Hi Friends,
                                              Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do.
                                                  There is just no time to look back, no time to wonder,"Will anyone read these pages?"
                                       With regards,
                                       Hemen Parekh
                                       27 June 2013

Sunday, 14 January 1979

PROMISE OF PRODUCTIVITY

Synopsis: Communication For Productivity
Letters written to some 7500 Workers / Managers / Union Leaders, following a period of strike / Go slow / Murders (1979 - 1987), at Mumbai factory of Larsen & Toubro Ltd. This direct / open / honest communication led to a remarkable atmosphere of trust between Workers and Management, which, in turn, increased productivity at 3% per year (ave). 

14 Jan 1979

To:
 General Managers

Promise of Productivity


The productivity has our minds agitated for nearly three years now.  It was in April 1975 that our Chairman (Mr. N.M. Desai) appointed a “System and productivity Committee" to study   the various.  Aspects of   productivity   and make recommendations.   A  Report containing   the recommendations was submitted in November 1976.

Without going  into the progress  made in  the implementation of the recommendations, this  morning appears to  be the most opportune   time   to   talk   to  you   once   again   about productivity.  The occasion  I have in mind is the signing of the four-year agreement with the Union last Friday evening.

I draw  your attention  to the clauses  on "Productivity  and Discipline" which have been incorporated in the agreement.

If a break-through has to be made  on the Productivity front, a way  must be  found out to  translate these  clauses (which might at first  glance appear like so may platitudes)  into a day-to-day  working   relationship  between   the  Shop-floor management and the workmen.

The  Union  and  the Workmen,   in return  for  the  benefits arising  out  of the  agreement,  have  agreed  to raise  the performance  Indices by  25 points above  the  existing level within three months.

What does this mean?

If  the  current PI  (Performance  Index)  for an  individual workman or a group of workmen  (Shop/Department) is, say, 50, the Union and Workmen have agreed to raise the PI to 75.

In essence,  the output in  physical terms,  in such a  case, should go up by 50 per cent.

In  my  numerous  discussions with  the  DGMs,  I  have  been informed that the Performance Indices are as  low as 22/24 in many Shops.  Assuming  this to be true, raising the  PI by 25 points over  the existing levels,  would mean an  increase of physical output per person by over 100 per cent!
With  this  background,  how  may  additional  vacancies  (of daily-rated  workmen)   should  we  budget  in   our  1979-80 Manpower  Budget?   This,  then,  is the  multimillion  Rupee question! (the cost of the four-year agreement).

Barring  rare   exceptions,  if  we   were  to   propose  any additional manpower  during 1979-80,  it would  be tantamount to ourselves not having faith  in the Productivity Clauses of the agreement I There are other  ways of dealing severe blows to the  spirit and  intent of  the productivity  Clauses, but proposing  additional' Manpower would  be the  surest  way of sounding the death-knell of the entire concept.

At this  stage I  cannot resist the  temptation of  narrating the English Electric case study.

English  Electrics  have  an   elaborate  system  of  Methods Study/Time  Standards based  on which  they  calculate daily/ monthly  PI  for every  shop.   At  the  time  of  signing an Agreement with the Union  some three months back, this PI was averaging  71  for  the  entire  factory.   The  Productivity Clauses  of the Agreement provided  for  the workmen to  raise the PI  to 81.  At end of three months  of constant pressure/ persuasion/monitoring/feed  back the PI  has actually reached 80  as  on 4th January  of  this year.   I  am sending  out a separate  detailed  Note  on the  subject  to  all  the  dgms/ Production Managers with a copy of the Agreement.

H.C. PAREKH

P.S.:     At English  Electrics, after receiving  the PI Statement  every   morning
from the Industrial Engineering Department, the FIRST THING  that   the 
production Managers/Personnel Officers  do is  to meet  the Union's shop
representatives  and bring it  to  their notice the shortfall  in  the  targeted  
PI  for  each  shop. EE considered  this DAILY  MEETINGS with  the 
Union's Shop  Representatives  to  be  a  crucial  factor   in bringing  about
productivity improvement.