Employees help Maruti Suzuki turnaround its fortunes

Maruti Suzuki is back!

After being hit by incessant strikes last year and suffering big blows on car sales last year, Maruti Suzuki seems to be back in reckoning after claiming the top three car brands positions this year, in terms of sales this year. The top three car brands by sales in India (2012) are Maruti Alto, Maruti Swift and Maruti Wagon R. Wagon R has pushed Hyundai i10 to number four position. Maruti is now expecting its news Dzire to razzmatazz the competitors even more.

So what turnaround the company’s fortunes? Diesel version of Swift, Wagon R? Possibly…but that could have happened last year as well. That did not happen because the production was halted several times at its Manesar plant, in the northern part of the country, due to strikes. Infact Maruti had to ultimately shift some of its Swift Diesel production to its Gurgaon plant. The bookings of the diesel versions at the dealers were running into long pending list and things were hardly working for the company. The original demand of the striking workers at the Manesar plant was formation of a separate union than the existing Maruti Udyog Kamgar Union (MUKU). The workers at the Manesar plant felt that the exiting union was primarily interest representation of the workers at Gurgaon and hence they demanded a separate union that could address to their concerns, one them being wage-hike. The management of the company opposed the new union formation tooth and nail and the deadlock continued for several weeks.

Interestingly the new union has now been formed by the workers at Manesar plant and the company’s management has not helped the workers register their new union but also has recognized the same. The union is also planning to take-up wage revision with the management. The present wage of workers at Manesar plant is around Rs. 18000/- per month that includes Rs. 8000/- as incentive. The resulting peace has presumably altered the sales figures of the company.

What led to this sudden change of heart on part of the company’s management? But then what was the logic in opposing the new union in the first place, if later the company were to accept it, in fact help forming it? Second, if it was a fair demand then why did the management oppose it?

I am sure they realized that such stance was not only being detrimental for the company in the form of low sales but more importantly they were losing the advantage to the competitors like Hyundai etc. but the Maruti story clearly shows:

1. People, and not anything else, are the real competitive advantage for a company. That is not to suggest that employees have an infinite right to demand but the legitimate needs & demands must also not be negated.

2. HR myopia is most damaging for any company. The workers with their union at Manesar plant shall always remember the ‘struggle’ more than the management’s help in getting them register. Had the company realized it in the first instance itself not only the loss could have been avoided but bad PR and bruises on employee engagement could also have been avoided.