyball,TT, carom ,chess matches organized against employees of other companies 2 sets of uniforms, 1 company cap, 1 pair of shoes provided to employees every year; same uniform for all including managers
  8. 8. Most HMSI workers not covered by Employees State Insurance (ESI) scheme under the ESI Act, 1948 as salary had crossed maximum salary limit for coverage • Such employees covered by Paramount Health care facility ; reimbursement of hospitalization expenses • Worker, his/her spouse & up to 2 children covered for RS. 75,000 each; workers‘ parents covered for Rs. 1,50,000 each. Invited workers‘ families for celebrating foundation day; later stopped with increase in workforce size. Support through cash payments on happy and sad occasions: • Rs. 2,100 at birth of a child (max. 2 children) • Rs. 3,000 on worker‘s marriage • Rs. 5,000 to family on employee‘s death; Rs. 3,000 on death of spouse/children/parent.
  9. 9. Aligned with philosophy of parent company: HMCL • though considered itself unique with some distinct employment & production practices. HMSI‘s philosophy had 2 fundamental beliefs: • Respect for individual differences- initiative, equality & trust • The Three joys – joy of buying, joy of selling , joy of manufacturing Employees were called associates – association promoted among all employees through similar uniforms and same canteen facilities for all. Induction programme involved acclimatizing employees to the Honda philosophy HR department expected to The Honda Way: human behaviour or way of thinking based on Honda philosophy. • E.g.: Perseverance to ensure safety & quality in all aspects
  10. 10. Organize training programs for: • Internalization of culture building and Honda philosophy • Training for building team leaders • TQM training; ISO 9000 training; 5S training Training dept. Supposed to be headed by an assistant manager; position lying vacant for a long time.
  11. 11. Performance Appraisal System for all employees including workers: • Interview by section head and shift in-charge; • PA done on a rating scale; workers divided into 5 grades • Increment Rs. 400 to Rs. 1400 p.m. depending on worker‘s grade • All PA results and salary hikes announced immediately at the end of financial year • Promotion opportunity for worker: • Worker -> sub-leader -> assistant executive -> executive • No one covered by Payment of Bonus Act, 1961 because of high salaries: • Company gave an ex gratia of one month‘s gross pay as incentive around Diwali • No scope for workers‘ expression through any letter to the editor.
  12. 12. Works Committee (WC) constituted under Industrial Disputes Act (IDA), 1947 on 1st April, 2004 consisting of 15 workers and 5 managerial representatives • Other committees: Canteen committee, transport committee, health committee, and sports committee. • Management nominated workers for the communities based on perceived interest. 6-paged, quarterly newsletter: Dream Team • Focussed on covering company‘s achievements in terms of awards, contracts, recognitions, quality certifications, list of new dealers and kaizen activities • Very few employee related matters covered like sports competition results and news about marriages and childbirth related to employees • No scope for workers‘ expression through any letter to the editor.
  13. 13. Nov 2004 Dec 2004 Jan 2005 Feb 2005 Mar 2005 Apr 2005 May 2005 June 2005 July 2005 Aug 2005 Diwali Gift Issue Apr 1 : Increment in Compensatio n Package; No Union Formation Apr - May : Efforts for forming Union; Gherao of Mgmt; Go-Slow May 26 : Conciliation – DLC Intervention Dec‘04 – Mar‘05: Negotiations between Workmen & Management June – July : 6 Conciliation Meetings July 19 : DLC sends the Conciliation Report July 25 : Another Jallianwala sort of brute treatment of the Honda Workmen July 27 : Enquiry ordered by Haryana CM July 30 : Truce between Mgmt & Workmen Aug 1 : Back to Work 1st sight for need of Unionization : • Stringent Company rules e.g.:- movement sheet, leave policy • Fear of Management‘s Authority • Idiosyncratic attitude of VP-Manufacturing (Japanese) • Charter consisting of more than 50 demands • Help from local union leaders
  14. 14. Police beating HONDA Workers – Dt. 25th July 2005 Clash between Police & HONDA Workers – Dt. 25th July 2005 The Whole Issue was covered by Media and the atrocities by the Police was highlighted and the incident was termed as Another Jallianwala Bagh. The act of Police was compared to that of General Dyer‘s.
  15. 15. Workers meet Sonia Gandhi against alleged highhandedness of Honda management and the police
  16. 16. Workers resuming duty from Aug 1, 2005 No new demands during the next 1 year Trade Union would continue to operate Reinstatement of 50 suspended workers & 4 Union leaders Right to conduct an enquiry into the case of 4 terminated employees Termination of any convicted employee (in court) No Work No Pay Principle to be implemented from June 27, 2005 Proper test to decide on the absorption of the trainees To be considered as Final Conciliation
  17. 17. Management: •Change in management attitude felt by union leaders; concessions allowed on various fronts •Freedom of not working on shop floor for union leaders to take care of pending IR issues •A small room allotted to union leaders with a promise of a union office in future •Invitation to all 7 union office-bearers to discuss workers-related problems or issues •Overtime working issues: lure of extra money; medical problems, workers not fresh •overtime working was scraped in most cases
  18. 18. Management: •Practice of inviting workers‗ family on founders' day revived •family members invited to factory on company expenses in batches •Diwali gift: Rs. 2000 & credit in bank account of Rs. 4000 as incentive bonus for all including managerial staff •09/09/2010: 'A shift' in assembly achieved its target of 1000 scooters for the first time after union formation. •VP- Manufacturing, GM- Productions came to shop floor & commended achievement of workers; sweet distributed to all workers next day.
  19. 19. Union: • Police case against 63 workers including all 7 union leaders - contact different people to make sound defence • Got all the trainees absorbed in regular work • Ensured no domestic enquiry proceedings or transfer for the 4 dismissed workers • Union leaders monitored worker-supervisor relations to ensure workers were treated better than before: • number of memos to workers negligible • far more positive managers' response towards leave applications • 4 days' leave for Diwali => 4 days factory closed ; 3 day's compensatory work on Sundays/holidays • hike in coverage of workers & their family members under medical insurance scheme : • family floater coverage scheme of Rs.175,000; one or more or all
  20. 20. Union: • Joined the nation-wide industrial strike against Central Govt's economic policies on 29/09; compensated loss by working on Sunday
  21. 21. On the Flip side: • 02/09/2005: Authoritative and provocative behaviour of 2 supervisors and a senior manager • A Union office bearer's views: • company claims of respect for individuals & the 3 joys : merely bookish concepts • Some senior managers creating distance between top management & workers • HR manager prevents the union from meeting Japanese top management fearing exposure of their ulterior designs and motives • Only 20% managers treat union leaders as members of the company; rest have ego issues • No one bothered about analyzing the causes and possible solutions of shop floor problems in a practical & acceptable manner
  22. 22. Mgmt.‘s approach to practicing a non-union model made them blind to reality DID NOT LISTEN TO WORKERS Workers viewed Mgmt activity as coercive and repressive Incompetent people mgt. by Indian Middle managers—Indifference Indian mgmt. blocking direct access to top company executive The 3 joys of HONDA were used as a means of control Issues in cross-cultural management
  23. 23. Failure of mgt. to realize importance of Diwali in Indian IR Tokenism of conciliation in resolving collective issues Complacency on the part of Indian mgrs. about labour power
  24. 24. The most effective functioning of the organization was achieved through the traditional principles of direction and control The traditional managerial beliefs and practices concerning HRM resulted in structural contradictions between the hierarchical nature of managerial direction and control and the need for integration, consensus, and commitment Management distinguished between market relations (wages, service conditions, etc.) and managerial relations (direction, surveillance, and discipline) and advocate a say for employees and trade unions in the former but not the latter (Fox 1966)
  25. 25. Honda lacked participation and grievance redressal which are the most critical determinants of organizational climate in India (B.R. Sharma, 1986) Honda should have integrated HRM into the organization‘s mainstream with •Proper representation on all major decision-making forums/bodies; •Clear definition of corporate philosophy and objectives; •Strategic linkage between the goals of HRM and the organization; and •Appropriate accountability for HRM-related matters in the role of all managersWhile Honda moved to restore balance in the relative power position between the Employees & the Management, upsetting the existing equilibrium per se had far-reaching consequences that were not easy to predict
  26. 26. Comparative HRM Unitary MarxistPluralistic Labour market Social action Systems Control over labour process Input Conversion Output Conflict differences Institutions & processes Regulation (rules) Approaches to IR Wider approaches Evolution Revolution Cooperation Conflict Authoritarian Paternalism HONDA HONDAHONDA
  27. 27. The three parties to Dispute Government Management Union
  28. 28. Evolve policies and systems To control workers and the unions To elicit commitment from the workers and their unions in order to facilitate the strategic, functional and operational interests of the Firm Ideal Role
  29. 29. Loopholes in implementing the policies was observed They could not check the growth of unionism Lack of farsightedness Actual Role
  30. 30. Protect and promote workers‘ interests Protect and promote interests of workers‘ organizations & affiliates through cooperation strategies where feasible Ideal Role
  31. 31. It was not able to highlight the problems of the workers through the proper channel It was unable to check the actions of its union members resulting to major trouble It had a rigid stance and was nonnegotiable Actual Role
  32. 32. Evolve policies and instruments to regulate the employer- employee relationship Manage the contradiction which arise in this relationship Strive for goal congruence between the employer, employees and Society Ideal Role
  33. 33. It was late in realizing the gravity of the problem Its role as a negotiator was in doubt Delay in getting both parties to negotiate Actual Role
  34. 34. Power - protect/support through strength in association - a countervailing force, pressure group. Note: bargaining leverage & member willingness to act together. Economic regulation - maximize member returns within wage-work framework. Note: political nature of TU wage policy - comparability & differentials. Inflation & unemployment (cost-push & demand pull). Win bigger slice of national income. Job regulation - establish a joint-rule making system to protect members from arbitrary management action . Enable participation in decisions affecting their employment. Expand job opportunities? Social change - express social cohesion, aspirations, political ideology & develop a society which reflects this? Institutionalize ―class‖ & ―conflict‖? Dilemma of participating in government. Member services - provide benefits/services to members Self-fulfillment - assist individuals to develop outside their job domain & participate in wider decision-making processes
  35. 35. India is governed by a Constitution that foresaw a welfare state and espouses the values of trade unionism and social justice HONDA Manufacturing Plant, Manesar
  36. 36. Welfare state: Efficient Government as facilitator Export-oriented production (SEZs) Changed labour policies of states
  37. 37. Multilateral IR: consumer/public/gender issues New issues: ––Customer Creation/sustenance ––Protecting environment ––Gender issues ––Safety promotion ––Child labour abolition Media‘s role in new issues
  38. 38. Figure 16.6Source: The Conference Board of Canada.
  39. 39. Flat organization --Flexible pay Cost saving: a big concern Competencies development Knowledge pay in high-tech. industries Emphasis on Performance – related Pay
  40. 40. Changed Govt. thinking --July 1991 Economic Policy --2nd NCL: July 2002 Rationalize Labour Law Social justice to market & trickle down --Vigorous attack on welfare state ideology Changed Thinking of State
  41. 41. Identify & enforce behavior Strive for Competitive advantage Focus on new interventions HRM & IR merged to produce positive energy HR strategy is the single most important Consultancy Area New Trends in India : IR Practices rooted in HR Strategy
  42. 42. Leadership matters Competent HR department is key Well crafted and communicated Mission and Vision Maintain channels of communication HR Strategy must align with and support business Listen to Employee concerns and issues for Organizational Justice Use HR Interventions (BOTH HARD AND SOFT) as tools for success •(welfare plans, empowerment, reward and recognition, etc.)
  43. 43. Keep cross - cultural issues in view Establish a sense of urgency Recruit and Retain Talent - right person In right job at the right time Be clear about performance and results – let them drive success Create short term wins (reward and recognition)
  44. 44. The HRM-IR-HRD interface integration should be such that it should move away from the principle of direction and control to a system based on the philosophy of consent and commitment Being sensitive to human needs & human problems at work & beyond work Evolving a value system based on trust, transparency, fairness, & equity Institutionalizing openness in subordinate-superior relationships Dealing with employee grievances promptly & explaining the logic & rationale of decisions to convince the aggrieved Providing exposure & understanding to line managers on HRM aspects to handle the day-to-day HRM activities & issues/problems Sharing information & consulting for shared understanding & co-operation Reviewing HR/IR policies & practices from time to time
  45. 45. THANK YOU!!!