HR Case Study

Source CiteHR: Posted by Bhargavi

Maruti Suzuki Limited (MSL) is remembered by all of us for the world class cars it manufactures. But of late the company is making news for it dubious labour management practices. The company which sells more cars in India than Japan benefits in multiple ways by doing business in India. 80% of the spare parts used in its cars are manufactured by its vendors by employing low priced workers and 70% of the workers in MSL factories are contract workers earning less than one third of the salary of regular workers. But unfortunately the company does not consider it important to provide proper service conditions to workers. India has a progressive economic policy and it tolerates ill treatment of workers for the sake employment generation. Had it been USA and Europe the operations of MSL would have been closed down by the government for the misconceived labour policies. A plethora of factors are contributing to the degeneration of people management practices in MSL starting with greed for more profit, lack of concern for labour problems, unprofessional approach of managerial staff and superstitious beliefs of the employer.

Understanding professionalism: Sometimes patients die because of medical negligence which is proved by other Doctors through autopsy. Occasionally Chartered Accountants collude in financial scams like, Harshad Mehta or Satyam Computers, which are detected by other Chartered Accountants. In either case the Doctors or Chartered Accountants look at the issue dispassionately in search of truth rather than protecting the professional colleagues responsible for the lapses. Human Resource (HR) Managers claim themselves to be professionals and they have professional associations like National HRD Network to promote professionalism among them. Almost every month there are HR conferences of one kind or the other happening all over the country to promote professionalism in HR. Every year new HR propositions like HR business partner, HR competencies, talent management and so on are advocated to project HR as a profession. However the question remains to be answered is how far Managers have matured to be professionals. The doctors or chartered accountants responsible for the lapses wouldhave lost their jobs or had their licenses revoked. But HR Managers in MSLactually get promotions and pay hikes after every incident of labour unrest.

For example prior to the three prolonged strikes by workers in 2011 at MSL Mr.S Y Siddiqi was General Manager (HR, IT and Admn) and after the strikes he was promoted as Chief Operating Officer. The work at the Manesar factory of Maruti Suzuki Limited (MSL) was stopped from 18th July 2012 to 21st August 2012 due to the failure of human resource management function, which has resulted in the death of a general manager and injuries to around eighty managers by the vengeance of frustrated workers. While everyone has condemned the attack and expressed condolences to the demised managers family, no one from the HR profession has tried to find out whether and if at all there was anything wrong with the HR department of MSL. Being a large organization MSL may think that it is capable of earning profit even by closing down the factory for months or by allowing its managers killed at workplace but it is also important to be careful about the workers who have nothing to lose. The only aspiration, most of the workers have for themselves is to go to work for earning their livelihood. When such a fundamental aspiration has been snatched away by the management by falsely implicating them for the misconduct they did not commit, the workers are left with the only option of expressing anger at management. Poisoning the Benevolence The parent company of MSL is Suzuki Corporation of Japan. Japanese are known for benevolent HR practices like life time employment, decent working conditions and reasonable salaries. But HR managers in MSL take the advice from international consultants by paying huge amount fees. The five advices repeatedly given by such consultants are (1) contract worker can be employed in any number and for any jobs, (2) It is sufficient and lawful if contract workers are paid minimum wages fixed by the government, even though it is very less than the wages earned by regular workers, (3) unionization of workers should be discouraged at any cost (4) unionization of workers can be avoided by having large number of contract workers and (5) payment of fair wages and providing humane working conditions are not important if labour department officers of the government are properly managed. While these consultants fail to understand the socio cultural dimensions of labour unrest, the benevolent organizations like Suzuki Corporation are branded in India as exploitative employers. Motives behind the violence Motives of all kinds were attributed by the management, government and

the mass media beginning with infiltration of militants, involvement of naxalities and the role of business rivals. Thank god, the only motive not attributed was involvement of neighboring foreign country. The workers have alleged that on the evening of 18th July 2012, MSL brought around 100 goons from outside to attack the workers, which has not been officially denied by the MSL management. The workers have further stated that when they confronted the goons in self defense it led to the violence. While the motive of workers to indulge in sporadic violence is yet to be fully investigated, the question at this point in time is whether it was ethical on the part of any organization to use goons to deal with employees. The workers allegation of outside goons entering the factory is equally difficult to believe since no attack or injury of serious nature on the workers have been reported. The 18th July 2012 violence at MSL is a reasonably well planned attack by the workers and they are surely aware of the adverse consequences like criminal prosecution and termination of service. But it is difficult to understand why MSL management closed all the peaceful options for resolving the conflict. In the morning there was a fight between a worker belonging to scheduled caste and a supervisor in which it was alleged that the supervisor has insulted the worker by using derogatory language against his caste and the worker in turn has slapped the supervisor. When both of them are prima facie guilty of misconduct the management has punished only the worker by suspension and spared the supervisor. The Maruti Suzuki Workers Union leaders have peacefully negotiated throughout the day for the revocation of suspension but management has taken a rigid stand not to negotiate in the matter. When the situation was going out of control the management has orally informed the union leaders that suspension order will be kept in abeyance. Workers wanted this oral information in writing and management refused to give it in writing which has finally led to the violence. If management was sincere in its words, it was prudent to give it in writing to avoid the violence. Trust and negotiation There is complete lack of trust, authenticity and transparency between the management and workers in MSL because the management has deviated from its promises not once but thrice during the year 2011, which resulted in three prolonged strikes. Trust can be built by openness in communication, fairness in decision making, and devotion for honoring commitments; but the managers in MSL seems to have forgotten all of them.

When there is a conflict it is best resolved by negotiating a solution. The basic rule of negotiation is the flexible approach of giving something to get something in return so as to create a win-win situation for all the parties. But in MSL, every time a negotiation takes place the management gets something from workers like good conduct bond and so on but it does not give anything to the workers as per the promise. When workers are repeatedly duped in the name of peaceful negotiation the faith is totally lost. Lack of expertise: It is alright to outsource labour law compliance work but industrial relation or dealing with workers is a core activity of HR managers which ought to have been given due importance. But HR managers at MSL are preoccupied with the holy topics of Indian HR such as, 360 degree feedback, assessment centre, psychometric testing and HRD audit. The way MSL managers are dealing with workers clearly shows their lack of expertise in the labour relation frame work of Industrial Disputes Act 1947, Industrial Employment Standing Orders Act 1946, and Trade Union Act 1926. Unfortunately MSL takes advice on labour matters from international HR consultants by spending crores of rupees, when the consultants themselves do not understand the legal framework. This lack of expertise has resulted in a series of mistakes by HR managers at MSL, some of which are discussed below. Dubious HR role: The job description of HR managers at MSL does not require them to seek either letters from the workers not to join any union or to seek good conduct bond for participating in lawful strikes. But this is what they did during the year 2011. When Shivakumar and Sonu Gujjar started mobilizing workers to form a lawful union of workers, the HR managers took written undertakings from many workers not to join the union. Workers have given such undertakings for fear of victimization by management but the feeling they carried about HR department was bitter. The job description of HR Managers at MSL does not require them to manage workers by continuously violating the labour law. For example Contract labour (Regulation and Abolition) Act 1970 states that if the nature of work performed by regular workers and contract workers is one and the same then contract workers shall be paid salary and allowances on par with regular workers. But the salary of contract workers in MSL is one third of the salary of regular workers, which has become a rallying point for the united struggle of regular workers and contract workers. The job description of HR managers at MSL does not require them to have HR practices contrary to the law of nature. Law of nature is the unwritten code

of god and not the one made by parliament. Accordingly to this law the regular work shall be carried out by regular workers. It would have been fair and reasonable to have around 20 to 25 percent contract workers to deal with economic recession and business fluctuation, but MSL has a whopping 70% contract workers to perform regular work and hence the labour turmoil at MSL can termed as anger expressed by god of nature. The HR department of MSL is extremely good at managing the national level trade union leaders affiliated to various political parties. As a result no trade union leader of eminence has seriously questioned the labour policy of MSL. In fact some of these leaders even advised the MSL workers during 2011 strikes to stop the agitation. While MSL workers realized that such advice is against the interest of workers, they started mobilizing themselves by identifying leadership within their rank and file like Shivakumar and Sonu Gujjar. The job description of HR managers at MSL does not require them to destabilize the lawfully formed union of workers by carrot and stick approach. At the end of third successful strike in the year 2011, the management did not revoke the suspension of twenty one office bearers and executive committee members of Maruti Suzuki Employees' Union including Shivakumar and Sonu Gujjar. All of them were charge sheeted for major misconduct on the one hand and at the same time enticing financial package ranging from Rs.16,00,000 to Rs.40,00,000 per head was offered in return for peaceful resignation from service. Caught between the devils and deep see these workers finally resigned from service in November 2011, by accepting the financial package. While such a huge financial package to destabilize workers union was unheard in the history of Indian labour movement, the workers at MSL learned three important lessons from this episode namely (1) the management did not want to conduct enquiry to prove the allegations mentioned in the charge sheet since the allegations are false and baseless; (2) had the charges been true the workers should have motivated the HR managers to take a lenient view but here management is motivating the workers to accept financial settlement and (3) the best way to earn enormous amount of money being worker in MSL is by organizing strong unions to go on strike. The job description of HR managers at MSL does not require them to sponsor the formation of union by workers. But a senior level HR manager at MSL on 19th July 2012 has given a media statement from his hospital bed which states that What sin did I commit; in fact I took these workers to the registrar of trade union and I gave the money for registration of the union but

they have in return beaten me badly for all the help I rendered. After sending home all the union leaders of Maruti Suzuki Employees' Union by paying attractive monetary compensation, MSL should have improved its labour relation practices to remainas a non-unionized organization. But HR managers at Manesar plant have supported the formation of a new union called Maruti Suzuki Workers Union so as to keep its leaders under management control. The Maruti Suzuki Workers Union (MSWU) was formed at the behest of management very recently in March 2012 and in less than four months time such a friendly union has turned violent on 18th July 2012. It clearly demonstrates the kind of dubious labour relation practices prevailing in MSL. After the 18th July 2012 violence; all the leaders of MSWU have been arrested by police and sent to jail and it is yet to be seen whether MSL will attempt to sponsor the formation of another union of workers or discourage the unionization activities or take a neutral stand. Defense mechanism: While people all over the country are shocked at the way things are going wrong in MSL, its HR managers are tactfully behaving to deny the reality. HR head of MSL Mr. S.Y.Sidiquee has invited all his HR friends from other industries and made a presentation on 30th July 2012 to highlight the mistakes of MSL workers and to justify all the actions of managers which led to the violence at Manesar factory on 18th July 2012. The senior most HR managers of MSL had started writing articles in business magazines and delivering lectures in managerial forums even before the injured managers were discharged from the hospital. These managers are yet to accept the universally accepted fact that progressive labour relation is a science which can be learnt and practiced. The company has not accepted responsibility for the safety of its employees at work place and hence has not taken action against any managers for the collapse of security measures. Rather it is holding the frustrated workers responsible for the insecure climate prevailing at workplace. The top management of MSL has gone one more step ahead. Instead of resolving the basic problems of workers to promote harmonious labour relations, it has started believing in superstition. Hence religious rituals were performed at Manesar plant by inviting South Indian Hindu priests from Karnataka to correct the so called Vaastu problems. The top management now believes that a graveyard and three temples existed at the sites which were destroyed to build Manesar plant and hence labour unrest can be eliminated by conducting religious rituals.

Misconceived diversity: It is true that hiring people from all sections of the society brings diversity for business advantage but MSL practices diversity in wrong ways. Even though it hires people from all sections of the society the demarcation lines are clearly drawn. While people belonging to lower social strata of the society like scheduled castes and tribes are hired at worker level along with rural upper castes, the managerial cadre are dominated by urban elite from New Delhi. This kind of misplaced diversity policy has failed to promote common understanding between managers and workers rather it has given birth to social disharmony among its own managers and workers. It is important to note that organizational fabric cannot be strengthened without knowing the socio-cultural undercurrents among individuals and groups. Taking revenge: It is not clear whether it is the desire of Suzuki bosses in Japan, or the Chairman of MSL in New Delhi or HR managers of the company to perpetuate the practice of vengeance against workers. The nature and scale of violence clearly shows that about 180 workers were responsible for planning and executing the violence at Manesar plant on 18th July 2012, which is corroborated by police investigation and labour department findings, but the management is summarily refusing to employ more than 500 workers without any charges being proved against them in the enquiry. It is easier to send home these workers with the assistance of police department, but such an unethical move would cause ugly wounds in the minds of remaining employees who are allowed work and every such unjust act of management may be retaliated unjustly by the workers in the days to come. Management and government may brand dismissed workers as bad but they have already earned a permanent place as martyrs in the minds of remaining employees. Winners and losers MSL has started operations in Mansear factory with effect from 21st August 2012, by terminating the services of nearly 500 workers. But it is difficult to judge the winners and losers in this battle. The basic reasons for the escalation of this conflict were just three namely (1) low wages (2) poor working conditions and (3) employing large number of contract workers. While MSL has retained the first two problems intact, it has come out with a solution which seems workable. Prior to the July 2012 violence the company had two contract workers for one regular worker or say 70: 30 ratio. Now MSL has resolved to reverse this ratio by having one contract worker for every two regular workers which appears to be a partial victory for the workers but the joy of regular employment may also be squeezed

by management offering harsh working conditions and lower wages. Low wages and poor working conditions continue to be the thorns in the way of peaceful industrial relation in the days to come. It is immaterial whether the workers will unionize again or not, but the sooner MSL resolves these two fundamental labour problems the better its path for progress.