VIS A VIS ANALYSIS OF MSIL & DR REDDY CASE

Synopis
The incidence at MSIL was a management union problem incidence related to contractual
work. The incident broke into a mob violence where 1 person die, 100 executives were
severely injured and there was huge loss of equipment and damage to property. While the
incidence at Dr. Reddy too included management union problem but there was no mob
violence and large-scale property damage. It involved labour strike owing to issues with
contractual employment. Both the case studies talk about the actions taken by the
management to resolve the issue

MSIL Dr. Reddy

Nature of the incident occurred
 The incident was the worst incident in 
the company’s industrial relations (IR)
history.
 1 HR chief was burned alive, injury to
nearly 100 managers including Japanese
expatriates. The entire administrative 
block was reduced to ashes. Cars on
production line and parked outside
were damaged. Security cameras were
destroyed.
 MSIL shares slumped by 8.9% the next
day. Per day loss was estimated at 70  This demonstration involve loss for both
crores. The total loss of 2012 was
estimated at 2500 billion .
The incident happened at Pdp plant of
plant in Andhra Pradesh of Dr Reddy
group and is motivated by
regularization and pay hike for contract
worker.
This incident lasted for 100 days and in
this involve not only the worker but
their family as well as children in hunger
strike and demonstration and on other
side also involve organization
leadership.
companies as well as workers because
of this Dr Reddy has lose 300million in
business and the worker lose 10 Mn in
salaries and lived under pressure from
families and constant pestering by
money lander and fear to become
irreverent to organization.

Time frame & Place of occurrence

 The incident occurred on July 18,2012  The incident occurred on Nov 14,2011
in Manesar, Haryana. at Pydibheemaviram industrial area in
Srikakulam district of Andhra Pradesh.
Nature of the organization & business
 MSIL is an automobile manufacturing  Dr. Reddy is a Pharmaceutical
organization. Such organisation manufacturing company. Since it has
focusses on quantity i.e. high volume yearly license check by US authorities, it
output and low cost labour input. is focuses more on quality and
 It derived raw materials from India and performance.
 met Indian consumer needs only.
 Thus, it was Pro- production based.
Management Structure
 Suzuki, a Japanese company, had a
majority share in MSIL. All the top-level
managers, the decision makers, were
Japanese. Senior and operation level
managers were Indian.
 Even the Crisis management task force
comprised of 2 Japanese and 1 Indian.
Manpower structure
 MSIL heavy relied on Contractual
workers over permanent employees
 Out of its 18,911 manpower in 2011, it
had 8,554 workers on contract, which is
a staggering 45 % of total employees.
This led to Power shift in favour of
Contractual workers.
 There was Different policies and huge
benefit gap for contract workers.
Manpower characteristics
 The majority of workforce at Manesar
plant aged around 22-24.
 There were no female workers contrary
to Gurgaon plant.
 The education background of Manesar
unit consisted of illiterates or semi
literatesworker. Not married not
responsible
 The workers had other sources of
income, so were not much dependent
on job for survival.
 Thus, the young aggressive workforce
had no stabilisation from experience or
responsibility or gender diversity. the
rough and tough upbringing of Haryana
culture further exacerbated the
problem.
 It derived raw materials majorly from
China and had markets in Russia,
middle east, Mexico and USA.
 Performance governed by US license.
 Dr. Reddy is an Indian pharmaceutical
company located in Hyderabad,
Telangana.
 So, the Management comprised of an
all Indian team so.
 Dr Reddy employed about 17,000
people around the world in various
category.
 At Pdp plant, its 6th plant, 500
contractual employees were engaged in
various support function at plant.
 The Management was Compassionate
to contractual workers.
 Workers age was between the range of
25-60. Thus, there was an ample mix of
experience and youth.
 Pdp plant had 10% women of
contractual worker. This reduced
aggressive nature through gender
diversity.
 Even though the contract worker who
were involved in support function have
not completed their high school, some
are exceptional.
 The workers were not having other
source of incomes which is evident from
collecting 100-day food supply for the
strike.
 All the Permanent employee had
diploma degree or were post graduates.
Since, basic education requirement was
minimum ITI ,it helped as a restraining
factor from turning into Mob violence.
 Union structure, Management-Union relationship
 The Manesar union was not recognised
by MSIL while recognising Gurgaon
workers’ union.
 The Manesar union had a young
leadership with no political party
support. They lacked IR experience. This
led to problem in control of agitation
ultimately leading to mob violence.
 The management union relationship
had huge communication gap. There
was no participatory decision making
process. The Indian manager didn’t
listened to workers grievances.
 After the management sponsored
candidates lost to nominees of jailed
union leader there was almost a
complete rift in relation.
Management practices
 The management practices at MSIL can
be described as mechanistic and
authoritarian.
 The tight work schedule led to stressful
work under already harsh conditions.
Only two tea breaks of 7.5 min and one
30 minute lunch break were allowed. A
worker would lose his half day salary for
being a little late. He can’t also talk to
his colleagues during work.
 Earlier strikes were settled by secret
payments which made workers angry,
betrayed, defeated and disillusioned.
 Dr. Reddy had a recognised workers
union, CITU headed by Govind Rao. It
had political backing of the local
communist party.
 The management was always willing to
listen to workers and took proactive
actions.
 V. Narayan Reddy senior director
coordinates the relation ship between
management and union. This showed
management is empathetic about the
contractual worker and know how to
Handel IR relation.
 VN Reddy and Govind Rao shared a
friendly relation.
 The management practices at Dr. Reddy
are best described as Humanistic.
 At their end management did best to
provide support to the contractual
workers. They were always open for
two-way dialogue
 Organization was proactive in insuring
compliance with Indian statutory norm
for contractual worker such as
employee state insurance and
provident fund.
 They organised cultural events, trips to
holy places, sports events and family
meet.

Action taken
 The corrective measures were
punishment based aimed to discipline
and teach lessons. There was
involvement of police and lathi charge.
Disciplinary action were taken for
inconsequential events.
 There was differential treatment for
worker and executives in Jiyalal’s case.
He was suspended for misconduct; even
when he was at the receiving end of
cast-related slur and had full right to
 Police is only involved to control the
people when they are pestering
company permanent employee and
there was no such violence involved.
 Police was involved to make this
stalemate to end as the unrest in this
region will discourage further industrial
development and defame the image of
region.
 enjoy his tea break.
Cross-cultural issues
 Haryana culture has a higher degree of  Since the company was based in South
conflict characteristic. People get easily India only from nearby area of
provoked and pay less heed to logic or Hyderabad and had Indian Managers
settlement. there was no such issue of cross culture.
 Hofstede’s culture dimension model
clearly shows that the Japanese
management goals was at loggerheads
with the workers expectations in
criteria of power control, masculinity
and long-term orientation. This led to
huge worker dissatisfaction.

Proposed solutions
PRE-INCIDENCE:
 The employees of MSIL were disgruntled about unfair labour practices and high
handedness of the management.
Shift of worker between Gurgaon and Manesar plant would have redistributed
average income as income was age dependent, quelled dissents as less people would
have had lesser incomes owing to experience gap.
5 min extra for tea break should have been given which could be accommodated by
5 min earlier reporting and 5 min late work exit time. This would give overworked
workers time to rest and chat. They would feel that their demands are being heard.
Lunch time would have been extended as if required at a future period
Wage cut for late coming should have been on basis of hours late to total work hour
in a day, rather than arbitrary 50% cut.
Union should have been recognised and Management should have played a role in
supporting an experienced candidate whose approach could be of Buddha’s Middle
path.
 The contractual employee role was being becoming redundant in case of Dr. Reddy
due to mechanisation of process.
Management could have regularized high performers and put technical criteria on
further hiring owing to technology related progress. This was they could have
reduced regularization pressure and dealt with downsizing.

DURING INCIDENT
 Secret Payment settlement related to strike created distrust among workers at MSIL.

Instead of Theory E of management, Theory O should have been incorporated.

 Employees should have been adopted. Reward system for helping in making process
back to track should have been adopted.
Employee roles should have been improved.
Management practices should be more focussed on grievances redressal.

 Some portion of contract workers can be retrained and regularized at Dr. Reddy.
Better communication between company and contract workers and approach to
mitigate the situation in the starting phase. It should have been clearly
communicated to unions that they should think about betterment of workers and
not adhere to their agenda at any cost.
Also, the demand of 500 worker regularization should have been proposed to be
carried out in steps. As such if we reduce the number of dissenters the strength of
the resistance would also reduce. Then, negotiations could have been done with
having a certain advantage.

AFTER INCIDENT
For both MSIL and Dr. Reddy scenario way forward can be:

 Contracts: A contractual agreement have to be made stating the nature of the

employment and making the clear terms with the contractual employees before
joining, so that in future no such events should reoccur.
 Salary: Maintaining secrecy of salary and hike details between the regular and
contractual employees, so that no one should feel they are underpaid.
 IR relation: Regular meets with the union leaders to maintain good relations.listen to
their problem and come to a solution with mutual understanding.
 Management Practices: Theory O, bottom down approach should be used. New
managers are to be employed so that there could be a new start to relation. Mode of
grievances redressal should be accommodating rather than punitive. The perceived
power distance has to be reduced by inclusion of employee participation in decision
making process.
 Long Term orientation: Japanese model of long term goal should contain Indian
model of short term results.
Fig : Hofstede comparison of India (Blue) vs Japan (purple)