Honda Motorcycles and Scooters India Ltd (HMSI)
Presented by: Group AKaushik Mohapatra (U109071)Anand Bardhan (U109105)Biswajit Mahapatra (U109111)Saurabh Kumar (U109156)
History of Honda
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.
It’s the world's largest manufacturer of internal combustion engines measured by volume, producing more than 14 million internal combustion engines each year.
Honda spends about 5% of its revenues into R&D
Also involved in F1 racing and other segments of the automobile industry.
HMSI
Established in 20th October 1999 in Manesar (Haryana).
It is a wholly owned subsidiary of HMCL Japan.
The company aims to manufacture world class scooters and motorcycles from this plant.
The plant had a initial capacity of 0.1 million which was to be raised to 0.6 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 a reasonable price.
Workforce in HMSI
2000
1000
Workforce in HMSI
WorkersEmployees
HMSI Workforce Breakup
1300
700
700
300
Workforce Breakup
Confirmed WorkersContract WorkersTraineesApprentice
Workforce & Salary
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 was over.
The company was believed to be a good paymaster.
In October 2005 salaries of workers ranged from Rs 8150 for unskilled to Rs 11200 for skilled workers including Rs 2000 for house allowance.
Also apart from these the workers were entitled for bonuses in the Diwali season.
Employee Welfare:
Subsidized canteen facilities
Transport facilities to and from workers’ residences at subsidized rates
Sports club for employees ‘ use at Sukhrali village in Gurgaon with indoor games facilities
• Football, volleyball,TT, carom ,chess matches organized against employees of other companies
2 sets of uniforms, 1 company cap, 1 pair of shoes provided to employees every year; same uniform for all including managers
Employee Welfare:
Most HMSI workers not covered by Employees State Insurance (ESI) scheme under the ESI Act, 1948 as salary had crossed maximum salary limit for coverage
• Such employees covered by Paramount Health care facility ; reimbursement of 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 with increase 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 worker’s marriage• Rs. 5,000 to family on employee’s death; Rs. 3,000 on death of
spouse/children/parent.
Human Resource Policies
Aligned with philosophy of parent company: HMCL
• though considered itself unique with some distinct employment & production practices.
HMSI’s 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 all employees through similar uniforms and same canteen facilities for all.
Induction programme involved acclimatizing employees to the Honda philosophy HR department expected to
The Honda Way: human behaviour or way of thinking based on Honda philosophy.
• E.g.: Perseverance to ensure safety & quality in all aspects
Human Resource Policies
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.
Human Resource Policies
Performance Appraisal System for all employees including workers:
• Interview by section head and shift in-charge;• PA done on a rating scale; workers divided into 5 grades• Increment Rs. 400 to Rs. 1400 p.m. depending on worker’s grade• All PA results and salary hikes announced immediately at the end of financial
year• Promotion opportunity for worker:
• Worker -> sub-leader -> assistant executive -> executive• No one covered by Payment of Bonus Act, 1961 because of high salaries:
• Company gave an ex gratia of one month’s gross pay as incentive around Diwali
• No scope for workers’ expression through any letter to the editor.
Human Resource Policies
Works Committee (WC) constituted under Industrial Disputes Act (IDA), 1947 on 1st April, 2004 consisting of 15 workers and 5 managerial representatives
• Other committees: Canteen committee, transport committee, health committee, and sports committee.
• Management nominated workers for the communities based on perceived interest.
6-paged, quarterly newsletter: Dream Team
• Focussed on covering company’s 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.
Case : Timeline
Nov 2004
Dec 2004
Jan 2005
Feb 2005
Mar 2005
Apr 2005
May 2005
June 2005
July 2005
Aug 2005
Diwali Gift Issue
Apr 1 : Increment in
Compensation Package;No Union Formation
Apr - May :Efforts for
forming Union;Gherao of
Mgmt;Go-Slow
May 26 : Conciliation –
DLC Intervention
Dec’04 – Mar’05:
Negotiations between
Workmen & Management
June – July : 6 Conciliation
Meetings
July 19 : DLC sends the
Conciliation Report
July 25 : Another
Jallianwala sort of brute treatment of the Honda Workmen
July 27 : Enquiry
ordered by Haryana CM
July 30 : Truce between
Mgmt & Workmen
Aug 1 : Back to Work
1st sight for need of Unionization :• Stringent Company rules e.g.:- movement sheet, leave
policy• Fear of Management’s Authority• Idiosyncratic attitude of VP-Manufacturing (Japanese)• Charter consisting of more than 50 demands• Help from local union leaders
The Clash (in Pictures)
Police beating HONDA Workers – Dt. 25th July 2005
Clash between Police & HONDA Workers – Dt. 25th July 2005
The Whole Issue was covered by Media and the atrocities by the Police was
highlighted and the incident was termed as Another Jallianwala Bagh. The act of Police was compared to that of General
Dyer’s.
The Clash (in Pictures)
Workers meet Sonia
Gandhi againstalleged
highhandedness of Honda
management and the police
Truce Conditions
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 terminated employees
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
Union- Management Dynamics in Post-Violence Scenario
Management:• Change in management attitude felt by union leaders; concessions
allowed on various fronts• Freedom of not working on shop floor for union leaders to take care of
pending IR issues• 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 or issues• Overtime working issues: lure of extra money; medical problems,
workers not fresh• overtime working was scraped in most cases
Union- Management Dynamics in Post-Violence Scenario
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
incentive bonus for all including managerial staff• 09/09/2010: 'A shift' in assembly achieved its target of 1000
scooters for the first time after union formation.• VP- Manufacturing, GM- Productions came to shop floor &
commended achievement of workers; sweet distributed to all workers next day.
Union- Management Dynamics in Post-Violence Scenario
Union:
• Police case against 63 workers including all 7 union leaders - contact different 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 ensure workers 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's compensatory
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 the
family members could utilize it. Rs. 100,000 if further expenses occur change in management policy; w.e.f. 01.10.2010
Union- Management Dynamics in Post-Violence Scenario
Union:
• Joined the nation-wide industrial strike against Central Govt's economic policies on 29/09; compensated loss by working on Sunday
Union- Management Dynamics in Post-Violence Scenario
On the Flip side:
• 02/09/2005: Authoritative and provocative behaviour of 2 supervisors and a senior manager
• A Union office bearer's views:• company claims of respect for individuals & the 3 joys : merely bookish
concepts• Some senior managers creating distance between top management &
workers• HR manager prevents the union from meeting Japanese top management
fearing exposure of their ulterior designs and motives• Only 20% managers treat union leaders as members of the company; rest
have ego issues• No one bothered about analyzing the causes and possible solutions of
shop floor problems in a practical & acceptable manner
Key Issues & Problems
Mgmt.’s approach to practicing a non-union model made them blind to reality 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
Key Issues & Problems
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
Key Causes of HONDA’s Difficulty
The most effective functioning of the organization was achieved through the traditional principles of direction and control
The traditional managerial beliefs and practices concerning HRM resulted in structural contradictions between the hierarchical nature of managerial direction and control and the need for integration, consensus, and commitment
Management distinguished between market relations (wages, service conditions, etc.) and managerial relations (direction, surveillance, and discipline) and advocate a say for employees and trade unions in the former but not the latter (Fox 1966)
Key Causes of HONDA’s Difficulty
Honda lacked participation and grievance redressal which are the most critical determinants of organizational climate in India (B.R. Sharma, 1986)
Honda should have integrated HRM into the organization’s mainstream 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 all managers
While Honda moved to restore balance in the relative power position between the Employees & the Management, upsetting the existing equilibrium per se had far-reaching consequences that were not easy to predict
Comparative
HRM
Unitary MarxistPluralistic
Labourmarket
Socialaction
SystemsControl over
labour process
Input Conversion Output
Conflictdifferences
Institutions & processes
Regulation(rules)
Approaches to IR
Wider approaches
EvolutionRevolution
CooperationConflict
AuthoritarianPaternalism
Theoretical Perspectives : Honda’s stand
HONDA HONDAHONDA
The Big Three
The three parties to Dispute
Government
Management Union
Role of Management (Ideal v Actual)
Evolve policies and systems
To control workers and the unions
To elicit commitment from the workers and their unions in order to facilitate the strategic, functional and operational interests of the Firm
Ideal Role
Role of Management (Ideal v Actual)
Loopholes in implementing the policies was observed
They could not check the growth of unionism
Lack of farsightedness
Actual Role
Role of Union (Ideal v Actual)
Protect and promote workers’ interests
Protect and promote interests of workers’ organizations & affiliates through cooperation strategies where feasible
Ideal Role
Role of Union (Ideal v Actual)
It was not able to highlight the problems of the workers through the proper channel
It was unable to check the actions of its union members resulting to major trouble
It had a rigid stance and was nonnegotiable
Actual Role
Role of State (Ideal v Actual)
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 and Society
Ideal Role
Role of Union (Ideal v Actual)
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
Power - protect/support through strength in association - a countervailing force, pressure group. Note: bargaining leverage & member willingness to act together.
Economic regulation - maximize member returns within wage-work framework. Note: political nature of TU wage policy - comparability & differentials. Inflation & unemployment (cost-push & demand pull). Win bigger slice of national income.
Job regulation - establish a joint-rule making system to protect members from arbitrary management action . Enable participation in decisions affecting their 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
Trade Union Functions
India is governed
by a Constitution that foresaw a welfare stateand espouses the values of
tradeunionism
andsocial justice
Changing IR Scene at Global & National levels : New Thinking
HONDA Manufacturing Plant, Manesar
Welfare state: Efficient
Government as facilitator
Export-oriented production (SEZs)
Changed labour policies of states
The Role is Changing
Multilateral IR: consumer/public/gender issues
New issues:
––Customer Creation/sustenance
––Protecting environment
––Gender issues
––Safety promotion
––Child labour abolition
Media’s role in new issues
Global Trends – India Trends
Figure 16.6Source: The Conference Board of Canada.
Building Cooperation with Unions
Flat organization --Flexible pay
Cost saving: a big concern
Competencies development
Knowledge pay in high-tech. industries
Emphasis on Performance – related Pay
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
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 rooted in HR Strategy
Lessons Learnt : A Guide for Business Success
Leadership matters
Competent HR department is key
Well crafted and communicated Mission and Vision
Maintain channels of communication
HR Strategy must align with and support business
Listen to Employee concerns and issues for Organizational Justice
Use HR Interventions (BOTH HARD AND SOFT) as tools for success
• (welfare plans, empowerment, reward and recognition, etc.)
Lessons Learnt : A Guide for Business Success
Keep cross - cultural issues in view
Establish a sense of urgency
Recruit and Retain Talent - right person In right job at the right time
Be clear about performance and results – let them drive success
Create short term wins (reward and recognition)
Road Ahead
The HRM-IR-HRD interface integration should be such that it should move away from the principle of direction and control to a system based on the philosophy 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 & rationale of decisions to convince the aggrieved
Providing exposure & understanding to line managers on HRM aspects to handle 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
THANK YOU!!!