Four Industrial Relations insights from the Maruti Suzuki Strike

By Vivek Patwardhan
The peace of the last twenty years in Industrial Relations (IR) has been ruffled by the
current, bitterly fought Maruti Suzuki strike. It stands out as one of four strikes that
caught the attention of the nation in the past three decades the te!tile strike, the
"#$# strike at Telco, now called Tata Motors, and the %ore recent strike at &et
'irways. The Maruti Suzuki strike has brought to the fore se(eral issues that ha(e
been silently plaguing IR o(er the years, of which four are of particular interest.
Insight 1: Contract Labour is just indicative of larger issues
Maruti Suzuki, like %any other co%panies, engages o(er )* per cent of its workforce
as contract labour and te%porary workers. This is a co%%on practice used by
e%ployers to sa(e on costs.
The proble% is that in a country with great une%ploy%ent, the desire for per%anent
e%ploy%ent, particularly in a blue chip co%pany like Maruti Suzuki, is
understandably high. +ost "##*, the (icissitudes of the econo%y forced so%e
industrial organisations to reduce their per%anent workforce, which they found
e!tre%ely difficult gi(en the legal i%plications and business obligations.
,onse-uently, e%ployers ha(e realized that the archaic labour laws of the country
are out of sync with the ti%es and changing business en(iron%ent. 'nother factor
that predisposes organisations to use contract labour is that although the reduction
of workforce or closure is allowed by law, it is only after per%ission is granted by
the .o(ern%ent which often is based on political considerations not ger%ane to the
issue.
/iscouraging use of contract labour indiscreetly and pre(enting their e!ploitation is
necessary. It is also essential to allow e%ployers to resize their organisations. It is
beco%ing ob(ious that there is an urgent need to find out why undesirable practices
are being adopted and %ake corrections accordingly.
In +akistan, the per%ission of the 0abour ,ourt is re-uired only if the e%ployer is
ter%inating the e%ploy%ent of %ore than )* per cent of its work%en. 'lthough this
shifts the debate to the acceptable nu%ber of e%ployees, it undoubtedly %akes for a
better syste%.
Insight 2: The need to use a mature approach to Industrial Relations
's per reports, Maruti Suzuki did not recognise the union at its Manesar plant and
the authorities did not register it. 1hile the right of association is guaranteed by the
,onstitution of India, there is no conco%itant right to represent at the bargaining
table. In other words, it is not %andatory for the e%ployers to bargain with a union,
e!cept in the State of Maharashtra, where the ,ourt decides the representati(e
status.
There are %any reasons why an e%ployer would not like to bargain collecti(ely with
a union. So%eti%es it has %ore to do with a personality than principle. 't Tata
Motors, the Tatas who dealt with an 2e!ternal3 leader at &a%shedpur were a(erse to
dealing with a dis%issed worker whose obstinate attitude and resorting to %indless
(iolence subse-uently 4ustified the stance taken by the co%pany. In another instance,
the Managing /irector of a foundry resigned and beca%e +resident of the union
when the organisation refused to deal with hi%.
'nother reason collecti(e bargaining is not welco%e in the Indian conte!t is that
unions often ha(e political connections. Multinational organisations operating in the
country need to be sensiti(e to these cultural nuances.
The %ost %ature state%ent on an organisation3s stance on unions co%es fro%
Toyota. Their position is articulated by &effrey 0iker and Michael 5oseus in the book
The Toyota Culture published by Tata Mc.raw 5ill as6
". Managing the Toyota 1ay and establishing a Toyota culture is not negotiable.
7. The local %anage%ent should establish a stance toward labour unions, taking into
consideration local culture, laws and labour %o(e%ents.
8. If the %anage%ent of the co%pany does ha(e a union, both should recognise that
the prosperity of the co%pany is the co%%on ob4ecti(e and both %ust use thorough
co%%unication in order to resol(e any differences of opinion and build a healthy
relationship of %utual trust.
9. The relationship of %utual trust can ensure the long ter% prosperity of the
co%pany and thereby stabilise e%ployee li(es by %aintaining and i%pro(ing
working conditions.
0iker and 5oseus su%%arise that Toyota agrees with the union ad(ocates who
argue that %anage%ent cannot always be counted on to be fair and consistent.
:;eing heard is the foundation of the Toyota culture of continuous i%pro(e%ent. So,
Toyota sets up %echanis%s through the 5R depart%ent to allow tea% %e%bers to
be heard. 1e saw that e(en the 5R depart%ent can be (iewed as biased. The
counter %easure was to set up a separate :I< tea% representing a cross section of the
plant to in(estigate e%ployee issues.<
The Maruti Suzuki episode should force organisations to introspect on their stance
on unions. The real -uestion is not whether to deal with a union or not, it is to deal
with which union as e!e%plified by =+ ;hatt, ,hair%an of the State ;ank of India,
who successfully carried out se(eral changes in the largest public sector bank in the
country. In his inter(iew by Mc>insey3s ?uarterly he was asked, 2@ou also had to
bring the %essage to the trade unionsA3 To which he responded, :These are
i%portant stakeholders, and I brought senior representati(es fro% the unions and
officers3 associations together in a %eeting si%ilar to the %anage%ent concla(es. I
spent four days with 8* leaders fro% across the country. So%e of %y best ad(isers at
the bank warned that the leaders weren3t trustworthy and could be disrupti(e, but
by being different and asking the% to a concla(eBlike %onks in a ca(eBI built up
huge curiosity. They wanted to know what I was doing. I told the% I3d sit with
the%, but only if they ca%e as friends of the bank. ....The results were fantastic. They
had the good of the bank as %uch at heart as anybody else....<
Insight 3: Industrial Relations requires proactive management
The young workforce in India is %arked by high aspirations and fle!ibility. This
gi(es rise to an opportunity to practice and shape industrial relations proacti(ely.
.one are the days when increasing producti(ity was resisted tooth and nail. There
is, on the contrary, a greater appreciation of the need to increase producti(ity. That
se(eral organisations ha(e producti(ity linked incenti(es for work%en in new
industries around +une is a testi%ony to the fact that a new era in industrial
relations has arri(ed.
=rganisations are increasingly appreciating that not 4ust co%%unication but a
dialogue with e%ployees is essential. It calls for willingness to e%pathetically
understand the other point of (iew and act on it. This is the enlightened practice of
industrial de%ocracy.
5igh le(el of 2control3 e!ercised by %anage%ents is an anathe%a to industrial
de%ocracy. The irony is that while %any tools and techni-ues de(eloped by
&apanese industry to harness the energy and creati(ity of the workforce are practised
by Indian industry, there is no success co%parable to what Toyota achie(ed at the
CDMMI plant in DS'.
Many industrial organisations ha(e e!peri%ented with redesigning 4obs of
e%ployees to %ake the% %eaningful, and allowing greater discretion in their hands.
Dnfortunately, the press co(ers %any stories of industrial strife and rarely any of
shaping good industrial relations. =therwise the stories of organisations like State
;ank, Ther%a!, 'sian +aints and Marico would ha(e recei(ed greater publicity and
brought forth the awareness of best practices.
In essence, 2controlling attitude,3 2/o this if you want to get that3 is outE discretion,
openness and align%ent are in. The soul of proacti(ely %anaging industrial relations
is pro%oting trust. Research shows that increasing trust between the %anagers and
workforce will lead to strengthening corporate go(ernance.
Insight : The abilit! to handle and resolve a conflict is a business requirement
The golden rule in resol(ing conflicts is that e(en disagree%ent %ust be arri(ed at
after an effort is %ade to understand the position of the other party. So%eti%es there
are irreconcilable differences. +atience %ust be shown to talk, negotiate and resol(e
the dispute.
'ny party3s conduct during the strife is indicati(e of its corporate persona, and a
certain brand is created in the %inds of people at large. Moreo(er, it also creates a
%indset which e%ployees at (arious le(els tend to follow. It is i%perati(e, therefore,
that the leadership knowingly takes steps to resol(e the dispute.
5andling conflict does not end when people return to work. It is i%portant to %ake
the e%ployees feel includedE if the di(ide between %anage%ent and workforce is
allowed to continue or grow it is only an in(itation to another discord. Fostering an
inclusi(e culture after a %a4or breakdown of industrial relations is one of the
toughest 4obs. It takes years to build. It takes %agnani%ity of the parties in(ol(ed to
accept that in a long drawn dispute both sides need to share the bla%e.
Vivek Patwardhan retired as Head of HR at Asian Paints. He writes and blogs on HR issues and
works as an Executive Coach and HR Consultant. This article was written for SHR and was
!osted on their website.