Toyota Industrial Relation

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Information about Toyota Industrial Relation
Business & Mgmt

Published on March 2, 2014

Author: prasant26



Q 1. Examine the industrial relations (IR) problems at TKM. What factors led to the strike and lockout at the company’s plant? What measures, according to you, should the management and employees take to avoid such problems in the future? TKM had around 2358 employees as on Jan 2006, out of which around 1500 were members of TKM Employees Union (TKMEU). TKM had had a history of unhealthy labour relation between the management and labour right after few years of inception of its Bidai plant. Some of the major problems at the Bidadi plant can be listed as follows: i. ii. iii. There were two strikes happened in 2001 and one in 2002, which was followed by a lockout, due to increased shift upto 12 hours. Strike during May 2005: Employees demanded a hike in wages as there was extension of working shifts. During the strike fifteen employees were suspended and three were sacked from the job. The management showed the reason for suspension as misconduct at the workplace and attacking the supervisor. After rigorous clash between management and the Employees the wages were raised by 15% Strike during Jan 2006: As the case of three sacked employees remained unresolved the other employees again revolted. It appeared as a flash strike as the Employee Union (TKMEU) did not give a 14 days’ prior notice, as mandated by Industrial Dispute Act, 1947. This made the strike illegal and the following events happened during the strike. a. 400 employees blocked the road b. They threatened to blow LPG cylinders inside the premises c. They obstructed the outward movement of manufactured vehicle d. They stopped the production, which was again illegal e. The mishandled the other workers who were a not the part of the strike. There were number of factors that led to the strike and lockout at the TKM’s plant. Some major factors can be listed as follows: a. b. c. d. e. f. g. h. i. j. Labour unrest at the workplace Worker’s unruly and rude behavior Senior Official’s strict behavior Worker’s indiscipline at workplace and consistent poor performance Increase of work shift to 12 hours from 8 hours No hike in wages were announced accordingly No bathroom breaks were given during the shift Dismissal of the workers on the ground of misbehavior External party (CITU) interference These issues evoked a strike

k. It was followed by a lockout citing safety concerns by the management According to my view, company should take the following actions to prevent such incidents in the future. They may be listed as follows: a. As both strike and lockouts are illegal, it should be banned. b. A declaration stating the disciplinary rules and work ethics at workplace should be taken from the workers before joining c. There should be a regular meeting happening between the Worker Union members and management discussing various issues and grievances of the workers d. Employees could be called in different shifts, in order to avoid overtime of the employees e. Overtime should not be made mandatory, it should be made volunteer. f. Overtime should be compensated optimally g. Proper break time, lunch time should be maintained h. If a lockout is prevailing for longer time, the company can outsource some of its activities, if possible. Q 2. Comment on the role played by trade unions in IR problems at TKM. Explain the concept of collective bargaining by the labour unions. Do you think the trade unions have performed their duties adequately in the light of TKM case? The role of trade union in an economy is to enable job security and real earnings, secure better conditions of work and life, and fight against exploitation and arbitrariness to ensure fairness and equity for employees. They are present in the economy since long time. However, the role has undergone significant change over time. Center of Indian Trade Unions (CITU) was involved with the TKMEU for all the activities, after TKMEU was affiliated to the CITU in 2005. This actually aggravated the rift between the TKEMU and the management. This was mainly because; the company did not want any third party to interfere in TKM’s internal decision. The management also challenged some of the employees for taking part in unproductive and wrong works with CITU. CITU also played a major role during the negotiation process. CITU state committee constantly supported the TKMEU representatives. With this support, members of

TKMEU put forward some demands which were later modified a little and then fulfilled. After the clash between the management and TKMEU finally came to an end, during January 2006, CITU stated that it would continue to support TKMEU in the future and also fight with the management regarding the order suspending the workers during the strike. On February 05, 2006 Union members started hunger strike and CITU also supported this. Collective Bargaining by the labour unions: Collective bargaining can be defined as a process of negotiation between employers and a group of employees, so as to reach at a mutual consensus in order to improve and regulate the working conditions. The common issues for which this method is employed is mainly wage scale, training, working hours, health and safety, grievance mechanisms, overtime, employee rights etc. There are labour unions which are headed by their representatives who negotiate with a single employer or a group of management people. The results thus got are much faster, wider and easier to implement without any further disagreements between the employees and the employers. The agreement thus reached is called as collective bargaining agreement (CBA) or collective employment agreement (CEA). In my opinion, the trade union has fulfilled its duty in the TKM case. It always stayed as a support during various strikes to make the labour union’s voice reach the management during the strike. Q 3.What impact can such labour disputes have on foreign direct investments in India? Is there any need to reform Indian labour laws? Justify your answer. In India, labour unions are very strong due to their affiliation to Central Trade Unions and their affiliation directly with the political party. In a country like India, where politicians use their power and position to gain a huge chunk of vote share give so much priority to such labour unions who constitutes the major part of their ballot bank. Sometimes, these labour unions grow so strong; they make management and corporate to bow their head in front of their demands. This in turn, sends wrong signals to the companies that were going to invest in India from outside, as how unrest and indiscipline the labour force are here and how they can sometime emerge more

powerful than the employee. This brings in additional concern of legal, political issues apart from economical issues making the place unattractive for the investors. Labour laws in India: Indian labour laws such as Industrial Disputes (Amendment) Act, 1947 are the main legislation that governs the labour disputes in India. This law has mainly focused in three areas, such as a. The provision for payment of compensation to the workman on account of closure or lay off or retrenchment. b. The procedure for prior permission of appropriate Government for laying off or retrenching the workers or closing down industrial establishments c. Unfair labour practices on part of an employer or a trade union or workers. While this law mainly focuses on the rights of employee and responsibility of the employer to protect the interest of the worker, it talks less about the code of conduct need to be followed by the workers, rules and regulations regarding strikes etc. These are various issues that are needed to be addressed by the Indian Government so as to keep a harmony between the management and the workers. Q 4. In the TKM case, comment on the suitability of the Japanese management style in the Indian labour context? Do transitional cooperation need to localize their global production process and HR policies to adapt to the different socio-cultural environments in which they operate? Explain. Japan, as a country is rich in morals and values. This is also reflected in their work behavior and management style. Traditional Japanese management style cosists of the following main pillars, such as a. Lifetime employment b. Seniority c. Enterprise Unions But keeping an eye on the recent developments in work practices around the globe it has implemented several changes in the traditional system in order to go hand in hand with other countries. The lifetime employment policy is amalgamated with pay cut or hike, performance basis job etc. And the enterprise unions, which held a strong position in traditional management style, had been diluted very deeply so as to reduce the nonproductivity of the workers and have a control over them.

This has led to a very mechanical and robotic style of management. Now they have less human consideration. They give too much stress on forcing TPS on employees, rather than taking their wishes into consideration. This has led to creation of a negative image about Japanese company’s organizational culture. In order to meet to the local demand and work structure, the global organizations should give more autonomy to the local units to make their own HR policies, work practices, other workplace requirements. Some Examples: Nissan motors, a Japanese car manufacturer, when entered India made several policy changes according to the domestic requirements. Firstly , the concept of seniority was discarded and the incentive system attempted to limit the subjective evaluation of an employee’s contribution, and individual performance was given more priority. In Canon, lifetime employment is regarded as long term employment. In this process, employees are allowed to gradually acquire skills and focus on long term career after joining the company. The employees are allowed to build their own career plan and work accordingly, so that he can grow and prosper within the company in long term. *****************

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