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
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.
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