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?

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