A

WRITTEN MATERIAL OF

“CASE BASED PRESENTATION” ON “HONDA UNREST” OF THE SUBJECT

MANAGEMENT PRACTICES AND ORGASTIONAL BEHAVIOR

Submitted to submitted by : Miss. ALKA SHARMA sahil kashyap Roll no: B-25 Regd no : 11002637

LABOUR UNREST

Labor unrest is a social phenomenon of enormous complexity and it is very difficult to give any complete explanation of this phenomenon. It is a matter of controversy whether the predominant factors underlying labor unrest are economic or non-economic. It has been concluded that so long as income remained the all important means for satisfying human wants and needs, wage would continue to be major consideration in labor unrest.

Considering the nearing period of labor unrest with the recent cases of Honda and Maruti, it is the time to do root cause analysis and find out what are the possible reasons which lead to labor unrest so as to address these issues and untide the tide of labor unrest.

INTRODUCTION

On July 25, 2005, the management of the Honda Motorcycle & Scooter India (Private) Limited, (HMSI), a wholly-owned subsidiary of Honda Motor Company Limited6 (HMCL), encountered violent protests from workers that disrupted production at their plant in Gurgaon7.

HMSI workers were severely beaten up by the police, and newspapers and TV channels gave wide coverage to the violence of the action. The protest followed six months of simmering labor unrest at the HMSI factory in which the workers also resorted to job slowdown8 (since December 2004 when the workers' demand for an increase in wages was rejected by the HMSI management).

With their demands being rejected by the management, the workers tried to form a trade union and this resulted in a confrontation with the management. Fifty workers of the production team were suspended and four others dismissed in May 2005. Apparently there was a show of strength between the management and the workers.

While the management alleged that the workers were resorting to 'go-slow'9 tactics and were threatening not to return to work until their

colleagues had been reinstated, the workers alleged that the management was using pressure tactics such as victimization of active union members and a 'lock-out'10 to break the back of the union. On July 25, 2005, the workers of the plant were demanding reinstatement of the suspended employees when some workers allegedly attacked policemen on the plant premises.This led to police intervention and a violent tussle ensued between the police and the workers in which workers protesting peacefully were also beaten up.

The police were reported to have overreacted and it was alleged that they had been overzealous in protecting the interests of the HMSI management, even without any direct request from the company's management (Refer to Exhibit I for some images of violence during the HMSI protest).For companies, the incident brought to the fore the need to maintain sound industrial relations to ensure productive and profitable operations.

ABSTACT

The case study focuses on the HR problems faced by Honda Motor Cycle & Scooters India HMSI. The case discusses the various reasons which led to the dispute between the management and employees of HMSI. It elaborates the incidents, which led to the strike at the company that resulted in HMSI workers being severely beaten up by the police. Labor strife and the management's inability to deal with it effectively had resulted in huge losses for the company due to the fall in the production level at the plant. In addition to this, the company also received a lot of negative publicity as newspapers and TV channels gave wide coverage to the violence of the action.The case highlights the growing number of instances of clashes between the employees and the management of companies in India, which is often guided by external parties such as trade unions and political parties.

Time line of events

January 17, 2005 - A Honda official kicks a worker.

May 26, 2005 - AITUC leader gurdas dasgupta complains to harayana

chief Minister.

May 30, 2005 - workers get unions registered, company dismisses four unions Office bearers and suspends over two dozens workers. June, 27, 2005 - Dass gupta meets the prime minister of India after writing to him, same day all workers stopped from entering company premises.

July, 6, 2005 - unofficial lockout, company willing to allow workers in if they Sign undertaking.

July 21, 2005 - unions asked why workers not allowed in despite giving Undertaking.

July 25, 2005 - 11.00 AM- about 3000 marching workers clash with people, Deputy superintend of police were beaten-up.

1.30 P.M - workers told by police to go to mini- secretariat at gurgaon to Submit memorandum.

2.30 P.M - workers assemble there, over 500 policemen surround them and Beaten up them.

ISSUES

» Understand the factors that lead to labor unrest at a factory and the impact of such incidents on the employees and the company.

» Study HR policies adopted by organizations to prevent labor unrest at the workplace.

» Examine top management's role in maintaining a peaceful working environment.

ANALYSIS

(1) When the Honda facility’s workers wanted a raise and found the management unwilling to make concessions, they resorted to a “go slow” technique. Management responded by hiring temporary workers to boost output, a development that provoked the violence. In the beginning of July, Honda management suspended some (50) workers and dismissed 4 others, replacing them with contract laborers and raising the daily output to 1000 motorbikes. Trouble has been simmering in factory, and finally things came to head when workers demonstrated and were brutally beaten by police. It is clear that management took the easy way out instead of addressing a legitimate worker demand for better pay.

(2) HR policies adopted by organization to prevent labor unrest at the work place and top management's role in maintaining a peaceful working environment...

Bringing to an end a month-long labor problem, the first batch of workers resumed work on AUGUST 1, 2005 morning at 6:00 AM, after signing an undertaking in which said they “shall abide by good conduct, discipline,, devotion to duty, meet company targets, completely observe the certified standing orders applicable to the establishment and refrain from sabotage activities” etc. the second shift at the Honda factory started at 2:00 PM, while the third started at 11:00 PM. Some injured workers also reached the factory to carry out certain formalities for payment for their treatment. The company as per the agreement reached b/w them promised the injured workers paid leave. They signed undertaking and went to hospital after taking a half day leave. Security arrangements in place to prevent any untoward incident and around 30-40 policemen were posted outside the factory. the stalemate ended with the management and agitating workers reaching an agreement on late July, 29, 2005 night, under which all employees, including the four dismissed and 50 suspended, would be taken back. The workers would not get salary during the period they were on strike. HONDA would also increase the wage of employees and would not take ant desplinery action against workers who agitated against the company. All the settlement was brokered by the HARAYANA GOVT.

ROOT CAUSE ANALYSIS

From the study of some of the strikes and lockouts over last 10 years, it is concluded that all the possible reasons can be classified into five major heads. The potential problems can then be researched to find the root cause and correct it. The five heads are as follows: MonetaryPoliticalLegalJob SpecificOthers

The Blame Game

The management and the workers traded allegations and counter allegations on what the root cause of the dispute was. They blamed each other for the situation that ultimately took an ugly turn on July 25, 2005. The management held the workers responsible for indiscipline and for slowing down production, while the workers insisted that there had been no indiscipline on their part and that the management was bringing up this issue only to prevent the formation of a trade union at HMSI...

Violation of LawsSome analysts charged that the incident was fallout of the long-term oppression and malpractices at the Gurgaon factory by the HMSI management.

They alleged that HMSI's management had violated certain laws relating to the welfare of workers It was reported that a worker had allegedly been kicked by a Japanese manager on the shop floor in December 2004. The services of four other workers who had come to his rescue were allegedly terminated...

CONCLUSION

It must be recognized that labor market reforms are not going to be easy in a situation where employment opportunities have been shrinking. Also there is a larger question of providing social security to the workers employed in the organized sector. The vast unorganized labor force, which constitutes over 90 per cent of the total, is denied fair wages and even modest levels of social security. Hence, labor market flexibility must be accompanied by some kind of insurance and social security to the vast unorganized labor force in

the country. Government should make all possible efforts to dispel the fears of trade unions by enlarging the scope and coverage of the social security net.

Hence no solution can be reached if the stakeholders continue to take extreme positions. There has to me a meeting ground to address everyone's interests, to the extent possible. The immediate challenge in bringing about the desired labor reforms is to resolve the anti-labor stand in the employer's mindset, and labor prejudices. They have to realize that employer and employee are not separate entities but two faces of the same coin. They equally need each other and the relationship between the two can only be harmonious if they work towards defending each other's interest rather than contesting the same. Hence employers should pay more attention to human resource development and capacity building of their employees. Industrial bodies have to take up workers education. Workers on the other hand realize the importance of 'no work no wages come'.

There should be a general consensus on the labor reform ideology among the major political parties. Political leaders should look beyond their narrow interests and develop consensus for the larger benefits of the Indian economy. It demands to bring in a balanced view whereby concerns of all the stakeholders, especially the trade unions and the employers are addressed. This may further be strengthened through a wider debate involving academicians, legal experts, policy makers and public at large. All the stakeholders should arrive at some consensus so that there is something for everyone.

Once such consensus is developed; it may be coupled with good and clean corporate governance.

POSSIBLE ALTERNATIVE SUGGESTIONS

Though there are significant conflicts in the interests of the trade unions and employers, the contact workers are quite freely changed by employers owing to high vulnerability of those workers. The high job insecurity and unemployment in the country virtually forces the contract workers to insure compliance to employers. It enhances the control of the employers at the workplace. Hence, the trade unions are keen to develop strict norms of employing least number of contract labor and higher number of regular employees. In such scenario, it is a challenge to both the employers and trade unions to reach to a common ground to get solution to the present situation.

http://www.themanager.org/strategy/Balanced_Scorecard.htm

BIBLIOGRAPHY

http://gurgaon.gov.in/honda.htm

http://news.techwhack.com/1750-hero-honda-expels-3500-workers

http://www.telegraphindia.com/1050727/asp/frontpage/story_5039844.asp

http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organization%20Behavior/HROB104.htm

http://www.indianmba.com/Occasional_Papers/OP77/op77.html

http://www.indianmba.com/Occasional_Papers/OP77/op77.html