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THE HMSI CASE (5)

The Honda Motorcycles and Scooters India Ltd. (HMSI) is a wholly-owned subsidiary of
Honda Motor Company Limited (HMCL), Japan; the latter is the largest manufacturer of
two-wheelers at the global level. HMSI was established on 20th October 1999, and
employed about 3000 employees in all in its plant at Manesar Gurgaon. It provided many
welfare benefits to its employees, and also met its liabilities under different labour laws.
The human resource (HR) policies of HMSI are in alignment with the philosophy of its
parent company, HMCL, which includes two fundamental beliefs: 1) respect for
individual differences; and 2) the three joys: the joy of buying; the joy of selling; and the
joy of manufacturing. The HR policies of HMSI, among others, include constituting
some committees by the management consisting of workers and management
representatives. The company's three-monthly newsletter focuses on targets, safety,
achievements concerning quality, safety and training programmes on defensive and safe
driving of two-wheelers; thus highlighting management's concerns and not issues that
workers consider important.

Workers perceived unfair treatment for the first time in November 2004, when they were
offered by the management a Diwali (6) gift of Rs. 600. They thought that keeping in
view the fact that their company was a well-known MNC they deserved much better
treatment on that occasion. This feeling got accentuated with other acts of arbitrariness
and nepotism practiced by Indian managers in HMSI. They also felt aggrieved at the
idiosyncratic attitude of a Japanese Vice-President (Production) who one day kicked a
worker (though it was partly a friendly kick) who was slightly late in joining work after
the tea interval. The discipline enforced on workers was very strict; they were often given
sermons on their work behaviour, which they did not like. While Japanese top
management had cross-cultural misunderstanding about Indian workers' psyche, Indian
managers were practicing favouratism and hierarchical authoritarianism against them.
The workers also noted a high wage difference in HMSI and the Hero-Honda (7) for the
same work. So they started a campaign for registering the union, and made demands by
submitting to the management a demand charter. The management tried in vain its level
best to stop union formation and registration. The concerned registrar of trade unions
denied union registration on the frivolous ground that registration would vitiate the
peaceful atmosphere in the Gurgaon industrial region, which was a patently illegal
reason. Eventually, the union registration took place in May, 2005 with the active
intervention of Mr. Gurudas Gupta, a Member of Indian Parliament, who belonged to the
Communist Party of India (CPI). He was an office bearer of its trade union wing, AITUC
(All India Trade Union Congress). Some usual IR tactics were adopted by both sides,
which heightened the tension in IR climate. There were also some cases of minor
violence by workers at the workplace.
The worst happened in the short IR history of HMSI when a violent battle was fought
between the HMSI workers and the local police on 25 July, 2005 at the office of the
Deputy Commissioner (who is Chief of the civil administration) of Gurgaon district
where workers had gone to protest against the alleged highhandedness of the HMSI
management in, what they described as, collusion with the state administration. This
resulted in severe injuries to some 70 workers. The Indian multi-channel TV news
network telecast the violence on workers almost live. Due to workers representatives'
pressure on the government, the state Chief Minister was directed by the Congress (the
ruling party) President Mrs. Sonia Gandhi to facilitate a settlement between the HMSI
management and its workers. On July 30, 2005 an agreement was arbitrated by the state
chief minister, which provided that the striking workers would resume duty from 1st of
August 2005, suspended workers would be taken back on duty, and that workers would
not raise any new demands with financial implication during the next one year. The
management was concerned at not just the losses but also at the magnitude of alienation
amongst the workers and the violence perpetrated on them by the police.

In the post-July 25 scenario, the management allowed several concessions to workers on


many fronts. The union office bearers were allowed to do full-time union work. Despite
the losses, workers could secure an impressive amount of money from management as
bonus for the year 2004-05. The management's allegiance to soft model of HRM strategy
was more of merely rhetoric as it had taken the workers for granted. It is only in the post-
July 25 scenario, that the management started sending managers to attend management
development programmes (MDPs) in areas such as inter-personal skills; team-building,
negotiation, and conflict management. It decided to appoint a Senior Manager-IR. Union
office-bearers were given training by the HR department on building cooperative IR.

The interesting thing about the HMSI case is that the company wanted to pursue a non-
union model without implementing its projected HRM strategy. It thought that its policy
of paying slightly higher wages than the average in the automobile industry in Gurgaon
region, providing same uniforms for all employees, and offering attractive welfare
benefits to its employees would be good enough to secure their commitment to the
company. The Japanese top management left HR issues to be handled by senior Indian
managers who were basically production specialists, and were not experts in handling IR
issues. Also, the hierarchy-ridden Indian managers were insensitive to issues that
concerned the common workers. The management was caught unawares when it found
that the accumulated grievances led workers to become very hostile and form a union
with the help of the AITUC, which is the trade union wing of a political party that is a
partner in the ruling coalition at the central level i.e. United Progressive Alliance (UPA).
Managements in India often succeed in breaking workers' unity in most union-
organisation situations witti the help of state government agencies and using the legal
system to their advantage. But in the present case that could not happen. Saini (2006) has
noted that this is happening at a large scale in the industrial belt of Panipat as well--
another industrial town in Haryana, where even medium firms with nearly 500 workers
have been violating most labour laws with impunity; nor are union leaders operating in
that region able to unionise the workers in the Panipat handlooms exports sector. In the
HMSI case, the power struggle between labour and management led to a violent battle
between the workers and the police that resulted in the causing of considerable loss to the
company. The central government was compelled to come to the rescue of the working
class due to the coverage of the media and the pressure of the CPI. The company suffered
a loss of Rs. 1.3 billion; and saw the emergence of a strong union.

But keeping in view the totality of the HR practices that the company was following,
there was a wide gulf between its projected HR policies and actual practices. The
managers conducted themselves like autocrats, abused their authority, imposed
unreasonable restrictions on employee movement, refused leave even in genuine cases of
leave, threatened the workers of termination from service, etc. The employees were not
treated with dignity or even as people.
In the present era of globalisation there is a trend to treat labour as a dispensable
commodity. Large-scale use of contract (8) and casual labour has been taking place at
quite an extensive scale. These categories of workers had lent a supportive hand to the
workers' struggle, without which the core workers would have found it difficult to win
their battle against management's repression. When workers gave a call for strike, there
was almost complete shutdown. Thus, the help lent by contract and casual workers also
proved crucial for shaping of the conflict generation in this case.

TRADE UNION DYNAMICS IN THE HMSI CASE AND THE EMERGING IR


REALITIES

The HMSI case clearly shows the presence of Tayloristic working conditions in the
company before the trade union came into existence, which became balanced after the
July 25 scenario. The union's absence aided the pursuit of discriminatory personnel
policies, especially by the Indian managers, which sowed the seeds of discontent among
workers. This shows that even in MNCs the relevance of trade unionism should not be
considered as a thing of the past.

From employers' point of view, a union is almost always considered as undesirable as it


is seen as weakening managerial prerogatives and bringing in inflexibility in
organisational working. It is viewed as carrying the danger of destroying the established
relationships and old loyalties. Union demands are mostly perceived as excessive and
frivolous. Thus, the union symbolizes resistance to managerial unilateralism.
Confrontation, suspicion and hostility at the time of the entry of a union in a non-
unionised organisation, as was so in the HMSI case, are therefore naturally expected.
These dynamics actuate the management to adopt tactics for weakening the union
strength or prevent it from coming into existence.
HMSI apart, the general trend in the new era is that while in smaller organisations
employers are becoming far more authoritarian with employees in case of larger
organisations, efforts are being made to promote a kind of new unitarism at the
workplace, which involves use of HRM strategy to promote a seeming commonality of
interests--involving a mix of hard and soft HR interventions--which aims, among others,
to dilute the influence of the trade union (Saini, 2000; Saini and Budhwar, 2004). These
efforts help individualisation of IR and dilution of trade union strength. An increasing use
of post-Fordist production system is noticeable in today's era of new technology. This
means a greater emphasis on logistics, and a comparatively lesser concern for human
relations that is increasingly going down. The departure from confrontationist style to
collaborative style of industrial relations is visible on quite an extensive scale.

The case narration clearly shows the management's keen concern for union avoidance. In
the process, it committed many unfair labour practices, which were well within the
knowledge of state agencies involved in this dispute. Somewhat similar instances in other
states reveal that labour and general administration has been showing hardened stances in
its anxiety to woo investors. No government--not even a government led by the left
coalition--is willing to give a pro-worker impression in addressing labour--management
strife. The undue delay in union registration and the frivolous reasons given for state
inaction in this regard explain such concerns of the state governments.

But then, what explains the state's coming to the rescue of HMSI workers and eventually
forcing the management to condone the supposed acts of violence and indiscipline
committed by the workers and the union leaders? The police brutality created enormous
sympathy from the public and the media for the agitating workers. Due to the pressure
put on it by the CPI the government had to show consideration to the interest of workers
and take some action against the administrative officials. On the state's part, this was
necessary to show to the media that the government cared for the working class. Thus
HMSI workers and their union scored a moral victory and earned public sympathy.

The covert state support to management in general has helped the latter to manage IR
issues the way it likes. In the HMSI case, management allowed the workers' grievances to
pile up; when they wanted to have them processed through a union that they formed, the
management colluded with the state agencies to deny them registration of their union on
illegal and frivolous grounds, thinking that in the process it would be able to break the
spine of the workers' unity. It committed many other illegal acts in this regard. For
example, the management offered the workers a compensation package on the condition
that they would not form a union, and the suspension/termination of services of workers
who took active part in getting the union organised, were not lawful acts on the part of
the management. These are gross violations of the provisions of the Trade Unions Act
1926 and schedule V of the Industrial Disputes Act, 1947.

The State (political executive, administration, police) came to the aid of HMSI
management in its efforts to discipline workers and resist union formation. All this
however strengthened the linkage between the union and the AITUC. Today, state's
priorities are more focused on efficiency, higher growth in GDP, and foreign direct
investment rather than social justice. The present state of apparent cooperation in IR is
symptomatic partly of a covert pressure on workers of the state's indifference to their
cause. The Indian data on industrial conflict shows that mandays lost due to lockouts is
much higher than those due to strikes (Datt and Sundharam, 2006: 699). Thus, in a way
the state assists capital in violation of trade union rights of the working class and dilution
of labour standards.

In the Western context, while some scholars are writing the obituary of IR thanks to the
role being played by strategic HRM in the present era of globalisation (Looise and
Riemsdijk, 2001), others do not see HRM as essentially anti-union (see, for example,
Storey, 1995). The latter category of scholars has argued that trade unions and HRM
strategy can survive as compatible entities in workplace settings. But as shown by the
HMSI case, in actuality most employers in the context of developing countries including
India consider union as hindrance. In such a situation, it is difficult to build sustainable
cooperation between the two sides. Companies like those belonging to the Tata Group are
able to build cordial relations with their unions due to their willingness to give space to
unions' point of view.

CHALLENGES FOR UNIONISM IN THE NEW ERA: SOME LESSONS FROM THE
HMSI CASE

The most important source of labour power in any country is a facilitative IR law and its
effective working. This branch of law enables labour to organise itself, struggle to secure
social and industrial justice and prevent commission of any unfair labour practices on the
part of the management and workers in the course of processing their differences.
Therefore, the Trade Union Act, 1926 and the Industrial Disputes act 1947 are legal
instruments that confer important legal rights on labour. It is important to ask how did
these laws work in the HMSI case from the view point of workers, and what can one
learn from it. The connected issues can be discussed as follows:

Firstly, it is important to note that we need to distinguish between the role of trade unions
in public sector and private sector. Often, most of the criticisms of trade unions that are
applicable to public sector may not apply to private sector unionism. For example,
speaking of the problems of trade unionism in India, Sheth (1994: 132) notes:

The existing trade unions are characterised byfragmentation, divisiveness, internecine


conflicts, rivalries, scramble for leadership within unions, dependence onpolitical
patronage, and favours from employers in pursuitof short-term goals of specific segments
of employees. Theseforces have failed collectively in...