INTRODUCTION

ÊTwo plants in India- Mumbai and Ghaziabad

ÊProducing 12 million cigarettes every month (marginal profit)
Ê1100 employees in Mumbai
ÊAmerican & Indian owners ʹ 36% stake each
ÊIndustry dominated by 4 players

ISSUES
ÊHigh excise duties by government leading to marginal profits & inability to meet targets
ÊU.S. representatives recommended closing down the Mumbai plant (main supplier) and
relocating elsewhere
ÊIncreasing personal demands of the workers, high levels of inertia & resistance to change
ÊLack of shared values for organizational success between top-management and workers
ÊThe union of workers are lead by external sources having strong political influence
ÊUnion of workers reject the proposal of manpower rationalization
ÊHigh levels of stress on workers and high levels of pressure on the leadership to satisfy
them
ANALYSIS AND IMPLICATIONS
A) Industrial Disputes Act,1947
An Act to make provision for the investigation and settlement of
Industrial disputes and for certain other purposes that safeguard the
interests of workers.
Ê According to this the unions cannot demand astronomical wages
Ê Demand for a reasonable hike in wages can be considered because
the standard of living may have arisen from increasing inflation
Ê Closely related are bonus, incentives and other allowances. Hence
a component of performance variable pay can be introduced so
that the employees feel rewarded when the company is on the
profit generation track
Ê Failure of negotiation or arrival of a consensus can lead to work
disruption and slow production tactics
Ê Clauses for closure or relocation of factory premises
V) Trade unions (Amendment) Act,2001
It provides for registration of trade unions of employers and workers
and in certain respects, it defines the law relating to registered trade
unions. It confers legal and corporate status on registered trade unions.
Ê Therefore we see that the trade union is expected to be registered
Ê Formation of a secondary union influenced by external sources thus
the legal union became weak with only 15 members
Ê The mounting pressure is to meet with an unregistered union who
will contest for wage settlements.
Ê Inter union rivalries also leading to serious assaults and assisted by
lack of consensus amongst the members of the union
Ê The top management need not talk to them. However, the political
link makes the matter tricky.
Ê Workers of 15 years and a Union of 15 years would have some
inherent loyalty.
Ê We need to tap into that at this time of need
Ú) Management Úonstraints

Financial Pressure 4uman Resources Pressure

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RECOMMENDATION AND ACTION
PLANNING




Demand of hike must be toned down at this time due to mounting pressure for
performance . In such a scenario achieving productive operational settlement within 6
months is of prime importance.
Ê Introduction of an Inside-Outsider as a Change Leader. A more experienced person who
has been in the company for long needs to lead so that the transition can be smooth
Ê Collective bargaining techniques to be used to achieve a peace treaty between
conflicting parties at the same time maintaining industrial prudence
Ê Hire and train a supervisor in the union as a loyal and worthy point of contact
Ê Communicate problems to the Union and involve them in constructive decision making
Ê Incase of failure of bargaining and negotiation, resort to adjudication i.e. the legal
process of resolving a dispute
Ê The new emerging secondary illegal union to be treated with a firm hand. Complaints
to be only entertained coming through the registered legal union.
Ê If the external troublemakers protest then demand second union to also be legalized
failing which it requires to be dissolute
Ê Deal with any cases of serious assaults with severity



 

 To turn around the Mumbai unit- make it a profitable venture




Produce higher volumes thus countering the effect of high excise duties,
reduce costs, increase productivity, analyze relocation and more importantly building
strong relationships between the top-management and the workers.
Ê Let some employees go i.e. rationalize by providing them with voluntary retirement
scheme and monetary incentives
Ê Decrease the amount of political activity in the Union by building unity programs
Ê Building a strong organizational culture for motivation towards organizational goals
with steps like- Sensitivity Training, Survey Feedback Approach & Team-Building
Ê Developing a positive organizational culture for individual growth and vitality by the
means of organizational rewards as well as involvement - Education, communication,
& participation of employees at the organizational level
Ê Redefine processes through enhanced leadership and innovation
Ê Regaining competitive advantage/increase profit margins by redesigning the cigarette
to reduce its length such that the excise duties may come down
Ê Investments in next generation machinery is the need of the day which has a two fold
effect both on profits due to increased productivity and decreased workforce required
Ê Trying to expand the market and develop non cigarette tobacco products owing to
changing consumption habits among the people due to increased awareness
 LEARNINGS
Ê Employees are the wealth of the organization. Effective HRM helps in using this
resource in the most efficient and effective manner without any hiccups
Ê In organisations where both employees and senior management are in sync
over the organisational goals and share its values, transition and weathering
change becomes easy
Ê Healthy industrial relations are the key to success in any organization. Strikes,
lockouts, slowing tactics can cause large scale disruption, increased costs and
strained relations with customers
Ê Unions are necessary to protect labor rights. But political elements can cause
havoc if entertained by such unions. Also multiple unions do not benefit any
party and just add more stress, strain, misrepresentation and confusion
Ê Government policies can bring about a whip lash effect on both the social and
economic fronts, thus their effects should be studied and mitigated at the
earliest
Ê During times of crisis an new recruit i.e. a recent entrant is always looked
upon by mistrust and as an enemy. During such situations change should be
channeled through a person who is perceived to be loyal to the company and
who is presumed to be a part of the family!