A CASE ANALYSIS ON

PEOPLE MANAGEMENT FIASCO IN HONDA

MOTORCYCLES AND SCOOTERS INDIA LTD.

A Case Analysis Report

Submitted by: Team Bond

Bhishan Joshi
Kirtan Raj Dahal
Nalina Shakya
Roshan Acharya
Rupak Kuikel
Shweta Subedi

Submitted to:
Mrs. Sabina Tuladhar
Faculty of Human Resource Management
SAIM College

In Partial Fulfillment of the Requirements for the

Masters of Business Administration (MBA)

Old Baneshwor, Kathmandu

March, 2018
 TABLE OF CONTENTS

1. SYNOPSIS.................................................................................................................. 1
2. ISSUES AND PROBLEMS ...................................................................................... 2
3. ANALYSIS ................................................................................................................. 3
4. CONCLUSION AND RECOMMENDATION ....................................................... 6
4.1 RECOMMENDATION ............................................................................................ 6
4.2 CONCLUSION .......................................................................................................... 6
1. SYNOPSIS
The case study deals with the problems faced by HR on Honda Motorcycle and scooters.
There are many reasons discussed in the case that led issues between management and
employees of HMSI. In 2006, the President and CEO of Honda Motorcycles and Scooters
India Limited (HMSI) had to make some radical decisions on a number of issues facing
the company following the July 2005 altercations with its management and
workers. He had to repair the damage to the company’s image and develop a
strategy for long-term cooperation with its employees. On July 25, 2005, the management
of the Honda Motorcycle & Scooter India (Private) Limited, (HMSI), a wholly-owned
subsidiary of Honda Motor Company Limited (HMCL), encountered violent protests
from workers that disrupted production at their plant in Gurgaon. HMSI workers were
severely beaten up by the police, and newspapers and TV channels gave wide coverage to
the violence of the action. The protest followed six months of labor unrest at the HMSI
factory where the employees slowed down their work as the demand for increase in
wages were rejected by HMSI management. The case starts with the radical decisions
made by CEO of Honda on a number of issues. The human resources policies were
aligned with the philosophy of the parent company which had two fundamental beliefs:
Respect for individual differences and also three joys – buying, selling and
manufacturing. They also used to organize training programs for cultural issues, building
team leaders. They also had a performance appraisal system performed by section head
and divided into 5 categories. Then the introduction to labor strike bought down the
company which was not dealt by the company properly. Indian management and
Japanese management contributed to the problems in the present situation. Workers were
unhappy with the Japanese national also the vice president as he was a strict
disciplinarian. So there was labor unrest. There are also number of incidents of clashes in
the case between the employees and the management and are guided by trade unions and
external parties.

To conclude the synopsis, this case deals with

i. The factors and causes that led to labor unrest at HMSI
ii. Its impacts on the employees
iii. HR policies adopted to prevent labor unrest case
iv. Role of external parties i.e. Trade Union and Political Party
2. ISSUES AND PROBLEMS

1. Cross Cultural Differences

The cross cultural differences between Japanese and Indian can be seen HMSI. The
Japanese executive are not being able to know the importance of Indian cultural for
instance, the dispute that has been created during the Diwali Bonus, attitude towards the
work and difference in leadership and management style.

2. Strong Organization Philosophy but Lacks Implementation

The rigid management style of the Japanese Management has been strongly affect the
organization. The autonomy management style has created many problem at work place
like inflexible working schedule, difficulty in granting leaves, regular threat for
termination of job, fear of management authority.

3. Perceptual Differences
In HMSI there is perceptual difference between the levels of management. The
perception of worker towards the managers shows the favoritism and partiality in posting
and job placement. Similarly, the management perceived that the employees’ demands
are unrealistic as the compensation standard of company is above the industrial standard.

4. Improper Communication and Partiality

The top level management is inaccessible to the operating level staffs due to the middle
level management show restrict to share the information to the executives. There is
unresponsive conciliation approach to solve the dispute among the levels of the
organization.

5. Role of Political Parties, Unions and Management

The unlawful tactic adopted by HMSI to prevent Labour union formation at the
workplace. The company threaten to the employees not join the union otherwise they will
be fired from the job. HMSI uses various means not to register the trade by lobbying with
the government.
3. ANALYSIS

1. Cross Cultural Differences

Globalization has brought lots of liberalization with increment of FDI and Subsidized
business all around the world. With incorporation of business , Parent Company should
be prepared about cross culture difference one might face in holding Companies due to
difference in attitude towards work, cultural atmosphere, perception of people towards
certain gesture and soon. Generally, higher impact of cross cultural difference is seen
between Asian, American or European group of companies because of difference
between individualistic and collective behavior. However, among the Asian countries too
such difference makes a huge impact, mostly due to rigid policies of Parent Company and
in ability of holding companies to cope along with it. For instance, Japanese firms are
said to be ethnocentric in their management style and there are lot of grievances too that
they do not try to understand local culture of place they have been operating which has
been clarified in the Case. HMSI has been incorporating in India for six years (1999-
2005). At this stage, company should have broad overview regarding importance for
Diwali festival and ensure that bonus are in respect to market rate. The actual situation is
that Japanese did not try to learn nor Indian employees could come freely describe its
importance in right way. Similarly, The Japanese leaders adopted a high authoritative,
strict model of management. They are time conscious and strongly follow rules regarding
efficiency in work. At the same time, in India most of people are ignorant and even are
always late for work and meetings, which has been grievances of many Multi-national
companies, so due to management view that Indians employees are indifferent towards
roles and responsibilities, might have dismiss the staff who has left for washroom due to
serious reason. These minimal incidences with lack of understanding of environment and
culture had cause the conflict in organization.

2. Strong Organization Philosophy but Lacks Implementation

Organization are able to integrate all people in one clove is due to its philosophy.
Philosophies are Fundamental values which defines characteristic of an organization.
Values not only provide general idea about firm but also gives direction regarding
organizational goal achievement, insights employees how they are to behave and what
kind of support one can attain i.e. special attribute leader / founder possesses in
organization. When policies of organization, regulation of work carried out
complementarily, it help to wipe out imbalance in work structure and ensure strong flow
of work. In HMSI it has strong value linking organizational goal (ensure joy of living and
individual Support) with work performance, evaluating and giving rewards accordingly.
However, philosophy and standard rules set has vast difference. Standards set in
organization should be such that they are attainable and does not cause any kind of
overstress in work. The situation here interprets that company is trying to save cost by
engaging same worker twice to do two different tasks. Similarly, there are strict
regulation regarding leaves. At one hand company is promoting that they support their
staff in difficulty on the other response is reversed. Policy were strong but
implementation and coerciveness in work atmosphere caused the problem.

3. Perceptual Differences
Perception is the way in which people gather information about the world and the degree
to which information is gathered. While two people can experience the same stimulus
through the senses, they may perceive the information differently. Generally, in an
organization the perception between the levels of management is quite different. The top
level management always expect more productivity, effective, efficient and quality
output whereas, the employees expect good pay scale, proper job enrichment, good
incentives, good work environment, proper work life balance, job security etc. These
perceptual clash may create many problems in an organization. In order to solve
differences, proper communication is required, employees should be motivated. In HMSI,
perceptual difference vary according to management level, Japanese VP was dominant in
nature and though way he behave with staff like pushing cap of Sikh worker or hitting
employees showed that he perceives worker as slave and should be controlled via
autocratic style. Middle level Managers were reaping out the benefits, they were not
concern with low level staff grievances. The management has refused to appoint some
trainees and pressurized the employees to work on more shifts. This has consequently
employees perceived the management as the discontent among the employees. Aftermath
of situation showed positive reflection when management changed their view leading to
smooth flow of work. Therefore, situation should be viewed from both side of coin.
4. Improper Communication and Incorrect Grievance Handling Procedure
Communication is one of the most productive tools in a company’s toolkit to impact the
workforce and the public image. Management should communicate regularly to and with
its work force, and create platforms for a two-way dialogue. Lack of Communication
happens to be the seed of all these conflicts, which led to strikes and lockout. This
misunderstanding of communication raised as favoritism was seen in form of
performance appraisal system. Furthermore, HRM concept was not develop in the
manager level itself. If the manager would have the awareness of HRM then there would
have been implementation of employee relation in policies of employee engagement,
which lead to increase productivity of employee and work. Similarly, the base of
miscommunication were governed by middle level managers who never heard workers
grievance, therefore if company adopts a successful collaborative strategy with the
union, the union can often act as a voice and advocate for management as well.

5. Role of Political Parties, Unions and Management

General overview organization have about union are bad which came as nightmare to
HMSI too. Unions governed by political parties lead to absenteeism and stoppage of
work. Union at HMSI initial phase was vague as company was providing more than
average industrial standard. This point helps to analyze that Unions should have proper
objectives and should work for betterment of staff and organization both. If formation is
on untruthful grounds then it causes nothing more than disparity. Similarly,
Management’s actions were demoralizing and disrespectful at many levels: When
employees opposed management decision of not having union, management called
individual and pressurize them not to join the union. Involved Government in one way
and other to delay the formation of committee. These all lead to destruction. Eventually at
its aftermath when union was formed under strict guidance and code of conduct, it
reduced grievances and increased efficiency work which makes a point that right course
of action depends on proper code of conduct and efficient implementation and review of
such policy.
4. CONCLUSION AND RECOMMENDATION

4.1 RECOMMENDATION

 The Top level management should keep in mind the cross cultural issues while doing
business in host country about their values, belief and assumption.
 Top level manager should keep open door policy or grievance handling team so that
worker could feel free to work. It leads to employee satisfaction at the workplace.
 Performance Appraisal should be continuous process and two-way feedback is
necessary, so that employee can grow according to the need of the company.
 Organization policies should be revised with proper implementation and review
approach.
 HMSI needs to place a high investment in HRM who can provide the training and
support for the Japanese and Indian managers.
 HR programs need to be redefined, such as the job posting process, to promote a
culture of fairness.
 A value system based on trust, transparency, fairness and equity should be created
 Labour union are not bad if implied in right way, so management should keep their
mind open regarding it.
 Company should avoid Autocratic leadership approach.

4.2 CONCLUSION

Not all organization is perfect at its own, all the components, associates, business partner
should be cooperated and integrated to solve any problem. Any problem can arise in the
organization and reaction to the problem plays vital role. HMSI is large company and
have larger opportunity and scope in the market. However, it made error on people-
management issues. Management caught unaware when the accumulated grievances of
employees led to hostile and form an alliance with the help of trade union wing of the
political party, which was a partner in the ruling coalition at the federal level.
Management failed to break the unity of the workers or by enlisting help from the
government or through the legal system to their advantage. The struggle for power has
led to violent clashes between workers and police who were called to the defense of
management HMSI. This incompetent addressing HR Company led to a long strike by
the workers. The strike, in addition to causing significant financial losses have also led
to the emergence of a very strong union.
Lastly, from this case we can understand that importance of a defined HR strategy to
facilitate healthy industrial relations. This case also demonstrates how important it is to
have a mechanism for understanding and resolving employee grievances. We also see
how the government, political parties etc. can have a significant impact on the effective
operation of a business.