Professional Documents
Culture Documents
The President of the 2nd largest tobacco company in India looked out of his office in Delhi. The
wide landscape occasionally strewn by trees and tall skyscapers was a sight to behold but he
was in deep thought .The representatives of the Principal shareholder in US ,with whom his
Company had a collaboration , during their recent visit, had made a report that the Mumbai
plant which was a main suppliers in Indian was not doing well. In view of the low productivity
and high cost they had recommended that the Unit may well be closed down and relocated
elsewhere and would not like to see their investments eroded. The Government had also recently
reclassified the excise duty structure in the budget from ad valorem duty to duty based on the
length of cigarettes which further eroded their competitveness and market position viz a viz their
competitors. He has been informed that the industrial relations at the Unit is troubled.He is to
have a meeting with his Mumbai team and decide further course of action.
The Corporate Management Team is based The Unit has a union represents all the
in New Delhi .The Management team in worker and staff since the last 15 years and
Mumbai is headed by the Factory Manager is legally recognized . There is strong
and Functions viz Production, R & D internal committee and the leadership is by
,Quality Control, Materials, Human an external person who has a political
Resources , Distribution. The Heads have affiliation to the ruling Government‟s party.
managers and staff to support these It represent the workers in many other
functions. The Heads of these functions companies including the one of the
except the HR have been with the Company competititor. There are regular meetings
for over 2 decades .The HR Head is a recent between the Management team led by the
entrant. Factory Manager every month and the union
The last few settlements of 5 years have
The Company has been producing 12 been resolved though negotiation and union
million cigarettes every month and with this has got its demands of increased wages
volume has been making very marginal based on collective bargaining which has
profits and not been able to meet corporate also seen work disruption at times . The
targets and further will make losses every yearly bonus issue during October gets
month with the recent changes in the excise resolved through some work disruption and
structure. The Unit has been having plant go slow tactics .
and machinery to support the volumes and
the Management is toying with the idea of Since last year when the next wage
making massive investments in next settlement is was due , the Union had given
generation machinery to improve production a Charter of Demands to the Management
higher volumes. Recently the Management asking for astronomical hike in wages in
team has gone through a review process line with trends in Mumbai . Managements
with the representatives of the Principals in have been able to arrive at settlements at
US as stated earlier fairly high wages based on benchmarking
with the industry – cum - region formula
The management team meets regularly to either bilaterally or through conciliation and
plan , review and achieve results in line with few through judicial process which were
the Corporate plans and have a strong very long . The Management have been
professional orientation in meeting the expressing their inability to undertake such
goals . an the increase and asked their union to
tone down their demands . There is no
They are also considering an agenda of headway over several rounds of meeting.
improving productivity of the plants in line The Management based on the consultant‟s
with the observation of the Principals team recommendations presents to the Union a
visit who have noted „ This plant is run by Proposal for increasing Producitvity which
Union‟. involves manpower rationalization of 178
workmen and staff.
The Factory Manager has asked his team to The Union forthright rejects it.
send their proposals in their respective areas
to increase productivity in the last meeting. In the mean time the major competitor has
The Factory Manager on the advice of the announced closure of his plant and
President has also requested the an relocation out of Mumbai
External Consultant to do the same.
The workers are getting restless and
frustrated and there is pressure on the
leadership to resolve the wage settlement as
has been done in the past. Daily work
processes are getting affected.
There is rumbling heard that the workers
and their committee are already talking to
outside perceived „tougher‟ leadership to
force the management to make a wage
settlement in line with their demands. The
Union committee has gone to the „tough‟
leadership and influences all workers to
unite under the new leadership . The
recognized union is left with 15 committee
members.The Management receives a notice
to discuss with the
new union leadership . There is also a case
of serious assault because of union rivalry
on the premises.