Lessons from Maruti - from - Business-Standard.com

Lessons from Maruti:

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The recurring labour unrest at the country’s largest passenger car maker Maruti Suzuki clearly shows effective dispute resolution should be a strategic priority for Indian corporations, say analysts. Four leaders present their views.

Engage the workforce

Rajeev Dubey
President, group HR & aftermarket sector, M&M

The main question is: How aware we are of the aspirations of the people who work for us. We have to listen to our own people. The issues of operational efficiencies and cost competitiveness will have to be married to issues of equity among employees.

The most important way to do this is through dialogue. Companies should review if they listen enough to their people and whether they consider the latter’s points of view or not. For a manufacturing company, there has to be the right amount of productivity to stay competitive, but it can’t ignore the task of keeping the workforce engaged and motivated with a sense of ownership in the company. Ownership among employees prevents them from damaging the company in any way because they feel they are as much a part of its well-being as the top management.

That will come only when they believe they are being heard by their employer.

However, there is no magic wand for it. The main lesson that one can draw from a workforce-company face-off is that there needs to be more dialogue than what existed.

But a crisis such as a strike tends to underline the fact that opening a dialogue overnight does not help. It has to be done over time, as an exercise. Investing time in dialogue with employees, including blue-collar workers, makes it easy to build a critical factor in employer-employee relationships — and that is trust. A sustained two-way communication is a genuine way of understanding each other. Do that over a period of time, and mistrust and misunderstandings will be taken care of.

The best way to build that trust through dialogue is by sharing the business plans with the employee on the factory shop-floor or at the sales front-end. The yearly business plan, once created by the leaders, will have to be translated into a cascading, but two-way communication, so that even the blue-collar workforce in the factory understands what levels of productivity and innovation are needed of them to achieve the targets and why. They would want to work towards it — after all, it will improve their livelihood as well.

But it is critical to leave a channel for them to contribute their ideas as well. It will give them the power to co-create and feel a greater sense of ownership in the company’s future. This will depend on who conveys the business plan to the workers. The shop-floor supervisor, for example, will have to be sensitised to listening well. Otherwise, how will the employees feel their voices are being heard? I have witnessed some of the best operational and even strategic ideas coming from blue-collar employees because they are closest to the scene of production.

A company can anticipate a workforce crisis if it keeps its ears and eyes open. There have to be mechanisms such as listening posts within. Dialogue methods and listening posts should include a two-way feedback system, training for the employees, and, of course, sharing the company’s business plans.

The channels ensure that the employer does not come across as insensitive and, at the same time, give the employer ways to understand what could be ailing the employees. By conveying what is critical in the company’s periodical business plans, the employees are made to feel a sense of responsibility for the well-being of the place they work in. Emails and memos are tools towards this end but the most vital tool is one-to-one conversation.

The problems of disconnect and mistrust can take certain forms for some companies, but they are issues that riddle all companies today. Constant dialogue to work together to create a successful future is a sure-shot way of avoiding untoward distress.

Build psychological connect

Debi S Saini
Professor & chairperson, HRM Area, MDI, Gurgaon

The stock owners of Maruti Suzuki, its management, as well as those concerned with higher economic growth for India must have heaved a sigh of relief to see an end to the workers’ strike. The key issue was registration of trade union by workers of the Manesar plant. Such attempts in the private sector in India have almost always involved some acts of indiscipline on the part of workers concerned. Eventually, the centre of attention in this case as well shifted from the core issue of union registration to negotiating for having the dismissed workers back.

No doubt, violence of any kind cannot be accepted in a civil society, though often dispute resolution processes in such cases take a more reasonable view of such happenings in the interest of industrial peace, and thus condone such acts of indiscipline. A viable solution to the Maruti Suzuki story needs a holistic analysis in view of what is happening to the union movement globally as well as in India in the post-globalisation era. Over the last two decades or so, the union density and reach have substantially declined globally. The International Labour Organisation (ILO), the sole international custodian of workers’ rights, has shifted its focus from ‘adversarial collective bargaining’ to ‘provision of decent work to men and women’ everywhere, as its main raison d’être.

The post-globalisation economies are struggling with chaotic competition at the global level. Enlightened employers are competing with unions in wooing the individual worker to see that situations do not arise whereby s/he is compelled to go to the union for help. Rather, they want that the worker falls in love with the employee development agenda developed by the corporations themselves.

Despite the current peace at Maruti, there is no guarantee that the flare-up would not happen again. There are many reasons to support this thesis and therefore the management needs to prepare itself against such happenings. First, the Maruti management needs to become more aware of the writing on the wall, and not sit on its past laurels — the present victory and the year 2000 victory at the Gurgaon plant that had led to the present compliant union there. Most workers at the Gurgaon plant are older unlike the young Gen Y Manesar workers, who are less tolerant if challenged.

Second, the Indian democracy and Constitution guarantee to its citizens the freedom to form associations and unions. This right cannot be taken away from the Indian legal system, despite the exigencies of faster growth, and younger workers do not fear being sacked for making such attempts again. This happened in the case of Honda workers in July 2005 in the same region; their union has been openly supporting the Maruti workers in the Manesar plant. In fact, it would not be wrong to say that the repeated unionisation attempt of the Maruti workers is inspired by the Honda workers’ success.

Third, there are strategic shifts in managements’ approaches to handling industrial relations as they march towards a no-union or cooperative union model. I believe that an employer has the right to pursue a no-union model provided it successfully makes employees’ worklife exciting, dignified and fulfilling, as is being done by several leading companies today. Even some small Indian companies, like Classic Stripes in Mumbai with just 300 core workers, are successfully following a no-union model not only with amazing success but also with exemplary respect from the workers. This company came sixth in the recent best employer company survey in India, beating most multinational companies working in India.

For lasting cooperation, Maruti needs to train its line managers not just in grievance redressal but in caring for and communicating with each worker from their heart so as to develop among them a sense of ownership. That would help strengthen a workplace culture that restores the workers’ pride and dignity. This task cannot be just episodic and left to the HR department alone. The company needs to build a psychological connect with each employee, and internalise a great deal of passion in its employee care programme so as to move away from any symbolism or neglect. It must have a comprehensive communication and human relations agenda touching most aspects of the workers’ lives and their families so as to bring the alienated workers back into the mainstream and on a path of commonality of objectives as a way of life.

It will take a while to build that culture and will necessitate a long-term focus on training line managers in soft skills development. This role of the line managers should be written in the managers’ key result areas for the purpose of assessing their performance. Let the workers feel from within, and not due to fear, that they believe in the company’s vision for their own benefit as much as for the company’s.

Learn to trust

Abdul Majeed
Auto practice leader, PricewaterhouseCoopers India

Companies today increasingly focus on market suppliers and financials while perhaps not investing much in labour relations. On top of that, the labour laws are not fair and not balanced. They tend to favour only one of the parties — the labour force. Once a manufacturing company employs a permanent staff numbering more than a 100 people, they become bound by the inflexible labour laws. The employers cannot fire at will.

Before liberalisation, the bulk of the labour force was made up of permanent workers and a small fraction was contract workers. But post-liberalisation, most manufacturers have opted for contract workers to work around unfavourable labour laws. Now, almost 50-60 per cent of the labour force comprises contracted and temporary workers for manufacturers, hired through contracting agencies.

These workers get only those benefits that the agencies think is fit to provide.

As a result, two classes within the workforce are being created. The companies end up creating a complex supply chain of labour. It becomes the company’s prerogative to offer similar benefits to both sets of their workers so that they don’t feel alienated. Handling the two groups of employees becomes a veritable challenge.

One of the ways to handle such a scenario is to invest in adding skills to the workforce, contract or permanent. Indian universities don’t impart the required practical skill-sets, as a result most original equipment manufacturers (OEM) in the automotive industry train them for a few months after employing them.

There is no evidence to suggest that Maruti has given anything but best-in-class benefits to both the classes of workers. And their stand on not tolerating indiscipline is justified. But the problem was mainly due to each concerned party losing confidence in the other. With trust, an employer can make its employee understand the reasons behind a code of conduct and the employees would sign it voluntarily. The DNA of the company through its governance code has to be made clear.

Communicating well with the labour-force is a sure-shot way of getting out of such face-offs. Because at the end of the day there are no winners; the company loses, the employee loses and the government loses. Whatever is the issue, the confidence of the workers in the employer should not waver. Interventions from third parties could shake the confidence levels of blue-collar workers, however. This was seen in the Maruti crisis. Blue-collar workers tend to get more emotional in their dealings with their employer. They need to be addressed accordingly. They have to be coaxed to step into the management’s shoes and see their point of view. At the same time, the management too should be able to empathise with them.

Most auto OEMs and component makers operate on reed-thin margins of 2-3 per cent. And, when there is a liquidity crunch, say after interest rate hikes, then sales take a beating. The blue-collar workers have to be briefed and made to understand the industry issues. Regular sessions with them to explain the broader business environment and hence, the limitations because of them, would inspire confidence and keep everyone on the same plane of reference.

At the same time, auto manufacturers ought to be wary of repeating the crisis in Detroit. That is, companies can't give away more than what they get. Hence, if the times are good, they can afford bonuses etc. But if the times are bad then they would need to scrimp. Their workforces would have to be sensitised to such predicaments.

Another proactive step could be auto manufacturers telling their contract workforce: “We will pay you more or increase benefits if you can improve your skills,” and create ways for them to do that, say, through training. However, nothing can replace the mantra of ‘communicate, communicate and communicate’.

The labour laws together make for a time bomb. Crises such as the one at Maruti get more difficult with political intervention by groups who are none of the immediate parties concerned. Manufacturers are still intent on setting shop in India because our market is too large to ignore. However, the unstinting labour laws could eventually see companies setting up factories in nearby countries to feed the Indian demand.

Be proactive, not reactive

Michael Dias
Secretary, The Employers Association, Delhi

Recent newspaper reports indicate that Maruti Suzuki India has finalised a deal with the Gujarat government to set up a manufacturing plant in the Mehsana district. Whatever may be the provocation for the shift in the manufacturing base from the state of Haryana to that of Gujarat, it should be clearly understood that the Indian worker working in any part of the country shares a common psyche and, of course, is governed by a common law, even though labour laws fall in the domain of the Concurrent List of the Constitution of India.

That being so, the moot question is why did the strike take place in the first instance, given that the company had experienced labour strife at their Gurgaon plant just a couple of years ago. An analysis of the current problem takes us to December 2010 when, according to a management release, “A handful of Manesar plant workers started a negative and secret effort to de-stabilise the Maruti Udyog Kamgar Union (MUKU). They joined hands with external elements to form a separate union at the Manesar plant, thereby negatively impacting the environment at Manesar Plant. The young and inexperienced workmen population became easy prey to these negative workmen.”

Going by this version, is it the contention of the management that it was unable to effectively deal with ‘a handful’ of workers at the Manesar plant? Also, what makes the Maruti management believe that the MUKU alone can articulate the needs of the Manesar plant workers? This approach is flawed as it goes against the fundamental principle of freedom of association. The Trade Union Act, 1926, clearly reflects that there is no legal prohibition with regard to the number of trade unions that may be formed or may exist in an establishment.

The first flash strike by workmen began on June 4, 2011. The contention of the management was that it was without any valid labour issue or demand charter. There would obviously be none because the strike was not for higher wages or better working conditions per se. Workers struck work at Manesar demanding that the company recognise a separate independent union besides reinstating the workmen dismissed on alleged disciplinary grounds.

The matter has been concluded through a settlement dated October 19, 2011. A key provision in the settlement is the constitution of a Workers’ Welfare Committee in the company. Clause 5 of the said agreement provides for a Grievance Redressal Committee under Section 9-C of the Industrial Disputes Act, 1947. The Section mandatorily provides for the setting up of a Grievance Settlement Authority in an establishment. Had this legal provision been complied with, the contention of the management that “the young and inexperienced workmen population became easy prey to these negative workmen” would have been adequately dealt with.

Before concluding, it is important to discuss the role of the labour officials who play a pivotal role in ensuring harmonious employer-employee relations in the industrial estate. Gurgaon, for instance, has just six-seven labour inspectors. As things turned out, the assistant labour commissioner of Gurgaon is, in fact, a top official with HUDA and is kept busy with HUDA issues.

The issue of contract labour, unfortunately, has not been adequately addressed in this entire episode. It needs to be understood that contract labour, in the Indian context, is not cheap labour. It is here to stay, provided that contract labour, as the ILO urges, is provided “decent work”. The decent work agenda of the ILO, which the Indian government professes, appears to have faltered in the engagement of contract labour at the ground level. This is an important issue that needs to be addressed as a national agenda since the existing statute on the subject, namely, Contract Labour (Regulation & Abolition) Act, 1970, is woefully inadequate to meet the challenges of production in the 21st century in order to make India the world’s manufacturing hub, even ahead of China.

The Ministry of Labour & Employment needs to diligently address this issue. Regrettably, the Standing Labour Conference held at New Delhi on October 17, 2011, where the agenda for the Indian Labour Conference to be held early next year was finalised, did not have contract labour on its agenda. Does it mean that the ghost of the Maruti agitation will continue to haunt other industrial hubs across the country?