final honda motorcycles and scooters india ltd (hmsi)

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


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.


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.


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


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:

• 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:

• Joined the nation-wide industrial strike against Central Govt's economic policies on 29/09; compensated loss by working on Sunday


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


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


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!!!

final honda motorcycles and scooters india ltd (hmsi)

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