People Management Fiasco @ HMSI

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    Presented by:Prem Kumar(12PT-026)

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    Honda is headquartered in Minato, Tokyo, Japan.

    It is the world's largest manufacturer of motorcycles.

    It has more than 120 manufacturing units in across 30 countries for two-

    wheelers production.Its the world's largest manufacturer of internal combustion enginesmeasured by volume, producing more than 14 million internal combustionengines each year.

    Honda spends about 5% of its revenues into R&D

    Also involved in F1 racing and other segments of the automobile industry.

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    Established in 20 th October 1999 in Manesar (Haryana).

    It is a wholly owned subsidiary of HMCL Japan.

    The company aims to manufacture world class scooters andmotorcycles from this plant.

    The plant had a initial capacity of 0.1 million which was to be raised to0.6 million by 2005.

    The company in India wants to become the vehicle of change.

    Apart from a focus on good quality the company also wanted to keep areasonable price.

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    2000

    1000

    Workforce in HMSI

    Workers

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    1300

    700

    700

    300

    Workforce Breakup

    ConfirmedWorkers

    ContractWorkers

    Trainees

    Apprentice

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    The trainees generally had a certificate from some or the other (ITI).

    All trainees were generally taken by the company.

    15% of apprentice use to get the job after the apprenticeship period wasover.

    The company was believed to be a good paymaster.

    In October 2005 salaries of workers ranged from Rs 8150 forunskilled to Rs 11200 for skilled workers including Rs 2000 for houseallowance.

    Also apart from these the workers were entitled for bonuses in theDiwali season.

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    Subsidized canteen facilities

    Transport facilities to and from workers residences at subsidized rates

    Sports club for employees use at Sukhrali village in Gurgaon with indoorgames facilities

    Football, volleyball,TT, carom ,chess matches organized againstemployees of other companies

    2 sets of uniforms, 1 company cap, 1 pair of shoes provided to employeesevery year; same uniform for all including managers

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    Most HMSI workers not covered by Employees State Insurance (ESI) scheme

    under the ESI Act, 1948 as salary had crossed maximum salary limit forcoverage

    Such employees covered by Paramount Health care facility ; reimbursementof hospitalization expenses

    Worker, his/her spouse & up to 2 children covered for RS. 75,000 each;workers parents covered for Rs. 1,50,000 each.

    Invited workers families for celebrating foundation day; later stopped withincrease in workforce size.

    Support through cash payments on happy and sad occasions:

    Rs. 2,100 at birth of a child (max. 2 children) Rs. 3,000 on workers marriage

    Rs. 5,000 to family on employees death; Rs. 3,000 on death ofspouse/children/parent.

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    Aligned with philosophy of parent company: HMCL

    though considered itself unique with some distinct employment &production practices.

    HMSIs philosophy had 2 fundamental beliefs:

    Respect for individual differences- initiative, equality & trust The Three joys joy of buying, joy of selling , joy of manufacturing

    Employees were called associates association promoted among allemployees through similar uniforms and same canteen facilities for all.

    Induction programme involved acclimatizing employees to the Honda

    philosophy HR department expected toThe Honda Way: human behaviour or way of thinking based on Hondaphilosophy .

    E.g.: Perseverance to ensure safety & quality in all aspects

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    Organize training programs for:

    Internalization of culture building and Honda philosophy Training for building team leaders

    TQM training; ISO 9000 training; 5S training

    Training dept. Supposed to be headed by an assistant manager;

    position lying vacant for a long time.

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    Works Committee (WC) constituted under Industrial Disputes Act (IDA),1947 on 1 st April, 2004 consisting of 15 workers and 5 managerialrepresentatives

    Other committees: Canteen committee, transport committee, healthcommittee, and sports committee.

    Management nominated workers for the communities based on

    perceived interest.

    6-paged, quarterly newsletter: Dream Team

    Focussed on covering companys achievements in terms of awards,contracts, recognitions, quality certifications, list of new dealers and

    kaizen activities Very few employee related matters covered like sports competition

    results and news about marriages and childbirth related to employees

    No scope for workers expression through any letter to the editor.

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    Nov2004

    Dec2004

    Jan2005

    Feb2005

    Mar2005

    Apr2005

    May2005

    June2005

    July2005

    Aug2005

    Diwali GiftIssue

    Apr 1 : Increment inCompensatio

    n Package;No UnionFormation

    Apr - May :Efforts for

    formingUnion;

    Gherao ofMgmt;

    Go-Slow

    May 26 : Conciliation

    DLCIntervention

    Dec 4 Mar 5:

    Negotiationsbetween

    Workmen &Management

    June

    July : 6 ConciliationMeetings

    July 19 : DLC sends

    theConciliation

    Report

    July 25 : Another

    Jallianwalasort of brutetreatment of

    the HondaWorkmen

    July 27 : Enquiry

    ordered byHaryana CM

    July 30 : Truce

    betweenMgmt &

    Workmen

    Aug 1 : Back to Work

    1 st sight for need of Unionization : Stringent Company rules e.g.:- movement sheet,

    leave policy Fear of Managements Authority Idiosyncratic attitude of VP-Manufacturing

    (Japanese) Charter consisting of more than 50 demands Help from local union leaders

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    Workersmeet Sonia

    Gandhi againstalleged

    highhandednessof Honda

    management

    and the police

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    Workers resuming duty from Aug 1, 2005

    No new demands during the next 1 year

    Trade Union would continue to operate

    Reinstatement of 50 suspended workers & 4 Union leaders

    Right to conduct an enquiry into the case of 4 terminatedemployees

    Termination of any convicted employee (in court)

    No Work No Pay Principle to be implemented from June 27, 2005

    Proper test to decide on the absorption of the trainees

    To be considered as Final Conciliation

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    Management:

    Change in management attitude felt by union leaders; concessions allowed onvarious fronts

    Freedom of not working on shop floor for union leaders to take care of pending IRissues

    A small room allotted to union leaders with a promise of a union office in future

    Invitation to all 7 union office-bearers to discuss workers-related problems orissues

    Overtime working issues: lure of extra money; medical problems, workers notfresh

    overtime working was scraped in most cases

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    Management:

    Practice of inviting workers family on founders' day revived

    family members invited to factory on company expenses in batches

    Diwali gift: Rs. 2000 & credit in bank account of Rs. 4000 as incentivebonus for all including managerial staff

    09/09/2010: 'A shift' in assembly achieved its target of 1000 scooters forthe first time after union formation.

    VP- Manufacturing, GM- Productions came to shop floor & commendedachievement of workers; sweet distributed to all workers next day.

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    Union:

    Police case against 63 workers including all 7 union leaders - contactdifferent people to make sound defence

    Got all the trainees absorbed in regular work Ensured no domestic enquiry proceedings or transfer for the 4

    dismissed workers

    Union leaders monitored worker-supervisor relations to ensureworkers were treated better than before:

    number of memos to workers negligible far more positive managers' response towards leave applications

    4 days' leave for Diwali => 4 days factory closed ; 3 day'scompensatory work on Sundays/holidays

    hike in coverage of workers & their family members under medical

    insurance scheme : family floater coverage scheme of Rs.175,000; one or more or all

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    Union:

    Joined the nation-wide industrial strike against Central Govt'seconomic policies on 29/09; compensated loss by working onSunday

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    Mgmt.s approach to practicing a non-union model made them blind toreality DID NOT LISTEN TO WORKERS

    Workers viewed Mgmt activity as coercive and repressive

    Incompetent people mgt . by Indian Middle managers Indifference

    Indian mgmt. blocking direct access to top company executive

    The 3 joys of HONDA were used as a means of control

    Issues in cross-cultural management

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    Failure of mgt. to realize importance of Diwali in Indian IR

    Tokenism of conciliation in resolving collective issues

    Complacency on the part of Indian mgrs. about labour power

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    The most effective functioning of the organization was achievedthrough the traditional principles of direction and control

    The traditional managerial beliefs and practices concerning HRMresulted in structural contradictions between the hierarchicalnature of managerial direction and control and the need forintegration, consensus, and commitment

    Management distinguished between market relations (wages,service conditions, etc.) and managerial relations (direction,

    surveillance, and discipline) and advocate a say for employeesand trade unions in the former but not the latter (Fox 1966)

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    Honda lacked participation and grievance redressal which are themost critical determinants of organizational climate in India (B.R.Sharma, 1986)

    Honda should have integrated HRM into the organizationsmainstream with

    Proper representation on all major decision-making forums/bodies;

    Clear definition of corporate philosophy and objectives;

    Strategic linkage between the goals of HRM and the organization; and

    Appropriate accountability for HRM-related matters in the role of allmanagers While Honda moved to restore balance in the relative power position

    between the Employees & the Management, upsetting the existingequilibrium per se had far-reaching consequences that were not easyto predict

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    Comparative

    HRM

    Unitary MarxistPluralistic

    Labourmarket

    SocialactionSystems Control over

    labour process

    Input Conversion Output

    Conflictdifferences

    Institutions& processes

    Regulation(rules)

    Approaches to IR

    Wider approaches

    EvolutionRevolution

    CooperationConflict

    AuthoritarianPaternalism

    HONDA HONDAONDA

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    The three parties to Dispute

    Government

    Management Union

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    Evolve policies and systems

    To control workers and the unions

    To elicit commitment from the workers and their unions in orderto facilitate the strategic, functional and operational interests ofthe Firm

    Ideal Role

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    Loopholes in implementing the policies was observed

    They could not check the growth of unionism

    Lack of farsightedness

    Actual Role

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    Protect and promote workers interests

    Protect and promote interests of workers organizations &affiliates through cooperation strategies where feasible

    Ideal Role

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    Evolve policies and instruments to regulate the employer-employee relationship

    Manage the contradiction which arise in this relationship

    Strive for goal congruence between the employer, employees andSociety

    Ideal Role

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    It was late in realizing the gravity of the problem

    Its role as a negotiator was in doubt

    Delay in getting both parties to negotiate

    Actual Role

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    Power - protect/support through strength in association - a countervailingforce, pressure group. Note: bargaining leverage & member willingness to acttogether.Economic regulation - maximize member returns within wage-workframework. Note: political nature of TU wage policy - comparability &differentials. Inflation & unemployment (cost-push & demand pull). Win biggerslice of national income.Job regulation - establish a joint-rule making system to protect membersfrom arbitrary management action . Enable participation in decisions affectingtheir employment. Expand job opportunities?

    Social change - express social cohesion, aspirations, political ideology &develop a society which reflects this? Institutionalize class & conflict ?Dilemma of participating in government.

    Member services - provide benefits/services to members

    Self-fulfillment - assist individuals to develop outside their job domain &participate in wider decision-making processes

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    India isgoverned

    by a Constitutionthat foresaw awelfare state

    and espousesthe values of

    tradeunionism

    andsocial justice

    HONDA Manufacturing Plant,Manesar

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    Welfare state : Efficient

    Government as facilitator

    Export-oriented production (SEZs)

    Changed labour policies of states

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    Multilateral IR: consumer/public/gender issues

    New issues :

    Customer Creation/ sustenance

    Protecting environment

    Gender issues

    Safety promotion

    Child labour abolition

    Medias role in new issues

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    Flat organization --Flexible pay

    Cost saving: a big concern

    Competencies development

    Knowledge pay in high-tech. industries

    Emphasis on Performance related Pay

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    Changed Govt. thinking

    --July 1991 Economic Policy

    --2nd NCL: July 2002

    Rationalize Labour Law

    Social justice to market & trickle down

    -- Vigorous attack on welfare state ideology

    Changed Thinking of State

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    Identify & enforce behavior

    Strive for Competitive advantage

    Focus on new interventions

    HRM & IR merged to produce positive energy

    HR strategy is the single most important Consultancy Area

    New Trends in India : IR Practices rootedin HR Strategy

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    Keep cross - cultural issues in view

    Establish a sense of urgency

    Recruit and Retain Talent - right person In right job at the righttime

    Be clear about performance and results let them drive success

    Create short term wins (reward and recognition)

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    The HRM-IR-HRD interface integration should be such that it should moveaway from the principle of direction and control to a system based on thephilosophy of consent and commitment

    Being sensitive to human needs & human problems at work & beyond work

    Evolving a value system based on trust, transparency, fairness, & equity

    Institutionalizing openness in subordinate-superior relationships

    Dealing with employee grievances promptly & explaining the logic & rationaleof decisions to convince the aggrieved

    Providing exposure & understanding to line managers on HRM aspects tohandle the day-to-day HRM activities & issues/problems

    Sharing information & consulting for shared understanding & co-operation

    Reviewing HR/IR policies & practices from time to time

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    THANK YOU