Managerial Ethics: Group Project 2(GMP Sec A)

Group Members: Question 5 Question 5

Pashmina

Ahirrao:

G13031:

Neelam Mohapatra: G13029: Amit Ganguly: G13004: Question 3 Sampad Biswas: G13041: Question 4 Bipradas Bandyopadhyay:G13014: Question 2

Rajesh Ranjan: G13038: Question 1

Q1) You are hired as an external consultant to resolve this issue before it escalates into a major strike that could force close down the Chakan plant and block its transfer of operations to Aurangabad or Pantnagar. What will you do? What is your strategic plan of action? Why and with what intended effect? Ans: On careful analysis of the case we can conclude that the workers have stopped working because their needs and desires are not being fulfilled. Looking for a short term solution like transferring the work to some other location is short-sightedness. In order to resolve this problem fully and satisfactorily so that it does not surface again, one should look at the bigger picture of keeping the employees happy in the long run so that they may be productive and the company may leverage their enthusiasm and satisfaction in order to gain more value for its shareholders. In doing so, we can divide the needs and desires of the employees into four categories: a) Concern from company towards employees: If the employee does not feel that the company is concerned about him or her, the employee might stop being concerned about the company. Hence, this is a vital element of consideration. b) Internal emotional needs: Every individual has some internal emotional needs that must be satisfied to keep ones morale high. Need to have an identity and need for admiration are two of the needs that boost an individuals morale and motivated enough to keep going. c) Current monetary needs: If an individual finds it a struggle to satisfy ones monetary needs in order to live a decent life and have a good status in the society in which he lives, he is bound to feel rebellious towards the company that employs him or might not have stability of mind which in turn affects his work. d) Future security of self and family: Employees are genuinely concerned about future security of themselves and their family members. In such a case if the employer provides that assurance, the employees will be more than happy to deliver their best in the workplace. In this particular case, the employees complaints can be categorized into some of the heads mentioned above. Categorization of Complaint/Demand Concern from company towards employees Complaints 1. The company has made overtime mandatory. 2. Based on fabricated performance reports, the management has started issuing warning letters, show case notices and dismissals, suspensions and pending inquiries. 1. Not expressed explicitly through complaints Or demands

Internal emotional needs

Current monetary needs Future security of self and family

1. Relatively low wages of employees-hence demand for 25% increase of wages. 1. Demand for 500 shares at Re 1/share

Keeping in mind the abovementioned things, as a consultant one should come up with a plan that satiates the root cause of the strike which is the needs that we talked about earlier. Hence, one should go ahead with the steps mentioned in the circular matrix below in order to resolve the problem in the long term so that it does not occur again. In doing so, I have made certain assumptions: 1) Since Rajiv Bajaj didnt comment on raising the wages by 25%, I have assumed that raising the wages of all employees is feasible. 2) The full capacity of 4000 units/day is achievable without making overtime mandatory through better efficiency during the working hours.

The following circular matrix addresses the concerns of the employees to a large extent:

Q2) Specifically, what are the legal rights and duties of the management and the labour (Unions) in this regard at the Chakan plant, and why? In India, there exist certain laws and regulations catering to the needs of both companys management and the labour unions such as the Indian Trade Unions Act, 1926, The Industrial Disputes Act, 1947. The relationship between the labour unions and the companys management is ideally defined as a mutually beneficiary relationship with a common aim to increase the productivity of the company. But history has shown us that due to the moral/ethical deviations demonstrated by some companys managements and the labour unions have created a status of conflicts the conflicts which ultimately have ended in the lockout/closure of the companies devastating the families of the workers of the companies.

To critically analyse the positions of both the management and the labour union in Chakan plant we first need to understand the basic duties and rights of the management and the labour union in the realm of laws and statues of the country. The following table analyses the various rights and duties of the management and the labour union across different contexts. Context of Rights and Duties Firing Management Rights Duties To decide whom to fire, how many, when and under what conditions To be fair in firing practices with no discrimination based on color, race, creed, nationality, age and gender. Duty to protect minimum wage and market and social value of the employee. Duty to be fair and equitable to distributing recognitions, promotions and rewards across all employees with no discrimination. Duty to appraise employees periodically through fair and objective performance appraisal systems. Union Rights Worker has the right to be fired when costs of maintaining Workers far exceed the benefits and skills they bring. Right to demand wage as per workers fair market value Duties Duty to constantly update ones skills, talents and usefulness to the employing company. Duty to protect Workers wage as per market value and social need by providing required service. Duty to train and update oneself, and to contribute workers best to the company, and this seek promotions. Duty to be open and cooperative when assessed and appraised periodically through fair, transparent and objective performance appraisal systems. Duty to complain and grieve when mutually agreed on terms of work, wages and working conditions are violated.

Wages/Salary

Right to pay as per market value of the employee

Promoting

Right to decide whom to promote, how, when and with what rewards.

Right to be developed, promoted and recognized for valuable contributions to the company. Workers have the right to be assessed and appraised periodically through fair, transparent and objective performance appraisal systems.

Appraising

Right to appraise employees periodically through fair and objective performance appraisal systems.

Due Process

Right to establish due process systems for receiving, handling and settling employee complaints and grievances.

Duty to establish due process systems for receiving, handling and justly settling employee complaints and grievances.

Right to complain and grieve when mutually agreed on terms of work, wages and working conditions are violated.

Safety

Right to protect worker safety and prevent harm in and around work environment.

Duty to protect worker safety and prevent harm in and around work environment.

Right not to be harmed, to worker safety, to harm prevention in and around work environment.

Duty and responsibility to prevent and protect oneself from harm, and risk of harm, in relation to body, mind, heart and spirit in and around work environment.

At Chakan Plant, the main points of conflict revolve around the following: Low Wages Low Wage Increment Excessive Workload Overtime mandatory but no corresponding payment for additional hours Fabricated Performance Reports

The Labour Union has demanded justice, safety and security of the workers by asking for Equity shares at a discounted rate, a high increase in wages and reinstatement of few fired workers from the management. The management on the other hand has rejected the demands as there already existed a labour wage agreement effective till 2019 which was agreed by the labour union and the management in 2010. Additionally management understands that the facilities, wages and benefits provided to the workers are as per the prevailing market standards and there is no plan by the management to issue stakes(equity shares) to the workers as no one in the company including the management team gets this option. The way forward to resolve the conflict is to apply the rights and duties of both Employees and Employers in relation to the existing legal rules/statues such as Industrial Disputes Act, 1947 and Indian Trade Union Act, 1926. Executives and Activists with strong moral and ethical considerations if sit across the table to resolve this conflict, a meaningful and constructive dialogue can be expected and an amicable solution agreeable to both parties can be reached in near future. The only critical point of consideration in the process of resolution would be to understand the supporting rights and duties of the employees and employers and working on those to reach to the solution leaving aside the potential conflicting rights and duties between them.

Q3) What are the underlying assumptions, presumptions, suppositions and pre suppositions, biases and prejudices of the workers and the management, and in resolving the strike how will you eliminate them progressively?

Management View (as reported to The Hindu) The reason for the strike, which has been on since June 25, is the unions demand for an allotment of 500 shares for each of its 925 employees at Re.1 per share and also higher wages. Management Response Bajaj Auto is a public limited company, not a Kirana Shop and company Shares can be mishandled in such a way. Thinking Parameters ( in Progressive Evaluation)

Component of Uncritical Thinking (Includes Biases, Prejudices)

Dispute Resolution

Bias A workers duty is to work; Wage is a reward/ privilege for the efforts. Worker Rights and Duties Pre Supposition Creation of Opportunities to advance personal Wealth for Employees acts as motivation factor for them. Fact (Reported to The Hindu Arvind Kejriwal) Though the Company has done well, the Employees share in Value Addition has gone down drastically from 31% to 12%. Workers Share in Value Addition Presumption Private pursuit of Economic self interest fosters growth of the organization as a whole. Hence, equitable distribution of wealth may not be necessary. Assumption In the 14 years of operation of the Chakan Plant there has never been any major agitation by the Workers. Management took Employee Stock Option plan for granted. Fact (Reported to Business Standard in the interview by Rajiv Bajaj) Thanks to exchange rate at Rs 60, what we make on Pulsars in Export is twice that what we make in Domestic Market. Wealth and Profit Accumulation Bias For corporate growth Profit making is a necessary condition. Prejudice Higher profits from one market (Foreign) will ensure Brand Competitiveness in other Markets (Domestic). Presumption Higher market demand buying power will ensure Profitability. Fact (Reported in Business Standard) Dilip

1. Proper understanding of Managements responsibility towards Workers Rights. 2. Qualitative and Quantitative analysis of Violation reported. 1. Root cause analysis of Why Employee Stock option has never been provided at Bajaj Auto. 2. Implication Study of providing such a scheme. 3. If found feasible, administering the necessary policy changes.

1. Understanding the Core requirements of Domestic Segment of the customers. 2. Creating products as per the market demand and maintain the necessary Competitive Edge. 3. Creating Schemes for equitable sharing of the Profits with Employees

1. Analysing the Validity of Mr Pawars

Pawar tried to create troubles in Pantnagar and Aurangabad plants. Corporate Responsibility and Control Bias Management considers Mr Pawar an Opportunist. His intensions have not been in the interest of the organization; hence he does not represent the collective demands of all the employees. Presumption Mr Pawar has some deeper self interest that cannot be predicted.

Demands and verifying that it reflects the opinion and demands of all the Employees. 2. Making the Management understand Mr Pawars Viewpoint and presenting them a scope of Negotiation.

Productivity and Growth

Fact Management intends to shift most of the production activities of Pulsar to other plants at 1.Presenting a cost benefit Pantnagar and Aurangabad. Analysis to the management of undertaking such a Major Assumption The Employee agitation at shift in Operations. Chakan will not affect employees at the other 2. Presenting the plants. Thus productivity of the organization Profitability index based will be restored. on scope of negotiations discussed. Supposition Existing employees at other plants are Satisfied. Employee hiring at the new plants will not be difficult. Prejudice Humans/ Employees are mere factors of Production.

Workers View Excessive Work Load; Relatively Low Wages; Low Annual Pay Increases; Mandatory Overtime without Additional Pay. Workers Response Union has terminated the Wage Agreement with the Management. It is demanding a New Agreement considering the factors it demands. Thinking Parameters (In Progressive Evaluation)

Component of Uncritical Thinking (Includes Biases, Prejudices)

Dispute Resolution

Fact- (reported to Business Standard) Out of 1500 Employees, 600 workers are Temporary. Bias Relative Skill levels and Employee Efficiency immaterial; Management responsible for Income disparity. Presumption- Management responsible for Socio-Economic Common good for its employees.

Equitable Income Distribution

1.Understanding the cause of income disparity. 2. Promoting ways to administer Income distribution as per responsibility assigned.

Higher Productivity Higher Income

Assumption Increased organizational productivity means greater share for the workers. Presumption - Increased productivity of the organization means higher Employee Efficiency that should be suitably rewarded. Supposition Performance Measurement provides growth opportunity for individual through Rewards; Management is accountable for misappropriation of the system. Presupposition Management responsible for Fabricated performance report; Fabrication indicates Immoral Management control. Bias Possession (Equity Shares) is a motivating factor; Motivation expands when it is shared between Management and the Employees. Presumption Monetary rewards and Shares increases Employee happiness index; Rewards make Employees more accountable.

1. Understanding how organizational productivity can be shared equitably. 2. Increasing Employee Commitment through participation in growth. 1. Qualitative analysis of Performance review method followed. 2. If Ethically challenged methodology incorporated, then the decision should be questioned. 1. Rationalize worker efficiency increase through effective utilization. 2. Create Systematic growth opportunities for Motivation.

Standardized Performance Measurement

Worker Motivation

4. How can you legally, ethically and morally defend Rajiv Bajaj, the Managing Director of Bajaj Auto, and his stance on this issue? The actions of the MD of Bajaj Auto, Rajiv Bajaj is not morally and ethically defendable to a certain extent. Employees have ethical rights and when a business practice violates these rights, the practice is unethical. A detailed taxonomy of conflicting/supporting rights and duties of employers versus employees is given in the table. Context Hiring Firing Wages Safety Privacy Employers rights Decide whom to hire and how many Decide whom to fire, how many Right to pay as per market value of the employee Right to protect worker safety and prevent harm in and around work environment Right to protect worker privacy in relation to personal and family assets brought to work Employees rights Right for gainful employment Right to be fired when costs of maintaining employees far exceed the benefits Right to demand as wage as per ones fair market value Right not be harmed, to worker safety, to harm prevention in and around work environment Right to worker privacy in relation to personal and family assets brought to work

The employer-employee relationship should not be looked at simply in economic terms. It is a significant human relationship of mutual dependency that has great impact on the people involved and both the

employer and the employee have moral obligations arising from this relationship. The employer has a moral obligation to make decisions that would advance the welfare of the employees. This includes but goes beyond a duty to treat employees respectfully, to pay them fairly and provide good working conditions. An ethical employer does not think of employees only as a means to an end. Employees must be treated as a major stakeholder group. Ethical employers consciously and consistently treat the promotion and protection of the well-being of employees as an important business obligation and objective. Table below depicts the factors influencing managerial ethics: Individual Values Work background Family status Personality Organizational Top level management philosophy Firms reward system Job dimensions Leadership Quality Environmental Competition Economic conditions Social/cultural institutions Social responsibilities

Going by what transpired in the Chakan plant, according to reports- the employees were underpaid, worked overtime and had low annual pay increases-the rights of the employees were not uphold by the management and hence Rajiv Bajaj. So this is not ethically justifiable. It is understandable that the demand for share distribution to the workers at the discounted rate of RS-1 is not viable, but at least they could have upholded the demand for wage rise. Along with employees, the shareholder is an important stakeholder for the business. The company is equally responsible for upholding the rights of the shareholders. In the present case, if the demand of the employees to allocate them 500 shares each at a highly discounted rate of Rs 1.0 per share had been met, there might have been an impact to the overall market value of the shares of the company. This decision of allocating shares would be a collective one taken by both shareholders and management. So going by this logic, the management in general and Rajiv Bajaj in particular can be said to act morally. Moral judgment focuses on deciding whats rightnot necessarily doing what is right. Being perceived as a moral person is related to a good character, which is intricately tied to the employees perception of the leaders traits, behaviors and decision making processes. Being a moral person tells the followers what the leader will do. Therefore a reputation for ethical leadership also depends upon being perceived as a moral manager, one who leads others on ethical dimensions. A two dimensional matrix taking the moral manager and moral person is shown below. Also the ethical leadership matrix is depicted . A leader who is strong on both moral manager and moral person is considered to be an ethical leader. So Rajiv Bajaj can be put under an ethically silent leader( who is neither a strong ethical nor strong unethical leader). Dimension Traits Behaviors Decision making Moral person honesty, integrity, trust openness, concern for people, holds people accountable personal morality values-based, fair Dimension Role modeling Rewards/Discip line Communication Moral manager visible ethical action holds people accountable for ethical conduct conveys message an ethics/values

Q5: Following Frederick Taylors theory, you could treat labor as mere factors of production. But following Maslow, Herzberg, McGregor and others thereafter, you could treat workers as human beings with dignified human personhood endowed with immanence, individuality, sociality and transcendence Hence, how will you strategize your consultancy plan so that both workers and management win in the long run? Labor is required for majority of companies and it is the most important factor when running a business. It is normally recognized that quality and obligation of individuals who work for company is key factor to profitability and success. Within labor factors, there are lots of individual components. Those are labor cost and productivity, labor skills, labor flexibility and laws. Labor management is the most essential factors of running profitable business. An initial step is to decide how many individuals are needed to be on staff. All the employees will not be working at same time, understand the dynamics of every labor is critical. Every labor can be paid several wages and people need to have accommodating work schedule and be trained in various skill sets. The amount of hours which is determined to be used is called as ceiling hours. Setting labor hours schedule is based on the anticipated sales volume is an initial step in maintaining ceiling hours. The manager must know corresponding labor hours to be utilized with sales volume and it is based on hourly wage. Based on the phenomenology of the Executive act, the plan can be strategized in the following way so that both workers and management win in the long run. Order of Action State of Personhood Powers Used Intellectual powers Choosing actions Perception: Positive working environment ensures labor satisfaction Judgement: Currently the labors are unhappy about the working environment Volitional powers Acceptance of act: Willing to take measures to improve the working environment of the labors Intending actions: Willing to consider the following issues: - Assess the workload burden -Rework on the wages -cap on additional work hours and payment for the

(Benefit for Labors)

Transcendence Internal action (aspirations of the management

Intentions/ expectations

same Immanence (inherent/indwe lling attributes of the management) Choosing means Honest Deliberation: - No of workers/shift and the % of work assigned -Current wages offered scope of increasing the variables/ incentive component - hours of additional work put in per week DECISION Decision: - Increase the number of labors by 100 (to reduce work load per person) - Number of productive additional hrs put in will be incentivized every week. -Wages increased by 510% Consenting to act: - Current wages/no of workers -Payment for additional work done with appropriate caps on hrs -Reward and Recognition schemes/incentiv es Decision: Willing to bring into effect the decided points within 3 months

(Benefit to the company)

External Action

Individuality

Choosing strategies

Execution

Plan of implementation : Prioritising the execution of the decisions 1. Incentives on additional hrs/

Choose time/schedule 1. Schedule of Incentives to be declared within 15 working days

week to be declared

2. Begin recruitment of additional labor

2. Recruitment of new labor to be completed within 2and half months.

3. Wage hike to be given

3. Revised wages to be effective by the end of 3 months (beginning from today)

Sociality

Choosing to implement monitor and control

The plan to be declared immediately and make sure the strike is called off

Persistent assessment: To form a grievance redressal cell presided over by an ombudsman to settle all disputes amicably