HMSI HR Failure

PEOPLE MANAGEMENT FIASCO IN �HONDA MOTORCYCLES AND SCOOTERS INDIA LTD

1. PEOPLE MANAGEMENT FIASCO IN HONDA MOTORCYCLES AND SCOOTERS INDIA LTD PREPARED BY: UNNI KRISHNAN BIDISHA SARMA RUTVIZ DHANANI SAHIL JAIN MANAS RANJAN TRIPATHY ARUN VERMA

2. Honda Motorcycles and Scooters India ltd. Honda is World’s largest manufacturer of Motorcycles. Headquartered in Minato, Tokyo, Japan. HMSI is established in 20 th October 1999 in Manesar (Haryana). HMSI is a wholly owned subsidiary of HMCL Japan. Total 3000 employees : Out of that 2000 in worker category: (1300 confirmed workers, 700 contract workers) Apart from this 700 were Trainees & 300 were apprentices.

3. HR Policies : HMSI followed the same policies as HMCL. Two fundamental beliefs: Respect for individual differences- initiative, equality & trust The Three joys – joy of buying, joy of selling , joy of manufacturing. Association promoted among all employees through similar uniforms and same canteen facilities for all. Mainly focused on developing individual’s capacity to think, to reason, and to dream. Joy of Creating was also an important value for the company. Providing work environment free from discrimination, indiscipline and violence.

4. HR Policies : Appraisal was performed by the section head and the shift in charge. Workers were divided into five categories with increments ranging from 400 to 1400 per month. Opportunities for workers ranged from workers to sub-leaders to assistant executives to executives. No one covered by Payment of Bonus Act, 1961 & most of employees were not covered by Employees state insurance act 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 .

5. Issues Created in HMSI: The first labor unrest voiced in November 2004 regarding the Diwali gifts. Movement Sheet for Washroom Breaks. Managers showed partiality in matters related to job posting. Strict attitude of the Japanese vice president. Too much of workload in the form of handling multiple machine at the same time. Strict in granting leaves .

6. Reasons for Unrest : The company failed to understand the needs and demands of the employees. Workers viewed Management activity as coercive and repressive. HR policies adopted by the company was not in the context of Indian work environment. Top management were inaccessible to workers. Hindrance by management towards formation of employee union. Role of external parties in escalating the situation.

7. Case Timeline: Nov 2004 Dec 2004 Jan 2005 Feb 2005 Mar 2005 Apr 2005 May 2005 June 2005 July 2005 Aug 2005 Nov’04 - Diwali Gift Issue Apr 1 : Compensation Package offered; No Union Formation Apr - May : Efforts for forming Union; Gherao of Mgmt; Go-Slow May 26 : Conciliation – DLC Intervention Dec’04 – Mar’05: Seeds of U nionisation June – July : 6 Conciliation Meetings July 19 : DLC sends the Conciliation Report July 25 : Brute treatment of the Honda Workmen after clash with police July 27 : Enquiry ordered by Haryana CM July 30 : Truce arbitrated by Haryana CM Aug 1 : Back to Work March 2005: Workers came out with 50 demands

8. Consequences: Slowdown of work Output was affected Widespread discontent among the workers. Workers demanded creation of union. Employees gheraoed the management resulting in violence. Shutting down of production. The incident of 25 th July 2005- workers got beaten up by the police .

9. After-Effects : Registration of employee union 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.

10. After-Effects : Diwali gift: Rs . 2000 & credit in bank account of Rs . 4000 as incentive bonus for all including managerial staff Foundation day was again extended to family members On Sep 9 th , 2005 '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 .

11. Conclusions HR Plan should be made keeping in mind the mentality and culture of the people There should be proper implementation of HR Plan without favoritism There should be proper appraisals given to the employees Third party intervention could have been avoided by both Management & Employees.