Human Capital - April 2016 new

100www.humancapitalonline.com
realising business strategy through people Vol.19 No.11 April 2016
®
Grooming Leaders:
Where Do You Stand?
CASE
STUDY
Pg 54

www.humancapitalonline.com54 N April 2016
Breaking the Labour
Union Logjam
CASE STUDY
Management-Labour conflicts in India form an ethereal issue that
threaten to damage the vital fabric of the organization, and, attempt
to derail the very economy of an emerging superpower. This vastly
contrasts with the healthy labour-management relations in countries
like Japan, where both parties traverse that extra mile to reach out
to each other.
r. Sujit had just finished
the discussion with a
group of labourers. WhileMhe is concerned about the
demand for better benefits by a
section of the labour, he is equally
worried about the growing cost of
production of the company.
However, establishing an amicable
labour management relationship in
India is an uphill task. Recently
Sujit got an opportunity to visit
the Honda Motors in Japan and
had an experience of harmonious
labour management relationship.
Sujit was wondering how to
replicate the same in India as the
HR leader of a premier
automobile company in India. He
was also in a dilemma whether
the application of the same
practices of Honda will give him
leverage or not. While sipping a
cup of coffee, he was reflecting on
his experience of Honda.
Honda Motors is driven by a
fundamental belief of respect for
the individual and emphasize on
three joys - the joy of buying, the
joy of selling and the joy of
- BY DR. MANORANJAN DHAL

www.humancapitalonline.com April 2016 N 55
CASE STUDY
creating. The company maintains a
global viewpoint, and is dedicated
to supplying products of the
highest quality, yet, at a reasonable
price for worldwide customer
satisfaction. The management
policy is to proceed always with
ambition and youthfulness; respect
a sound theory, develop fresh
ideas, and make the best use of
time; enjoy your work and
encourage open communications;
strive constantly for a harmonious
flow of work; be ever mindful of
the value of research and
endeavour. The orientation
towards people management
differentiates Honda from its
competitors.
Honda's HR policy is derived
from the fundamental beliefs of
respect for the individual and
emphasize on three core values of
initiative, equality and trust. The
same gets cascaded to the bottom
by creating metrics, for respecting
people, valuing creative thinking,
respecting an individual's basic
human rights, and strictly
prohibiting forced labour and
child labour. To ensure fairness,
Honda promotes equal
employment opportunity and
follows a no discrimination policy
and allows free and fair
competition. For maintaining
mutual trust the associates and
the company make every effort to
engage in sincere discussion about
all the issues arising or existing
through collective bargaining.
Honda's HR division draws a
global strategy, but ensures an
integration of the strategy
proposed by the division in
coordination with each region. The
regional operation which was
earlier managed by Japanese
expatriates is now being managed
by local managers. The
development of human resource is
rooted in on-the-job training for
every job description and areas of
expertise. The on-the-job training
also includes the contract
employees who are working in the
production line. This training not
only ensures the developmental
capabilities and career
opportunities, but also operates as
a socialization process for the
employees, and ensures the
integration of the non-regular
workers into the core values of
the company. The off-the-job
trainings are three fold: self-
improvement training aimed at
career development, work
performance training aimed at skill
development, and management
development which focus on
leadership development.
The basic concept of labour-
management relationship at
Honda is based on three pillars:
consensus through discussion,
mutual trust and harmonious
coexistence and stability. The
management establishes contact
with the union by applying the
above philosophy of consensus
through discussion, with mutual
respect for the standpoint of both
parties. The company establishes
continuous development towards
better working conditions of the
workers.
Japanese automobile sector,
mostly follows a union shop
system, which not only helps the
workers to come together for
protecting their interest, it make is
quite convenient for the
employers to communicate to the
workers' community. Union shop
means all the workers of the plant
are covered under the umbrella of
a single union and the company
recognizes the union as a single
negotiating body. The existence of
in-house and enterprise based
single union makes it easy to
achieve a joint and cooperative
labour management relationship.
Sujit got fascinated with the
existence of a structured and
organized labour bargaining
system at Honda. While the
bottom level of the bargaining
structure is represented by the
regional branch executive
committee, the central executive
committee leads the negotiation
with the headquarters. The
management gets into a
negotiation with the union every
year with respect to the wage,
bonus and working hours which is
popularly known as the 'spring
labour management negotiations'
as it takes place during the
months of March and April every
year. Thus, the workers or the
union does not trouble the
management with respect to wage
related issues all through the year.
However, the management is in
constant communication and
bargaining with the union with
respect to the production and
sales agenda. The management
and union jointly review the sales
situation and finalize the
production plan for a period of
two months, whereas a tentative
production pan is put in place for
the subsequent month. The top
management, including the
President of the company,
regularly gets into discussion with
the union leaders for maintaining
a healthy labour-management
relationship which is known as the
'labour top forum'. Besides this,
the management organizes the
explanation sessions with the
union leaders about the business
strategy on a yearly basis and
explanation of the financial results
in every quarter.
While these explanation
sessions were core to the labour
HC
Dr. Manoranjan Dhal is the
Associate Professor of
Organizational Behaviour and
Human Resource Group, Indian
Institute of Management,
Kozhikode. He can be reached at
manoranjan@iimk.ac.in.

clearly reflect the philosophy and
culture of the company and their
management style in managing
people. It promotes transparency,
engagement, joint responsibility
and good communication channels
t is a great practice by Honda,
including the workmen as well
as the contract workers, whichI
established to contact, engage and
communicate to the lowest level
in the organization.
We need to recognize that
Honda should have a strong
management committed to work
in this fashion and it cannot be
just mandated as a mere process.
They stand for this as a company
and it also goes with their
Japanese culture, followed by
other Japanese companies as well,
where mutual respect, building
trust and communicating deep
down the organization is part of
their culture.
Like Sujit, there are several
others who will find this practice a
great one and want to follow this
to maintain a great industrial
harmony.
Modelling the IR Policy
It is not a question of how can an
HR leader like Sujit would convert
their IR policy and process to
replicate and how it will be
successful. It is important to
recognize that Honda's IR policy is
a reflection of their organization's
philosophy and culture. It is
important to ask few questions
here - Will this model fit and is it
sustainable for your organization?
Will it be supported by the
ecosystem in the organization to
make it successful? Does it fit the
culture and the organization's
thought process?
If it is an internal union, it is
easy to make it work. However,
the task becomes difficult if Sujit
has a multi union situation and
they are supported through
political affiliations. Their agenda
and interest in collective
bargaining is a whole different
dimension.
Sujit should consider taking the
spirit of Japanese model and
cherry pick the learnings into his
current system and make changes
that will work and be sustainable.
The process of change
management
The key is for one's ability to
manage change through a
structured change management
process. The need is to identify
what is working well and not
working well. I believe few things
which Sujit could consider doing:
1. Create a charter that requires
change and how that change will
look like
2. List out the stakeholders at all
levels - like unions, workers,
contract workers, first level
company supervisors, managers,
IR teams, business heads and the
top management itself. Make a
quick assessment of their support
and how to influence their
participation
3. Ask these 6 critical questions,
Mukund Menon is Director - HR &
Communications in International
Paper for India Region, and is based
in Hyderabad, India. He has been a
part of companies like Mahindra
Satyam, Charles River Computers,
DSQ Software, Manali Petrochemical
Ltd (SPIC). He has a Master's Degree
in HR from the University of Madras.
management relationship in Japan,
Sujit was puzzled about its
effectiveness in India. His factory
suffers from a multiplicity of
union. The union leaders are not
mature enough to analyse the
market position of the company
and connect to the bigger picture
of the market. The massive use of
contract labour also inhibits his
effort to make the workers
understand about the economic
challenges being faced by this
company.
The core to Honda's labour
management relationship is the
outright endeavour to engage in
sincere discussions. The company
has several committees which
facilitate these discussions. Some
of the committees include labour
agreement subcommittee, safety
and health committee, wage
committee, wage committee,
welfare and benefits committee,
complaint handling committee,
rewards and penalties committee,
health insurance union board, and
corporate pension fund board.
Mr. Sujit being the HR head of
an automobile company in India
was fascinated by the Japanese
management practices. His visit to
the Honda plant in Japan has
sparked his orientation towards
people, and motivated him to
relook at the approach that he
follows in his plant, which already
follows Japanese production
technology. What overwhelmed
Sujit is a more than five decades
of healthy labour management
relationship at Honda without a
single labour dispute. Nagging
labour problems in India was also
prompting him to look forward to
a new approach. But some of the
questions which he was struggling
to find an answer was inhibiting
him to decide on the change in
his HR policies.
(Inputs have been corroborated with the aid of
Honda Corporate profile, 2015 and the Honda
Sustainability Report, 2015)
CASE STUDY

www.humancapitalonline.com April 2016 N 57
together is success" - Henry Ford
Digitalization and globalization
of business enterprises have
transformed operational paradoxes
of the pre-digital age, from
standardizing to empowering,
controlling to innovating, and
unleashing the human potential
for greater accomplishments.
Japan's Honda Motors case
study reveals that labour forces in
Japan and especially in Honda
Motors Co. Ltd are highly
adaptive, skilled and receptive to
change. They participate and
support business aspirations and
believe in the ideologies of
consensus through discussion,
mutual understanding and synergy
at work place. They seek
inspiration, success stories and try
to solve local problems with a
global viewpoint.
The Honda HR policies are
very conducive, besides being
people-centric and consider
respect for individuals as one of
oming together is a
beginning. Keeping together
is progress. Working
“C
their basic fundamentals of people
management. They treat their
employees as prized contributors
in their larger scheme of things
and engage them through open
communication and creative
discussions. They promote equal
employment opportunities and
induce fair competition to prosper
professionally. They constantly
adapt best practices from diverse
industries to come up with fresh
ideas for business and people
development.
Comparatively, the Indian
labour landscape is replete with
age-old challenges and
complications. Though HR leaders
might want to adapt the Honda
Motors' philosophy of labour
force governance, and best
practices in their current setup,
the below mentioned challenges
might hinder successful execution
of the Honda model:
Growing cost and
depleting revenues
India has the second largest
labour force in the world after
for each stakeholder category and
find answers and resolutions. It
will be a different situation for
each of the stakeholders;
i. What is changing
ii. Why is it changing
iii. What do you want me to do
iv. What is there for me
v. How will it impact me
vi. How will I manage the change
4. Make a risk matrix with high,
medium and low impact, make an
assessment of what can go wrong
and find mitigation plans to
manage
5. Develop a clear communication
strategy at all stages
It will be a good idea to check
how Honda or Toyota in India is
managing IR in their Indian
operations. What are the key
components of their Japanese
culture and process, they were
able to implement in India. How
is it working and how different it
is from their Japanese culture.
Consistent communication
The best would be to approach
this in a phased manner. Look for
those low hanging fruits like -
creating deeper and frequent
communication channels to start
with. It will set the stage to create
a trusting environment, improved
engagement and will also bring the
company, management and
workers together to share plans
and create a more transparent
culture.
There are companies in India,
which have established a good IR
strategy and have managed to
maintain a harmonious
environment. Sujit should check
with them how it is working for
them and what makes it work.
In today's world and in future,
the union activism will witness the
change though new generations.
They are more informed, engaged
and intelligent. They are willing to
listen to the management and
company. They are asking for
participation and willing to share
their shoulder to the wheel. In a
couple of years the baby boomers
and Gen X will also retire from
the scene. It will be Gen Y and the
Millennial who will be supporting
the business in future.
It is time that we start thinking
in this direction. More and more
companies have started treating
contract workers as important as
their workmen and extend similar
facilities at the work site. The
manufacturing processes are also
becoming global in nature and it
will help to have a more
informed, engaged and supportive
working in the company. It
relieves the stress and tension
that prevails otherwise, if we
don't make everyone directly and
indirectly working for the
organization part of the business.
Vinay Kumar Karkala is Vice
President - Human Resources &
Learning Academy, Angel Broking
with expertise in Talent Acquisition,
L&D, Content Development and
Delivery, Compensationand
Benefits, PMS, R&R Design,
Employee Engagement. He carries
an experience of 15 years.
CASE STUDY

China. However, the labour force
in India is highly unorganized and
labour related issues are not new
to India. Most significantly, the
once shining auto industry has
been experiencing difficult times
due to decline in revenues and
profitability. To add to the woes,
obsolete labour laws and the
indiscriminate growth of contract
labours have exacerbated the
crisis, resulting in the rise of
dissatisfied, impatient and insecure
workforce. They resort to venting
their demands, anger and
frustrations through collective
bargaining and trade unions,
which mostly do not comply with
the market feasibility and
profitability of the organization.
Unorganized growth and
rising grievances
The report from auto industry of
the last 10 years shows an
increase in the workforce at a rate
of 11%, which is twice the rate of
overall employment growth in
organized Indian industries. Most
of it is contractual workers, which
was convenient initially to escape
stringent labour laws. However,
this has spiralled into sticky,
uncontainable situations like the
one that unfolded at Maruti's
Manesar plant, exposing the ugly
and brutal side of labour force
disgruntlement.
Complexities of the union
system
The effectiveness to bring in
change is often diluted by multiple
trade unionisms, which is seen
mainly because of the political
outsiders wanting to flex their
political influence although in the
urban areas. Conflicting political
views rising out of rival
organizations with disparate
ideologies and agendas are greatly
responsible for the unrest. The
existence of divergent groups of
insiders and outsiders, new
entrants and vintage staff,
moderates and radicals, and caste
distinctions have spawned divisions
within the unions, and escalated
further problems
Probable solutions to the
HR dilemma
The fascination to implement
global best practices is a
Herculean task, though feasible as
the eco-system in the country has
changed. An HR leader can focus
on the following change agents to
bring in a cohesive environment
by implementing the following
practices:
1. Evolving eco-system - The
current generation is more
technologically savvy, more
inclusive, liberal, and are more
progressive in their thoughts and
actions. This trait can be used
effectively by the learning and
development wing of the
organization to align the employees
to global standards and quality.
2. Digitized Learning - Online
apps and e-commerce ventures
are thriving, owing to the greater
divide work and handle the
discrete needs of the workforce to
promote a sense of belonging
among workers and give them a
definitive purpose to achieve
workplace goals.
4. Transparency and Open Culture
- HR can encourage a single
union concept like 'Union Shop'
being followed by Honda, by
sharing the business philosophies
and financial results of the
organization. HR driven town
halls, sports meet, and recreational
events can foster attachment and
instil a culture of trust, which is
the foundation for all the change
management initiatives.
5. Psychometric-based screening
and hiring - Quality hiring is the
cornerstone for building a world-
class team. One such tool is to
implement Thomas Jobs, aimed at
developing the desired traits and
The Case Study Recipe
penetration of affordable yet
highly sophisticated gadgets,
fuelling the inquisitive appetite of
the masses. Employees in the
automobile industry are far more
educated and skilled compared to
other industries in the country.
Thus, HR can optimize this
proliferated and dynamic platform
to implement effective learning
management initiatives and
disperse information far and wide
as per the transformational goals
of the organization.
3. Empowering Focus Groups -
HR can create small teams to
profile; administering Personal
Profiling Analysis can make
screening effective and can help
HR hire only those candidates
who suit the role, culture and
psychological requirements of the
organization.
6. Management Involvement - HR
should involve top management in
various union-driven initiatives
that help in striking a chord with
the labour force. This will in
future help in negotiating with the
union with respect to wages,
bonus and working hours, and
push forth win-win solutions. HC
CASE STUDY

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