A POPULAR HR CHIEF BURNED TO

DEATH: PEOPLE MANAGEMENT

DYNAMICS AT THE INDIAN SUBSIDIARY
OF SUZUKI Ltd.
Section D Group 8
Arunika Sangwan 19P190
Bhavya Jain 19P195
Riya Kothari 19P215
Sarthak Das 19P219
Tarun Damani 19P232
Yashvardhan Chamoli 19P238
 Industrial Relations at
MSIL before 2012
 Founded in 1983, Maruti Udyog Limited had few problems
in its labor relationships. Locally hired workforce
accepted the Japanese work culture & modern
manufacturing processes.
 In 1997, with the changed ownership, Maruti came under
government control.
 Labor problems started under the management of the
Indian government. In 2000, a major IR issue began and
employees of Maruti Udyog went on an indefinite strike,
demanding major revisions of their wages, incentives and
pensions.
 Employees resorted to ‘slowdown’ in Oct 2000, to force a
revision to their pay and perks.
 After the elections were held & a new central
government led by the NDA alliance took command,
pursuant to the disinvestments policy, the new
administration proposed to sell part of its stake in Maruti
Suzuki.
 The workers opposed this public offer plan stating that
the company will lose a major business advantage of
being subsidized by the Government and that the
workers are better protected under the Govt control.
 The cold war between the union and the management
continued through 2001.
 The management did not pay heed to the union demands
because of increased competition in the automotive
sector and lower profit margins. The central government
prevailed and privatized Maruti Udyog in 2003. Suzuki of
Japan became the majority owner of Maruti Udyog
Limited with 51% share with the public holding 12.5%.
  From April 2012, the Manesar plant workers’ union demanded a fivefold
increase in salary, monthly conveyance allowance of 10,000, laundry
allowance of 3,000, corporate gift with every new car launch, & a
house for every worker who wants one or cheaper home loans for those
who want to build their own house.

 In addition to this compensation & normal weekend/holidays, the union

demanded the current four paid weeks of vacation be increased to 7

Manesar
weeks, plus each worker to have 40 days of sick leave and casual leave
amounting to 75 days.

 The workers claimed harsh working conditions and extensive hiring of

Violence low-paid contract workers who are paid about US $130 a month, which
works out to half the minimum wage paid to permanent employees.

July 2012  Maruti said that the dispute was not over wage discussions, but after
the workers’ union demanded the reinstatement of a worker – Jiya Lal
who had been suspended for physical violence on a supervisor.

 Lal was a Dalit and had alleged that he had reacted when the supervisor
made derogatory casteist remarks against him.

 On 18 July 2012, Maruti’s Manesar plant workers at one of its auto

factories attacked supervisors, engineers & management personnel and
burnt & killed a senior HR executive, injured 100 managers, including
two Japanese expatriates.
  Shinzo Nakanish took over the reins of MD from Jagdish Khattar. Recently, Maruti
contributed more than half of the parent’s profits. As Maruti’s contribution to Suzuki
has increased, the latter’s tendency to control India operations has increased.

 Culturally, Indians and Japanese are far apart. Their sense of discipline, punctuality,
employee connect too are very different that caused differences.

 Maruti was trying to bring down costs and improve productivity. They hired contract
labor to bring in flexibility and reduce costs. At Maruti’s Manesar factory, 40% workers

Breakdown 
were on contract and their salary was half of the regular workers.

Land prices surged as Gurgaon became a commercial hub. People became rich and
their lives transformed because they made a killing selling their land. Such changes

of IR in 2012 re-calibrated worker expectations. Poor wage hikes and raging inflation resulted in an
impatient, militant workforce, which believed in aggressive posturing.

 The union has said the violence stemmed from an altercation between a worker and a
supervisor.

 The situation had been building up for the past 8-10 days, with several instances of
worker hostility. Cases of manhandling and workers spitting on supervisors’ faces
were common.
 Cross-cultural issues
 The company’s management that had become
increasingly Japanese since 2007 –failed to feel the
intensity and gravity of the problem.
 The company's managing director and CEO, Shinzo
Nakanishi, told Business Standard that "we did not get
any negative indication from the workforce since the
wage settlement agreement was signed in October".
 Japanese management was more focused on productivity
and outcome. All the major manufacturing contracts were
loaded on Manesar plant. This obviously increased the
pressure.
 There was constant pressure from the Japanese
management on the Indian management to enhance
productivity and increase revenue.
 The workers felt compelled to do overtime. They were
not comfortable with overtime.
 Indian management could not make their Japanese
seniors understand this or Japanese management, with
different work culture and style ,did not try to
understand it or all these worked together – are left to be
analyzed.
 The scale and the cold-bloodedness of the mayhem at
Maruti Suzuki’s Manesar factory shocked everyone but the
Japanese management’s main concern was only profit and
profit.
Role played by state and agencies in the
dispute
 In 2000 Maruti started employing contract labor in a big way, soon after the
Government began privatizing it. In October that year, the company saw its first
major confrontation between workers and the management.
 The Haryana government also played a reprehensible role by turning a blind eye to
the persistent violation of labor laws in employing contract workers for regular jobs
and by siding with the management in its repression of workers.
 The Haryana government chose to overlook labor laws and back company
managements. The labor department authorities were in know of the disputes but did
little to ensure smooth running of the plant.
 Government mandated procedures for labor dispute resolution are currently very
slow, with tens of thousands of cases pending for years.
 The government of India is being asked to recognize that incidents such as Manesar
violence indicate a structural sickness which must be solved universally.
Sustainable labour-management
cooperation at the Manesar plant
 MSIL should review if they listen enough to their people and whether they consider the latter’s points of view or not. There
must be the right amount of productivity to stay competitive, but it can’t ignore the task of keeping the workforce engaged
and motivated with a sense of ownership in the company. Ownership among employees prevents them from damaging the
company in any way because they feel they are as much a part of its well-being as the top management.

 The Maruti management needs to become more aware of the current situation and not past events — the year 2000
victory at the Gurgaon plant that had led to the present compliant union there. Most workers at the Gurgaon plant are older
unlike the young Gen Y Manesar workers, who are less tolerant if challenged.

 Indian democracy and Constitution guarantee to its citizens the freedom to form associations and unions. This right
cannot be taken away from the Indian legal system, despite the exigencies of faster growth, and younger workers do not fear
being sacked for making such attempts again.

 Employer has the right to pursue a no-union model provided it successfully makes employees’ work life exciting, dignified
and fulfilling, as is being done by several leading companies today. MSIL will have to put in efforts to improve the dismal
working conditions of its workers – like unhygienic food, hurried lunches, overtime, late entry penalties.

 Japanese companies have faced labour unrest in many countries like India, China, South Africa and Indonesia, due to the
system of contract labour which is the second most prominent cause. Work culture is an important factor in labour problems.
Most of the Japanese subsidiaries prefer Japanese as the heads of their divisions and very rarely local people are appointed
on the Board of Directors. Their work culture does not resonate with the employees. MSIL should try to have a diverse
management that could understand and deal with problems effectively.
 Work culture plays a critical role in a company. Mismatch
between employee and management’s work style
expectations can have drastic results.
 Misplaced HR strategies cause trouble if the management
fails to read the signals and takes things for granted.
 Postponing decisions makes workers suspicious of
management’s intentions. They can grow restless and Lessons Learnt
eventually violent.
 Management’s greed for higher production without adding
more machinery and manpower put a lot of pressure on
supervisors and workers. The continuous pressure to achieve
higher targets eventually takes its toll.
THANK YOU