HONDA MOTORCYCLES AND SCOOTERS INDIA LTD.

(HMSI)
The president of Honda Motorcycles and Scooters India Ltd. (HMSI), who was also its CEO, had recently chalked out an aggressive expansion plan, which involved making the production capacity of the company’s plant (at Manesar, Gurgaon, India) triple by the end of 2007-08. Postexpansion, the company would produce 0.6 million motorcycles compared to 0.2 million in 2005; and its total two-wheeler capacity would increase to 1.2 million units from eight lakh in 2005. He was exploring the options towards building a strategy for a long-term cooperation with the employees. But he had bitter memories of the recent past. He looked back at the happenings in the company in the last twelve months. Neither he nor perhaps any of the members in his managerial team could have imagined that workers’ seemingly not-so-major grievances could actually lead to a war-like situation. It was not just any ordinary unionization struggle that HMSI workers had recently fought for. The company could not prevent the union formation, which took place in May, 2005; that too with affiliation to AITUC (All India Trade Union Congress), which was the trade union wing of the Communist Party of India. What was more worrying to him was the damage to the company’s image due to the large-scale violence that took place at the Gurgaon civil lines area involving its workers and the police on 25 July, 2005. The workers had gone there to seek a more proactive intervention of the state machinery towards reinstatement of their colleagues who had been dismissed or suspended by the HMSI management for acts related with union formation. This incident was reminiscent of a police state reflecting barbarism of the type practiced in the feudal era. The CEO would surely not have liked that to happen even to his supposedly “indisciplined” workers. Many happenings of that day were telecast almost live by multiple news channels in India. And they were perceived by the management to have done perhaps an irreparable harm to the social existence of the company. The drop in the company’s sales was also worrying him. The company had suffered a production decline resulting in monetary loss of Rs. 1300 million as a consequence of the strike and go-slow tactics by the workers especially during the months of May and June, 2005. But there was much more to it than just the monetary loss. He wanted to focus the attention of his whole workforce and the managerial team on the ambitious goals that the company had set before itself when it decided to extend its manufacturing operations to India. While choosing the company’s logo of the wings, the company aimed to fly high by taking a dominant role in the Indian two-wheeler industry, simultaneously taking advantage of the rapidly growing Indian economy. He was looking at the possible ways in which he could increase the intensity of the company’s march towards realization of its vision. HMSI: PRODUCTS AND WORFORCE Honda was the largest manufacturer of two-wheelers at the global level. HMSI was a whollyowned subsidiary of Honda Motor Company Limited (HMCL), Japan. 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 was established on 20th October 1999. Its aim was to achieve this dream through production of world-class scooters and motorcycles manufactured 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.

This case is prepared by Prof. Debi Saini, MDI, Gurgoan

HMSI operated on principles, which were followed worldwide by all Honda companies. Maintaining a global viewpoint, HMSI was dedicated to supplying products of the highest quality,

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Besides. To provide support to an associate at the time of happy and sad occasions the company had a policy of paying cash as under: Rs. backed up with after-sales service of Honda’s global standard. 700 persons were working as trainees and 300 were apprentices under the Apprentices Act. The company had about 3000 employees in all. 1960. that practice was stopped. in October 2005. 2100 birth of a child (limited to maximum number of two children).000 each. 5000 given to the family of an employee on his/her death. chess.200 for skilled worker. Till very recently. carom board.000 each. 2005. 3000 on death of an associate’s spouse or child or parent. About 1000 employees belonged to the supervisory and managerial staff. one company cap and one pair of shoes were provided to each employee every year. this scheme envisaged re-imbursement for hospitalization expenses. Earlier. which ranged from subsidized canteen facilities to attractive hospitalization reimbursement for all employees. 75. Going by the region-cum-industry considerations. On the intervention of the union these rates were enhanced later on in September. it used to invite workers’ families for celebrating the foundation day. It aimed to produce technologically superior. HMSI’s philosophy advocated two fundamental beliefs: 1) Respect for Individual Differences. included the value of each individual. badminton. HMSI had the reputation of being a comparatively good paymaster. which among others. 11. whereas only about 15 per cent of the apprentices were able to get a job with the company after the apprenticeship was over. Thus. Rs.yet at a reasonable price for complete customer satisfaction. salaries for workers ranged from Rs. table tennis. The latter considered itself as a unique organization as it claimed to have adopted some distinctive employment and production practices. Besides OPD (outpatient department) facility. 1. tug of war and high/long jump. volleyball. Instead of being just vehicles of transportation. all employees including the managers wore similar uniforms. 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. 3100 on his/her marriage. and 700 were contract workers. and change in the way you live. and workers’ mother and father were covered for Rs. The company had a sports club for employees’ use at Sukhrali village in Gurgaon. The company covered such employees under Paramount Health Care facility. its products were intended to become vehicles of change: change in the way you work. The company also met its liabilities under various labour laws. Most of the HMSI workers were not covered by the Employees State Insurance (ESI) scheme under the ESI Act. but as the size of the workforce increased. Rs. All trainees normally got absorbed in the regular workforce after the training.150 for its unskilled worker to Rs. which had facilities for indoor games. and 2) the Three Joys 2 . Some of the key initiatives in this regard were as follows: Besides canteen. efficient and reasonably priced two-wheelers. EMPLOYEE WELFARE HMSI had taken several initiatives in the area of employee welfare. 8. It also had certain fundamental beliefs. and Rs. which included Rs. the way you travel. During the time when workers waged recent agitation. the company had increased the wages of each worker by Rs. Almost every worker or trainee held a certificate from some or the other ITI (industrial training institute) in India. transport facilities to and from workers’ residences were provided at subsidized rates. 3000 per month.50. 1948 as their salaries had crossed the maximum salary limit for coverage. with Honda-tested technology. HUMAN RESOURCE POLICIES The Human resource policies of HMSI were in alignment with the philosophy of its parent company. Two sets of uniforms. of these 2000 were in the worker category––1300 were confirmed workers. Workers had been organizing matches with employees of other companies in different games including football. 2. HMCL.000 towards house rent allowance.

safety and training programmes on defensive and safe driving of two-wheelers. Apart from training in Honda philosophy. The company’s six-page three-monthly quarterly newsletter was titled “Dream Team. 400 to 1400 per month depending upon the PA grade of an employee. ISO 9000 training. Some of these were canteen committee. contracts. and kaizen activity. The induction programme of HMSI involved. The company also talked of a “Honda way” which was not a written statement but was expected to run through the company. was supposed to be headed by an assistant manager. the respect for the individual got translated into independent spirit and freedom. Very few employee-related matters were covered. was on covering company’s achievement in terms of awards. The promotion chances for workers ranged from worker to subleader to assistant executive to executive. Since almost nobody was covered by the Payment of Bonus Act. The Honda way meant “human behaviour or way of thinking based on Honda philosophy. the company organized the following types of training for its employees: TQM (total quality management) training. in line with its parent Honda's Philosophy. Respect for the individual stemmed from initiative. transport committee. among others. workers were divided into five categories. increments ranged from Rs. acclimatizing the employees to the Honda philosophy. Since April 1. equality. reason. The company promoted “association” among different categories of employees through provision of similar uniforms and same canteen facilities for all. The nominations to these committees were done by the management on the basis of the perceived interest of different persons. the joy of selling world-class products.e. the company had the policy of giving an ex gratia of one month’s gross pay to every employee as incentive pay around the Diwali festival. Based on its philosophy.e. For example. training for building team leaders.” which was a key mission at Honda. quality certification. as they got higher salary. one would get his/her pay-hike/promotion letter. The company announced all PA results and salaryhikes immediately on the end of the financial year. and most importantly. and trust. list of new dealers.e. The company believed that what thrilled its employees––who were called its associates––most was the “Joy of Creating.that it wanted to promote for all organizational members. the Joy of selling. HMSI had a performance appraisal (PA) system for all its employees including those in the worker category. A perusal of the past issues of the Newsletter revealed that its focus was on targets. and which would take the company into the future. and the Joy of Manufacturing i. among others. It involved interviewing of the person concerned by the section head and the shift incharge. after the union came up. which was a part of its Human Resource department. ability to dream. achievements concerning quality. but this position was lying vacant since long. However. 2004 the company had constituted a works committee (WC) under the Industrial Disputes Act 1947 (IDA) consisting of 15 workers and 5 management representatives. Thus on April 1 of each year. and sports committee. the joy of using world-class products. safety. the joy of producing high-quality products. the WC had become merely symbolic. i.” The HR department was expected to organize training programmes and facilitate internalization of culturebuilding so as to promote the Honda way among the employees. on the basis of which PA was done on a rating scale. and announcement of. recognitions. which was a clear written statement.” Its focus. equality and mutual trust of human beings who worked for or came in contact with the company. 1961. The company believed that it was the contribution from each individual in the company that was responsible for company’s success. and 5S training. The company claimed that its policies focused on developing each individual’s capacity to think. The training department. Nor was there any scope for workers’ expression through any letter to the editor related to issues that concerned 3 . i. HMSI conducted all its daily activities in pursuit of: the Joy of Buying. For the purpose of increment. health committee. exhortations related to. With its focus on The Three Joys. which aimed to promote working for company’s own happiness. one of the prominent Honda ways was perseverance to ensure safety and quality in all aspects. The management had also constituted some other committees consisting of workers and management representatives.

workers raised slogans against the VP. which they did not like. it offered a coupon of Rs. While denying the leave. but partly it was a friendly kick. Ninety nine per cent of the workers refused to accept this Diwali gift. Memos were issued for different reasons. as he could not withstand the pressure. Another somewhat similar incident occurred on a day when a Sikh officer of the company was wearing a different-coloured cap and not the usual company cap. which too was refused by the workers. he pulled the line chain and rushed to relieve himself. As the news spread amongst others by the evening. Alternatively. SEEDS OF UNIONIZATION AND AFTER Things were going smooth for nearly two years after production started. Perhaps the major resentment of the workers was expressed when the company decided to give to each employee a Diwali gift of Rs. If a worker wanted to change a shift temporarily for some compelling reason. When he returned some minutes later. He was often seen moving on the shop-floor with a 14-feet-long stick that was used for measuring the standard height of a trolley. Their blue-eyed boys were posted in jobs outside the production-line work. this created stress for them. a worker got late by 2 minutes after the tea time. they would crack jokes about him at his back. Often workers had to attend to more than one machine simultaneously. Sometimes they would be told to leave the company permanently if they could not perform up to its expectations. and child birth in case of employees or their spouses. Workers perceived that many managers had been showing partiality in matters related to posting. One day a worker was denied permission to go to the toilet. “In the past years also. and it fell down. who was a strict Honda disciplinarian. The official 4 . The next day. Workers also encountered certain other problems. They were made to sign a ‘movement sheet’ whenever they went to toilet or drink water. They wanted these postings to be done on the basis of seniority. news about marriage. sermons were given to them. Even when a worker’s close relative was seriously ill or circumstances were otherwise serious. and led to considerable bickering among workers. The Indian managers asked some 15 workers to have a meeting with them on this issue. it was almost never granted. He kicked this worker at his leg to show his anger. The practice was going on since beginning. leave would not be granted.them. 600. The enormity of the problem had taken a serious proportion. this money was transferred to the bank accounts of all workers. Workers were also unhappy with the idiosyncratic attitude of the Vice-President (VP)– Manufacturing (a Japanese national). This worker somehow did not react at all. The company was also very strict in granting leave. 600 in November. as happened in the post-Fordist production system. nobody could dare raise his voice or think of seeking a grievance redressal. The VP gave a push to his cap from one edge. The Japanese top management knew little about it. The Indian managers would not let the workers meet the top management to share their problems. almost every day some or the other worker would get a threat of termination. One day. Employee-related matters covered included: sports competition results. There was considerable fear of management’s authority amongst the workers. The production-line job was far more exerting than that outside it. 2004. Production got completely stopped for one and a half day. After 10 days of Diwali. The managers enjoyed this picture as it prevented the workers from uniting. Union leaders said.” A manager added that the perception of unfairness among workers was enhanced when some rumour also got spread that Hero-Honda had given a refrigerator each to its workers as Diwali gift. they were afraid of him as he could say anything to anybody any time. a free-style person. we all felt belittled at this small gift. and the company took it back. Most workers did not like his carrying a stick. but for a series of unpleasant events. the value of the Diwali gift was of about 400 to 500 rupees. nor did the other workers do so. Union leaders claimed that this was done mainly with a view to creating a friction amongst the common worker. Looking at the stature that our company enjoys in the global market. he was dismissed. he apologized in front of the workers’ gathering.

2 lakh for marriage of sibling/child. It also apprehended that it would result in disharmony of relations between the industry and workers in the region at large. Interestingly. This was on the condition that the workers would not form a union. but their resolve was too strong. This made the situation in the company still more explosive. adopting a go-slow policy. they began making efforts to form a union. During the same period. the global philosophy of Honda stated as follows: Honda is committed to providing a work environment that is free from unlawful discrimination. abolition of the policy of overstay (if the production target for the day was not achieved. It resorted to various means like lobbying with the Haryana Government to help prevent union formation and its registration. 2500 per month in wages. so far as the importance of local laws was concerned. tampering with the quality of output. not wanting the formation of a union in the organization. Letters were sent to certain workers’ homes that they were indulging in undesirable activities. and would also prove detrimental to the growth and development of the industrial belt in and around Manesar. It retorted by suspending 50 workers and dismissing the previously suspended four workers without any enquiry. on April 1. the management also refused to absorb some trainees who had completed their two years of internship. collected together under the leadership of the suspended workers. conveyance allowance at Rs. indiscipline and unrest. The workers were not satisfied with a mere apology from the VP. and started raising slogans. Many workers were individually called to a manager’s room and were exhorted not to join the union. house rent allowance to be pegged at 70 per cent of wage. HMSI management suggested to the workers. provision for free distribution of one kilogram of milk and ½ kilogram of gur (jaggery) per worker everyday. the workers started collecting money for funding of union activities. 1500 per month. 20 per cent bonus on wage + dearness allowance. whether permanent or trainees. including harassment that is based on any legally protected status. 5 . The management saw this as a grave and acute case of breach of discipline. They also “gheraoed” the management within the offices located at the factory premises. 3000 per month. provision of a library within company premises. a loan of Rs. In the next 15 days they came out with a charter consisting of more than 50 demands which included: an increase of Rs. 20 per cent annual increment in wages. They refused to accept the management’s offer. 2005 the management offered to workers a compensation package comprising of an increment of Rs. With the help of local union leaders (affiliated to political parties). provision for a Union Office within the company premises along with all incidental facilities like telephone. Consequent to this. The management allegedly hired some outsider toughs to frighten the workers if they formed a union. tried its level best to stop union registration. Most workers. “Why don’t you form an internal committee instead?” The workers declined this suggestion. workers were required to compulsorily stay back until the target was achieved). During this “gherao” one person from senior management was manhandled and beaten up. When the management did not yield. With considerable heartburn and opposition. no other action was taken against him. The management. The registrar allegedly denied registration of the union on the ground that the proposed workers’ action was initiated in bad taste. The errant VP was later sent back to Japan. the workers resorted to a slowdown of work (go slow) and refused to put in overtime to complete the production targets. The entire incident of “gherao” and violence resulted in the production being shut down for 30 minutes. The management viewed the new stand of the workers as a serious case of breach of discipline and suspended four workers on charges of insubordination. and subsequently moved an application for registration of the union to the Registrar of Trade Unions at Chandigarh. The aforementioned actions of the management led to widespread discontent among the workers.concerned felt insulted but kept quite.

However. after entering the premises. federal or local law. It was this clause that became contentious and due to which the workers refused to sign the statement. 28. The DLC thought that the conciliation proceedings failed due to “the uncompromising stand adopted by both the union as well as the management representatives. 14. The management. the Gurgaon area was divided into four regions. This policy forbids any unwelcome conduct that is based on an individual’s age. Conciliation proceedings were initiated on May 26. the registration of the proposed HMSI union was further delayed by more than a month. a member of Indian Parliament. who was the conciliation officer in the Gurgaon region for all general-demands disputes. chose to stick to their demands. race. in retaliation. and July 8. The newly-formed union raised further demands while adopting the demands raised earlier. Gurudas Dasgupta. The representatives of the union. Eventually. on any ground––whether legal or equitable––to raise the wages of the workers since it was already paying more than the regioncum-industry standards. the management asked the workers to sign a statement of good conduct. The management hired some temporary workers from its vendor companies in order to maintain production schedules. In view of the resistance from the management. sexual-orientation…or any other basis protected by state. CONCILIATION FAILURE AND THE INTESITY OF WORKERS’ ACTION Eventually. sex.Honda will not tolerate any form of harassment that violates this policy. during the pendency of the conciliation proceedings. Dharuhera (a joint venture between the Hero Group of Companies and Honda Motors) a similar situation had arisen. The statement also contained a clause envisaging non-pursuance of union activities by the workers while on work. these workers disrupted the work done by the temporary workers from the vendor 6 . However. In the meanwhile. national origin. entered into an agreement with the workers and allowed batches of 400 workers to enter the premises and resume work. They remained almost quiet during the proceedings. The cause of the workers and their application for registration was then supported by a letter of the AITUC chief Mr. 2005.” He submitted a confidential failure report to the Haryana Government under section 12 (4) of the Industrial Disputes Act 1947 (IDA) on July 19. the dispute landed itself for conciliation. 17. Six conciliation meetings were held on June 3. Furthermore. and temporary workers from vendor companies were used to continue the production. 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. The management of Hero-Honda Motorcycles Ltd. The HMSI management was represented by two managers belonging to the company’s human resources department. under circumstances similar to those in the present case. For conciliating matters related to individual disputes. an apprehension continued to bother the management as a few years ago at Hero-Honda Motorcycles Ltd. The only contention of the management was that the company was not required. 2005 by the Deputy Labour Commissioner of Gurgaon. colour. These temporary workers were asked to stay in the factory premises and requisite facilities were provided to them within the factory. and 19. refused to let the workers enter into the factory premises without their signature on the good-conduct bond. ancestry. 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. religion. 2005 was addressed to the Chief Minister of Haryana and requested him to look into the matter to secure early registration of the proposed union. however. Workers agreed to do so. This statement provided that workers would remain disciplined while in the factory premises and that they were returning to work unconditionally. marital status. This letter dated May 20.. Subsequently the HMSI labour union was registered by the Registrar. each headed by a labour-cumconciliation officer.

they were asked to assemble at the lawns of the secretariat. But 70 of them suffered severe injuries. At the end.m. 2005. the management was forced to declare that the production would be shut down for the day. Later on the police arrested a number of workers and booked them under different sections of the Indian Penal Code. 2005 workers from HMSI and those from the neighbouring industries staged a rally at offices of the district authorities to press their demand for reinstatement of their dismissed and suspended colleagues. but later the management further retracted and announced that it would take back workers in batches of 50 only. The persistently explosive situation in the factory resulted in fear being instilled in the minds of the temporary workmen who had come from the vendor companies. The identity of these masked men had not been confirmed. THE DANCE OF NAKED VIOLENCE AND ITS AFTERMATH On July 25. 2005. When within the enclosure. The protesters attacked the Deputy Superintendent of Police (DSP). the HMSI management got apprehensive and decided to allow only batches of 100 workers to enter the factory premises. At this point several masked men began throwing stones. The legal counsel of the HMSI union was also booked by the Haryana Police on charges of An angry lady relative of an injured worker assaulting a policeman on 26 July. They also set fire to the vehicle belonging to the sub-divisional magistrate (SDM). who was beaten mercilessly. The police. an incident covered by the television media that invited public sympathy for the police. was not exactly unprovoked. On the following day. The police prohibited the workers from entering the Civil Lines area which housed the offices of all major government functionaries of the district. The media reported the use of the worst possible police brutality on the workers. Anguished workers agreed yet again but the management eventually decided not to allow any worker to enter the factory. however. succeeded in controlling the mob. After obtaining registration for their union. in order to take revenge of the earlier attack on the police. including the District Collector. At 1:30 p.” as a result of which during the month of May. The television images of the savagery 7 . Many of these workers fled from the factory premises. only 38 workers reported to work on June 18. though inexcusable. Times of India attempt to murder. most workers were discharged after first-aid. the workers had been resorting to “go slow. Later it was discovered that the management had placed an advertisement in a newspaper for recruitment of new workers. June and July 2005 the production was reduced to just 10 per cent of the normal––from 2000 scooters per day to around 200 scooters per day. on some slight provocation it resorted to the use of brute force against the unarmed workers (see pictures to the left). The media reported that the police brutality. the workers put up the union flag at the factory gate.. While the initial claim of workers’ injured was 700. The management also requested and got a good degree of police protection.companies and brought production to a halt. After this clash a message was sent to the workers that the administration would meet them and accept their memorandum. and workers denied that anyone from their ranks were amongst them. The management at HMSI feared a similar incident being repeated at HMSI.

the terminated employees would be reinstated only after they had submitted an unconditional letter of apology. was arrived at between the workers and the management of HMSI. Of ever-growing inequality.exhibited by the Police in their attack on the workers brought to many minds the savagery of Jalianwala Bagh by General Dyer’s army perpetrated in the interest of their British masters. the management had the right to transfer them to any other department other than the manufacturing department. however. The constabulary forced workers indiscriminately to kneel holding their ears while they were being thrashed. the day after the unprecedented violence. The terms of reference. Some of these were whisked away by the police and were charged with the previous day’s violence. they were released on 11 August. Consequent to severe protests in different circles. Sonia Gandhi to hold discussions with the HMSI management and its workers. However. but it did not declare a lockout. The HMSI union maintained that it was so done by the outsiders. and whether the means available with the police were adequate to control the crowd. HMSI had closed operations for half a day. this was later on also verified with the records of the HMSI. It presented us a microcosm of the new and old Indias. The undertaking contained a clause that the workers promised not to engage in any act of indiscipline and assure normal production. Sixty-one workers remained in jail for more than two weeks. 79 had nothing to do with the strike at HMSI. technically this was a conciliated settlement and not a case of arbitration under the IDA. examining the role of outsiders in the incident. The Haryana Chief Minister was also directed by the Congress President Mrs. the management retained the right to conduct an enquiry into the reasons for termination of the aforementioned four terminated employees and if after such enquiry the employees were found guilty. The police action on workers was severely protested by the print and the television media and the politicians in and outside Parliament. 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. Of different realities for different classes of society. 2005. 2005 an agreement. That inflamed matters further. The four terminated workers were also required to submit a separate assurance letter to the top management. As a result. The trade union. Greater than Honda. continue to operate. THE TRUCE AND ROLE OF THE STATE On July 30. The second 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 (see picture above). police brutality or corporate tyranny…The streets of Gurgaon gave us a glimpse of something larger than a single protest. English daily wrote: The scenes from Gurgaon gave us more than just a picture of labour protest. among others. the Inspector-General of Police conceded that the incident was an act of gross negligence on part of the police. provided for: completing the inquiry within a period of 3 months. which was the bone of contention between the workers and management would. arbitrated by the Haryana Chief Minister. However. A journalist of The Hindu. The agreement also provided for termination of any employee of 8 . Of course. The DSP and the SDM concerned claimed that out of the 375 odd persons arrested after the incident. Of private cities and gated communities. The agreement stated that the striking workers would resume duty from Monday. and examining whether the force used by the Police was justified or excessive. The agreement also stated that the 50 suspended workers would be reinstated as also the four union leaders whose services had been terminated. On July 26. the 1st of August 2005 and that they would not raise any new demands during the next one year. Far more complex than the "image of India" as an investment destination. on 27 July. it was admitted that some policemen were beaten by the mob before the police responded with its brutality. Bigger than a portrait of the Haryana police. Of course.

The number of memos that workers get is negligible. But the union could convince the management that the company should stick to the agreement. The injured workers had their problems. damage to knee caps. the workers would get full salary for the months of May and June. it was agreed that the agreement would be considered as final conciliation in respect of all demands raised by the workers and in future both the parties would maintain cordial relations. Union leaders said. 15 cases were far more serious which included head injuries. when a worker asks for leave. 2005. The union got all of them absorbed in regular jobs. No domestic enquiry proceedings were started against the four dismissed workers who had been taken back. On the day of the tripartite agreement. Workers are able to adjust half-day shift within the next day with negligible hassles. the management has hesitantly agreed to this proposal. managers speak with much restraint. 9 . Another area of the union leaders’ involvement was the issue of absorption of trainees in regular jobs. the management was initially refusing to take most of them on different pretexts. it was decided that a proper test and a detailed appraisal form would be administered for evaluating their performance before inducting them as permanent staff. This necessitated running around to contact different people for making their defence sound. they had supported the workers’ struggle. a union leader observed: Now. from June 27 onwards. There was also an informal understanding that the union leaders would have the freedom of not working on the shop floor since several IR issues were pending that required their persistent attention.” They had to monitor the worker–supervisor relations closely to see that workers were treated better. multiple fractures.HMSI who would get convicted in any of the court cases that had been initiated against them by the city administration in connection with the July 25. 2005 incident. and consequently closure of the factory for four days. including all the seven union office-bearers for the July 25-violence. This meant three days’ compensatory working on Sunday and/or holidays. Even as the absorption of all persons who had completed their trainees into regular service formed part of the tripartite settlement. The workers wanted four days’ leave on Diwali in November 2005. most factories in Gurgaon were working on 29th September. Police had registered cases against 63 workers. observed the day as strike. Our union. The management had also informally allotted a room to the union leaders. “We had to struggle to ensure that their salaries are paid regularly. Further. 2005 when some of the major Indian trade union federations gave a call for industrial strike all over the country in protest against the Central Government’s economic policies. About the workers’ demand to absorb the trainees as permanent employees after the completion of their internship as per the prevalent practice. however. But it had promised them a proper union office after some time. The company showed all these injured as absent. and was hesitant to pay them their salaries. Speaking of the change. etc. However. their response being far more positive. The management allowed concessions on several fronts. UNION–MANAGEMENT DYNAMICS IN THE POST-VIOLENCE SCENARIO The union office-bearers felt that a good degree of change could be seen in the attitude of the managers in the post-July 25 scenario. nor were they transferred to other departments as envisaged in the tripartite agreement. which needed intervention of the union: out of 50 workers who had suffered major injuries. Finally. And. the principal of “no work no pay” (as per an earlier ruling of the Supreme Court of India) would be implemented. the management wanted to terminate the services of some 200 contract workers even though the tripartite agreement provided for reinstatement of all workers. though it was not sufficiently big. It was also provided that the injured workers who were not able to work immediately would be given paid leave.

1. Overtime was being paid at the rate of double of the basic wage rate. Union’s help was sought. They were shown the conditions under which their near ones worked in the factory. One incident took place on 2nd September 2005. The union negotiated this issue and made the management agree for a family floater coverage scheme of Rs. next day sweets were distributed to all workers.000. After they came back. the next day they all felt sorry for the incident and appreciated our intervention in the matter. 1. when two supervisors in the aluminum machine shop behaved with workers authoritatively and in a provocative manner as they used to do so earlier. Union leaders said that the targets could not be achieved for various interruptions. This agreement was reached not through any written settlement with the union but by way of a change in management policy at the instance of the union. the company agreed to pay up to Rs. So unlike one month’s gross pay for the year 2004 the bonus money for the year 2005 was smaller. Workers of the whole shift stopped the work for some 15 minutes. he spoke angrily with the union leaders too.” Another incident occurred on 9 September. and a decision was taken to scrap the overtime working completely in most cases. the management invited all the seven union office-bearers for discussion. Earlier. The ‘A shift’ in assembly achieved its target of 1000 scooters for the first time after the union formation. among others. Workers found it somewhat attractive to work overtime and make extra money. 2005. But this had led to. some 150 of them came to the union leaders seeking their intervention.000. The scheme of inviting workers’ family on the founders’ day had been stopped as the number of employees had increased. 2005. 2005. and came into effect from October 1. The Diwali gift for the year 2005 became a matter of negotiation. 1. Despite these developments. along with GM–Production came to the shop floor during the lunch time and commended the achievement of the workers.Though the management felt bad to know its decision. That day most senior managers had gone to Chandigarh for some work. Each employee was given a gift of Rs. The biggest sufferers were the managerial employees. On hearing the target achievement that day. medical problems. union leaders still did not feel happy at the worker–manager relations. they could not satisfactorily explain why these interruptions did not affect the target achievement earlier. “We went to all the departments to exhort the workers to start the work. and this was becoming unmanageable in view of the fact that Honda workers were from more than 20 different states of India. Earlier. 4. Workers never felt fresh while on work.35. The workers of this department reacted. we did not want work to be interrupted. This practice had been revived since late September. In September 2005.00. this overall limit could be utilized by one or more or all the family members.000. If the expenses still exceeded this amount. this was never so earlier. Vice-President– Manufacturing. But the management could convince the union that the factory had suffered huge losses and hence the ex gratia bonus had to be cut down. The worker was already in distress as his wife had died. the hospitalization expense of a worker’s wife went up to Rs. A union leader said. 10 . nobody could dare talk these things with the management. the union compensated the loss by working on a Sunday. Another new development was that whenever there was a workers-related problem or issue. One of the major recent achievements of the union was the hike in the coverage of the worker and their family members under the medical insurance scheme. However. 2000 and a credit in their bank account of Rs. Now the family members were invited to the factory at the company’s expense in batches. When the union leaders went to settle the issue with the Senior Manager concerned.75. The management was facing the problem of increasingly stressed workers who had to work overtime to meet the production targets. as they had got a bonus of one month’s salary in 2004.000 in the form of incentive bonus including the managerial staff. The management refused to pay the excess of the coverage limit. the target used to be achieved in almost every shift.

Indian managers were specialists in production. came with a lot of ideas. The Director––General Affairs. The company also has a lot of problems of hierarchy consciousness. LOOKING BACK AND THE FUTURE PLANS The company had been performing extremely well since beginning. As shown in Figure 1. The managers as well the workers need to change. however. Things have. 11 . the problems always emanate at the shop floor. that were known to be much more tolerant. negotiation skills. perhaps the problems may never have arisen.Expatiating on the issues involved. as he feels that a transparent working may expose his ulterior designs and motives. team-building and conflict management. and how could things be made to improve. On the other hand. who also is responsible for overall HR management. commanded respect among most workers] had not left. Managers were being sent out to attend management development programmes (MDPs) organized by. The HR manager never wants that we meet the Japanese top management. The Japanese do not understand the workers’ language also. Interestingly. Singh [who was HR chief till some time ago.P. If D. Some of the senior managers want to see a big distance between the top management and the workers. Another problem was that the Japanese had not given Indian managers much power to take major initiatives in different dimensions. but he could not understand the organizational working from the employees’ point of view. it revamped and intensified its training function. We consider it as ours. Some of the issues at hand that needed attention were identified by a manager of HMSI as follows: The company had a total lack of direction on people front. He had a good rapport with the workers. The worker always wants fair and just working of the company. he reacts. and had left HMSI. It had got several other recognitions in other spheres. When this does not happen. where he could successfully tackle somewhat similar discontent among workers. HMSI led the two-wheeler category in India. the solitary vacancy of an Assistant Manager– Training was lying vacant since long. Japanese managers did not know what to do. which to a great extent is still persisting. It wanted to know what had gone wrong and where. among others. When workers had resorted to go-slow. The respect for the individual and the Joys that the company claims to be practicing are merely in the book. and leadership building. Confederation of Indian Industry (CII). they did not understand how to handle industrial relations (IR) issues. and had shown promising results on several fronts. most others have big egos. It got 108 points. but nobody bothers about analyzing their causes and possible solutions in a more practical and acceptable manner. But in the post-July 25 scenario. a union office bearer observed as follows: We are committed to the company. however. the company took quite some time to absorb the shock of what had happened. somewhat improved in this regards now after 25/7. and always want to do our best for it. Management does not know what to do to overcome the shock of July 25 and its aftermath. The present GM–Operations came from Maruti (a Suzuki-controlled automobile company). Recently. leaving behind Hero-Honda which got second place with 96 points. You know. as per a research conducted on two-wheeler dealers by TNS Automotive Dealers Satisfaction study in 2004. Only some 20 per cent of the managers treat us with the dignity that we expect as members of the company. and All India Management Association (AIMA) in areas such as inter-personal skills. The HR department had been actively informing the line managers to volunteer for the MDPs that were being organized by some of the leading organizations. Japanese were conversant dealing with the Japanese unions.

These officials decided that a new person should be appointed as Senior Manager–IR and Administration. and were given training by the HR department on building cooperative industrial relations. Kinetic Engineering Yamaha You may focus on the following Questions while presenting the case. Earlier. 3. 2005 LML Hero Motors In view of the damage done to the company’s reputation. 4. its advertisements were not being perceived as effective. in September. he was also wondering if some radical decisions were required and on what fronts. They were aware that two posts of Senior Manager–IR and Senior Manager–Administration were lying vacant since long. 2. Also. April-June. the managers seemed to remain under the impression that Honda products would sell due to its world-wide image. given the substantial damage the company has recently suffered.Fig. 1: 2004 DSS Ranking: Two-Wheeler Source: Dream Team: HMSI Newsletter. It recently organized a one-week drive in this regard. He was considering alternatives for bringing about change in the situation fast. He was perhaps haunted by the ghost of July 25 more than anything else. though do not restrict yourselves to these questions only: 1. 2005 all union office-bearers were taken to an outside resort. The company also nominated a committee consisting of seven worker representatives who would bring the workers’ grievances to the notice of the management and the union leaders. But it realized that in the post-July 25 scene. 5. so newer ways were being thought of to cope with those problems. What do you think were the principal causes of the trouble that HSMI faced? Whether the HMSI management committed any major violations of the industrial relations law? What role of trade unions you can foresee in HMSI? Assume different possible scenarios in this regard. what would be your advise? Royal Enfield 12 . What lessons in people management do you learn from this case? If you are engaged as a people-management consultant by the CEO of HMSI about the predicament that he faces. HMSI was running road shows of two of its popular two-wheeler models. A meeting of the top management and the department heads took place at an outside resort to decide the future course of action. The CEO was asking himself whether these measures were sufficient to move in the right direction. Outsider trainers were also invited in this programme. HSMI was busy in an image-building exercise. whereby the HMSI logo was applied in henna on ladies’ hands. In its endeavour to reach the far-flung masses across the country. Eterno and Unicorn.

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