Labour Issues at MSIL Case Study Analysis

GROUP 5

ARUN MATHEWS JACOB

TESLIN RANJAN

JENY SABU

Company Profile

Maruti Suzuki India Limited, is an automobile manufacturer in India.

It is a subsidiary of Japanese automobile and motorcycle manufacturer

Suzuki

Automotive industry are involved in the design, development,

manufacture, marketing, and selling of motor vehicles.

Does not include industries dedicated to the maintenance of

automobiles following delivery to the end-user, such as automobile

repair shops and motor fuel filling stations.

Generates cash majorly form the sales of automobiles.

Profiles

Chairman : Leads the board, sets its agenda and ensures it is an effective working .

He must promote a culture of openness and debate and is responsible for effective communication with shareholders.

ensure that all board members receive accurate, timely and clear information

General Manager : Policies and HR , Project Management ,Financial Management , Careers and Salary.

HR Department : Tactical and Strategic HR Planning.

Assembly Line Workers :

Read schematics, Quality Control ,Use Machines , Environmental hazards.

UNIONS

Provides representational assistance/guidance members. Typically serves as the Union representative during

arbitration hearings. Chief Negotiator for the Union. Communicates to all bargaining unit employees;

Gathers input from Union Reps, Union members, and bargaining unit employees; and provides representational service directly to bargaining unit employees on occasion.

ISSUES

Contd.

What did MSIL do to resolve the Issues??

MSIL has undertaken a programme to regularise all contract workers engaged in core production activities across its five factories in Gurgaon and Manesar.

The trouble in all the strikes has emanated from the contract workers who get paid lesser than regular employees, don’t get social security benefits and depend on the whims and fancies of the manpower contractors for their livelihood was settled.

The entire recruitment process is now routed through the company’s own human resource department.

In the new dispensation, manpower contractors will not be in the picture at all.

Contract are selected so as some of these workers can be offloaded during the lean months and can be re-hired when the demand picks up.

“Contract workers are used largely because companies require flexibility,” Maruti’s Chief Operating Officer (administration) S Y Siddiqui had earlier told Business Standard. “Business has become so competitive that industry has stumbled upon this per force.

CONTD.

MSIL Actions

Increased wages by a record 50 per cent for permanent workers at its Manesar and Gurgaon facilities.

Gross salary has been increased by Rs 14,800 per month.

The gross salary of an entry-level worker was increased from Rs 23,500 to Rs 37,800 per month over the next three years.

For an experienced worker at Gurgaon and Manesar, the increased salary will stand at Rs 51,800 and Rs 39,800, respectively.

The wage pact had benefited around 2,800 workers at Gurgaon and around 700 workers at Manesar.

Additional Rs 1,000 in an ad hoc payment to workers, travel allowance of Rs 1200 every month, interest-free personal loans of up to Rs 20,000 and doubled insurance coverage to Rs 5,500.

The revisions is considered to be very healthy, considering that the company had given an increment of Rs 9,300 per month when wages were revised last in 2009.

Further Reformations

Amitava Ghosh, senior vice-president and head (regulatory), TeamLease Services, India’s largest human resource services company, says:

“If Maruti Suzuki plans to sustain its operations in Manesar under such a volatile and perturbed environment, it should immediately form a committee where heads of local Gram Panchayats must be given a vital role.

Also more female employess could be engaged so that it helps in trust building in the locality which may work as a great preventer of violence in near future.

Despite the handsome increment offered by Maruti Suzuki in the new wage agreement, the company’s wage bill is expected to remain the lowest among listed automobile companies

SOLUTIONS

Better Industrial Relations.

Monthly Meetings should be conducted between Management and the employees.

Establishment of separate union for Manesar Plant.

Basic benefits and work related enhancements as demanded by the workforce.

Managers

They have to Properly Co Ordinate with each other.

Proper rules for indiscrimination in salary.

They should try to understand the labour’s problem.

What could had been done in order to avoid the event

People Management : Very important in industries. Employee Labour Relationship - decorum. Collective Bargaining : It is this idealistic point that we need to

address to attain organizational goals.

 Flexibility is the key, not the cheapness. Treat workers in the factory like humans. The workers should refrain from taking law into their own hands. Performance Management : Reach agreement with each

employee on what you expect to when to contribute and document this agreement.

360 degree appraisal system could be employed.

Contd.

One of the successful negotiation strategies they could have implemented was empathy.

Approach the situation as a problem to be solved rather than making it a battlefield by taking law in the hands.

A consensus can be brought between trade unions, employers, government and political parties in Contract Labour Act.

TAKE AWAYS

Most enterprises of today face conflicts, tensions, low efficiency and productivity.

Successful management means managing men, money and material in the best possible way according to circumstances and environment.

Concepts of scientific management principles, leading to disastrous results in MSIL.

Such a sustainable competitive advantage cannot be achieved through operational effectiveness alone; a winning strategy considering the social and economic aspects need to be determined.

Key managerial decisions were taken but somewhere along the way the leadership faltered and were taken for a ride in their quest for higher productivity.

TAKE AWAYS

Work culture may be one of the issues but it is only like tip of the iceberg and the real causes lie deep buried underneath.

In fact it is the responsibility of the top management to ensure that the services of the experts from the field of cross culture management, which are available.

Good strategic and tactical plans plays huge importance.

Better IR and People Management.

Thank You!!