Professional Documents
Culture Documents
11/19/2015
Submitted to: Ms. Ridhi Arora
Submitted
By: Tanu Uppal
Shalu Rajta
SUBMITTED BY:
SUKHMANI KAUR(501404124)
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SHALU RAJTA(501404117)
RUBAL BANSAL(501404102)
Abstract
This case is about the mishappening in Maruti Suzukis Manesar production plant. The
Assembly Line laborers went on a strike 3 times in 2011 which eventually led to a lockout in
July 2012. The overall situation exacerbated and led to a brutal murder, plants General
Manager of HR burnt alive within the company premises. Due to these 3 strikes the company
incurred a loss of Rs. 25 billion.
This case highlights the circumstances that led to such unfortunate incidents at the Manesar
Plant.
The following were the plights:1. The workers demanded a formation of an independent Labor Union at the Manesar
Plant.
2. The workers on contractual basis were paid a salary 1/3 rd of a regular employee
although the work performed was the same by both set of groups.
3. The severity in the nature of deduction of Days pay on coming even a few minutes
late to the plant.
4. The exasperation among the workers after learning that the union leaders were bought
by the company.
TIMELINE OF EVENTS
On 4 June, 2011 approximately 2000 workers at MSILs Manesar plant went on strike before
the commencement of Second shift of production. The company suffered a production loss of
650 units.
The workers on strike demanded a Autonomous Labor union at the plant which would help
them safeguard and ameliorate their standards of living.
The concerned MSIL authorities did not reciprocate to the demands of the workers as a trade
union already existed named Maruti Udyog Kamgar Union, in the Gurgaon Plant.
MSIL authorities proposed that if the workers demand for another labor union, then it should
be the aegis of the existing Trade Union.
DISCREPANCY IN PAY
The main reason for this revolt from the workers was the inappropriate nature of apportioning
the growth of revenues and profits made by the company among the management.
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The wage structure of the workers in the Gurgaon and Manesar factory was nearly the same
but in case a senior permanent employee in the Gurgaon plant had not availed his/her
company assigned leaves for one calendar year, he/she was subjected to a remuneration of
amount Rs. 2.8 lakhs(talking of 2007).
INEQUALITY
Minimal compensations being given to temporary workers at MSILs Manesar plant which
comprise of workers, trainees and apprentices for tasks that were of daily production basis for
both permanent and temporary workers.
The case examines the challenges for HR department where the compensation is decoupled
from the performance on the basis of nature of employment in same organization. It
represents a unique situation where two employees performing similar roles are compensated
quite significantly different because of the nature of their association with organization.
Naturally, this is not a straight-jacketed situation rather quite complex and therefore led to
industrial unrest. We will try to study the flexibility of existence of two such systems
parallely in a single organization. It is not an easy situation for an HR department but that is
current reality of the manufacturing sector in India.
Temporary workers in India an average about 40% of industry workforce is temporary. This
has gone up from 30% a few years ago. This change in milieu of the work force is creating a
conflicting scenario which the HR managers are finding it difficult to manage.
Labour disputes are prevalent in the auto industry of India and have affected other
manufacturers. India has strict labour laws, but their application is avoided by hiring lowwage contract workers.
Methodology
For this case study we have used secondary data and information. The secondary data and
information have been collected through interne and newspapers.
Examples of Recent Strikes/ Unrests
The Indian Automobile Industry, in the recent two years (May, 2009- June, 2011) has
encountered several strikes and unrests.
April, 2010
Honda (Honda Siel Cars India Limited) faced the same problem of work slowdown which led
to dramatic low sales. Due to the slow down the supply to the dealers immensely decreased
causing reportedly 50% month on month decrease of hot selling cars, Honda City and Civic.
The workmen being less motivated and thus the quality of work suffered.
Maruti Suziki India Ltd:- All the workers from the lowest rank jobs to the top
management employees used to wear the sae grey uniform and used to have their meals in the
same canteen. Any worker or employee finding any kind of fault anywhere in the assembly
line had the power to ring the bell and stop the process. The concept of Ringiseido provided
the chance to managers and employees to partake an individuals idea but the recent strike
was about the recognition of new labor union which shows that the workers are still not
motivated enough or the management lacked in keeping their employees happy and
contented.
The next factor for the classification of workers is when they are divided into two groups i.e.
Permanent workers and Contact workers. Contract workers are indirect employees hired for
specified period of time for doing specified work and they are hired typically through labor
contractors. There is small core of permanent workers but considerable number of workers
are hired on contractual basis. According to the reports MSIL has 85% of workers working on
contractual basis and 75% in Ford.
Sometimes the management is also not professional enough to motivate the workers.
Sometimes the management is accused to be a catalyst of the strike and unrest. For instance,
in Mahindra and Mahindra the unrest was all about the safety, job security and salary related
which the top management could have easily taken care off.
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Recommendation
The PR by Maruti has not been proactive. Instead, it has been reactionary.
Legal action on accused: show that proactive action is being taken against any
violations of law.
Government Concern: The increase in labor unrest during the recent years has many a
time raised Governments concern. The matters related to industrial relations, is at
present regulated by three main central enactments: The Trade unions Act, 1926,
Industrial Employment Act, 1946 and Industrial Dispute Act 1947.
The main reason behind any kind of unrest is the communication gap between the top
management and the workers. If the workers feel motivate enough and if the company
is able to make its stakeholders feel contented and happy enough then such situations
can be easily avoided. Here, in this case we can apply the Victor Vrooms Expectation
Theory. The theory deals with three components known as VIE (Valence,
Instrumentality, Expectancy) and focuses on maximum happiness and least pain.
The top management should identify what rewards the workers want or what rewards
keep the highest value to them which is called as Valence. Secondly, the managers
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must motivate the workers to accomplish their tasks in order to receive the desired
rewards. Also, the managers must ensure that the workers get the perfect and
necessary conditions to accomplish the given task and help them to grow selfconfidence and achieve the desired results and get rewarded.
Hiring of welfare officer to counsel the labor union leaders so as they can act as
catalysts rather help as a building bridge between the top management and the
workers.
Formation of joint teams should be there and participation from the labor should be
encouraged in the various management related decisions.
Questions:
1) In your opinion what Maruti could have done to avoid such a situation?
2) According to you which among the three Acts (Trade unions Act, 1926,
Industrial Employment Act, 1946 and Industrial Dispute Act 1947) is best
applicable in the Maruti case?
3) Do you think Maruti should only hire permanent workers in order to avoid
such situations?
4) If you were the HR manager what necessary would you have taken in such a
situation?
References
http://articles.economictimes.indiatimes.com/2012-0722/news/32777541_1_maruti-suzuki-s-manesar-maruti-s-manesar-shinzonakanishi
http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and
%20Organization%20Behavior/Labor%20Unrest%20at%20Maruti%20Suzuki
%20India-Case.htm#Happy_Employees_-_Happier_Customers
Vroom, Victor H.; Kenneth R. MacCrimmon (1968). Toward a Stochastic Model of
Managerial Career. Administrative Science Quarterly, 2646