Maruti IR Case

1. What are the positive and negative aspects of cross-cultural issues in this case?

Positive aspects:

● Diverse cultural perspectives can inspire creativity and drive innovation

● Local market knowledge and insight makes a business more competitive and
profitable
● Cultural sensitivity, insight, and local knowledge means higher quality, targeted
marketing
● Drawing from a culturally diverse talent pool allows an organization to attract and
retain the best talent
● A diverse skills base allows an organization to offer a broader and more
adaptable range of products and services
● Diverse teams are more productive and perform better
● Greater opportunity for personal and professional growth

Negative Aspects:

● Failing to adapt global business models to the local market

● Failing to identify regional and subculture differences, as per the case senior
management people from Suzuki think that IR issue is like war with unions but
they don’t understand Indian culture where HR Manager like Awanish Dev was
so friendly with workers and was always available for them
● Failing to adapt management practices across cultures, as per the case 7.5
minutes break was unjustified in India but this could have been no issue in Japan
● Failing to adapt human resource management to local markets, HR policies is
also one cross cultural issue as in India wedge difference and leaves
management should be considered by country’s context
● Failing to understand local legal and ethical issues

2. What led to the IR breakdown at Manesar Plant? What was the role of the state and its
agencies in this dispute?

The following were the reasons for the IR breakdown at Manesar Plant:
● Disparity in wages for the contract workers and permanent workers
● The stringent time schedule for the employees (Following Japanese work
practice in India) and not keep a reserved force to operate a more automatic
machine
 ● The immaturity of the union labour with incapability to explain the terms and
impatience for results
● Lack of experience in the workforce compare to the Gurgaon plant.

Role of state and its agencies:

● State Government: The entire protest was initiate from an inspiration of the 2001
incident were the government support the labour and fulfilled their demands.
Also, they did not intervene and support the organisation at right time to supress
the protest.
● Labour Unions registering office: They did not verify the credentials and eligibility
of the unions neither understood the motive behind the union formation.

3. How could a wiser leadership have prevented this from happening?

The ongoing hostility between the employees and management led to IR breakdown
Manesar. The following actions may have been taken to avoid the incident:
1) Rather than acting as a barrier to the formation of the union and the ensuing
conflict, the management could have understood what motivated the workers to
form the union.
2) The leadership could have taken into consideration the grievances of the
workers and helped promote a healthy channel of communication. The reasons
the employees were driven to the brink of revolting could have been understood
by management if it had been more sympathetic.
3) The management may have looked for alternatives to using contract workers
or sought to pay them similarly. Multiple pay scales among the employees
undoubtedly contributed to an increase in complaints.

4. List down (if any) Unfair Labour Practices committed by Union and/or management.

● The management falsely informed the workers that they could not be members of
two unions, in collusion with the registrar at the office of the registrar of trade
unions. This was a strategy employed by the management to prevent the workers
from organizing a union.
● According to the Industrial Disputes Act of 1947, the management engaged in
unfair labour practices by fielding its own candidates in the union election.
● The management also acted in concert with the state government to have the
Industrial Disputes Act of 1947 applied to the workers' protests, making them
subject to negotiation and resolution.

5. What are your thoughts on the practice of employment of contract labourers in Global as
well as Indian context?
 ● Zero-hour contract is a type of contract where the employer has no obligation to
provide any stipulated hours of work, but the employee is required to be available
‘on call’, as and when the employer needs his/ her service. The payment is based
on the number of hours worked on call.
● A curious aspect of the Indian labour laws is that central legislations can be
applied with different ferocity in different states, because states are free to amend
certain operational aspects to strike a balance between local-level diversity and
the national objectives.
● The data are taken from various issues of Annual Survey of Industries and Indian
Labour Yearbooks, Government of India.
● In the Indian context, contract workers are rarely used when permanent workers
go on strike, and contract workers themselves are reluctant to step in during
industrial disputes, so as not to antagonise the powerful unions.
● Our empirical work finds some asymmetry between the effects of export
orientation and the effects of import penetration on the contract labour usage.
This probably relates to differences in structural characteristics of export-oriented
industries to import-competing industries. The nature of unions may also be a
factor in causing this asymmetry.
● If there are no serious regulatory restrictions and if unions are not so powerful,
the firms would like to hold on to skilled workers on a permanent basis and even
invest in their further skill improvements, for their obvious long-term value. Thus,
in an ideal world, the tenure of employment should be closely related to the
worker’s skill level. However, in a rigid labour market, a firm may take the
contract route to avoid militant unions or bureaucratic regulations. When more
firms take the contract route, momentum may gather for larger regulatory reform.

6. How should Maruti Suzuki Ltd develop a culture reflecting genuine, responsible, and
disciplined Labour Practices?

The major initiative that the Maruti Suzuki Ltd can initiate is as following:
● Transparent labour policies revised annually with consultation of the labour
Unions, management and HR team.
● Structuring the quantifiable eligibility for conversion of temporary workers to
permanent workers.
● Incentivising team for higher discrepancies resolving ratio.
● Also having an HR team that can be approached by the labour and unions.