People Management Fiasco in Honda Motorcycles and Scooters India Ltd

1. Identify and discuss the key factors that led to the breakdown of industrial relations at HMSI.
The HR polices of HMSI were adopted from its parent company, HMCL, which is a Japanese company. Even though the HMSI had very good HR policies in place, the management in India failed to implement the company’s written HR policies, which had created a collapse in the industrial relations at HMSI. Further, the following incidents that took place in HMSI had created a rift between the workers and the management.
HR Policies v. Managers’ practices
Incident 1: Gift - When employees refused to accept the low value Diwali (a major festival in India) gift, the management never listened to employees demand and transferred the value of the gift to employees salary account without their consent.
Incident 2: Movement Sheet – Employees were required to sign the movement sheet for every break, including drink and restroom break. Further, a worker stopped the conveyer belt, when he was denied permission to use the restroom, which had created resentment among employees towards the management.
Incident 3: Strict Leave Policy – Workers were denied leaves even for some serious and emergency situations. And the workers were asked to leave the company if they could not perform up to expectation.
Incident 4: Shift changes – Employees were not allowed to make temporary shift changes and some employees even received the threat of termination.
Incident 5: Partiality – Many managers showed partiality to few workers and posted them in low-stress jobs, which created frustration among workers.
Incident 6: The attitude of VP - The Japanese Vice President behaved like a dictator and used physical forces on workers. Subsequently the arrogant Japanese VP was sent back to Japan, there was no action taken against him, which also created displeasure among workers.
Employees’ Collective Demand
The employees were dissatisfied with the HR policies and practices of the management and issued a charter with 50 demands, which includes fiscal and non-fiscal claims. But the management rejected the employees’ demands and offered them an increment in salary, with a condition that workers should not form a union. Subsequently the employees refused the management’s offer and started forming a union.
However, the management was against the employee’s decision on union formation and used all possible ways to prevent the employees to register the union, which had raised the workers vengeance against management.
Due to the intervention of the HSMI, the workers were not able to register their union with the registrar of trade unions, so the workers started to slow-down the work and denied to work overtime. The management in order to counteract the workers action suspended and dismissed some workers. Also, the management refused to permanently hire the trainees who completed the 2 years of internship. Consequent to this, the employees raised slogans against the management and manhandled a manager, the company responded by dismissing 50 workers without any enquiry, which made the company situation more destructive.
Consequences of Union Formation
The conciliation attempts made by the deputy labor commissioner were failed between the union and management of HMSI. Simultaneously, the management compelled the workers to sign statement of good conduct and hired temporary workers from its vendors, when HMSI workers refused to sign the code of conduct.
Then, due to the potential explosive situation, the HSMI management not allowed any worker to enter the factory, which greatly affected the production of HSMI.
The workers of HSMI had conducted a rally to petition the district authorities and a massive violence took place, which resulted in severe injuries to many workers of HMSI.
Post Violence Situation
The state government involved to settle the disputes between HSMI workers and management. The agreement provided by the state contained many conditions for both workers and management of HMSI and the relationships between workers and management were started growing. In spite of the developments, some supervisors treated the workers very authoritatively which led to production halt for 15 minutes.
Altogether, the incidents mentioned above and the overall ineffective crisis management strategies of HSMI are the key factors that led to the breakdown of industrial relations at HSMI.

2. Discuss the failures on the part of the Japanese and Indian managers that contributed to the present situation.

The Indian managers were not caring about their employees' needs, were not respecting the employees' situations, would not let the workers meet the top management (Japanese) to share their grievances, and prevented the workers from uniting.
Further, the Japanese managers (top management) were not aware of the employees' complaints and dissatisfaction, even when Indian managers prevent workers from sharing their grievances with the top management, Japanese managers should develop communications with all subsidiaries' employees and meet them to share their complaints and get their feedback.
In addition, the Japanese vice president of manufacturing was strict and unpredictable, treating workers in a bad manner (physical abuse) and after he was sent back to Japan no action was taken against him.
Finally, the lack of cross-cultural understanding, transparency and open discussions between the supervisors and workers are considered as the failures on the part of Japanese expatriates. Likewise, the lack of people management skills, such as, soft skills, negotiations skills, team building skills and conflict resolution and leadership skills are considered as the failures on the part of Indian managers.

3. What HRM strategy was being pursued by the management, and what factors led to its failure?

HRM strategy pursued: The HR policies of HMSI were in alignment with the philosophy of the parent company in Japan. It had certain beliefs including respect for individual differences and the "Three Joys" that it wanted to promote for all members (the joy of using, selling, and manufacturing high quality products) with addition of the joy of "creating". The company believed that it was the contribution of each employee that was responsible for a company's success. It also claimed that its policies focused on developing each individual's capacity to think, to reason, and to dream. One of the prominent Honda ways was to ensure safety and quality in all aspects. The HR department organizes training programs for the employees and facilitates internationalization of culture-building to promote the Honda way among employees.
Appraisal was performed by the section head and the shift in charge, who graded the employee on a rating scale. From this grade, workers were divided into 5 categories with increments ranging from Rs 400 to 1400 per month. The company announced all appraisal results on the end of the fiscal year. The company had constituted a works committee under the Industrial Disputes Act, consisting of 15 workers and 5 management representatives.
In line with its HR policies, all employees including the managers wore similar uniforms. HMSI also had taken several initiatives in the area of employee welfare, which ranged from canteen facilities to attractive hospitalization reimbursement for all employees.
What led to its failure: Despite all the HR initiatives, it seemed all was not as it had appeared. Workers first expressed resentment at receiving Diwali gifts valued at Rs.600 apiece (perceiving the gift as very small). Workers were comparing themselves with a competitor of HMSI, who was giving a refrigerator each to its workers as a Diwali gift. Other resentments were because workers were made to sign a "movement sheet" whenever they took a break (a worker was once denied permission to go to the toilet). Also, workers were often required to attend to more than one machine simultaneously (this increased stress levels on workers). The company was very strict in granting leave even when the circumstances were serious. Sometimes workers would be told to leave the company permanently if they could not perform up to expectations. Workers were not allowed to change shifts temporarily for any reason. Nobody dared to seek grievance redressed because of the fear of the management authority. Workers also perceived that many managers showed partiality in matters related to job postings. While this practice was in place since the beginning, Japanese top management knew little about it. Workers were unhappy with the idiosyncratic attitude of the vice-president of manufacturing (a Japanese national). He wasn't treating employees respectfully, and no action was taken against him.

4. Discuss the provisions of Indian industrial relations law that may have been violated by HMSI management.

Based on the information provided in the case, HSMI might have violated the following Indian industrial relations laws,

1. The Trade Unions Act, 1926
According to Section 4 – Clause 1 of The Trade Unions Act, 1926, “Any seven or more members of a Trade Union may, by subscribing their names to the rules of the Trade Union and by otherwise complying with the provisions of this Act with respect to registration, apply for registration of the Trade Union under this Act”.

The HSMI management violated the certain provisions of The Trade Unions Act, 1926 by not allowing the workers to create and register a union.

2. The Industrial Disputes Act, 1947 (Schedule V)
According to Schedule V of The Industrial Disputes Act, 1947, the following acts of employers are considered as “Unfair Labor Practices” “I. On the part of employers and trade unions of employers 1. To interfere with, restrain from, or coerce, workmen in the exercise of their right to organize, form, join or assist a trade union or to engage in concerted activities for the purposes of collective bargaining or other mutual aid or protection, that is to say :- (a) Threatening workmen with discharge or dismissal, if they join a trade union; (b) Threatening a lock-out or closure, if a trade union is organized; (c) Granting wage increase to workmen at crucial periods of trade union organizations, with a view to undermining the efforts of the trade union organizations”.

The HMSI management violated the above mentioned provisions by offering the workers a compensation package on the condition that they would not form a union and by suspending/terminating the services of workers who took active part in getting the union organized