Honda Motorcycles and Scooters India Ltd (HMSI)

Presented by: Group A

Kaushik Mohapatra (U109071)
Anand Bardhan (U109105)
Biswajit Mahapatra (U109111)
Saurabh Kumar (U109156)
 History of Honda

Honda is headquartered in Minato, Tokyo, Japan.

It is the world's largest manufacturer of motorcycles.

It has more than 120 manufacturing units in across 30 countries for two- wheelers
production.

It’s the world's largest manufacturer of internal combustion engines measured by

volume, producing more than 14 million internal combustion engines each year.

Honda spends about 5% of its revenues into R&D

Also involved in F1 racing and other segments of the automobile industry.

HMSI

Established in 20th October 1999 in Manesar (Haryana).

It is a wholly owned subsidiary of HMCL Japan.

The company aims to manufacture world class scooters and motorcycles from
this plant.

The plant had a initial capacity of 0.1 million which was to be raised to 0.6
million by 2005.

The company in India wants to become the vehicle of change.

Apart from a focus on good quality the company also wanted to keep a
reasonable price.
Workforce in HMSI
Workforce in HMSI

1000

Workers

2000
HMSI Workforce Breakup

Workforce Breakup

300 Confirmed
700 1300 Workers
Contract Workers
Trainees
700 Apprentice
Workforce & Salary

The trainees generally had a certificate from some or the other (ITI).

All trainees were generally taken by the company.

15% of apprentice use to get the job after the apprenticeship period was over.

The company was believed to be a good paymaster.

In October 2005 salaries of workers ranged from Rs 8150 for unskilled to Rs

11200 for skilled workers including Rs 2000 for house allowance.

Also apart from these the workers were entitled for bonuses in the Diwali
season.
Employee Welfare:

Subsidized canteen facilities

Transport facilities to and from workers’ residences at subsidized rates

Sports club for employees ‘ use at Sukhrali village in Gurgaon with indoor games
facilities

• Football, volleyball,TT, carom ,chess matches organized against employees of

other companies

2 sets of uniforms, 1 company cap, 1 pair of shoes provided to employees every

year; same uniform for all including managers 
Employee Welfare:

Most HMSI workers not covered by Employees State Insurance (ESI) scheme under
the ESI Act, 1948 as salary had crossed maximum salary limit for coverage

• Such employees covered by Paramount Health care facility ; reimbursement of

hospitalization expenses 
• Worker, his/her spouse & up to 2 children covered for RS. 75,000 each; workers’
parents covered for Rs. 1,50,000 each.

Invited workers’ families for celebrating foundation day; later stopped with increase in
workforce size.

Support through cash payments on happy and sad occasions:

• Rs. 2,100 at birth of a child (max. 2 children)

• Rs. 3,000 on worker’s marriage
• Rs. 5,000 to family on employee’s death; Rs. 3,000 on death of
spouse/children/parent.
Human Resource Policies
Aligned with philosophy of parent company: HMCL

• though considered itself unique with some distinct employment & production
practices.

HMSI’s philosophy had 2 fundamental beliefs:

• Respect for individual differences- initiative, equality & trust

• The Three joys – joy of buying, joy of selling , joy of manufacturing
Employees were called associates – association promoted among all employees
through similar uniforms and same canteen facilities for all.

Induction programme involved acclimatizing employees to the Honda philosophy

HR department expected to

The Honda Way: human behaviour or way of thinking based on Honda philosophy.

• E.g.: Perseverance to ensure safety & quality in all aspects

Human Resource Policies

Organize training programs for:

• Internalization of culture building and Honda philosophy

• Training for building team leaders
• TQM training; ISO 9000 training; 5S training

Training dept. Supposed to be headed by an assistant manager; position lying

vacant for a long time.
Human Resource Policies

Performance Appraisal System for all employees including workers:

• Interview by section head and shift in-charge;

• PA done on a rating scale; workers divided into 5 grades
• Increment Rs. 400 to Rs. 1400 p.m. depending on worker’s grade
• All PA results and salary hikes announced immediately at the end of financial
year
• Promotion opportunity for worker:
• Worker -> sub-leader -> assistant executive -> executive
• No one covered by Payment of Bonus Act, 1961 because of high salaries:
• Company gave an ex gratia of one month’s gross pay as incentive around
Diwali
• No scope for workers’ expression through any letter to the editor.
Human Resource Policies

Works Committee (WC) constituted under Industrial Disputes Act (IDA), 1947 on
1st April, 2004 consisting of 15 workers and 5 managerial representatives

• Other committees: Canteen committee, transport committee, health committee,

and sports committee.
• Management nominated workers for the communities based on perceived
interest.

6-paged, quarterly newsletter: Dream Team

• Focussed on covering company’s achievements in terms of awards, contracts,

recognitions, quality certifications, list of new dealers and kaizen activities
• Very few employee related matters covered like sports competition results and
news about marriages and childbirth related to employees
• No scope for workers’ expression through any letter to the editor.
 Case : Timeline
July 30 :
May 26 : Truce between
Apr 1 : Mgmt &
Increment in Conciliation –
June – July : Workmen
Compensation DLC
Intervention 6 Conciliation
Diwali Gift Package;
Meetings July 27 :
Issue No Union
Formation Enquiry
ordered by
Haryana CM

Nov Dec Jan Feb Mar Apr May June July Aug
2004 2004 2005 2005 2005 2005 2005 2005 2005 2005

Dec’04 – July 19 :
Apr - May : DLC sends the Aug 1 :
Mar’05:
Efforts for Conciliation Back to Work
Negotiations
forming Union; Report
between
Gherao of
Workmen &
Mgmt;
Management July 25 :
Go-Slow
Another
1st
st sight for need of Unionization : Jallianwala
• Stringent Company rules e.g.:- movement sheet, leave sort of brute
policy treatment of
• Fear of Management’s Authority the Honda
• Idiosyncratic attitude of VP-Manufacturing (Japanese) Workmen
• Charter consisting of more than 50 demands
• Help from local union leaders
 The Clash (in Pictures)
The Whole Issue was covered by Media
and the atrocities by the Police was
highlighted and the incident was termed
as Another Jallianwala Bagh. The act of
Police was compared to that of General
Dyer’s.

Police beating HONDA Workers –

Dt. 25th July 2005

Clash between Police & HONDA Workers –

Dt. 25th July 2005
The Clash (in Pictures)

Workers
meet Sonia
Gandhi against
alleged
highhandedness
of Honda
management
and the police
 Truce Conditions
Workers resuming duty from Aug 1, 2005

No new demands during the next 1 year

Trade Union would continue to operate

Reinstatement of 50 suspended workers & 4 Union leaders

Right to conduct an enquiry into the case of 4 terminated employees

Termination of any convicted employee (in court)

No Work No Pay Principle to be implemented from June 27, 2005

Proper test to decide on the absorption of the trainees

To be considered as Final Conciliation

Union- Management Dynamics in Post-Violence Scenario

Management:
• Change in management attitude felt by union leaders; concessions
allowed on various fronts
• Freedom of not working on shop floor for union leaders to take care of
pending IR issues
• A small room allotted to union leaders with a promise of a union office
in future
• Invitation to all 7 union office-bearers to discuss workers-related
problems or issues
• Overtime working issues: lure of extra money; medical problems,
workers not fresh
• overtime working was scraped in most cases
Union- Management Dynamics in Post-Violence Scenario

Management:
• Practice of inviting workers‘ family on founders' day revived
• family members invited to factory on company expenses in
batches
• Diwali gift: Rs. 2000 & credit in bank account of Rs. 4000 as
incentive bonus for all including managerial staff
• 09/09/2010: 'A shift' in assembly achieved its target of 1000
scooters for the first time after union formation.
• VP- Manufacturing, GM- Productions came to shop floor &
commended achievement of workers; sweet distributed to all
workers next day.
Union- Management Dynamics in Post-Violence Scenario

Union:

• Police case against 63 workers including all 7 union leaders - contact

different people to make sound defence
• Got all the trainees absorbed in regular work
• Ensured no domestic enquiry proceedings or transfer for the 4 dismissed
workers
• Union leaders monitored worker-supervisor relations to ensure workers were
treated better than before:
• number of memos to workers negligible
• far more positive managers' response towards leave applications
• 4 days' leave for Diwali => 4 days factory closed ; 3 day's compensatory
work on Sundays/holidays
• hike in coverage of workers & their family members under medical
insurance scheme :
• family floater coverage scheme of Rs.175,000; one or more or all the
family members could utilize it. Rs. 100,000 if further expenses occur
change in management policy; w.e.f. 01.10.2010
Union- Management Dynamics in Post-Violence Scenario

Union:

• Joined the nation-wide industrial strike against Central Govt's economic

policies on 29/09; compensated loss by working on Sunday
Union- Management Dynamics in Post-Violence Scenario

On the Flip side:

• 02/09/2005: Authoritative and provocative behaviour of 2 supervisors and a

senior manager
• A Union office bearer's views:
• company claims of respect for individuals & the 3 joys : merely bookish
concepts
• Some senior managers creating distance between top management &
workers
• HR manager prevents the union from meeting Japanese top management
fearing exposure of their ulterior designs and motives
• Only 20% managers treat union leaders as members of the company; rest
have ego issues
• No one bothered about analyzing the causes and possible solutions of
shop floor problems in a practical & acceptable manner
 Key Issues & Problems

Mgmt.’s approach to practicing a non-union model made them blind to reality

DID NOT LISTEN TO WORKERS

Workers viewed Mgmt activity as coercive and repressive

Incompetent people mgt. by Indian Middle managers—Indifference

Indian mgmt. blocking direct access to top company executive

The 3 joys of HONDA were used as a means of control

Issues in cross-cultural management

 Key Issues & Problems

Failure of mgt. to realize importance of Diwali in Indian IR

Tokenism of conciliation in resolving collective issues

Complacency on the part of Indian mgrs. about labour power

 Key Causes of HONDA’s Difficulty

The most effective functioning of the organization was achieved through

the traditional principles of direction and control

The traditional managerial beliefs and practices concerning HRM

resulted in structural contradictions between the hierarchical nature of
managerial direction and control and the need for integration,
consensus, and commitment

Management distinguished between market relations (wages, service

conditions, etc.) and managerial relations (direction, surveillance, and
discipline) and advocate a say for employees and trade unions in the
former but not the latter (Fox 1966)
 Key Causes of HONDA’s Difficulty

Honda lacked participation and grievance redressal which are the most
critical determinants of organizational climate in India (B.R. Sharma, 1986)

Honda should have integrated HRM into the organization’s mainstream with

• Proper representation on all major decision-making forums/bodies;

• Clear definition of corporate philosophy and objectives;
• Strategic linkage between the goals of HRM and the organization; and
• Appropriate accountability for HRM-related matters in the role of all managers

While Honda moved to restore balance in the relative power position between
the Employees & the Management, upsetting the existing equilibrium per se
had far-reaching consequences that were not easy to predict
 Theoretical Perspectives : Honda’s stand

Unitary Pluralistic Marxist

Authoritarian Cooperation Evolution
HONDA HONDA HONDA
Paternalism Conflict Revolution
Approaches to IR
Input Conversion Output
Conflict Institutions Regulation
differences & processes (rules)

Social
Systems
action Control over
HRM labour process

Labour
Comparative
market
Wider approaches
The Big Three

Management Union

Government

The three parties to

Dispute
Role of Management (Ideal v Actual)

Ideal Role

Evolve policies and systems

To control workers and the unions

To elicit commitment from the workers and their unions in order to

facilitate the strategic, functional and operational interests of the Firm
Role of Management (Ideal v Actual)

Actual Role

Loopholes in implementing the policies was observed

They could not check the growth of unionism

Lack of farsightedness
Role of Union (Ideal v Actual)

Ideal Role

Protect and promote workers’ interests

Protect and promote interests of workers’ organizations & affiliates

through cooperation strategies where feasible
Role of Union (Ideal v Actual)

Actual Role

It was not able to highlight the problems of the workers through the proper
channel

It was unable to check the actions of its union members resulting to major
trouble

It had a rigid stance and was nonnegotiable

Role of State (Ideal v Actual)

Ideal Role

Evolve policies and instruments to regulate the employer-employee

relationship

Manage the contradiction which arise in this relationship

Strive for goal congruence between the employer, employees and Society
Role of Union (Ideal v Actual)

Actual Role

It was late in realizing the gravity of the problem

Its role as a negotiator was in doubt

Delay in getting both parties to negotiate

 Trade Union Functions

Power - protect/support through strength in association - a countervailing force,

pressure group. Note: bargaining leverage & member willingness to act together.

Economic regulation - maximize member returns within wage-work framework. Note:

political nature of TU wage policy - comparability & differentials. Inflation &
unemployment (cost-push & demand pull). Win bigger slice of national income.
Job regulation - establish a joint-rule making system to protect members from
arbitrary management action . Enable participation in decisions affecting their
employment. Expand job opportunities?

Social change - express social cohesion, aspirations, political ideology & develop a
society which reflects this? Institutionalize “class” & “conflict”? Dilemma of participating
in government.

Member services - provide benefits/services to members

Self-fulfillment - assist individuals to develop outside their job domain & participate in
wider decision-making processes
Changing IR Scene at Global & National levels : New Thinking
HONDA Manufacturing Plant,
Manesar

India is
governed
by a Constitution
that foresaw a
welfare state
and espouses
the values of
trade
unionism
and
social justice
 The Role is Changing

Welfare state: Efficient

Government as facilitator

Export-oriented production (SEZs)

Changed labour policies of states

Global Trends – India Trends

Multilateral IR: consumer/public/gender issues

New issues:

––Customer Creation/sustenance

––Protecting environment

––Gender issues

––Safety promotion

––Child labour abolition

Media’s role in new issues

 Building Cooperation with Unions

Source: The Conference Board of Canada.

Figure 16.6
Emphasis on Performance – related Pay

Flat organization --Flexible pay

Cost saving: a big concern

Competencies development

Knowledge pay in high-tech. industries

 Changed Thinking of State

Changed Govt. thinking

--July 1991 Economic Policy

--2nd NCL: July 2002

Rationalize Labour Law

Social justice to market & trickle down

--Vigorous attack on welfare state ideology

 New Trends in India : IR Practices rooted
in HR Strategy

Identify & enforce behavior

Strive for Competitive advantage

Focus on new interventions

HRM & IR merged to produce positive energy

HR strategy is the single most important Consultancy Area

Lessons Learnt : A Guide for
Business Success
Leadership matters

Competent HR department is key

Well crafted and communicated Mission and Vision

Maintain channels of communication

HR Strategy must align with and support business

Listen to Employee concerns and issues for Organizational

Justice

Use HR Interventions (BOTH HARD AND SOFT) as tools for

success
• (welfare plans, empowerment, reward and recognition, etc.)
Lessons Learnt : A Guide for
Business Success

Keep cross - cultural issues in view

Establish a sense of urgency

Recruit and Retain Talent - right person In right job at the right
time

Be clear about performance and results – let them drive success

Create short term wins (reward and recognition)

 Road Ahead
The HRM-IR-HRD interface integration should be such that it should move away from
the principle of direction and control to a system based on the philosophy of consent
and commitment

Being sensitive to human needs & human problems at work & beyond work

Evolving a value system based on trust, transparency, fairness, & equity

Institutionalizing openness in subordinate-superior relationships

Dealing with employee grievances promptly & explaining the logic & rationale of
decisions to convince the aggrieved

Providing exposure & understanding to line managers on HRM aspects to handle the
day-to-day HRM activities & issues/problems

Sharing information & consulting for shared understanding & co-operation

Reviewing HR/IR policies & practices from time to time

THANK YOU!!!