When Abbott India Went LG Electronics Way

When Abbott India Went LG Electronics Way

Ashish Awasthi ended his life; he jumped in front of a running train. Media would have ignored it but for his tragic story bringing in sharp focus many ills of the corporate world. Awasthi had blamed his employer Abbott India Ltd., a subsidiary of Abbott Laboratories, USA, in his suicide note. I have given the link to this story as a footnote.

Awasthi’s story is that of an arrogant and demanding boss within an organisation with no scruples and a man trying to meet the targets. Bullying by boss led to Awasthi’s suicide. There are other texts which show that Abbott ignored policy guidelines, rather observed them only in their breach. This in spite of instances pointed out to the seniors.

There are patterns here which are too familiar. They need discussion and debate.

LG Electronics and Abbott India: Spot the Similarity!

This may sound strange. There something common between LG Electronics strike story which I covered recently [See Link as a footnote] and Abbott India. It is obvious. Both the Indian organisations have flouted their parent organisations’ avowed policies of employee relations.

Abbott flouts policies…

Take a look at what the Abbott policies say:

OUR CONNECTION TO EACH OTHER We all share in the responsibility to live our values every day.  By demonstrating and supporting ethical behavior, we positively impact the culture of Abbott. We are all responsible for understanding how this Code applies to our work and the role we perform in the company. Managers and supervisors, as leaders in the organization, must demonstrate a strong commitment to our values and lead by example. They must always promote and support ethical behavior by employees. Managers must help ensure that employees understand their responsibility to abide by this Code and must foster a work environment that allows employees to feel comfortable asking questions and voicing concerns without fear of retaliation.

…………Managers and supervisors have a fundamental responsibility to lead by example and ensure that employees understand and are held accountable to the Code. Those in leadership roles carry heightened responsibility for understanding and communicating Abbott’s expectations….

What is Abbott culture? Let us call it the ‘desired’ culture. Six words to define it [as the website says]:

[a] One Team, [b] Agile, [c] Results, [d] Mutual Respect [Treating others with respect is of utmost importance at EPD India. We believe in an open and transparent culture], [e] Trust [People are our greatest strengths. We have a people focused culture that rests on the pillar of Trust] and [f] Shape the Market.

The policy document also provides that “Those in leadership roles carry heightened responsibility for understanding and communicating Abbott’s expectations, and should contact the Office of Ethics and Compliance regarding potential Code violations. All reports of potential Code violations will be taken seriously and handled appropriately through follow up steps such as investigation, remediation, and where necessary, corrective actions to address issues, learn from mistakes, and avoid recurrence.”

The Awasthi story is well researched. Here is a sample of what it says:

Rajeev Khanna, who managed six sales representatives for neurology medicines in northern India, said he was fired after complaining to Abbott’s office of ethics and compliance that his team was submitting fake invoices to increase sales. He described a practice of giving discounts intended for government institutions to private wholesalers as a kickback.

Long and short of the story is that checks and balances instituted by the parent organisation as well as policies were systematically flouted. There is denial from Abbott India but the article has documented its case well. Readers are not going to believe the Abbott denial. Sales staff like Awasthi were put under tremendous pressure to perform disregarding the policies.

In conclusion: Parent organisation sets the policies and guidelines, local organisation flouts them.

And that’s precisely what LG Electronics did too:

I wrote about the recent strike at LG Electronics. Just in case you haven’t read it I am giving the relevant text for your ready reference.

LG workers formed a union and applied for registration in January 2016. That was supposed to be an ‘Employees Union.’ Let me quote the IndustriAll [IndustriAll is an international union] report places facts on table:

[I quote] On 9 July, 11 workers, including office bearers of the proposed union were denied entry to the factory, and management took their ID cards away. The workers were then informed that they were being transferred to different locations in distant parts of India including, Jammu Kashmir, Jharkhand and Bihar and asked to report to work in those places. A twelfth person received the transfer order a couple of days later. [Unquote]

So the workers struck work from July 11. Then police intervened by making some arrests.


So our next step is to investigate the Labour Policy of LG Electronics. This is where the story takes a very different turn because the actions of LG Electronics India P Ltd become difficult to understand in the light of the Global labour policy of LG. I have very often emphasised the need for organisations to declare Employee Relations Policy, and here is one such organisation declaring its policy on the website. The policy is laudable! Let us examine it before we think of this strike.

[I quote]

Labor Rights Protection

We protect employees’ basic labor/human rights and build a future-oriented “Win-Win Labor-Management Relations”.

LG Electronics strives to motivate employees by actively protecting their labor/human rights and to reduce risks associated with labor/human rights across its supply chain. We also run a grievance resolution process through multiple channels to promptly address any issues that employees face.

All employees are eligible to join and participate in the activities of labor unions, in accordance with the relevant collective bargaining agreements and labor union regulations. The union’s infrastructure consists of one head office and six branches in Korea. All union members have voting rights and are eligible to stand for office. In addition to the quarterly labor-management meeting and annual Collective bargaining, LGE communicates various issues, including working conditions, regularly through diverse channels. Both parties negotiate in good faith and with patience on important agendas to reach an agreement. LGE also operates the Junior Board to obtain suggestions from both union and non-union members. LGE further makes diverse efforts through various channels to promote effective communication.

LGE has spread the advanced labor-management culture and labor management know-how to overseas offices as a part of its ongoing efforts to form a global advanced labor-management culture. In addition, LGE is strengthening the global labor management network to monitor and evaluate the labor-management relationship in real-time and assign a Green, Yellow, or Red signal corresponding to the situation. [Unquote] 

Why do organisations flout their professed policies and ethics guidance?

We can sum it up by saying that it is all about leadership. But like all generalisations, it will miss the point by being too general.

If we look around carefully and look at the leaders in the corporate world applying the Koestenbaum model, you will discover that Vision, Reality, Courage and Ethics, the four characteristics of leaders are found in descending order of abundance. Every leader has a vision, websites and walls are full of the organisation’s vision statements, often signed by the Chief Executive. A good many make too little effort to understand the reality. The pulse of people is missed too often. Courage and Ethics are in short supply. And the reality facing the organisation is too complex to be described in market survey or engagement survey numbers.

When the parent organisation is setting goals, it takes courage and skill on the part of the Chief Executive to negotiate them in the local context. Even compliance to policies cannot be seen in ‘done-not done’ polarities. I was training a certain pharma company’s managers. Their official stance was to sell products ethically. The sales staff was saying, very openly, that if products are to be sold by ethical practices, none would meet the target.

The situation is Abbott was no different. Resolving this dilemma is the prime responsibility of the Chief Executive and it can be done only through conversations with managers and by being a role model. This approach is not commonly found, usually organisations think that training can influence the managers and sales staff; the fact is that it doesn’t. Conversations do.

Sales persons are trained to compete fiercely. When they fear loss of sales and consequent failure to meet the targets due to insistence on compliance with policies, they tend to sacrifice policies. If their fear is not addressed there is no way a Chief Executive can ensure compliance with policies. Add to this the general attitude towards policies of MNCs: “This works in USA, it will not work here.”

If LG Electronics thought that unions are predominantly acting against the interest of the organisations, they have been blind to many positive experiments done within this country. And they have also missed the fact that Southwest Airlines staff has seven unions and yet they are the only consistently profit making airline for the last thirty plus years!

The point is that the solution is in dialogue, and conversations. [It also requires courage to experiment and a staunch belief in the ethics]. In his book ‘The Humble Inquiry’ Edgar Schein focuses on similar problems. He says, “How does one produce a climate in which people will speak up, bring up information that is safety related, and even correct superiors or those of higher status when they are about to make a mistake? The answer runs counter to some important aspects of U.S. culture — we must become better at asking and do less telling in a culture that overvalues telling. It has always bothered me how even ordinary conversations tend to be defined by what we tell rather than by what we ask.

There lies the key to implementation of policies. The related behaviour of bullying is also countered exactly by the same technique.

Abbott and LG Electronics unfortunately are just two of the pack of similar organisations. So we will probably read more of such stories. After all the Press, particularly the foreign Press, does not enjoy covering positive experiments in India!

Vivek S Patwardhan

Just in case you haven’t read the story, read it here. [http://www.nytimes.com/2016/08/11/business/international/abbott-india-suicide-inhuman-drug-sales-tactics.html?_r=1]

The Employees Strike at LG Electronics https://vivekvsp.com/2016/07/employees-strike-lg-electronics/