Summary

Maruti Suzuki India Limited (MSIL) was an Indian subsidiary of the Japanese Suzuki Motor Corporation (SMC). MSIL had two production facilities, one at Gurgaon and the other at Manesar. The Manesar plant comprised a vehicle assembly plant and a diesel engine plant collectively employing more than 9000 people. Cars manufactured at the Gurgaon and Manesar plants were entirely different. The new entrants such as Hyundais Santro and Tatas Indica were a serious threat to MSIL in the small car segment as it held 60% share in this segment. Maruti Udyog Kamgar Union (MUKU) was the trade union that operated in MSILs Gurgaon plant. Year 2009-10 experienced an upswing in demand. MSIL introduced several initiatives to augment production at Gurgaon and Manesar. These steps rapidly increased output. Manesar plant produced cars in excess of its capacity. Long shifts with small breaks became the norm with workers complaining of misbehavior by the supervisors. To negotiate with MSILs management on these issues, the Manesar workers demanded a Union. Workers at the Manesar plant went on their first strike demanding recognition of the new union, higher wages and better working conditions. Workers were suspended and the strike was declared illegal but it caught the interest of national level trade unions. The strike was called off and the company agreed to separate a trade union demand by Manesar workers. Unfortunately, workers went on a strike again for one month and this strike ended by signing of a good conduct bond by the workers. Lastly, the third time when the workers went on strike, all the large trade unions, regardless of their party lines, lashed out at the company management. Also, workers from major automobile hubs in India who were associated with trade unions decided to hold demonstrations at their respective factory gates followed by a sit in strike. As a result, with the ending of the strike, it was decided to set up a grievance redressal committee and a labor welfare committee, comprising representatives of workers and management. While assessing the financial impact of all the dismal strikes, MSIL management realized that the strikes had affected the entire supply chain of the company. Since no consignments were received or utilized, vendors accumulated inventory. The strike also affected the component suppliers of Maruti Suzuki adversely. They had reduced their production as little demand had been generated from Maruti. Customers who could not wait long for Marutis cars decided in

favor of other car manufacturers. Also, there was an adverse impact on the Gurgaon Manesar area as a destination for new investment. The series of strikes posed many questions about the functioning and management of MSIL. The management was worried as to whether these strikes would lead to larger confrontations and what future lay ahead for MSIL. Problems How could have the MSIL management handled the earlier strikes? What were the shortcomings that led to repeated strikes? How to fill the deep lack of trust that had come between the workers and the management and avoid larger confrontations in future? Analysis and Solutions: How could have the MSIL management handled the earlier strikes? What were the shortcomings that led to repeated strikes? Workers first went on strike demanding recognition of the new union, higher wages and better working conditions o Instead of straightaway suspending the workers on charges of instigating the strike, the management should have given an oral reminder to the employees o The management should have met privately with the employees to discuss their problems. Instead of warning the employees of more serious disciplinary action such as suspension, managers should have made them realize that they had a personal responsibility to meet reasonable standards of performance and behavior o If the problem arose again, the manager should have given a written reminder. The manager should have reviewed the good business reasons why the rules or standards needed to be observed and through counseling should have gained employees agreement to solve the issues amicably instead of declaring the strikes illegal repeatedly, suspending the workers and not reinstating them again Employee agreement is important for several reasons:

This was also evident as Manesar plant was not able to meet their production targets and they were falling short of quality clearance o The employees are more likely to improve if they make an agreement to change than if the company mandates compliance o If the problem continues, and another disciplinary discussion is necessary, the subsequent discussion will focus not only on the continuing problem but also on the employees failure to abide by the original agreement o Should the employees refuse to agree to meet reasonable employer expectations, the documentation of that refusal during the written reminder would strengthen the companys position if a record is needed to justify the employees termination After the second strike by the workers, the management wanted to keep an upper hand and thus with the support of Haryana government it declared the workers strike illegal o The point should not have been to reprimand for past misbehavior but rather to create an action plan for the future o Even if they wanted to handle their employees by suspension, the management should have gone for a paid suspension system. Suspension was necessary to demonstrate the seriousness of the situation. Although the cost of paying the employees for the non- working period was a visible one, it would have been the only cost associated with using the non-punitive system o Unpaid suspension would generate much higher hidden costs in overtime, inefficiency and reduced output when the suspended employees joined the plant again. Moreover, the paid suspension would be an evidence of the companys sincere, good faith effort to convince the employees to change and accept responsibility for appropriate behavior. they could have demonstrated that work policies at Maruti were in accordance with state governments labor policies and this strikes were volatile situation and Indian industry need to address them, this would help them to improve their situation as strike was supported by all workers in that region Lastly, the management should have realized that the Japanese management style which was considered a benchmark for human resources practices needed to be

modified according to the Indian culture and work environment. Giving a couple of breaks more of 15 minutes each could have easily helped in improving labor productivity without straining the workers and instead motivating them to perform better. How to fill the deep lack of trust that had come between the workers and the management and avoid larger confrontations in future? Maruti has always concentrated on Low-cost strategy with economies of scale, but better worker management relation helps to cut costs, from prolonged strikes for first time in decade, Competitors were able to gain market share and Maruti suffered heavy losses. Maruti is very respectful and household brand in India but after this issue their image was hurt.

Consistent Pay for workers depending on their work, because one of main reasons of strikes was same pay for Manesar plant workers even after high production o In reality salary was hiked for workers

Some local body for every plant to address needs of that plant o After strike, 15 legal trade unions have been set up for all 9 plants Set up grievance redressal committee with neutral and credible people o As labors will be biased about current system, externally appointed person who credible and respectful will help them to believe that management is changing and their problems will be rightfully addressed

Regular visits from Labor officer from state government o This will ensure that all labor laws are followed and government can directly track any concerns in very early stage

The young workforce in India is marked by high aspirations and flexibility. This gives rise to an opportunity to practice and shape industrial relations proactively o Rather adopting reactive policy where needs of workers were heard as and when demanded, they could proactively plan policies and shape better relations

Release video documentary on improved working conditions as plan

o This could be re-branding strategy to attract best of talented workers and promote Maruti Brand in society, specially local region had unified unrest against Maruti Maruti CSR campaign should undertake fundraising for education and healthcare of labor families, This will help labors and local region to connect to Maruti and motivate them to work for as Maruti is contributing for betterment of their society