Honda Motorcycles and Scooters India Ltd. (HMSI) case study

MODY UNIVERSITY OF SCIENCE AND
TECHNOLOGY
SCHOOL OF BUSINESS
HUMAN RESOURCE MANAGEMENT II
(BM 242)
HMSI Case study
Submitted to: Submitted by:
Dr. Sunita Verma Vidushi Bhageria
BBA, 2nd
year

INTRODUCTION TO HONDA MOTORCYCLES AND
SCOOTERS LIMITED
i. HMSI: PRODUCTS AND WORKFORCE
Manufacturing and Production: The Tokyo-headquartered HMCL was one of the leading
manufacturers of automobiles and power products and the largest manufacturer of two-
wheelers in the world, with more than 120 manufacturing facilities in 30 countries worldwide.
HMCL was known to have excelled in the adoption of the post-Fordist production system
(also called Toyota Production System).
HMSI Factory: Manufacturing took place at its state-of-the-art plant The HMSI factory was
spread over 52 acres. The initial installed capacity was 100,000 scooters per year, which was
scheduled to reach 6,00,000 scooters by the end of 2005.
High Standards: HMSI worked on principles, which were followed worldwide by all Honda
organizations. Keeping up a global perspective, HMSI was devoted to providing items of the
highest calibre, yet at a modest cost for complete consumer loyalty. It meant to create
innovatively prevalent, effective and equitably valued bikes, with Honda-tested technology,
backed up with after-sales service to match Honda’s global standards.
Aim: Instead of being just vehicles of transportation, its products were intended to become
vehicles of change: change in the way people work, the way they travel, and in the way they
live.
Workforce: The company had about 3000 employees in all; of these, 2000 were in the worker
category – 1300 were confirmed workers, and 700 were contract workers. About 1000
employees belonged to the supervisory and managerial staff. Besides, 700 persons were
working as trainees and 300 were apprentices under the Apprentices Act, 1960. Almost every
worker or trainee held a certificate from one or the other Industrial Training Institute (ITI) in
India. All trainees normally got absorbed in the regular workforce after the training; whereas
only about 15 per cent of the apprentices were able to get a job with the company after the
apprenticeship was over.
Well-paying Paymaster: Going by region-cum-industry considerations, HMSI had the
reputation of being a comparatively good paymaster. During the time when workers waged
their recent agitation, the company had increased the wages of each worker by Rs. 3000 per
month. Thus, in October 2005, salaries for workers ranged from Rs. 8,150 for an unskilled

worker to Rs. 11,200 for a skilled worker, which included Rs. 2,000 towards house rent
allowance
ii. HUMAN RESOURCE POLICIES:
Fundamental Beliefs: HMSI’s philosophy advocated two fundamental beliefs:
1) Respect for Individual differences; and
2) the Three Joys that it wanted to promote for all organizational members. Respect for the
individual stemmed from initiative, equality, and trust. The company believed that it was the
contribution from each individual in the company that was responsible for company’s success,
and which would take the company into the future.
The Three Joys: With its focus on The Three Joys, in line with its parent Honda’s Philosophy,
HMSI conducted all its daily activities in pursuit of: The Joy of Buying, i.e., the joy of using
world-class products;
the Joy of selling, i.e., the joy of selling world-class products; and
the Joy of Manufacturing, i.e., the joy of producing high-quality products.
Philosophy: The respect for the individual got translated into independent spirit and freedom,
equality and mutual trust of human beings who worked for or came in contact with the
company. The company claimed that its policies focused on developing each individual’s
capacity to think; reason; and most importantly, the ability to dream. It also had certain
fundamental beliefs, which among others, included appreciating the value of each individual.
Encouraged inter-departmental fraternization: The company promoted association among
different categories of employees through provision of similar uniforms and same canteen
facilities for all. The induction programme of HMSI involved, among others, acclimatizing the
employees to the Honda philosophy, which was a clear written statement.
Honda Way: The Honda way meant human behaviour or way of thinking based on Honda’s
philosophy. It was not a written statement but was an unspoken but readily intuited philosophy
expected to run through the company. For example, one of the prominent Honda ways was
perseverance to ensure safety and quality in all aspects.
Training: The company organized the following types of training for its employees: TQM
(total quality management) training; training for building team leaders; ISO 9000 training; and
5S training. The training department, which was a part of its Human Resource department, was
supposed to be headed by an assistant manager; but this position had long been lying vacant.
Performance Appraisal: HMSI had a performance appraisal (PA) system for all its employees
including those in the worker category. It involved interviewing of the person concerned by
the section head and the shift in charge, on the basis of which PA was done on a rating scale.
The company announced all PA results and salary-hikes immediately at the end of the financial
year.
Works Committee: Since April 1, 2004 the company had constituted a Works Committee
(WC) under the Industrial Disputes Act, 1947 (IDA) consisting of 15 workers and 5
management representatives. The management had also constituted some other committees

consisting of workers and management representatives. Some of these were the canteen
committee, transport committee, health committee, and sports committee. However, after the
Union came up, the Works Committee had become merely symbolic.
Dream Team Newsletter: The company’s six-page, three-monthly quarterly newsletter was
titled “Dream Team.” Its focus, among others, was on covering the company’s achievement
in terms of awards, contracts, recognitions, quality certification, list of new dealers, and kaizen
activity. A perusal of the past issues of the newsletter revealed that its focus was on targets,
safety, exhortations related to – and announcement of – achievements concerning quality,
safety and training programmes on defensive and safe driving of two-wheelers. Very few
employee-related matters were covered. Nor was there any scope for workers’ expression
through any letter to the editor related to issues that concerned them. Employee-related matters
covered included: sports competition results; news about marriage; and child birth in case of
employees or their spouses.
EMPLOYEE WELFARE
HMSI had taken several initiatives in the area of employee welfare, which were as follows:
 Canteen and transport facilities to and from workers’ residences were provided at
subsidized rates.
 The company had a sports club for employees’ use which had facilities for indoor
games.
 Workers used to organize matches with employees of other companies in different
games including football, volleyball etc.
 All the employees including the managers wore similar uniforms, one cap and one pair
of shoes.
 The company covered some employees under Paramount Health Care facility also.
 Besides OPD (outpatient department) facility, the scheme even envisaged
reimbursement for hospitalization expenses.
 The coverage of the workers and their family for hospitalization insurance was as
follows:
 A workman and his/her spouse and up to two children were covered for Rs.
75,000 each, while parents for Rs. 1, 50,000 each.
 On the intervention of the Union, these rates were enhanced later on in
September, 2005.
 The company also met its liabilities under various labour laws.
 It used to invite workers’ families for celebrating the foundation day, but afterwards,
that practice was stopped.
 To provide support to an associate (HMSI nomenclature for employee) on happy and
on sad occasions, the company had a policy of paying cash as under:
 Rs. 2100 on the birth of a child (limited to maximum number of two children);
 Rs. 3100 on his/her marriage;

 Rs. 5000 given to the family of an employee on his/her death; and
 Rs. 3000 on death of an associates spouse or child or parent.
CAUSES OF DISPUTE IN HMSI
There were several reasons of disputes in Honda Motorcycles and Scooters India Limited
(HMSI) which can summarized as follows: -
1) The major resentment was seen when the company announced a bonus, the amount of
which was quite disappointing to the employees.
2) The issue further gained the flames when the rumour spread that the Hero Honda has
distributed refrigerators to its employees as a bonus.
3) The workers were compelled to sign the movement sheet every time they went for
refreshment and any negligence would result in the suspension of that employee.
4) They had to attend more than 1 machine simultaneously due to the adoption of Post
Fordist system which proved to be a major source of stress for them and then there were
many cases coming related to the bad medical conditions.
5) The management was very strict on granting leaves, even in critical conditions and if
someone would overlook the warnings, sermons were presented to them immediately.
6) There was no power in the hands of employees to take any decision or any initiative
which inculcated a feeling of alienation amongst employees.
7) The company used to hire the temporary workers in case, the employees would refuse
to work.
8) The industry had a philosophy of respecting the individual’s differences, but its Vice
President was often seen hurting the sentiments of others by being quite Ideo
syncretic.
9) There was quite a little Job security because in case of any default, the workers were
given either the memos or were threatened for being terminated.
10) Earlier, the firm had a provision of calling the family members of the workers for the
Founder’s day celebration. But due to increment in the strength, they stopped that
practice. It was quite hurtful for the employees.
11) The company had a total lack of direction on the people front leading to many
problems.
12) Hierarchy consciousness could be seen in the mangers due to which they did not let
the workers to communicate with the top management.
13) There was absence of an effective grievance redressal machinery in the organization
due to which workers could not find appropriate solutions to their problems.
14) There were many vacancies left unfilled in the firm due to which there was lack of
supervision among employees.
15) When the company refused to absorb trainees, there was an outburst of anger among
the existing ones.
16) High expectations of management regarding targets created an undue pressure on the
associates. Consequently, they had to overstay in the firm giving rise to work overload.

17) Employees were suspended in case they asked for a temporary change in their regular
shifts.
18) Managers showing partiality in promotion as they wanted postings to be done on the
basis of seniority, and not on an ad hoc basis.
THE DANCE OF NAKED VIOLENCE AND INTRODUCTION OF COURT OF
ENQUIRY
 On July 25,2005: -
 HMSI workers and those from the neighbouring industries staged a rally at
offices of the district authorities to reinstate their dismissed and suspended
colleagues.
 The police prohibited workers’ entry in the civil lines area, consequently,
several masked men began throwing stones, attacked the DSP, who was
beaten mercilessly, and;
 They set fire to the vehicle belonging to the SDM.
 Control programme: -
 Police, somehow, managed to control the mob.
 Identity of the masked men was not confirmed.
 After the clash, a message was sent to the workers that the administration would
meet them and accept their memorandum.
 The police reacted to this slight provocation by resorting to the use of brute
force against the unarmed workers.
 Workers injured counted to 700 where most were discharged after first-aid, but
70 were severely injured.
 The legal counsel of the HMSI Union was also booked by Haryana Police on
charges of attempt to murder.
 The whole incident got full coverage by media and finally, it was admitted that,
initially, some policemen were beaten by the mob.
 The 2nd
day’s violence was reportedly sparked off when enraged members of
the public who turned up at the civil hospital could not find their relatives.
 The Inspector General of Police declared that the incident was an act of gross
negligence on part of the police.
 The DSP and the SDM concerned claimed that, out of 375 odd persons arrested
after the incident, 79 were outsiders.
 On July 26, 2005: -
 HMSI decided to close the operations for half a day, but did not declare a
lockout.
 On July 27, the Haryana Chief Minister ordered a court of enquiry to investigate
the violent incident to be conducted by a retired Judge of the Punjab and
Haryana High Court.

 The Haryana Chief Minister was also directed by Mrs. Sonia Gandhi, President,
Indian National Congress to hold discussions with the HMSI management and
its workers.
 Meanwhile, 61 workers remained in jail for more than two weeks and got
released on 11 August, 2005.
CONCILIATION FAILURE AND THE INTENSITY OF WORKERS’ ACTION
 Conciliation proceedings were initiated on May 26, 2005 by the Deputy Labour
Commissioner (DLC), Gurgaon, also the conciliation officer of the Gurgaon region for
all general-demands disputes.
 Six conciliation meetings were held on June 3, 17, 28, and July 8, 14, and 19.
 The HMSI management was represented by two managers belonging to the
company's human resources department and the workers were represented by the
members of trade union.
 The management sticked not to raise the wages of the workers since it was already
paying more than the region-cum-industry standards. The representatives of the
Union also, chose to stick to their demands. Consequently, the conciliation
proceedings failed.
 Therefore, a confidential failure report was submitted to the Haryana Government
under section 12 (4) of the Industrial Disputes Act, 1947 (IDA) on July 19, 2005, the
last day of meeting.
 It is noteworthy that, during the conciliation proceedings, the management asked the
workers to sign a statement of good conduct which included that workers would
remain disciplined and would not pursue union activities in the factory premises and
to return to work unconditionally.
Due to these conditions, the workers refused to sign the statement.
The management, in retaliation, refused to let the workers enter into the factory
premises unless they signed the good-conduct bond.
 It resulted in management hiring the temporary workers to meet the schedules.
 Eventually, the management and the Union reached an agreement in June, 2005
whereby the management agreed to allow the workers to enter the premises of the
company and work only under the condition that the terminated staff would not be
taken back/reinstated.
 Furthermore, it was decided that the workers would be allowed entry into the factory
premises in batches of 400, that too if they signed good-conduct bonds. Workers
agreed to do so.
 The Honda management feared a similar incident which happened a few years ago at
Hero-Honda Motorcycles Limited, Dharuhera, being repeated at HMSI.

 Thereby, it decided to allow only batches of 100 workers. But later the management
further retracted and announced the batches of 50 only, workers agreed yet again but
eventually, it decided not to allow any worker to enter the factory.
 Many of the temporary workers fled from the factory premises out of fear. At the end,
only 38 workers reported to work on June 18, 2005. At 1:30 p.m., the management
was forced to declare that the production would be shut down for the day.
 After obtaining registration for their Union, the workers had been resorting to 'go
slow' as a result of which during the month of May, June and July, 2005 the production
was reduced to just 10 per cent of the normal.
 Later, the management had to place an advertisement in a newspaper for recruitment
of new workers.
ARRIVAL AT THE SOLUTIOS TO THE DISPUTE
As per the research conducted by TNS Automative in year 2004, HMSI was the leader of two
wheeler category by 108 points leaving behind Hero Honda with 96 points.
But, after July 25th
scenario, the company took some time to absorb the shock and
understanding what has actually happened. So, it adopted the following solutions: -
 IMPROVED STRUCTURE: -
It revamped and intensified its training functions as:
1. Managers were sent to attend the Management Development Programs by CII & AIMA
for acquiring Inter-personal skills, conflict management, etc.
2. Provided trainings in the area of team building, leadership.
3. The HR department sent line managers to volunteer the Management development
programmes (MDPs).
 TACKLING DISCONTENT AMONG WORKERS: -
1. The present GM has successfully managed to tackle some discontent among workers.
2. The director general manager of affairs has lot many ideas but he could not understand
organizational working from employees’ view point.
 IMAGE BUILDING: -
1. One-week drive was organized in which HMSI logo in heena on ladies’ hand was being
applied.
2. In order to reach the customers, HMSI was staging road shows of two of its popular two-
wheeler models namely, Eterno and Unicorn.
 CONTEMPLATING FUTURE PLANS: -
There was a meeting of the top managers where many decisions were taken as:
1. New person should be urgently hired for the post of IR manager;
2. Trainings to union office leaders;
3. Formation of committee for grievance redressal;
4. Involvement of workers in considering alternatives and giving suggestions.

Honda Motorcycles and Scooters India Ltd. (HMSI) case study

More Related Content

What's hot

Similar to Honda Motorcycles and Scooters India Ltd. (HMSI) case study

Recently uploaded

Honda Motorcycles and Scooters India Ltd. (HMSI) case study