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People management Fiasco in Honda Motorcycles and

Scooters India Ltd.


Summary
Honda Motorcycles and Scooters India Ltd. (HMSI), a wholly owned subsidiary of
Honda Motor Company Limited, Japan, was one of the worlds leading manufacturers of
automobiles and power products. HMSI was established on October 20th 1999 with an aim to
produce world class scooters and motorcycles in India. Maintaining a global viewpoint, HSMI
was dedicated to supplying products of high quality, at reasonable price to ensure customer
satisfaction. However the problem started with in handling people-management issues. It seems
that the company goes against its own belief of respect and value of every individual. It wanted
to practise a non-union model but failed to develop and implement an appropriate human
resource management (HRM) strategy. Management always looked down to the concept of the
union. They were unaware that when small grievances led workers to turn aggressive and form a
union with the help of the trade union.
The management failed to break workers' unity either by asking for help from the
government agencies or by using the legal system like police protection. The situation turns
worst which led to violent conflict between the workers and the police. Everyone including
media was against this act of management which in turn hampers the image of the company. This
incompetent handling of HR issues by the company led to a long strike by the workers. The
strike, besides causing substantial financial losses, also led to the emergence of a very strong
union. In addition, production targets that were achieved on a daily basis before the union came
into existence were seldom achieved after the reunion came into effect. Besides this, Company
has lots of problem in hierarchy consciousness; understand language, handling industrial
relation, power to take initiatives in different dimensions etc. However if the company provide
insight into building and implementing a commitment model of HRM strategy, employers feels
secure and shows interest by managing the countervailing (balancing market power with
competitors) power of workers in the Indian context, and led to develop industrial relations

globally which helps to meet the challenges and provide benefits to the employee from various
aspects.

Issues and problems

Multinationals often make judgmental errors regarding cross-cultural issues and the business
environment prevailing in foreign countries. Honda Motorcycles and Scooters India Ltd.
(HMSI), a wholly-owned subsidiary of Honda Motor Company Limited, Japan, established its
plant in India in 1999 and made such mistakes in handling people-management issues.

The performances Appraisal are done at the end of the fiscal year.
The work committee is formed by 15 workers and 5 management representative and they
were nominated on the base of perceived interest of different person rather than the

experience and quality the person hold and also there was no voting system.
Employee state insurance wasnt provided.
As the number of workforce increases, company stopped celebrating foundation day.
The voice rose by employee on November 2014, when company gave Diwali gift too

cheap than they were expecting whereas competitors are giving refrigerator.
The employees have to sign movement sheet even to go toilet and to drink water.
The employees are forced to attend more than one machine at a time which leads to

increase the stress level of employee working at shop floor.


The company didnt used to grant leave easily.
They were threatened time to time.
Partiality in job posting.
Top management werent aware of these issued faced by employees.
Management prevent employee from uniting.
There was so much communication gap between management and employee due to

which the employee hold negative perception about the management.


Cultural differences.
Grievance wasnt handled properly.
The management have negative attitude toward the formation of union. So, they hire the
external in order to threaten the employee.

Management puts its full effort to weaken the employee effort but whatever they tries it
becomes worthless.

Analysis:
Two fundamental belief of HMSI was respect for individual differences and three joys but they
didnt follow their core belief to give respect to every individual in the organizations.
Factors that sink the industrial relation in HMSI:

Poor local management practices: Japanese inability to adapt the local Indian cultures.
Management didnt provide any platform for workers to express their opinions: they were

not in favor of unions.


Managements actions were demoralizing and disrespectful at many levels: After
employees denied the proposal of not having union, management called individual and
pressurize them not to join the union. Letters were sent to employee's home claiming that
they were indulging the undesirable activities. They were also threatening to hired

outsider toughs to frighten the worker if they form a union.


Failure of HR system: There were lack of grievance panel and proper arbitration. There
were several violation of human rights like workers have to take permissions for small
movements (bathroom breaks), workers were required to attain more than one machine at
a time; they were given mental tortures (threat of termination), workers were denied of

leave regardless of serious conditions.


Bias appraisal system: Management show partiality in matters related to job posting,

there were lot of favoritisms.


Lack of two way feedbacks: manager would not allow workers to share their grievances
to the top management.
Other factor that further contributes to worsen the situation was the act of the

idiosyncratic Japanese Vice president. He had a reputation for saying anything to anybody at
any time. Once he even kicked one employee in leg because he was late for two minutes
from tea time break. He apologized for his act but he repeated his same action by pushing the
cap of a Sikh worker knocking it off him just because he was wearing a different colored cap.
Later he was send back to Japan, but the workers were not satisfied with the mere apology by
the VP and lack of action taken against him.

After that incident workers raise many demands

Increase in wages
Provision of house rent- 70% of wage.
Dearness allowances
Provision of milk and gur(jiggery) per worker everyday
Provision of union office with telephone facility
Loan for marriage
Provision of library
Abolition of the policy of overstay

Management Action against the demand

Try not to let to form a union but purpose to form an internal committee instead
Lobbying with the government to prevent formation of registration of the union.
Management suspended four workers on charge of adopting go-slowing policy,

indiscipline and tempering with quality of product.


Refuse to absorb trainee as a permanent worker.
View it as an aggressive process and case of beach of discipline.
Then it suspended 50 workers and dismisses previously suspended four employees
without any enquiry.

Labor Action

Want to form a union


With the help of local union leaders moved an application for registration
Slow down of work- adoption of go-slow policy.
Ghearao program was conducted and one person from management was manhandled and
beaten up.

Results of such actions adopted by management and employees

Production stop for 30 minutes


More explosive situation
Registration process further delays
Latter approved with the help of member of India parliament
Labor union also added some extra demand on their list

Here, the conciliation process also failed because both the parties stick to their own
demands. Management wanted worker to sign statement of good conduct which consists a
clause to work unconditionally and remain disciplined while on factory premises and also clause
of stipulating non-pursuance of union activities by the worker at work. It was this clause that
became contentious and which compelled workers not to sign the contract and therefore
management refuse entry of the worker in the factory premises. Management hired some
temporary worker from its vendor companies in order to maintain production schedule. In June
2005, management and union reached an agreement whereby management agreed to allow
worker to enter the premises and work under the condition that the terminated worker would not
be taken back or reinstated. But the worker put up the union flag at the factory gate. And disturb
the work of temporary worker. Management decided to use police protection, the result of which
leads to fall in production.
On July 25th 2005, workers of HMSI with the help of other industries worker staged a
rally at offices of the district authorities to press their demand for reinstatement of their
dismissed and suspended colleagues. Police restrict their entry in the factory premises as a result
some masked men attack one of the police officer and also set fire to their vehicles. Then the
false message was sent to the workers that their demands are going to be met and asked them to
assemble at the lawns of secretariat. Then police use their armed force and attack the workers.
The number of workers injured was claimed to be 700. And also police arrested number of
workers and booked them under different section of the Indian Penal Code. This act was
criticized by most of the people including media. Violence continued till next day where HMSI
closed operations for half a day.

Positive side of Management:


Before unionization

Apart from the three joys, the company had imbibed the joy of creating as an important

value for itself, which helped staff drive happiness from their daily work.
Employees were called associates
Similar uniforms and common canteen facilities were provided for all staff.

Training program for internalization of culture-building, for building team leader, TQM

training, ISO 9000 and 5S training.


Organize matches against employee of other companies.
Company gives one months pay to every employee an incentive pay around the Diwali
festival (goes beyond Payment of Bonus Act, 1961 to motivate the employee).

After unionization

There was a good degree of change in management


union was able to convince the management not to terminate its contract workers
a small room was provided to union leaders
Union leaders monitor the worker- supervisor relations to see if workers were treated

better
Union got all of the trainees absorbed into regular jobs, when management refused to

take most of trainees.


There was the coverage of the workers and their family members under the medical

insurance scheme as the result of negotiation.


Whenever there was a worker- related issue or problems, management invites all seven

union bearers for discussion which was the new development in the Honda Company.
Overtime was completely scrapped out when union found health of the workers was

degrading and resulting in lower productivity due to it.


For the first time after union formation, vice president of manufacturing and general
manager came to shop floor & commended achievement of workers and sweets were

distributed to all workers when target was achieved.


Company revives the practice of inviting workers family on founders day on company

expenses in batches
Because of the union, workers Diwali bonuses and incentives were increased.

Recommendation
After going through the whole case it has been clear that the improper handling of human
resource was main cause of the entire problem faced by both management and labour.

The organisation or people at top management should keep in mind the cross cultural
issues while doing business in host country about their values, belief and assumption

Performance appraisal where it was performed annually should be converted into


performance management system. Appraisal should be continuous process and twoway feedback is necessary, so that employee can change according to the need of the
company.

The organisation policy should be such that they should be able to recruit highly
qualified people and retain them in proper manner to make sure that they stay within
the company.

Being sensitive to human needs and about their problem at work and beyond the
work.

Company should evolve a value system based on trust, transparency, fairness and
equity.

Make communication circle such that employee open up if any problem arises.

Management should deal with employee grievances promptly and properly because
improper grievances handling will lead to conflict as it happened in the Honda
Company.

Management should not have looked down upon labour union because it way to build
a relationship of dialogue between employees, employers and society also it is helpful
to avoid industrial disputes so as to develop a healthy work environment .

Company should avoid Autocratic leadership approach. Here, in this case


management seems to dominant the employee and their rights.

While handling the problem management should have to explain logic and rationals
of decisions to convince the employee.

Meeting should be conducted from time to time in order to know what is happening at
shop floor.

Should review HR policies and practices from time to time so that it makes working
environment more flexible to employee.

Conclusion
In Honda Company the whole problem started with a simple issue of bonus. And off
course the Vice President who was from Japan ill-treated the employees twice. But if all these
issues and grievances were handled properly and in timely manner that it would not have
resulted into a big conflict. But all this incidents with all other small issues compiled up and
result in the formation of the union. And from here, it took a violent turn. The success of Honda
was not the result of senior management works alone. In fact, team work can result in better
productivity, reduction in turnover, and absenteeism. The senior management should be open
minded and should have good cultural knowledge about the culture practices of the host country.
Employee working at all level should be treated well and participant them in decision making so
that a feeling of belongingness develop within the organization. The organization should listen to
the employee in order to know their expectation from organization. The company should take
labor Union positively that it is not only for the benefit of employee only but also benefited for
organization in case of undesirable demand by employee work as arbitrary between employee
and senior management.
At last, employee shouldnt be ignored, if company wants to be success in the market.

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