Unconscionable Is The Racold Closure

Unconscionable Is The Racold Closure

/ December 6, 2018 / 17 Comments / Industrial Relations, Values

The way you resolve conflicts tells a million words about your character. The latest provocation to write on this subject comes from the way Racold has effected closure of their factory at Chakan, near Pune. ‘Unconscionable’ is the word which best describes the act of the timid Racold Management.

Racold established a factory at Chakan near Pune in 1998. Chakan is an industrial belt where several reputed organisations have set up their manufacturing facilities. The production at this factory showed a skyrocketing curve. In 2013-14, the Company manufactured and sold 4.50 Lakh units of water heaters and had employed about 750 workers. Then came outsourcing and what followed, you guessed it right, a Voluntary Retirement Scheme. They brought down the strength to a tad less than 100 to enable them to close down the factory. [Here typically organisations do not count office staff and temporary workers, although they are workmen under the Industrial Disputes Act, but it is a subject of another blog, and in the instant case we will leave it for the lawyers to fight it out]. Somewhere along the way, they separated the Sales and Manufacturing in two different companies for a convenient closure arrangement.

There are ups and downs in the business and there is a reality of spiralling costs which forces many a management to consider closure. What stands out is the way they go thereafter.

In my earlier blogs, I had written about how Colgate had closed down their Sewree factory without a whimper. Godrej went one step ahead! They shifted their age-old factory from Vikhroli to Ambernath quietly – not a single local newspaper picked up the story. This is where these two notable instances differ from Racold. While Colgate and Godrej showed a good understanding of the people issues involved and demonstrated their will to sit down, talk about it and resolve to mutual satisfaction, Racold showed unmatched cunningness and timidity!

Racold distributed sweets on Diwali day and asked all employees to enjoy Diwali holidays. It, however, posted the termination letters on Oct 31, just before Diwali, which reached the employees almost on the day after Diwali. Racold had declared a three days holiday from November 1 to 3 for ‘stock checking.’ Nov 5 to 9 were Diwali days!! Racold had planned the closure ‘exceptionally well’ with the shrewdness of a wolf. The employees discovered that they had lost their jobs during Diwali holidays. There can not be a worse example of a closure than Racold’s case.

The Canadian philosopher Matshona Dhliwayo says “When a wolf is hungry it befriends sheep.”

Why do managements of organizations like Racold behave so unconscionably? There are possibly various reasons. The first and the biggest reason is that they do not believe in their ability to influence the employees – and also because there is an increasing tendency to think of employees, particularly the blue-collar employees, as being a different creed. They are, in the eyes of managements like Racold’s, supposed to be violence-prone, unreasonable, self-centred. What else can explain such timid and cunning action? Such examples are not rare. Rare are the examples set by Colgate and Godrej. It also speaks volumes about the kind of leadership and leader of organisation, this is why we said that the way you resolve conflicts tells the organisations’ persona.

[The termination letter. The name of the addressee is blocked to prevent identity]

Typically, the managers in organisation are well educated [note that we have not used the word ‘learned’], who often flaunt their management degrees. Does it prepare them for employing cherished values to resolve such conflicts? Does it prepare them for engaging in difficult conversations to bring about an acceptable solution to a deep conflict? There is increasing evidence that it does not, and the examples set by Colgate and Godrej stand out because they engaged in difficult conversations.

There is another reason why such Racold-like actions are practised. The most prominent being the Government’s inaction which borders on displaying the ‘Bystander Effect.’ It is a phenomenon where the onlookers do not help the victim. There are cases where onlookers did not help the victim or rescue the victim even when a rape was being committed! The Government’s inaction reminds us of the Bystander Effect.

Predictably, the local MP, a Shiv Sena nominee [Member of Parliament] has stepped in. What can he do really? The closure has been effected; nobody is going to reverse it except the Court. It takes a long time. By then a few would have gone to the land of no return!

A few hundred persons, at least five hundred, all from the families of the employees will have to come to terms with this reality. While the jobs are scarce, and employment to persons in their early forties almost impossible, a few hundred persons’ futures will be damaged beyond repair by Racold’s irresponsible act of closure.

Does anybody care?

Vivek S Patwardhan

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