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.

Bond sans Adhesive

Can signing a good conduct undertaking be a guarantee of good conduct by employees? Maruti Suzuki's strike at Manesar plant has reached a flash-point where both the management and workers seem to be unrelenting on the issue of the 'good conduct bond'. The management is adamant that the workers have to sign the bond and the workers refuse to do so.

The problems at Manesar plant came to surface few months back when workers at Manesar plant went on strike demanding a separate union then the existing one at the Gurgaon plant, which they alleged to be a management's union. the strike which lasted 13 days resulted in a huge loss for the company. Presently too the losses are accumulating. The Swift(diesel) bookings have been reportedly stopped by the dealers as the existing booking's delivery date shall stretch up to April 2012. And with car sales dipping, the company can ill-afford the small sliver-lining in the form of demand for diesel cars.

Anyways, coming-back to the core bone of contention ‘the good-conduct bond’- In the first place why should a company require its people to behave in a certain way only after they sign a good conduct bond? It is almost like asking your spouse to sign a bond that she would smile every time she opens the door for you when you return from your work? Shouldn’t that happiness reflect on its own? And if that joy of companionship is not there can someone be forced to smile? In other words that willingness on the part of employees to exhibit good conduct must be an automatic outcome of what goes on in the company rather than a forced one.

Second what is a company’s intention in insisting its employees to sign such a bond? Does it make the company look like focused on a policy of ‘hire and fire’? I think it does.

And finally, what shall the company do if a worker misbehaves after signing the good-conduct bond? Will it sue or sack or simply pest? Is it a tool to effect punishment or really a way to ensure good behaviour?

Respect, commitment, discipline can never be demanded; one can only illicit them voluntarily from others. This voluntarism is at the heart of engagement. The company who has a celebrated HR head is losing its touch on the pulse of people and slowly may be the people as well. Will it result in them also losing the people who buy their cars (customers) – I think they have already started to…

Eyes on the Star-bucks

Earlier this month, the nearly 200-member strong union in Chile launched Starbucks' first strike at company-owned stores, seeking pay that keeps up with inflation, a $100 monthly lunch stipend, as well as other benefits.

The Seattle-based company operates roughly 17,000 cafes in more than 50 countries around the world. The vast majority of its cafes are not unionized.Union workers account for roughly 30 percent of Starbucks' overall work force of nearly 700 in Chile. Despite the strike, the Starbucks' cafes  have remained open in the country.

Starbucks maintains that its pay and other compensation in Chile -- which includes stock awards, merit increases and comprehensive health coverage for full- and part-time workers -- is "above and beyond" what is offered by the coffee chain's peers in that market.

However as per reports, a Starbucks Corp executive sent a memo to company leaders late on Tuesday, saying the company would welcome back striking workers and that it hopes for an amicable resolution to the ongoing labor dispute.

It will be intresting to note the developments considering that Starbucks is a global brand and given the fact that it is known for its focus on employee engagement.

Back in 2008 when Starbucks Chairman Howard Schultz took over as CEO he was was blunt, telling analysts the company had lost sight of its mission and would rededicate itself to "laser-like focus on the customer experience."Schultz strongly believed that respect for employees will translate into better customer service, which ultimately leads to a stronger bottom line. He brought in a belief that engaged employees—those who are committed to the vision and values of their organization—generate higher sales and customer loyalty. Schultz had gone on record to say - "We're in the people business. Of course we sell coffee as a product, but we're in the people business. It's all human connection. We've been able to crack the code at creating an environment where people are treated well, they're respected, and they're valued. Customers come in and can see it's a different kind of environment, almost an oasis."

Watch-out this space for more.