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8/11/2019 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
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