Govindkaka's Psychological Contract With Contract Workers

Govindkaka’s Psychological Contract With Contract Workers

Sometimes you search for a valuable thing and give up all hope of finding it. Then comes a surprise – you suddenly discover that it was so close to you. You get a feeling that you were looking at the wrong place all along!

To cut the long story short, I was so pained by the plight of the contract labour that I had given up all hopes of finding a magnanimous employer who would treat them with fairness and dignity every worker deserves. Himanshu Bhatt mentioned that Shree Ramkrishna Exports [SRK] follows the kind of policy toward workers which I have always advocated. He asked Dr Nirav Mandir, who heads HR at SRK to explain it briefly to me.

I was surprised by the stance adopted by Shree Ramkrishna Exports P Ltd toward the workers. When Dr Nirav extended invitation to visit the factory and meet Mr Govind Dholakia [Govindkaka], the Founder Director I was delighted at the opportunity it presented.

I wanted to interview the entrepreneur, they said yes. ‘Can I interview workers,’ they said yes. [See this at the end of the blog post]. There were no restrictions put on me of any kind, there need not be restrictions they said, they were so open about everything in employee relations. Openness is the key to building good relations. They have discovered it early.

So I met three workers. “I will interview you” I told them, “it will be recorded.” They were ready. The three workers had spent long innings with Shree Ramkrishna Exports [SRK], one of them had joined in 1988 on a salary of Rs 1200, another in 2000 on a salary of Rs 7000.

There are about 4500 workers who do various type of work in their factory, they cut and polish diamonds. They use mostly automated machines if not computerised machines. Some machines use laser cutting, those are high precision machines. Where did they learn this skill? It is at SRK. Did SRK give training or did they recruit skilled workers? SRK trained their workers, no recruitment directly as a skilled worker. That, among other things, helps us understand why the worker who joined in 1988 can earn Rs one lakh per month including the performance incentive. Yes, Rs 1 Lakh per month!

It is interesting to note the recruitment policy of SRK. They don’t worry about educational qualification of a worker – the single decisive factor is can he do the job after training – can he learn and apply the skill which SRK arranges to impart. This may not be possible in all industries. But we can’t dismiss this practice by labelling it industry specific. We will make a mistake if we fail to understand this practice ignoring the people philosophy of SRK. People who work here are almost there for lifetime. [See Spot Talent Not Qualification]

Recession in 2008 hit the diamond industry very hard. Several units doing diamond cutting and polishing work retrenched workers. Not SRK. Not a single worker was removed! Govindkaka, the entrepreneur who established this institution, openly declares that the business would always be conducted by practising certain values. I call SRK an ‘institution’ because it is an organisation run by practising good values. While values are declared by many an organisation, those are often observed only in their breach – SRK is different.

I interviewed three workers. They talked about their experience. That’s the ‘test of the pudding’ as they say. If you wish to find out how effectively an organisation is run, ask the first level employee. A sensitive entrepreneur produces sensitive group of employees. Govindkaka’s refusal to retrench workers begot him about a hundred letters from workers who deeply appreciated the decision. They said so by writing letters to him – I saw a bund of about hundred such letters. The tone was ‘we will remember this gesture’, ‘we will reciprocate by an action which will help the company’. I was quick to take out my phone and click photos of those letters.

We have noted so far that SRK recruits workers without considering their educational qualification, it trains them well and gives them highest sense of security. Moreover it pays them well – if a 7th STD pass person can earn Rs one lakh a month in addition to the job security, his life is made!

But everything can’t be perfect – although I would say that things are near perfect at SRK for employees. Out of 4500 workers only a handful are permanent workers and all others are engaged through contract!

So take a look again, Sir ji. ALL workers get the same benefits, same wages, irrespective of whether you are so called permanent worker or contract worker. This means all workers are enrolled in provident fund irrespective of status as permanent or contract worker. Irrespective of salary they draw. Those who are not covered by ESIS are covered by Mediclaim policy – minimum of Rs 1 Lakh [max Rs 5 Lakhs] insurance – this too is uniformly extended to permanent and contract employees. All get the same wage scales. All are beneficiaries of the same incentive scheme! In other words, both permanent and contract workers make the same earnings – and they often touch Rs one lakh per month. And nobody, none of these contract workers was retrenched when the recession hit SRK hard in 2008, providing them highest sense of security! And all of them work in a five star facility which is a fully air conditioned factory!

But then why appoint on contract? I guess the well-known apprehensions of employers must have got them to use contract route for appointment. The diamond industry has often seen swings of fortune and an employer is often weary of labour laws of our country which have fallen out of step with times. I do see this as an anomaly, but isn’t it rendered inconsequential?

We will however be doing a grave injustice to SRK if we fail to appreciate their people policies which go beyond the ‘contract.’ SRK have not hired contract workers because they can be removed anytime. They have not hired for saving labour cost. They have not treated the contract workers differently because they can!

In this process they have raised themselves to the status of a model employer. They have not copied any foreign organisation in adopting such novel practice, in fact they have showed them the way.

And they have proven many popular theories wrong. Read this with my earlier blog post ‘The Contracts of Exploitation’ to understand the difference.

There are great benefits of adopting people philosophy which is rooted in strong human values. SRK is a shining example of this approach – like a well cut and polished diamond!

A 7th standard pass entrepreneur, Govindkaka Dholakia understands that psychological contract is what binds the employer and employee. That is the real contract which works!!

Is anybody listening?

Vivek S Patwardhan