Maruti factory violence: Decoding the uneasy management-worker relationship

If only it had avoided those glaring HR goof-ups

Business Standard is republishing this 2012 article, as a court in Gurgaon in Haryana on 18 March, 2017, sentenced 13 of the 31 workers convicted for violence at Maruti Suzuki's Manesar factory in 2012 to life imprisonment. The 2012 violence had seen a manager dying of asphyxiation.

No one knows yet who killed Awanish Kumar Dev, general manager (HR) of Maruti Suzuki India Limited, who was mercilessly beaten up and burnt to death inside the factory at Manesar. Was he the victim of spontaneous mob violence, which followed an altercation between a worker and his supervisor? Or was he the target of a carefully planned conspiracy by a union leader, as has been alleged by the late executive’s friends? The Gurgaon Police are apparently still clueless, after having arrested almost 100 workers, including union office-bearers.

Although it’s important that justice must be done and the guilty are dealt with ruthlessly, the latest round of violence in Manesar brings into sharp focus how Maruti could have done better in terms of industrial relations management.

Consider the timing of the Maruti Suzuki MD’s statement that the company will derecognise the newly instituted union with immediate effect, just a couple of days after the gruesome violence. Showing your muscle is one thing, but flaunting it at a time when the atmosphere is so volatile doesn’t speak well of the management’s maturity in handling such situations. No wonder Maruti had to swiftly clarify that it had no plans to take any such step.

The uneasy relationship between the Maruti management and its workers was evident after reports surfaced that workers were unhappy about the failure to implement several clauses in a tripartite agreement that was signed last year before they decided to call off a strike. In fact, the Haryana labour department had initiated proceedings against Maruti executives for allegedly violating the agreement — media reports the Maruti management did not deny. Maruti, for example, had committed in that agreement to form grievance redressal and labour welfare committees. These have not been set up and the wage increases agreed in that agreement were still under negotiation.

The withdrawal of last year’s strike also coincided with reports that a troop of disgruntled workers led by Sonu Gujjar had stopped production only to slyly broker a side deal with the management in which they got hefty payouts. This raised the question whether Maruti deviated from best corporate governance practices by helping Gujjar and others suspended for indiscipline cut a sweet deal for themselves and leave the company. To be sure, Maruti’s decision to offer these workers a settlement package was legal since the company was well within its rights to offer a settlement higher than the general severance rules. Legal experts agree that the Industrial Disputes Act only prescribes a floor – 15 days for every completed year of service – and not a ceiling for severance packages.

But the timing of that decision was an industrial relations and public relations disaster: a few workers got a hefty payout after creating trouble while others in the same factory had to forfeit wages for their participation in the over two-month old strike; this surely did nothing to bridge the trust deficit between the management and workers.

It is also pointed out how Maruti goofed up during last year’s strike by insisting that all workers sign a “good conduct bond”. The bond said workers would follow discipline, would not get involved in absenteeism, not resort to go-slow tactics, follow the production principle and not sabotage production or indulge in activities that may hamper production. Apart from the fact that such strong-arm tactics invariably fail in a hostile environment, the move was not sound — even legally. Schedule 5 of the Industrial Disputes Act says “to insist upon individual workmen, who are on a legal strike to sign a good conduct bond, as a pre-condition to allowing them to resume work is an unfair labour practice”. In the past, such attempts have been held to be an act of “force” and “coercion” by the courts.

The way it has handled its contract workers also doesn’t improve Maruti’s industrial relations score. A huge discrepancy in the wages of permanent and contract workers for the same amount of work; no leave for a segment of workers who constitute almost half your workforce; and no social security benefits — these issues had been festering for a long time. Sadly, India’s largest car maker wasn’t proactive enough to lead the way on this issue.

Maruti would do well to realise that communication with workers also involves dialogue. And such an approach calls for a willingness to empathetically understand the other point of view and act on it — that’s what industrial democracy is all about. And HR is not just about building a leadership development pipeline, flow charts and diagrams; it also involves industrial relations in which you are dealing with human beings on the shop floor.

Finally, Maruti must ignore the so-called “mahapanchayat” of leaders from some 100 villages who supported the management with a rider that the company should recruit only locals from nearby villages and that the villagers would constitute a committee comprising people from seven villages of the area, who will work with the Maruti management to find a solution to the labour crisis. Heeding such “helpful advice” would be nothing but a jump from the frying pan into the fire.