Turn around Success story , a live experience of a HR Professional
P. Senthilkumar***
I would like to share a success story, working with Deccan Sugars (presently EID Parry) Pugalur Plant where I had to deal with rampancy of incessant and nagging IR issues attributable to multiple union environments triggered by organisational legacies patronised by erstwhile management. A situation warranted ,come what may , to be firmly dealt with so as to salvage the organisation from facing corporate death. Trimming down the workforce being a major challenging priority and this onerous task was entrusted to me ,. I recall that my affirmative and confident answer to the tricky question of turn around of organisation during the selection interview precluded by a written test on labour laws, , got me selected to the position of Head of Personnel and IR. And I lied up to the expectations of the management and a real turn around did happen without a magic wand to work miracle.r:
Profile of the Author
HR/IR Intervention Specialist -P.Senthilkumar
A Post Graduate in commerce with specialization in Personnel Management & Industrial Relations from Madras University, having done his masters from A.M.Jain College Chennai. Did a Post-graduate Diploma in Personnel Management, Industrial relations and Labour from Coimbatore Productivity Council. Holding PG Diplomas in Labour Laws with Administrative Laws and also Business Administration from Annamalai University. He is a certified Bullet Proof Manger ,an acknowledgment of his having successfully undergone video based, live facilitated one year programme for professional and personal Development conducted by Crestcom,USA. He is also a certified PI Analyst for having acquired expertise in administering and interpreting behavioral and functional attributes amongst corporate Executives.
He has to his credit presented a number theme papers in National and regional seminars and conferences of Professional interest besides delivering guest lectures on management in various academic and social forums.
His Career Matrix commenced at the age of twenty four as an Officer in personnel Department and has a rich and varied experience of thirty four three years plus. Have spearheaded Personnel/Industrial relations/HR functions in leading corporates including Deccan Sugar (Presently EID Parry) , Ashok Leyland, Balmer Lawrie & Co ( Public sector enterprise under the petroleum Ministry) , Blue Star Ltd, Morgan group, HSI Automotives( Korean MNC).He was at the helm of affairs at DP World Chennai ( Chennai Container Terminal Pvt Ltd) heading HR,IR & Administration till 30th April 2009.
His Core Competency is in Human Relations at work and has the unique distinction of implementing and cascading the best of the HR strategies and practices in challenging environments so as to accomplish its desired Objectives towards drastic Transformation, Growth, Vision and Mission through HR Interventions; His avid forte is INDUSTRIAL RELATIONS, which is otherwise a rare blend and having done some good work with a reckoning repute in leading and labour intensive establishments viz Deccan Sugars ( Presenlt EID Parry), Ashok Leyland, Dunlop, Morgan Group , HSI Automotive ( Ancillary to Hyundai) Chennai container terminal . (DP World) .
Had led major labour negotiation and signed a number of Long Term Settlement on wages, Bonus Agreement and Productivity Agreement in most challenging environment. Besides this, has a thorough knowledge in Statutory Compliance, Legal (labour law) Matters and is very strong at HR/IR Processes .A recruitment specialist in Competency Based interviewing techniques and is well versed with all facets of any Industrial functions .
He has last worked for MRF Ltd as Corporate Head – Industrial Relations between Nov 2010 and Dec 2017 and ad major accomplishments in advising, coordinating and ironing out several Long term settlements across plants and also was responsible for bringing out various IR Policies with special accent on absenteeism and leave policy. Had conducted several training programmes and workshops on Labour Laws and Industrial Relations for HR and Production Heads of various plants .
He has been a Counselor, Panelist, Visiting Faculty, Recruiter, Trainer faculty and an Adviser for many industrial /professional Organizations/ employers forums like NIPM,EFSI, CII , Productivity councils and professioanl colleges /Business Schools and had been associated with erstwhile Indian Institute of Personnel Management and present National Institute of Personnel management, holding honorary Position as Secretary of the Institute (Coimabtore branch) and chiefly instrumental in activating the branch with number of professional activities and training programmes. One of his noteworthy article entitled “Turn around success story" has been published in a web portal ' www.humanlinks.com'. Has been an editor of House magazine and professional News letter of NIPM (Coimbatore Branch)called Fringe> Has published articles in various newsletters and media/web sites. He has addressed and made presentations at various national and regional professional seminars/conferences .A firm believer that Challenge the Challenges, Transparency, Professionalism, Pragmatism, Extroversion, Initiative clubbed with Risk taking and Simplicity are some of his attributes.
He can be reached by e-mail –
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Mobile No. +91-9884009193 >>>Residence: 044- 23775652
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Turn around success story - a live expereince
1.COMPANY HISTORY: Deccan Sugars (an erstwhile division of Navabharath Ferro Alloys Ltd.) and currently known as EID Parry India Limited is situated at Pugalur in Karur District. A 50 year old factory posed a formidable challenge to make it profitable. The major thrust to turn around was left to the plant management with the General Manager and the Personnel Officer, who played a major role to accomplish the task. It was indeed a critical task to strike a balance in operating the factory for breakeven results and in making a turnaround within a given time frame. The conviction of the top management to turnaround and the confidence they reposed in the plant management personnel were really commendable. The new management invested a few crores for mechanization / modernization to aid the plant management to strike a perfect balance in furtherance of the core results.
2. LABOUR SITUATION – 1982 :
2.1. The company had an excessive labour force in a total of 1,028 comprising of 748 workmen and 240 staff, in addition to 25 covenanted staff (managerial personnel).
2.2. The company was crushing 1,850 tones of sugarcane per day with not appreciable recovery in terms of production of sugar to sustain viability.
2.3. The only sugar factory in the whole of India, which was outside the purview of sugar wage board scales, DA & grades. The company had its own grading scheme, scales of pay and VDA linked to Cost of Living Index at Trichy as against all India Consumer Price Index prescribed under the sugar wage board. Due to this, the company had to incur heavy expenditure on a single head like wages.
2.4. The plant had a multiplicity of unions, with seven unions of different ideologies owing allegiance to different political parties, espousing the cause of labour and three non political unions representing the interests of the staff members who were known as non covenanted staff and transport drivers. 2.5. There was a subsisting award of industrial tribunal, prescribing the mode and manner in which the recruitment of workmen should be done. Ironically, when the unions demanded to recruit the sons of the deceased workmen, retired workmen and existing employees based on the service seniority, the management and union jointly approached the industrial tribunal to pass an award in the following manner.
a.When there is a vacancy in the labour category, the vacancy should be filled by the son of a deceased workman based on date of death while in service.
b. After filling 3 immediate vacancies with the sons of deceased employees as per Clause a, the 4th vacancy should be filled by the son of a retired employee based on the date of retirement, as recorded in the roster being maintained for the purpose.
c. After filling 4 vacancies in a row as per Clause a & b, the 5th vacancy to be filled by the son of a senior most employee in the service.
In keeping with the above provisions of industrial tribunal, the management had virtually “no say” in the matter of selection of labour in the factory. The tribunal’s award set an automatic mechanism for recruitment of labour as per above formula. The deficiency of this award was that the management was under compulsion to recruit workmen in the above manner without regard to the candidates’ qualifications, age, experience and other valid parameters generally assessed. It so happened that the persons aged between 18 and 38 who were engaged as agricultural coolies or doing miscellaneous jobs in the area, had successfully made their entry in to the factory and become confirmed workmen after the prescribed period of 6 months’ probation.
An analysis of the composition of labour threw a startling revelation that more than 100 families had a representation of 2 – 3 members each in the work force, leading to an unshakeable solidarity in promoting family-centric vested interests. Each workman was more right conscious than being duty bound and the company’s interest was least considered. The trade unions were vying with each other to enlist members to their union, wooing many unwarranted privileges and concessions, by constantly fighting with the management on even very trivial issues. The trade union activities were at its peak with obvious maladies of inter union rivalry and resultant adverse consequences at the cost of the company’s production and prerogatives.
2.6. Bundle of legacies : a. There was a special seasonal operation, necessitating the plant to do crushing operation for a period ranging from 15 days to one month, which in most occasions proved a very unviable exercise leading to an increased financial loss. b. In addition to huge labour force, the company had to carry with nearly 150 service casual labourers who were enlisted based on the availability of sons of deceased, retired and existing employees according to their seniority and in accordance with the recruitment formula spelt out by industrial tribunal in its award. These service casuals, in other words, may be known as prospective workmen. c. The company’s labour strength was inclusive of nearly 65 workmen who were not directly contributing to production and were serving in the peripheral areas like • Security (watch and ward division) • Canteen cook and bearers • Sweepers and scavengers • Building workers • Cane department maistries • Afforestation workers • Office peons d. Total resistance to change and accept new production norms / procedures. Wherever modernization and mechanization were implemented at huge investments, leading to redundancy of workmen, and necessitating transfer of workmen, the management found it difficult to implement transfer owing to stiff resistance of workmen patronized by their union. The company had to carry on with the unproductive surplus labour force in the mechanized operations.
2.7. Poor technical efficiency of the plant : The plant suffered frequent breakdown during crushing operations due to poor efficiency of the so -called skilled workmen and hence the factory’s technical efficiency was very poor. The promotion to skilled category like highly skilled fitter etc. was based on service seniority without reference to individual’s technical calibre. The company’s promotion practices, dictated by the unions was based on seniority over the past years. In fact, a service casual labour entering the company’s service as an unskilled worker to start with, would metamorphose into semi skilled, skilled and highly skilled technician which was an ultimate position in the career rung of the workmen in the company’s promotional system. The management had practically no control in the matter of labour promotion.
2.8. Old age and debilitated workmen : The company had to carry on with deadwoods like septuagenarian workmen, poor visioned and feeble workmen and the management’s inability to weed them out due to tough resistance from unions who were mainly interested in consolidating their membership.
2.9. Huge infrastructure : The company was maintaining a township containing 100 quarters to accommodate the essential service personnel and other categories who were getting berth in the quarters on the basis of unions fighting potential (with the management). The company used to spend huge money on maintenance of these quarters with nearly 20 workmen attached to building section, constantly attending to one repair or the other.
3.TURNAROUND STRATEGY: The survival of the company was dependant on achievement of the following : a. Labour rationalization. b. Introduction of sugar wage board scales. c. Productivity enhancement. d. Scientific promotion system e. Restoration of management prerogative to recruit labour (this calls for termination of the industrial tribunal’s award, which is a very sensitive and tricky area from the point of view of industrial relations maintenance). f. Abolition of peripheral areas / sections g. Dispensation of unviable and unproductive special crushing season 4. IMPLEMENTATION OF THE STRATEGY & RELATED ISSUES: After a careful diagnosis of problems / maladies, the following strategies were adopted leading to a fair amount of success, after a great encounter with the unions.
4.1. Labour rationalisation proposal : The management team visited sugar factories of identical crushing capacity with recent origin and collected the station-wise worker strength apart from studying the working system. Based on the data collected, a proposal was submitted in writing to all the labour unions(on reduction of labour force from 748 to 550 by way of retrenchment) which contained the following measures / details : a. Abolition of peripheral sections like security (watch and ward), afforestation workers, building workers, cane department maistries etc. b. The details of the present strength in each department, compared with the proposed strength and the envisaged surplus.
4.2. Formation of Joint Action Council (JAC) : On receipt of the management’s proposals, the unions were taken by surprise. All the labour unions joined together and formed a joint action council to thwart the move of the management. They convened a meeting of all workmen to seek the concurrence and support of all workmen to go ahead with agitation, confrontations etc. to safeguard the interests of the workmen. The unions got a blanket mandate / permission to their proposed action. Then they sought a meeting with the management. In the meeting, they virtually threatened the management to give up the proposals, failing which the management would meet serious consequences.
4.3. Management’s firmness : Since the management carried a conviction, it was firmly put forth to the union leaders that the management was really serious about the labour rationalization and there was no reversal on their side. It was also pointed out that the company would eventually go for closure in the absence of labour rationalization being achieved. As a prelude to this meeting with labour unions, we contacted in person the Commissioner of Labour (CoL) and explained our proposals. On hearing management’s firm stand, the joint action council convened a meeting of all workmen and passed a resolution to go on a strike.
4.4. Reference to Labour Commissioner / Special Deputy Commissioner of Labour : The CoL having seized of the unions’ strike proposal, hurriedly convened a conciliatory conference calling the management and all union leaders to appear before him for a conciliation. Along with conciliation call letter, the CoL advised the unions not to precipitate action and place faith in the conciliation for a smooth outcome. Both parties appeared before the CoL who in turn delegated the subject file to the then Special Deputy Commissioner of Labour (SDCL). The SDCL advised the unions and management to take recourse to direct negotiation at the bipartite level, narrow down the differences and get back to him for a pragmatic resolution of the issue.
4.5. Subsisting settlement on labour and staff strength : A Memorandum of Settlement was already in vogue at that point of time, wherein, the labour strength was fixed at 848 which was subsequently brought down to 748, consequent to mechanization / modernization introduced in certain areas in the plant. This reduction was brought about through mutual negotiation between the management and the union and therefore, the effective strength stood as on October, 1982 was 748 and therefore, it was incumbent on the part of management to religiously fill up the vacancies as and when there was a short fall consequent to retirement of workmen.
4.6. SDCL’s directive : In view of this impending settlement on labour strength, the management pleaded before the SDCL that management should not be insisted upon by the unions to fill up the vacancies in the event of the labour strength being depleted on account of retirement and separations, pending a settlement on the proposals of labour rationalization put forth by the management. Although there was resistance from the unions, the SDCL issued a directive, during the course of conciliation of proceedings as follows : “The management need not fill up vacancies during the pendency of conciliation proceedings, except those vacancies in the skilled category like Fitter, Turners, Welders etc. which alone can be filled by the management due to operational exigencies and that the unions should not interfere with such decision, until the issue of rationalization of labour is resolved.” This directive of the SDCL was accepted by the unions and therefore, the management was kept in good stead in so far as its pursuit of labour rationalization was concerned. While, a few unions appreciated the need for labour rationalization, a few unions strongly condemned the managements’ proposals and maintained the following dictum, in pursuit of their organizational philosophy “ No union worth its name will ever accept reduction of labour force”.
4.7. Management’s hidden agenda spelt out : At the bipartite discussions held at the plant at the advice of the SDCL, the unions evinced interest to know the details of the proposals. The hidden agenda of the management was not to really go in for retrenchment but to bring about the desired labour reduction through the following means : a. Discharge of old / feeble / debilitated / poor visioned workmen on medical grounds. b. Abolition of peripheral sections not directly contributing to production and redeploying such surplus workmen in appropriate. c. Introduction of voluntary retirement scheme. The management explained its designs to unions.
4.8. Unions’ mixed reaction : While some unions were favourably inclined to the above spelt out hidden agenda, some unions were not for implementing the above proposals. It was paradoxical that there was a mixed reaction from these unions which were ostensibly working under the banner of Joint Action Council due to the necessity of maintaining the solidarity of the workmen and in order not to get exposed.
4.9. Reference of workmen for medical examination before factory medical officer : Due to mixed reaction, the management and union could not reach any meeting point. The outcome of the meeting was reported to the SDCL. Since the management did not want to brook delay, it unilaterally referred certain workmen duly identified by the department managers for medical examination by the factory’s medical officer, invoking the management’s right under the certified standing orders applicable to the workmen. A list of 24 workmen who are mostly over-aged, debilitated and poor visioned were referred for medical examination.
4.10. Defective date of birth of workmen : It may not be out of context to mention that at the time of recruiting workmen in the earlier periods, the management did not verify any documentary proof for date of birth and whatever declared by the workmen was recorded and on the basis of the records generated in those times, they were continuing in the service of the company even after attainment of the age of 60 which was prescribed as age of superannuation under the sugar wage board norms, whilst the real age of the workmen being suppressed. In fact some of the old workmen had poor eye sight and they were physically carried to the factory by their sons in bicycles. Their continuance in service was detrimental to company’s interest as in our experience, a few workmen died of heart attack whilst on duty and on such occasions, the factory’s operations were brought to grinding halt leading huge loss of production.
4.11.Medical discharge of workmen : The factory medical officer who clinically examined the workmen certified that 20 workmen out of 24 referred were not clinically fit enough to be continued in the service. Therefore, the management discharged those 20 workmen on medical grounds without paying any retrenchment compensation.
4.12.Wild cat stay-in-strike : This had serious repercussions in the factory with the JAC having engineered a stay in strike, demanding reinstatement of the 20 medically discharged workmen. They also referred the matter to SDCL, seeking his intervention to advise the management and desist from precipitative action during pendency of conciliation proceedings.
4.13.SDCL’s advice : The SDCL endorsed the idea of discharging medically invalidated workmen, advising the union not to interfere with the management’s action as any resistance from the unions’ side will lead to inevitable retrenchment wherein, the junior most workmen who were mostly sons of deceased and retired employees will be thrown out of employment and it was, therefore, wiser on the part of the unions to allow such legitimate management exercises to be continued, in furtherance of labour rationalization which was inevitable for organization’s survival. 4.14.Face saving formula for JAC : The SDCL’s advice enabled the JAC to have a face saving formula and called off the strike, after inflicting damages to production for 2 days.
4.15.Reference of workmen to DMO for medical examination : Undeterred the management prepared another list of workmen to be referred for medical examination. This time, the unions approached the management and requested for copy of the list of workmen being referred for medical examination for which the management obliged. JAC took an unanimous decision and demanded the management to refer future cases to District Medical Officer (DMO) instead of Factory Medical Officer as according to them, the latter was prejudicial and under obligation to favour the management. Though the management felt that there was no locus standi for JAC to make such a demand, yet as a gesture of goodwill and as a special case, had agreed to refer another 40 workmen for medical examination before the District Medical Officer at Thiruchirapalli.
4.16.Unions’ discreet bid to safeguard their staunch members : On receipt of the list of workmen being referred for medical examination, individual unions separately approached the personnel officer with the request to delete one or two workmen of their choice who happened to be their henchmen. In order to gain the tacit support of unions and generally to appease the JAC, he agreed to delete the names of some workmen.
4.17.Discharge / Superannuation of workmen as per the DMO’s report : Finally, 30 workmen were short listed for reference before the DMO, Trichy. The DMO certified 26 workmen as medically invalidated either due to poor eye sight or health reason or over age. In fact, in some cases, the age was assessed through medical tests and the DMO estimated the age of few workmen to be over 60. On the basis of the DMO’s medical certificates, 26 workmen were discharged / superannuated as the case may be, from the services and their terminal dues were settled promptly.
4.18.Voluntary Retirement Scheme (VRS): a. The management designed a VRS to prune the labour strength. Accordingly, the management announced a compensation equivalent to 15 days of wages for every completed year of service subject to certain age restrictions / past service, in addition to an ex gratia of Rs.5,000/= as a VRS compensation package. b. To this management’s notification, there was again a tough resistance from the JAC. While, some unions decried / discouraged the announcement of VRS, some unions started negotiating with the management for a fabulous compensation package. c. Prior to the announcement of the voluntary retirement scheme, a survey was made in the area and found that nearly 60 workmen had heavily indebted and they were badly in need of money to clear off their debts and to live peacefully by taking to agriculture in their own land holdings for the rest of their life, as many of the workmen were drawn from agricultural family with some land holding in the same area, supplying sugarcane to the factory. d. Although it was expected that about 60 workmen would respond to the VRS, despite union’s adverse publicity to the VRS, yet there was an overwhelming response in as much as nearly 100 workmen opted for VRS. In fact, some of the workmen, fearing unions’ threat, discreetly approached the management, collected the VRS forms and returned after filling and signing the same. They also requested not to disclose their names until final announcements of their names in the notice board and settlement of their VRS compensation and terminal dues like gratuity and leave salary. The management, therefore, relieved 100 workmen under VRS by promptly settling their compensation and other legal
dues.
4.19. SDCL’s initiative: In the meanwhile, the SDCL had been convening conciliation meetings at frequent intervals. While, JAC was complaining against management, the management justified their stand. In order to avoid any major disaster to the organization, the SDCL subtly lend countenance to management’s strategic actions, although accused by JAC as a unilateral and precipitate course of action on the part of management. The fact remains that excepting one or two constituent unions, the JAC was not really bent upon thwarting the managements’ efforts. But, outwardly they were making all noise / agitation in public platforms, understandably to play to the sentiments of the workmen.
4.20. Natural wastages : There was an average reduction of 4 to 5 workmen from the rolls of the company on account of deaths while in service.
4.21 Conciliation Talks : Between March 1982 and June 1985, the management and the unions had attended nearly 30 rounds of conciliation meeting before the CoL and the SDCL, before a Memorandum of Settlement under Section 12(3) of ID Act being signed between the parties, fixing the labour strength at 550. It may sound interesting to note that some of the unions with staunch philosophies on labour reduction had become signatories to the settlement.
4.22 Proactive steps of the management : Since the management was confident of arriving at a settlement, all preparatory exercises like medical discharge of the workmen, voluntary retirement schemes etc. were to be carried out to prune the supernumerary personnel mainly with a view to avoid retrenchment with tears and in a bid to ensure that there was no surplus workmen at the time of signing the Memorandum of Settlement on labour rationalization. 4.23 Redeployment of surplus workmen :
4.23.1 In fact, when the settlement was signed, there were hardly 25 surplus workmen on rolls. The management had redeployed the available strength in such a way that necessary compliment as per man power study was deployed in the appropriate work stations in keeping with the manpower need. The workmen rendered surplus after redeployment were categorized as leave and absenteeism pool and they were utilized against leave vacancies on a day to day basis and were redeployed in various sections irrespective of the grade. Consequently, the engagement of service casuals to the extent of 25 workmen in the rotating shifts per day could be averted.
4.23.2 After six months of signing a settlement on labour rationalization, all those 25 workmen were absorbed against vacancies that arose consequent to retirement / natural wastage. It may not be out of context to mention that every year 10 – 15 workmen used to retire and during the period from 1982 to June’1985, more than 45 workmen retired on attaining the age of superannuation (i.e. 60 years), notwithstanding two deaths (death whilst in service) on an average per year during the corresponding period. 4.23.3.The reduction of labour from 748 to 550 was brought about, in keeping with the Memorandum of Settlement under Section 12 (3) of ID Act, 1947 entered into between the management and workmen as per the break up given below : Total work force 748 as of October, 1982. Less : Medical discharge 46 Relieved under VRS 100 Natural wastage 6 Retirements 46 198 Effective strength 550 as on October, 1995.
4.24. Settlement On Labour Strength (Scenario Prior To 1982) : There was a subsisting settlement in force prior to 1982 wherein, the labour strength was fixed at 848 and the management was religiously replenishing the strength as and when there arose the vacancy on account of retirement / natural wastage. The strength was brought down in stages and ultimately stood at 748 as on October, 1982 and the new management reviewed the labour strength in the changed context and proposed to the unions to further bring down the strength to 550 for ensuring the survival of the company.
4.25. Abolition Of Certain Peripheral Categories : The unique feature of this settlement inter-alia provides for abolition of certain peripheral sections like building workmen, afforestation workmen, cane department maistries etc. which were not directly contributing to production. The workmen displaced from these areas were either redeployed after proper training or relieved from the services under VRS.
4.26. Rationalization Of Staff Strength :
The company had 240 staff members on roles as on October, 1982. Although there were three independent unions representing the interests of the staff members who were known as non-covenanted staff and drivers, yet the management had to confine the talks / negotiation at bipartite level with only one union which was declared as a sole bargaining agent for staff members. The management made out a proposal, in writing, addressed to the bargaining agent, for reduction of staff strength from 240 to 185. The staff-rationalization exercise was taken up concurrently with labour rationalization. The management had to face all resistance and pinpricks from the union. The bipartite talks and tripartite talks before the CoL, Mr.Raja Subramaniam, had to be gone through. Several rounds of conciliatory discussions before the CoL culminated in the form of a Memorandum of Settlement under Section 12 (3) of Industrial Disputes Act, 1947 during the month of June, 1985, fixing the strength at 185 (downward revision).
4.27. Mechanism Of Sole Bargaining Agent (Staff) :
4.27.1 Interestingly, the three staff unions functioning at the plant had diametrically opposite ideologies and always remained arch rivals. Due to inter-union rivalry, the management found it extremely difficult to resolve any common issues affecting staff members. Most of the issues ended up with dead lock and on most occasions, the management was the target of attack / criticism by each union.
4.27.2 The management, therefore, spelt out a proposal to all the three unions for devising a mechanism of negotiating committee / sole bargaining agent, for resolving issues / grievances affecting staff category at bilateral level and in good time. 4.27.3. The salient features of the proposal may be summarized as follows : a. An election (secret poll) to be conducted and out of the three contesting staff unions, the union which has secured more than 50% of votes shall be declared “Sole Bargaining Agent for Staff Members” for a period of 3 years and the defeated union should not have any right to espouse the cause of any staff member before the management and shall however take recourse to provisions of Industrial Disputes Act, 1947 for redressal of individual or common grievances. b. In the event of none of the unions securing more than 50% of the votes in the election, the union securing the highest number of votes in certain percentage slabs shall be given a berth in the negotiating team and that union can nominate certain specified number of union members in the committee as prescribed. Any union which secures a percentage of 15 or less votes polled shall not be eligible to find a berth in the negotiating committee. c. When this proposal was mooted to the staff unions, there was mixed reaction. However, after a protracted discussions with all concerned unions, an understanding was reached to the above effect and parties decided to request the Asst. CoL(Conciliation), Trichy, for solemnizing the understanding in the form of a settlement under section 12(3) of the Industrial Disputes Act, 1947 for greater sanctity. The settlement provides inter-alia the tenure of the bargaining agent / negotiating committee for 3 years and that the election should be conducted at the premises of the factory by a representative of Labour department who shall act as presiding officer of the election and declare the results. d. On a scheduled day, the election was held at the factory premises in the presence of the representative of the Labour Department of the government. On the same day, the election results were announced. While, one union secured 65% of votes poll, another union 30% and the third union 5%. e. The union, namely, Deccan Sugars staff union which secured 65% of votes was declared SOLE BARGAINING AGENT for staff members for a period of 3 years. f. The other 2 unions became virtually extinct after the above union had swept to power and the management had successfully negotiated and settled major issues like wages and staff rationalization with the sole bargaining agent, which otherwise could not have become possible. g. Unable to accept the popularity of the sole bargaining agent, the defeated unions approached the Asst. CoL(Conciliation), Trichy, at the end of 3 years tenure of the sole bargaining agent, for termination of the settlement, in their anxiety to restore status-quo-ante. But these unions could not succeed in their attempts.
4.28 Introduction Of Wage Board Scales :
a. After the sugar wage board scales were introduced at EID Parry India Ltd’s Nellikuppam’s factory, at the behest of special industrial tribunal appointed by the Supreme Court of India, Deccan Sugars remained a solitary sugar factory in the whole of India, to continue to be out of purview of the sugar wage board scales of pay and DA.
b. On account of the company’s own grading scheme, scales of pay and DA pattern i.e. VDA linked to Trichy’s cost of living index, the workers at Pugalur Sugar factory were getting nearly Rs.250/- higher than their counter parts in the rest of the factories which were covered under the sugar wage board scales pay and VDA linked to All India Consumer Price Index
c. Since the company had no say in the statutorily fixed cane price, sugar price etc., the company’s financial viability had a terrific beating on account of the company’s own scales of pay and DA system
d. It was, therefore, inevitable for the company to bring the wage scales and DA system under the main stream namely, sugar wage board scales of pay and DA system.
e. It may be interesting to note that consequent to labour rationalization accomplished in June, 1985, fixing the labour strength at 550 and after redeployment and total pruning of supernumerary workmen, vacancies in the labour category arose within 6 months, making it obligatory on the part of the management to replenish the strength as per agreed norms.
f. It was in the above context that the management recruited fresh workmen on such grade, scale of pay and DA as per sugar wage board’s recommendations. Again the recruitment was based on the formula prescribed by the industrial tribunal award.
g. As expected, all the unions vehemently resisted the management’s action in recruiting the freshers under the sugar board scales. The manifestations of unions reaction included work stoppages, go slow, threatening / intimidation of personnel officer etc. In fact, they demanded the payment of wages, VDA as per company’s grading scheme, but the management stuck to its guns. The culmination of their reaction ended up with the wild cat strike during the crushing season. The matter was however, seized by the SDCL.
h. At the conciliation meeting, the unions argued the following points : • There cannot be dual wage structure for workmen doing the same job in the unskilled category. • The management was acting in a bid to victimize workmen.
i. On behalf of management, the following counter arguments were made : • The fresh recruits cannot be construed as members of union and therefore the unions had no locus-standi to espouse the cause of new recruits.
While, the management has made an offer and the new recruits has accepted, there cannot be any interference from a third party. • As regards dual wage structure, purported to be claimed by the unions, the management had come forward to redesign / recast the wage structure of all workmen in such a way that they would fall within the ambit of the sugar wage board scales of pay, DA system and grading scheme. The management however clarified that while redesigning the grade, scales of pay / DA system, the existing workmen who were under the company’s grading scheme and DA linked to Trichy cost of living index would continue to get the differential amount (i.e. existing company’s gross pay minus wage boards gross pay), till their retirement / cessation from service for reasons whatsoever. The management would protect the interests of the existing workmen and such a fitment as per sugar wage board scale was not detrimental to their pecuniary interest. It was further clarified that the management would continue to pay the differential amount in the form / nomenclature of personal pay, applicable only to the existing workmen and by no stretch of imagination, the future recruits could claim “personal pay” as a matter of right. j. After hearing the arguments of both parties, the SDCL advised the unions not to precipitate the matter and accept the management’s actions. In deference to SDCL’s advice, the strike was called off and new recruits were let in as per terms and conditions of appointment stipulated by the management, fixing the wage board scales and VDA linked to All India Consumer Price Index. k. Over a period of 2 –3 years, the workmen recruited on sugar wage board scales outnumbered existing workmen enjoying personal allowance. Management had accomplished the wage rationalization in keeping with the main stream. The excess strain on wage bill was eased to a great extent.
4.29. Streamlining Of Labour Promotion Policies :
a. Prior to 1994, the promotion dictum of the company at the dictates of the unions was based on mere seniority without reference to individuals’ skill, calibre, track record, attendance, past service record etc. which generally constitute a major criteria for promotion. The management was in a quandary and keeping its fingers crossed. b. The factory’s technical efficiency was at a very low ebb owing to the system of seniority based promotion. In fact, an unskilled worker without formal ITI qualification, necessary skill and calibre could become a highly skilled fitter over a period of time following the promotional avenues prevailing at that time. It is enough that the workmen had seniority in the unskilled category for moving to the next rung in the ladder i.e. semi skilled workmen, then skilled workmen and finally highly skilled workmen, depending on the vacancies in each level. The management had no say in the matter of promotion. The record on category-wise seniority maintained by the Chief Time keeper was the prime record for deciding the promotion. In fact the unions had access to all these records in a democratic manner and the office bearers of the union used to stake their claim for promotion of their members well in advance and pressurize the management to effect the promotion immediately when a vacancy arose. c. This metamorphosis way of promotion to even highly skilled grades rendered the following scenario : 1. Sometimes a highly skilled workmen may not be able to identify the equipments / tools that were needed to attend to break down in the mill and other areas, requiring the help and attention of the supervisors during his worktime which was invariably more than warranted time, detrimental to the company’s ongoing operations. 2. The company’s technical efficiency was very poor due to incompetent workmen at the higher levels and breakdowns were order of the day during crushing season. 3. ITI qualified youngsters who were juniors in service had to work under the incompetent and so called highly skilled workmen, demoralizing the formers. d. It was in the above context, a dispute was raised by the management before the Asst. CoL(Conciliation), Trichy. After several rounds of discussion, a settlement under section 12(3) of ID Act, 1947 was arrived between the parties, the salient features of this comprise settlement may be summarized as below : 1. In future, when there is a vacancy in skilled category like fitter, turner, welder etc., such vacancies should be filled by the management by inducting fresh or experienced ITI candidates in the appropriate discipline to the extent of 50% of the available vacancies, and the selection process consisted of a trade test to be conducted for the purpose of selection followed by an interview. 2. 50% of the vacancies in the skilled category to be filled on the basis of the seniority of existing workmen and the management should be clothed with the power and authority to identify such senior workmen on the basis of their workmanship consistently monitored and certified by his immediate superior, his attendance, and past record which should be free from blemish. 3. The above settlement revising the promotion system was effectively put in to operation and only deserving cases were given promotion for higher grade much to the relief of management. The technical efficiency of the factory had gone up appreciably, leading to better machinery utilization and enhanced overall productivity especially during the crushing season.
4.30.Termination Of Award Of Industrial Tribunal :
The management shelved its proposal to terminate the award of the Industrial Tribunal prescribing the mode and manner by which the recruitment of labour to be handled, in deference to the advice from the SDCL. The management thought it wiser not to take up too many burning issues at a time.
4.31. Encounters Met For Achieving The Above Targets :
4.31.1. A wild cat strike on withdrawal of a special season leading to declaration of lock out lasting for 35 days, inflecting huge production and financial loss to the company.
4.31.2.The estranged workmen led by their union leaders bent on creating violence including an attempt to put a workman behind the General Manager’s(GM) car when the General Manager was taking the car on reverse.
The workman had a miraculous escape by the providential act of the GM who suddenly applied the brake to bring the vehicle to a halt. It was an unruly scene wherein a strong mob of 500 workmen engulfed the GM and Personnel Officer. Thanks to some leaders in the group who foiled the attempt of the mob from their violent action which if not prevented would have exposed the GM and the Personnel Officer to a great risk of life and limb. There was insistence by the mob for the arrest of the GM and Personnel Officer, by charging them with attempt to murder the workman. The Asst. Superindentent of Police, leading a contingent of police personnel rushed to the spot within an hour. He tactfully handled the situation and diffused tension so as to avoid any untoward incident.
4.31.3. During lock-out, even essential services personnel including security guards were pulled out by the agitating unions, compelling the management to deploy expeditiously private security force for the safety and security of company’s properties during the lock-out period. The company’s security personnel were cautioned that unless they resumed work within 48 hours their services would stand terminated. This had a desirable result, that company’s security personnel, braving threats from the union leaders resumed work and the private security personnel were withdrawn from the plant.
4.31.4. Anonymous threatening letters used to be addressed to the GM and the Personnel Officer. While the letter meant for GM used to be addressed to Personnel officer’s residence and the letter meant for Personnel Officer used to be sent to GM’s residence.
4.31.5. Union leaders used to speak in public platforms, indulging in character assassination of the GM and Personnel officer, with a view to dissuading / discouraging them from their action.
4.31.6. Pump operators and electricians were prevented from discharging their duties thereby stopping the supply of drinking water and electricity to the residence of the GM and Personnel Officer.
4.31.7. Prevention of Accounts and Personnel department staff from preparing the pay roll during the strike / lock out period and insisting for disbursement of salary on due dates for the work rendered for the partial period during the strike / lock out month, thereby compelling the management staff to prepare pay roll and disburse salary. 4.31.8. Assembling / gathering in front of the office of GM and Personnel Officer, shouting slogans on top of voice etc. .
5. RESULTS ACCOMPLISHED / CONSOLIDATED :
Labour rationalization leading to reduction of labour strength from 748 to 550
a.Reduction of staff strength from 240 to 185
b.Dispensation of unviable special crushing operation
c.Introduction of wage board scales of pay and DA
d.Streamlining of promotional policy for labour
e.Abolition of peripheral categories of workmen not contributing to production
g. Discharge of deadwood employees including debilitated, overaged, and poor visioned workmen h. Introduction of mechanism of sole bargaining agent for staff category, in order to obviate the problems of inter union rivalry.
6. CONCLUSION :
The accomplishment of results could not have become possible but for
1.Top management’s total support to the plant management
2. Managements conviction to turnaround .
3.Support from the CoL/ SDCL
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From India, Chennai
49P. Senthilkumar***
I would like to share a success story, working with Deccan Sugars (presently EID Parry) Pugalur Plant where I had to deal with rampancy of incessant and nagging IR issues attributable to multiple union environments triggered by organisational legacies patronised by erstwhile management. A situation warranted ,come what may , to be firmly dealt with so as to salvage the organisation from facing corporate death. Trimming down the workforce being a major challenging priority and this onerous task was entrusted to me ,. I recall that my affirmative and confident answer to the tricky question of turn around of organisation during the selection interview precluded by a written test on labour laws, , got me selected to the position of Head of Personnel and IR. And I lied up to the expectations of the management and a real turn around did happen without a magic wand to work miracle.r:
Profile of the Author
HR/IR Intervention Specialist -P.Senthilkumar
A Post Graduate in commerce with specialization in Personnel Management & Industrial Relations from Madras University, having done his masters from A.M.Jain College Chennai. Did a Post-graduate Diploma in Personnel Management, Industrial relations and Labour from Coimbatore Productivity Council. Holding PG Diplomas in Labour Laws with Administrative Laws and also Business Administration from Annamalai University. He is a certified Bullet Proof Manger ,an acknowledgment of his having successfully undergone video based, live facilitated one year programme for professional and personal Development conducted by Crestcom,USA. He is also a certified PI Analyst for having acquired expertise in administering and interpreting behavioral and functional attributes amongst corporate Executives.
He has to his credit presented a number theme papers in National and regional seminars and conferences of Professional interest besides delivering guest lectures on management in various academic and social forums.
His Career Matrix commenced at the age of twenty four as an Officer in personnel Department and has a rich and varied experience of thirty four three years plus. Have spearheaded Personnel/Industrial relations/HR functions in leading corporates including Deccan Sugar (Presently EID Parry) , Ashok Leyland, Balmer Lawrie & Co ( Public sector enterprise under the petroleum Ministry) , Blue Star Ltd, Morgan group, HSI Automotives( Korean MNC).He was at the helm of affairs at DP World Chennai ( Chennai Container Terminal Pvt Ltd) heading HR,IR & Administration till 30th April 2009.
His Core Competency is in Human Relations at work and has the unique distinction of implementing and cascading the best of the HR strategies and practices in challenging environments so as to accomplish its desired Objectives towards drastic Transformation, Growth, Vision and Mission through HR Interventions; His avid forte is INDUSTRIAL RELATIONS, which is otherwise a rare blend and having done some good work with a reckoning repute in leading and labour intensive establishments viz Deccan Sugars ( Presenlt EID Parry), Ashok Leyland, Dunlop, Morgan Group , HSI Automotive ( Ancillary to Hyundai) Chennai container terminal . (DP World) .
Had led major labour negotiation and signed a number of Long Term Settlement on wages, Bonus Agreement and Productivity Agreement in most challenging environment. Besides this, has a thorough knowledge in Statutory Compliance, Legal (labour law) Matters and is very strong at HR/IR Processes .A recruitment specialist in Competency Based interviewing techniques and is well versed with all facets of any Industrial functions .
He has last worked for MRF Ltd as Corporate Head – Industrial Relations between Nov 2010 and Dec 2017 and ad major accomplishments in advising, coordinating and ironing out several Long term settlements across plants and also was responsible for bringing out various IR Policies with special accent on absenteeism and leave policy. Had conducted several training programmes and workshops on Labour Laws and Industrial Relations for HR and Production Heads of various plants .
He has been a Counselor, Panelist, Visiting Faculty, Recruiter, Trainer faculty and an Adviser for many industrial /professional Organizations/ employers forums like NIPM,EFSI, CII , Productivity councils and professioanl colleges /Business Schools and had been associated with erstwhile Indian Institute of Personnel Management and present National Institute of Personnel management, holding honorary Position as Secretary of the Institute (Coimabtore branch) and chiefly instrumental in activating the branch with number of professional activities and training programmes. One of his noteworthy article entitled “Turn around success story" has been published in a web portal ' www.humanlinks.com'. Has been an editor of House magazine and professional News letter of NIPM (Coimbatore Branch)called Fringe> Has published articles in various newsletters and media/web sites. He has addressed and made presentations at various national and regional professional seminars/conferences .A firm believer that Challenge the Challenges, Transparency, Professionalism, Pragmatism, Extroversion, Initiative clubbed with Risk taking and Simplicity are some of his attributes.
He can be reached by e-mail –
Mobile No. +91-9884009193 >>>Residence: 044- 23775652
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Turn around success story - a live expereince
1.COMPANY HISTORY: Deccan Sugars (an erstwhile division of Navabharath Ferro Alloys Ltd.) and currently known as EID Parry India Limited is situated at Pugalur in Karur District. A 50 year old factory posed a formidable challenge to make it profitable. The major thrust to turn around was left to the plant management with the General Manager and the Personnel Officer, who played a major role to accomplish the task. It was indeed a critical task to strike a balance in operating the factory for breakeven results and in making a turnaround within a given time frame. The conviction of the top management to turnaround and the confidence they reposed in the plant management personnel were really commendable. The new management invested a few crores for mechanization / modernization to aid the plant management to strike a perfect balance in furtherance of the core results.
2. LABOUR SITUATION – 1982 :
2.1. The company had an excessive labour force in a total of 1,028 comprising of 748 workmen and 240 staff, in addition to 25 covenanted staff (managerial personnel).
2.2. The company was crushing 1,850 tones of sugarcane per day with not appreciable recovery in terms of production of sugar to sustain viability.
2.3. The only sugar factory in the whole of India, which was outside the purview of sugar wage board scales, DA & grades. The company had its own grading scheme, scales of pay and VDA linked to Cost of Living Index at Trichy as against all India Consumer Price Index prescribed under the sugar wage board. Due to this, the company had to incur heavy expenditure on a single head like wages.
2.4. The plant had a multiplicity of unions, with seven unions of different ideologies owing allegiance to different political parties, espousing the cause of labour and three non political unions representing the interests of the staff members who were known as non covenanted staff and transport drivers. 2.5. There was a subsisting award of industrial tribunal, prescribing the mode and manner in which the recruitment of workmen should be done. Ironically, when the unions demanded to recruit the sons of the deceased workmen, retired workmen and existing employees based on the service seniority, the management and union jointly approached the industrial tribunal to pass an award in the following manner.
a.When there is a vacancy in the labour category, the vacancy should be filled by the son of a deceased workman based on date of death while in service.
b. After filling 3 immediate vacancies with the sons of deceased employees as per Clause a, the 4th vacancy should be filled by the son of a retired employee based on the date of retirement, as recorded in the roster being maintained for the purpose.
c. After filling 4 vacancies in a row as per Clause a & b, the 5th vacancy to be filled by the son of a senior most employee in the service.
In keeping with the above provisions of industrial tribunal, the management had virtually “no say” in the matter of selection of labour in the factory. The tribunal’s award set an automatic mechanism for recruitment of labour as per above formula. The deficiency of this award was that the management was under compulsion to recruit workmen in the above manner without regard to the candidates’ qualifications, age, experience and other valid parameters generally assessed. It so happened that the persons aged between 18 and 38 who were engaged as agricultural coolies or doing miscellaneous jobs in the area, had successfully made their entry in to the factory and become confirmed workmen after the prescribed period of 6 months’ probation.
An analysis of the composition of labour threw a startling revelation that more than 100 families had a representation of 2 – 3 members each in the work force, leading to an unshakeable solidarity in promoting family-centric vested interests. Each workman was more right conscious than being duty bound and the company’s interest was least considered. The trade unions were vying with each other to enlist members to their union, wooing many unwarranted privileges and concessions, by constantly fighting with the management on even very trivial issues. The trade union activities were at its peak with obvious maladies of inter union rivalry and resultant adverse consequences at the cost of the company’s production and prerogatives.
2.6. Bundle of legacies : a. There was a special seasonal operation, necessitating the plant to do crushing operation for a period ranging from 15 days to one month, which in most occasions proved a very unviable exercise leading to an increased financial loss. b. In addition to huge labour force, the company had to carry with nearly 150 service casual labourers who were enlisted based on the availability of sons of deceased, retired and existing employees according to their seniority and in accordance with the recruitment formula spelt out by industrial tribunal in its award. These service casuals, in other words, may be known as prospective workmen. c. The company’s labour strength was inclusive of nearly 65 workmen who were not directly contributing to production and were serving in the peripheral areas like • Security (watch and ward division) • Canteen cook and bearers • Sweepers and scavengers • Building workers • Cane department maistries • Afforestation workers • Office peons d. Total resistance to change and accept new production norms / procedures. Wherever modernization and mechanization were implemented at huge investments, leading to redundancy of workmen, and necessitating transfer of workmen, the management found it difficult to implement transfer owing to stiff resistance of workmen patronized by their union. The company had to carry on with the unproductive surplus labour force in the mechanized operations.
2.7. Poor technical efficiency of the plant : The plant suffered frequent breakdown during crushing operations due to poor efficiency of the so -called skilled workmen and hence the factory’s technical efficiency was very poor. The promotion to skilled category like highly skilled fitter etc. was based on service seniority without reference to individual’s technical calibre. The company’s promotion practices, dictated by the unions was based on seniority over the past years. In fact, a service casual labour entering the company’s service as an unskilled worker to start with, would metamorphose into semi skilled, skilled and highly skilled technician which was an ultimate position in the career rung of the workmen in the company’s promotional system. The management had practically no control in the matter of labour promotion.
2.8. Old age and debilitated workmen : The company had to carry on with deadwoods like septuagenarian workmen, poor visioned and feeble workmen and the management’s inability to weed them out due to tough resistance from unions who were mainly interested in consolidating their membership.
2.9. Huge infrastructure : The company was maintaining a township containing 100 quarters to accommodate the essential service personnel and other categories who were getting berth in the quarters on the basis of unions fighting potential (with the management). The company used to spend huge money on maintenance of these quarters with nearly 20 workmen attached to building section, constantly attending to one repair or the other.
3.TURNAROUND STRATEGY: The survival of the company was dependant on achievement of the following : a. Labour rationalization. b. Introduction of sugar wage board scales. c. Productivity enhancement. d. Scientific promotion system e. Restoration of management prerogative to recruit labour (this calls for termination of the industrial tribunal’s award, which is a very sensitive and tricky area from the point of view of industrial relations maintenance). f. Abolition of peripheral areas / sections g. Dispensation of unviable and unproductive special crushing season 4. IMPLEMENTATION OF THE STRATEGY & RELATED ISSUES: After a careful diagnosis of problems / maladies, the following strategies were adopted leading to a fair amount of success, after a great encounter with the unions.
4.1. Labour rationalisation proposal : The management team visited sugar factories of identical crushing capacity with recent origin and collected the station-wise worker strength apart from studying the working system. Based on the data collected, a proposal was submitted in writing to all the labour unions(on reduction of labour force from 748 to 550 by way of retrenchment) which contained the following measures / details : a. Abolition of peripheral sections like security (watch and ward), afforestation workers, building workers, cane department maistries etc. b. The details of the present strength in each department, compared with the proposed strength and the envisaged surplus.
4.2. Formation of Joint Action Council (JAC) : On receipt of the management’s proposals, the unions were taken by surprise. All the labour unions joined together and formed a joint action council to thwart the move of the management. They convened a meeting of all workmen to seek the concurrence and support of all workmen to go ahead with agitation, confrontations etc. to safeguard the interests of the workmen. The unions got a blanket mandate / permission to their proposed action. Then they sought a meeting with the management. In the meeting, they virtually threatened the management to give up the proposals, failing which the management would meet serious consequences.
4.3. Management’s firmness : Since the management carried a conviction, it was firmly put forth to the union leaders that the management was really serious about the labour rationalization and there was no reversal on their side. It was also pointed out that the company would eventually go for closure in the absence of labour rationalization being achieved. As a prelude to this meeting with labour unions, we contacted in person the Commissioner of Labour (CoL) and explained our proposals. On hearing management’s firm stand, the joint action council convened a meeting of all workmen and passed a resolution to go on a strike.
4.4. Reference to Labour Commissioner / Special Deputy Commissioner of Labour : The CoL having seized of the unions’ strike proposal, hurriedly convened a conciliatory conference calling the management and all union leaders to appear before him for a conciliation. Along with conciliation call letter, the CoL advised the unions not to precipitate action and place faith in the conciliation for a smooth outcome. Both parties appeared before the CoL who in turn delegated the subject file to the then Special Deputy Commissioner of Labour (SDCL). The SDCL advised the unions and management to take recourse to direct negotiation at the bipartite level, narrow down the differences and get back to him for a pragmatic resolution of the issue.
4.5. Subsisting settlement on labour and staff strength : A Memorandum of Settlement was already in vogue at that point of time, wherein, the labour strength was fixed at 848 which was subsequently brought down to 748, consequent to mechanization / modernization introduced in certain areas in the plant. This reduction was brought about through mutual negotiation between the management and the union and therefore, the effective strength stood as on October, 1982 was 748 and therefore, it was incumbent on the part of management to religiously fill up the vacancies as and when there was a short fall consequent to retirement of workmen.
4.6. SDCL’s directive : In view of this impending settlement on labour strength, the management pleaded before the SDCL that management should not be insisted upon by the unions to fill up the vacancies in the event of the labour strength being depleted on account of retirement and separations, pending a settlement on the proposals of labour rationalization put forth by the management. Although there was resistance from the unions, the SDCL issued a directive, during the course of conciliation of proceedings as follows : “The management need not fill up vacancies during the pendency of conciliation proceedings, except those vacancies in the skilled category like Fitter, Turners, Welders etc. which alone can be filled by the management due to operational exigencies and that the unions should not interfere with such decision, until the issue of rationalization of labour is resolved.” This directive of the SDCL was accepted by the unions and therefore, the management was kept in good stead in so far as its pursuit of labour rationalization was concerned. While, a few unions appreciated the need for labour rationalization, a few unions strongly condemned the managements’ proposals and maintained the following dictum, in pursuit of their organizational philosophy “ No union worth its name will ever accept reduction of labour force”.
4.7. Management’s hidden agenda spelt out : At the bipartite discussions held at the plant at the advice of the SDCL, the unions evinced interest to know the details of the proposals. The hidden agenda of the management was not to really go in for retrenchment but to bring about the desired labour reduction through the following means : a. Discharge of old / feeble / debilitated / poor visioned workmen on medical grounds. b. Abolition of peripheral sections not directly contributing to production and redeploying such surplus workmen in appropriate. c. Introduction of voluntary retirement scheme. The management explained its designs to unions.
4.8. Unions’ mixed reaction : While some unions were favourably inclined to the above spelt out hidden agenda, some unions were not for implementing the above proposals. It was paradoxical that there was a mixed reaction from these unions which were ostensibly working under the banner of Joint Action Council due to the necessity of maintaining the solidarity of the workmen and in order not to get exposed.
4.9. Reference of workmen for medical examination before factory medical officer : Due to mixed reaction, the management and union could not reach any meeting point. The outcome of the meeting was reported to the SDCL. Since the management did not want to brook delay, it unilaterally referred certain workmen duly identified by the department managers for medical examination by the factory’s medical officer, invoking the management’s right under the certified standing orders applicable to the workmen. A list of 24 workmen who are mostly over-aged, debilitated and poor visioned were referred for medical examination.
4.10. Defective date of birth of workmen : It may not be out of context to mention that at the time of recruiting workmen in the earlier periods, the management did not verify any documentary proof for date of birth and whatever declared by the workmen was recorded and on the basis of the records generated in those times, they were continuing in the service of the company even after attainment of the age of 60 which was prescribed as age of superannuation under the sugar wage board norms, whilst the real age of the workmen being suppressed. In fact some of the old workmen had poor eye sight and they were physically carried to the factory by their sons in bicycles. Their continuance in service was detrimental to company’s interest as in our experience, a few workmen died of heart attack whilst on duty and on such occasions, the factory’s operations were brought to grinding halt leading huge loss of production.
4.11.Medical discharge of workmen : The factory medical officer who clinically examined the workmen certified that 20 workmen out of 24 referred were not clinically fit enough to be continued in the service. Therefore, the management discharged those 20 workmen on medical grounds without paying any retrenchment compensation.
4.12.Wild cat stay-in-strike : This had serious repercussions in the factory with the JAC having engineered a stay in strike, demanding reinstatement of the 20 medically discharged workmen. They also referred the matter to SDCL, seeking his intervention to advise the management and desist from precipitative action during pendency of conciliation proceedings.
4.13.SDCL’s advice : The SDCL endorsed the idea of discharging medically invalidated workmen, advising the union not to interfere with the management’s action as any resistance from the unions’ side will lead to inevitable retrenchment wherein, the junior most workmen who were mostly sons of deceased and retired employees will be thrown out of employment and it was, therefore, wiser on the part of the unions to allow such legitimate management exercises to be continued, in furtherance of labour rationalization which was inevitable for organization’s survival. 4.14.Face saving formula for JAC : The SDCL’s advice enabled the JAC to have a face saving formula and called off the strike, after inflicting damages to production for 2 days.
4.15.Reference of workmen to DMO for medical examination : Undeterred the management prepared another list of workmen to be referred for medical examination. This time, the unions approached the management and requested for copy of the list of workmen being referred for medical examination for which the management obliged. JAC took an unanimous decision and demanded the management to refer future cases to District Medical Officer (DMO) instead of Factory Medical Officer as according to them, the latter was prejudicial and under obligation to favour the management. Though the management felt that there was no locus standi for JAC to make such a demand, yet as a gesture of goodwill and as a special case, had agreed to refer another 40 workmen for medical examination before the District Medical Officer at Thiruchirapalli.
4.16.Unions’ discreet bid to safeguard their staunch members : On receipt of the list of workmen being referred for medical examination, individual unions separately approached the personnel officer with the request to delete one or two workmen of their choice who happened to be their henchmen. In order to gain the tacit support of unions and generally to appease the JAC, he agreed to delete the names of some workmen.
4.17.Discharge / Superannuation of workmen as per the DMO’s report : Finally, 30 workmen were short listed for reference before the DMO, Trichy. The DMO certified 26 workmen as medically invalidated either due to poor eye sight or health reason or over age. In fact, in some cases, the age was assessed through medical tests and the DMO estimated the age of few workmen to be over 60. On the basis of the DMO’s medical certificates, 26 workmen were discharged / superannuated as the case may be, from the services and their terminal dues were settled promptly.
4.18.Voluntary Retirement Scheme (VRS): a. The management designed a VRS to prune the labour strength. Accordingly, the management announced a compensation equivalent to 15 days of wages for every completed year of service subject to certain age restrictions / past service, in addition to an ex gratia of Rs.5,000/= as a VRS compensation package. b. To this management’s notification, there was again a tough resistance from the JAC. While, some unions decried / discouraged the announcement of VRS, some unions started negotiating with the management for a fabulous compensation package. c. Prior to the announcement of the voluntary retirement scheme, a survey was made in the area and found that nearly 60 workmen had heavily indebted and they were badly in need of money to clear off their debts and to live peacefully by taking to agriculture in their own land holdings for the rest of their life, as many of the workmen were drawn from agricultural family with some land holding in the same area, supplying sugarcane to the factory. d. Although it was expected that about 60 workmen would respond to the VRS, despite union’s adverse publicity to the VRS, yet there was an overwhelming response in as much as nearly 100 workmen opted for VRS. In fact, some of the workmen, fearing unions’ threat, discreetly approached the management, collected the VRS forms and returned after filling and signing the same. They also requested not to disclose their names until final announcements of their names in the notice board and settlement of their VRS compensation and terminal dues like gratuity and leave salary. The management, therefore, relieved 100 workmen under VRS by promptly settling their compensation and other legal
dues.
4.19. SDCL’s initiative: In the meanwhile, the SDCL had been convening conciliation meetings at frequent intervals. While, JAC was complaining against management, the management justified their stand. In order to avoid any major disaster to the organization, the SDCL subtly lend countenance to management’s strategic actions, although accused by JAC as a unilateral and precipitate course of action on the part of management. The fact remains that excepting one or two constituent unions, the JAC was not really bent upon thwarting the managements’ efforts. But, outwardly they were making all noise / agitation in public platforms, understandably to play to the sentiments of the workmen.
4.20. Natural wastages : There was an average reduction of 4 to 5 workmen from the rolls of the company on account of deaths while in service.
4.21 Conciliation Talks : Between March 1982 and June 1985, the management and the unions had attended nearly 30 rounds of conciliation meeting before the CoL and the SDCL, before a Memorandum of Settlement under Section 12(3) of ID Act being signed between the parties, fixing the labour strength at 550. It may sound interesting to note that some of the unions with staunch philosophies on labour reduction had become signatories to the settlement.
4.22 Proactive steps of the management : Since the management was confident of arriving at a settlement, all preparatory exercises like medical discharge of the workmen, voluntary retirement schemes etc. were to be carried out to prune the supernumerary personnel mainly with a view to avoid retrenchment with tears and in a bid to ensure that there was no surplus workmen at the time of signing the Memorandum of Settlement on labour rationalization. 4.23 Redeployment of surplus workmen :
4.23.1 In fact, when the settlement was signed, there were hardly 25 surplus workmen on rolls. The management had redeployed the available strength in such a way that necessary compliment as per man power study was deployed in the appropriate work stations in keeping with the manpower need. The workmen rendered surplus after redeployment were categorized as leave and absenteeism pool and they were utilized against leave vacancies on a day to day basis and were redeployed in various sections irrespective of the grade. Consequently, the engagement of service casuals to the extent of 25 workmen in the rotating shifts per day could be averted.
4.23.2 After six months of signing a settlement on labour rationalization, all those 25 workmen were absorbed against vacancies that arose consequent to retirement / natural wastage. It may not be out of context to mention that every year 10 – 15 workmen used to retire and during the period from 1982 to June’1985, more than 45 workmen retired on attaining the age of superannuation (i.e. 60 years), notwithstanding two deaths (death whilst in service) on an average per year during the corresponding period. 4.23.3.The reduction of labour from 748 to 550 was brought about, in keeping with the Memorandum of Settlement under Section 12 (3) of ID Act, 1947 entered into between the management and workmen as per the break up given below : Total work force 748 as of October, 1982. Less : Medical discharge 46 Relieved under VRS 100 Natural wastage 6 Retirements 46 198 Effective strength 550 as on October, 1995.
4.24. Settlement On Labour Strength (Scenario Prior To 1982) : There was a subsisting settlement in force prior to 1982 wherein, the labour strength was fixed at 848 and the management was religiously replenishing the strength as and when there arose the vacancy on account of retirement / natural wastage. The strength was brought down in stages and ultimately stood at 748 as on October, 1982 and the new management reviewed the labour strength in the changed context and proposed to the unions to further bring down the strength to 550 for ensuring the survival of the company.
4.25. Abolition Of Certain Peripheral Categories : The unique feature of this settlement inter-alia provides for abolition of certain peripheral sections like building workmen, afforestation workmen, cane department maistries etc. which were not directly contributing to production. The workmen displaced from these areas were either redeployed after proper training or relieved from the services under VRS.
4.26. Rationalization Of Staff Strength :
The company had 240 staff members on roles as on October, 1982. Although there were three independent unions representing the interests of the staff members who were known as non-covenanted staff and drivers, yet the management had to confine the talks / negotiation at bipartite level with only one union which was declared as a sole bargaining agent for staff members. The management made out a proposal, in writing, addressed to the bargaining agent, for reduction of staff strength from 240 to 185. The staff-rationalization exercise was taken up concurrently with labour rationalization. The management had to face all resistance and pinpricks from the union. The bipartite talks and tripartite talks before the CoL, Mr.Raja Subramaniam, had to be gone through. Several rounds of conciliatory discussions before the CoL culminated in the form of a Memorandum of Settlement under Section 12 (3) of Industrial Disputes Act, 1947 during the month of June, 1985, fixing the strength at 185 (downward revision).
4.27. Mechanism Of Sole Bargaining Agent (Staff) :
4.27.1 Interestingly, the three staff unions functioning at the plant had diametrically opposite ideologies and always remained arch rivals. Due to inter-union rivalry, the management found it extremely difficult to resolve any common issues affecting staff members. Most of the issues ended up with dead lock and on most occasions, the management was the target of attack / criticism by each union.
4.27.2 The management, therefore, spelt out a proposal to all the three unions for devising a mechanism of negotiating committee / sole bargaining agent, for resolving issues / grievances affecting staff category at bilateral level and in good time. 4.27.3. The salient features of the proposal may be summarized as follows : a. An election (secret poll) to be conducted and out of the three contesting staff unions, the union which has secured more than 50% of votes shall be declared “Sole Bargaining Agent for Staff Members” for a period of 3 years and the defeated union should not have any right to espouse the cause of any staff member before the management and shall however take recourse to provisions of Industrial Disputes Act, 1947 for redressal of individual or common grievances. b. In the event of none of the unions securing more than 50% of the votes in the election, the union securing the highest number of votes in certain percentage slabs shall be given a berth in the negotiating team and that union can nominate certain specified number of union members in the committee as prescribed. Any union which secures a percentage of 15 or less votes polled shall not be eligible to find a berth in the negotiating committee. c. When this proposal was mooted to the staff unions, there was mixed reaction. However, after a protracted discussions with all concerned unions, an understanding was reached to the above effect and parties decided to request the Asst. CoL(Conciliation), Trichy, for solemnizing the understanding in the form of a settlement under section 12(3) of the Industrial Disputes Act, 1947 for greater sanctity. The settlement provides inter-alia the tenure of the bargaining agent / negotiating committee for 3 years and that the election should be conducted at the premises of the factory by a representative of Labour department who shall act as presiding officer of the election and declare the results. d. On a scheduled day, the election was held at the factory premises in the presence of the representative of the Labour Department of the government. On the same day, the election results were announced. While, one union secured 65% of votes poll, another union 30% and the third union 5%. e. The union, namely, Deccan Sugars staff union which secured 65% of votes was declared SOLE BARGAINING AGENT for staff members for a period of 3 years. f. The other 2 unions became virtually extinct after the above union had swept to power and the management had successfully negotiated and settled major issues like wages and staff rationalization with the sole bargaining agent, which otherwise could not have become possible. g. Unable to accept the popularity of the sole bargaining agent, the defeated unions approached the Asst. CoL(Conciliation), Trichy, at the end of 3 years tenure of the sole bargaining agent, for termination of the settlement, in their anxiety to restore status-quo-ante. But these unions could not succeed in their attempts.
4.28 Introduction Of Wage Board Scales :
a. After the sugar wage board scales were introduced at EID Parry India Ltd’s Nellikuppam’s factory, at the behest of special industrial tribunal appointed by the Supreme Court of India, Deccan Sugars remained a solitary sugar factory in the whole of India, to continue to be out of purview of the sugar wage board scales of pay and DA.
b. On account of the company’s own grading scheme, scales of pay and DA pattern i.e. VDA linked to Trichy’s cost of living index, the workers at Pugalur Sugar factory were getting nearly Rs.250/- higher than their counter parts in the rest of the factories which were covered under the sugar wage board scales pay and VDA linked to All India Consumer Price Index
c. Since the company had no say in the statutorily fixed cane price, sugar price etc., the company’s financial viability had a terrific beating on account of the company’s own scales of pay and DA system
d. It was, therefore, inevitable for the company to bring the wage scales and DA system under the main stream namely, sugar wage board scales of pay and DA system.
e. It may be interesting to note that consequent to labour rationalization accomplished in June, 1985, fixing the labour strength at 550 and after redeployment and total pruning of supernumerary workmen, vacancies in the labour category arose within 6 months, making it obligatory on the part of the management to replenish the strength as per agreed norms.
f. It was in the above context that the management recruited fresh workmen on such grade, scale of pay and DA as per sugar wage board’s recommendations. Again the recruitment was based on the formula prescribed by the industrial tribunal award.
g. As expected, all the unions vehemently resisted the management’s action in recruiting the freshers under the sugar board scales. The manifestations of unions reaction included work stoppages, go slow, threatening / intimidation of personnel officer etc. In fact, they demanded the payment of wages, VDA as per company’s grading scheme, but the management stuck to its guns. The culmination of their reaction ended up with the wild cat strike during the crushing season. The matter was however, seized by the SDCL.
h. At the conciliation meeting, the unions argued the following points : • There cannot be dual wage structure for workmen doing the same job in the unskilled category. • The management was acting in a bid to victimize workmen.
i. On behalf of management, the following counter arguments were made : • The fresh recruits cannot be construed as members of union and therefore the unions had no locus-standi to espouse the cause of new recruits.
While, the management has made an offer and the new recruits has accepted, there cannot be any interference from a third party. • As regards dual wage structure, purported to be claimed by the unions, the management had come forward to redesign / recast the wage structure of all workmen in such a way that they would fall within the ambit of the sugar wage board scales of pay, DA system and grading scheme. The management however clarified that while redesigning the grade, scales of pay / DA system, the existing workmen who were under the company’s grading scheme and DA linked to Trichy cost of living index would continue to get the differential amount (i.e. existing company’s gross pay minus wage boards gross pay), till their retirement / cessation from service for reasons whatsoever. The management would protect the interests of the existing workmen and such a fitment as per sugar wage board scale was not detrimental to their pecuniary interest. It was further clarified that the management would continue to pay the differential amount in the form / nomenclature of personal pay, applicable only to the existing workmen and by no stretch of imagination, the future recruits could claim “personal pay” as a matter of right. j. After hearing the arguments of both parties, the SDCL advised the unions not to precipitate the matter and accept the management’s actions. In deference to SDCL’s advice, the strike was called off and new recruits were let in as per terms and conditions of appointment stipulated by the management, fixing the wage board scales and VDA linked to All India Consumer Price Index. k. Over a period of 2 –3 years, the workmen recruited on sugar wage board scales outnumbered existing workmen enjoying personal allowance. Management had accomplished the wage rationalization in keeping with the main stream. The excess strain on wage bill was eased to a great extent.
4.29. Streamlining Of Labour Promotion Policies :
a. Prior to 1994, the promotion dictum of the company at the dictates of the unions was based on mere seniority without reference to individuals’ skill, calibre, track record, attendance, past service record etc. which generally constitute a major criteria for promotion. The management was in a quandary and keeping its fingers crossed. b. The factory’s technical efficiency was at a very low ebb owing to the system of seniority based promotion. In fact, an unskilled worker without formal ITI qualification, necessary skill and calibre could become a highly skilled fitter over a period of time following the promotional avenues prevailing at that time. It is enough that the workmen had seniority in the unskilled category for moving to the next rung in the ladder i.e. semi skilled workmen, then skilled workmen and finally highly skilled workmen, depending on the vacancies in each level. The management had no say in the matter of promotion. The record on category-wise seniority maintained by the Chief Time keeper was the prime record for deciding the promotion. In fact the unions had access to all these records in a democratic manner and the office bearers of the union used to stake their claim for promotion of their members well in advance and pressurize the management to effect the promotion immediately when a vacancy arose. c. This metamorphosis way of promotion to even highly skilled grades rendered the following scenario : 1. Sometimes a highly skilled workmen may not be able to identify the equipments / tools that were needed to attend to break down in the mill and other areas, requiring the help and attention of the supervisors during his worktime which was invariably more than warranted time, detrimental to the company’s ongoing operations. 2. The company’s technical efficiency was very poor due to incompetent workmen at the higher levels and breakdowns were order of the day during crushing season. 3. ITI qualified youngsters who were juniors in service had to work under the incompetent and so called highly skilled workmen, demoralizing the formers. d. It was in the above context, a dispute was raised by the management before the Asst. CoL(Conciliation), Trichy. After several rounds of discussion, a settlement under section 12(3) of ID Act, 1947 was arrived between the parties, the salient features of this comprise settlement may be summarized as below : 1. In future, when there is a vacancy in skilled category like fitter, turner, welder etc., such vacancies should be filled by the management by inducting fresh or experienced ITI candidates in the appropriate discipline to the extent of 50% of the available vacancies, and the selection process consisted of a trade test to be conducted for the purpose of selection followed by an interview. 2. 50% of the vacancies in the skilled category to be filled on the basis of the seniority of existing workmen and the management should be clothed with the power and authority to identify such senior workmen on the basis of their workmanship consistently monitored and certified by his immediate superior, his attendance, and past record which should be free from blemish. 3. The above settlement revising the promotion system was effectively put in to operation and only deserving cases were given promotion for higher grade much to the relief of management. The technical efficiency of the factory had gone up appreciably, leading to better machinery utilization and enhanced overall productivity especially during the crushing season.
4.30.Termination Of Award Of Industrial Tribunal :
The management shelved its proposal to terminate the award of the Industrial Tribunal prescribing the mode and manner by which the recruitment of labour to be handled, in deference to the advice from the SDCL. The management thought it wiser not to take up too many burning issues at a time.
4.31. Encounters Met For Achieving The Above Targets :
4.31.1. A wild cat strike on withdrawal of a special season leading to declaration of lock out lasting for 35 days, inflecting huge production and financial loss to the company.
4.31.2.The estranged workmen led by their union leaders bent on creating violence including an attempt to put a workman behind the General Manager’s(GM) car when the General Manager was taking the car on reverse.
The workman had a miraculous escape by the providential act of the GM who suddenly applied the brake to bring the vehicle to a halt. It was an unruly scene wherein a strong mob of 500 workmen engulfed the GM and Personnel Officer. Thanks to some leaders in the group who foiled the attempt of the mob from their violent action which if not prevented would have exposed the GM and the Personnel Officer to a great risk of life and limb. There was insistence by the mob for the arrest of the GM and Personnel Officer, by charging them with attempt to murder the workman. The Asst. Superindentent of Police, leading a contingent of police personnel rushed to the spot within an hour. He tactfully handled the situation and diffused tension so as to avoid any untoward incident.
4.31.3. During lock-out, even essential services personnel including security guards were pulled out by the agitating unions, compelling the management to deploy expeditiously private security force for the safety and security of company’s properties during the lock-out period. The company’s security personnel were cautioned that unless they resumed work within 48 hours their services would stand terminated. This had a desirable result, that company’s security personnel, braving threats from the union leaders resumed work and the private security personnel were withdrawn from the plant.
4.31.4. Anonymous threatening letters used to be addressed to the GM and the Personnel Officer. While the letter meant for GM used to be addressed to Personnel officer’s residence and the letter meant for Personnel Officer used to be sent to GM’s residence.
4.31.5. Union leaders used to speak in public platforms, indulging in character assassination of the GM and Personnel officer, with a view to dissuading / discouraging them from their action.
4.31.6. Pump operators and electricians were prevented from discharging their duties thereby stopping the supply of drinking water and electricity to the residence of the GM and Personnel Officer.
4.31.7. Prevention of Accounts and Personnel department staff from preparing the pay roll during the strike / lock out period and insisting for disbursement of salary on due dates for the work rendered for the partial period during the strike / lock out month, thereby compelling the management staff to prepare pay roll and disburse salary. 4.31.8. Assembling / gathering in front of the office of GM and Personnel Officer, shouting slogans on top of voice etc. .
5. RESULTS ACCOMPLISHED / CONSOLIDATED :
Labour rationalization leading to reduction of labour strength from 748 to 550
a.Reduction of staff strength from 240 to 185
b.Dispensation of unviable special crushing operation
c.Introduction of wage board scales of pay and DA
d.Streamlining of promotional policy for labour
e.Abolition of peripheral categories of workmen not contributing to production
g. Discharge of deadwood employees including debilitated, overaged, and poor visioned workmen h. Introduction of mechanism of sole bargaining agent for staff category, in order to obviate the problems of inter union rivalry.
6. CONCLUSION :
The accomplishment of results could not have become possible but for
1.Top management’s total support to the plant management
2. Managements conviction to turnaround .
3.Support from the CoL/ SDCL
****************************
From India, Chennai
Dear Senthilkumar Sir,
Your success story of well thought out turnaround of sugar mill is not only inspiring but highly educative besides being chronologically well documented account.
This is lesson to learn how a seasoned IR professional acts as a catalyst right from thinking to implementing the turn around strategy with grit and determination and achieves the planned end results.
You deserve hearty congrats for sharing this live case study.
Regards
Vinayak Nagarkar
HR-Consultant
From India, Mumbai
Your success story of well thought out turnaround of sugar mill is not only inspiring but highly educative besides being chronologically well documented account.
This is lesson to learn how a seasoned IR professional acts as a catalyst right from thinking to implementing the turn around strategy with grit and determination and achieves the planned end results.
You deserve hearty congrats for sharing this live case study.
Regards
Vinayak Nagarkar
HR-Consultant
From India, Mumbai
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