Building Employment Relationship at Workplace: Bajaj Auto
In a recent visit to Pune I learnt some interesting details of the Bajaj Auto’s industrial relations at their plant in Pantnagar. It accounts for 25% of production of Bajaj Auto.
Bajaj Auto established a plant at Pantnagar in 2007. It employs about 1200 persons. There
was a strike in June 2012 as the workmen demanded a hike of Rs 8,000 while the management proposed to increase their wages by about Rs 1500.
Bajaj Auto signed a settlement with representatives of workmen before the Conciliation Officer. This means it will be binding to all workmen, present and future. [We have a copy in hand].
But the union of workmen at Pune, Vishwa Kalyan Kamgar Sangthan has different view. It says it is practically impossible to register a trade union in Uttarakhand, though there is no legal bar. This is attributed to the State Government’s apathy towards unions. So the Vishwa Kalyan Kamgar Sangthan asked what was wrong in it representing the workmen at Pantnagar. Bajaj Auto submitted that unions registered outside State cannot represent their workers. The matter went to the High Court. Legal Pundits feel that there is no bar to Pantnagar employees being represented by the Vishwa Kalyan Kamgar Sangthan or the Pune Union as the constitution of Pune union of Bajaj Auto workmen permits pan-India membership.
This introduces a twist in the tale as the Company would like to avoid exactly this situation! The Pune Union is also challenging the conciliation settlement. In their eyes it is a sham settlement. There are some very interesting [!] clauses in the settlement. It is not my intention to cover all but one clause ‘takes the cake.’
The settlement gives a ‘Performance based’ increase. In a nutshell this works as follows:
[a] All workmen get uniform increase in allowances.
[b] But they get differing increases in Basic salary. Those rated A will get 100% of the agreed increase, B rated will get 80% and C rated will get 50%.
Since the allowances are increased without any differentiation, the effective rate of increase will be 100% for A rated, 90% for B rated, and 75% for C rated workmen.
This surely raises some issues:
[a] Is it a viable policy to keep out unions out of the negotiations room, particularly since the fundamental right allows their legal existence?
[b] Would differentiation work in the case of auto industry where the workers work on an assembly line?
[c] Would differentiation in wages work in the case of workers where appraisal of performance may not be believed in? [All HR Managers have faced innumerable issues with appraisal ratings of managers who are more inclined to accept differentiation in compensation.]
[d] Should such a differentiation be made in Basic wage or in Variable component?
We must remember Alfie Kohn’s words “Punishments and rewards are not really opposites. They are two sides of the same coin, and the coin does not buy very much. Researchers believe that you should pay people well, and do everything to take their eyes off money! The real issue is what kind of culture is promoted at workplace. Sometimes intentions are laudable, but the effect can be the opposite!
A new factory allows scope for experimentation. Those who seize it will take the organization forward. The real issue is how we build employment relationship at our workplace. What are our beliefs and principles on which we will build it?
Vivek
See also: http://hresonance.blogspot.in/2012/03/bajaj-auto-union-first-steps-on-road.html
See also: http://hresonance.blogspot.in/2012/03/bajaj-auto-union-first-steps-on-road.html
Dear Sir,
I read the above article posted by you & it has really intrigued me.
I may not have the relevant experience or knowledge to comment on the above topic, however of whatever I have seen & understood from my working experience, I would like to express my opinion as following.
• It is really an innovative step taken by Bajaj Auto by putting the “performance based increase” clause in the settlement.
• In fact I feel that if handled properly, this can really bring upon a transformation at the workplace both for the management as well as the workers.
• This is exactly the kind of system that would work in a manufacturing setup with an assembly line production as now the workers will know that the work done by one will affect the next in line’s productivity & hence they would all work in harmony & would themselves identify & bring out any person who is causing problem in their team
• Positive motivation plays a very important role in boosting the morale of any employee & hence if their performance is measured, & they are rewarded for it would motivate them to become more productive & take the productivity of the organization to a completely new level.
• I agree that, at many places, a formal appraisal of performance for the workmen may not be believed by everyone. However this can always be welcomed as a positive cultural change in the organization.
• I believe that most of the issues at workplace arise because the workmen’s issues are not addressed by the management ON TIME. Instead of sitting on the problems, if the management acts on time, this would be a fantastic turnaround at the work place.
• The management needs to accept & believe in such a system & be patient enough for it to be ingrained in the system of the workplace as bringing about such a cultural change might take months even years.
• The management can go one step ahead & give autonomy to workers in terms of their daily production activities & make them responsible for the output. In this way, the workmen will not have any one to blame to for their non – performance.
• My opinion to your last question would be – the differentiation should be made in the variable component which can be linked to the target productivity.
I would welcome inputs about my opinion & would like to hear from more people on the same.
Warm Regards,
Anagha