NEXT POWAI LEVEL PRODUCTIVITY COMMITTEE MEETING ON 13TH OCTOBER 1983

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).

10 Dec 1983

To:

Deputy General Managers (Mfg.)

SUB -     NEXT  POWAI LEVEL  PRODUCTIVITY  COMMITTEE MEETING ON   13TH OCTOBER 1983                                                                  

You must have already  received my earlier circular dt,  29th September 1983 regarding this meeting.

I  would earnestly  request  you  to attend  the  forthcoming meeting in view of the following:

1.           In the  very first meeting with  the President &  Gen. Secretary (BKS

Union - Sena Bhavan) on  the Charter of Demands on  24th February 1983, 

I had  emphasised the aspect  of almost stagnation Productivity at  Powai

in  most of our operations since 1979,  despite the Clause in the  Agreement

providing  for a  25 point  rise.  I had also mentioned in my  opening

remarks that arising out of  1979 experience an  attempt should  be made to       

make 1983 agreement,

'A post-performance reward' type agreement.

All of us collectively  need to impress this  upon the Union.

2.        From the  information  made available  by the  Finance Department, I

gathered  that both the  sales price and  the  transfer price  of  Powai 

manufactured  products during  the Budget year  1983-84  is likely  to be 

as  much as 10% lower from  the actual production attained during  1982-

83.     If  the  transfer prices  taken  for computing this are higher  than those

taken for 82-83, the actual physical output may  be even as much as 15%       

to   20%  lower  than   the  comparable   figures  for 1982-83.  If this is so,  it

is quite  serious'. As it  is,  I  have,  through  my  earlier  circular  already       

requested the  production managers  to present  at the 13th October  1983

meeting,  1982-83  achievements and 1983-84 targets  product-wise in  physical quantities. This   should' highlight   the   problems   of  demand        slackness.

While presenting these figures, we should  also try to highlight whether 

the 83-84  physical quantities  are expected  to be achieved with  the same

number  of man hours  or with reduced/increased  number of man  hours

thereby   highlighting   the  level   of  productivity expected.

I  belive your  participation  would  help  in  generating  a constructive  dialogue  on  what  steps  could  be  taken  to increase our operational  productivity at Powai in  the years to come and thereby increase our competitiveness.

H.C. PAREKH

MANAGEMENT'S CHARTER OF DEMAND

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).

8 Nov 1983

To:

Dear Shri,

MANAGEMENT'S CHARTER OF DEMAND

I take this opportunity of wishing you personally, the Bharatiya Kamgar Sena and workmen of L&T Group of companies, a Happy and Prosperous New Year (Vikram Samvat 2040).

I am sure you will recall my letter of January 25, 1983.

In that letter I had expressed the hope that the negotiations on the Charter of Demands would be concluded amicably to the benefit of both employees and the Company. I had pointed out that  the Agreement, while improving the quality of life of the Company's employees by increasing  their remuneration, benefit? and facilities, should also improve the financial and business health of the Company.

Every new Agreement imposes an additional financial burden on the Company and adds directly to the cost of the Company's products and services. The company has, till date, prospered despite these increasing costs, largely due to technological innovations, good strategic planning, rational financial management, and correct make/buy decisions. Unfortunately, increased productivity, particularly labour productivity, has not been a factor in helping the Company to prosper.

In the 1979 Settlement, the Union had agreed to raise the levels of labour productivity. However, this clause has remained largely unimplemented despite the best efforts of Management. Labour productivity levels since 1979, have remained dismally stagnant at Powai. The enclosed charts show productivity levels for some Units in Powai. It is not difficult to see, that in almost all cases, the productivity levels over this 4-year period, are far below the levels agreed to in the 1979 Settlement and unfortunately show no appreciable upward trend. Before expecting any additional emoluments through a new wage agreement, it is only fair that the employees deliver what the Union promised on their behalf in 1979, in return for the enhanced wages granted to them then.

The Indian economy today is plagued by recession. The competitive pressures in a number of the company's product-lines has always been high. Today, with the shrinking market, these are even more acute. We are being forced out of some product-lines and are losing ground in others because of non-competitive prices.

The Management now considers it vital that the financial cost of the new Settlement is neutralised through labour productivity improvements. The organisation can thrive only if employees agree to contribute something more for the additional emoluments / benefits they receive through a new wage agreement, and the bulk of these additional emoluments should be paid only after the company has realised the benefits of increased productivity. A company can go on absorbing higher costs without increased productivity only at the expense of its financial health. Therefore, it is essential that the Union accepts the principle that the financial burden of the new Settlement be neutralised" through labour productivity as the sole and just basis for all negotiations on the Charter of Demands.

In my letter of January 25, 1983, I had requested you to give a call to all employees of L&T to immediately participate in a drive to increase productivity at least to the level which was agreed to in the 1979 Agreement. I once more urge you, in the interest of this Company, to make this call to the employees.

Increased efforts on the part of the workmen is only one way of improving productivity. The Management is also seeking in these negotiations that productivity be increased through-

i.     use of better machines, equipment and methods;

ii.   enlarging jobs by adding duties, combining trades, increasing skill versatility and job flexibility.

iii.  eliminating wasteful practices, such as reporting late for duty, leaving the workplace early, tardy resumption of work after breaks, frequent visits to dispensery, Credit Society, Labour Department, etc., during working hours.

Our classification proposals and the 'Management Requirements' submitted to you, are aimed at achieving these objectives.

I urge you and your team of Unit leaders to accept these proposals and cooperate with the Management in implementing them.

I thank you for the constructive role the Bharatiya Kamgar Sena has always played towards the Company and its employees, and I am hopeful of receiving your cooperation on this occasion also.

I close with warm regards and best wishes.

Yours sincerely,

H.C. PAREKH

THE NECTAR-AND THE POISON!

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).

16 Mar 1983

To:

Dear Mr.

THE NECTAR-AND THE POISON!

Sub:  EMPLOYEE SURVEY

Almost a year ago, we had hired M/s. Marketing Business Associates to conduct an employee survey at Powai and City Offices. With the cooperation of the Union, some 2500 Unionised employees were interviewed by 10/12 investigators, over a period of 6 months.

I was happy that, once the objectives of the survey were explained, not only you and your colleagues joined in framing the questionnaire, you, in turn, explained the objectives to the employees and urged them to cooperate with the investigators by being open and providing frank and honest answers.

This cooperation on the part of the Union and the employees, in a totally voluntary manner, is what makes the survey unique.

It is quite possible that other companies might have conducted surveys for an equally large number of employees.

What makes our survey unique is,

·              the coverage of subjects

·              the depth of probing

·              the treatment (conjoint analysis)

To the best of my knowledge, no Indian company has ever attempted ('dared' would be more appropriate!) to ask its unionised employees:-

'Now that we are about to begin negotiations on the Charter of Demands, what kind of a compensation-package would you like to receive?'

But we did.

And if the Management dared to think about this, you were even more courageous in agreeing to the proposal!

I am sure, both of us did not quite know what to expect when the findings were submitted. It was like agreeing to participate in the 'Dadhimanthan' - the churning of the Ocean; it could throw-up anything disregarding your 'likes' and 'dislikes'.

Except this 'Dadhimanthan' differed from the ancient, in one vital respect:

The Management and the Union did not represent the 'Devas' and the 'Asuras' - and should the survey throw-up any poison, we do not have a third-party. Lord Shiva to hold it in his throat!

You have the MBA report with you for sometime now - and I am sure you are as much surprised with some of the findings as I am. There are also a few which are more or less as expected.

If you or your colleagues need any assistance in interpreting the findings, please let me know. I can arrange for the MBA team to make a presentation.

But do not expect MBA to answer a question like

"Well, now you have found out what employees want but what are they going to get?"

The survey-findings can only help the Union and the Management to find an answer to this  question during the negotiations on the Charter of Demands.

And I have repeatedly stressed that any attempt to find an answer, must have, for its basis, the acceptance of the principle of

'Post-performance Reward'

If we wish to conclude the negotiations in any reasonable length of time, it is essential that we have an acceptance of this principle at the earliest.

Once you indicate your willingness to negotiate on the basis of this principle, we can jointly start work on evolving a suitable formula and mechanism.

I earnestly request you to give this your serious thought. As far as I am concerned, I do not see any other way employees anywhere in the world can expect to improve their standard-of-living (and not mere neutralisation of cost of living) without first and continuously raising the productivity of their organisation.

With regards,

H.C. PAREKH

THE BATTLE OF SURVIVAL

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).

13 Feb 1983

To:

Dear Mr.

THE BATTLE OF SURVIVAL

Sub: Growth, Survival And Productivity

This is with reference to the discussions I had with you, & some of your Jt. Secretaries on 10th inst. when I took the opportunity of briefing you on the Management's decision to wind up the Company's activities in the area of Packaging Machinery manufacture and the consequent task of re-deployment of the persons concerned.

In my recent letters to BKS Union, on the subject of 'Productivity' I have mentioned about fierce competition to many of our products and the consequent threats to their survival. When one or more competitor offers better-quality products or cheaper cost products (or both), we lose our market-share and production-volumes go down.

On the other hand, costs keep on rising -

- the material costs

- the labour costs

- the financing costs etc. etc.

Rising costs force us to raise our selling-prices and we lose still more orders.

This vicious circle goes on and on;

Sometimes we succeed in breaking this circle by raising productivity and manage to survive that product.

But sometimes, we fail and must give up the manufacture of such a product !

This has happened to us several times in the past. For example, in the past, we have been forced to stop the manufacture of

- mild-steel vessels

- sheep-foot rollers

- domestic switches

- connectors

- marine junction-boxes

- diamond & T.C. bits

- drilling equipment etc., etc.

On several occasions, we have come very close to stopping manufacture of petrol-pumps.

And based on similar considerations, recently we decided to stop the manufacture of 'Packaging Machinery'.

One more product has fallen in the 'battle of survival' !

This means that, the group of persons who constitute the Packaging Machinery Dept. will be required to be moved to other Departments/Units in order to save their jobs.

In a language that we - you, I, workmen - all understand, this means that we must-now re-deploy these employees in other areas of our operations.

You will recall that when we discontinued the manufacture of drilling equipment in Madh Works, with your cooperation, we were able to re-deploy over 250 workmen in other areas and thus, we were able to save their jobs. As compared to the re-deployment of Madh workmen, the re-deployment of Packaging Machinery Dept. will not pose much difficulty considering that only 22 workmen are involved.

The names of the persons affected are given in Annexure 'A'.

As mentioned during our meeting, we have started working on the preparation of a re-deployment plan and I shall make the same available to you within 10-15 days.

I wish to thank you for the understanding shown by you and your colleagues during our meeting and I feel confident that, with your cooperation, we will be able to carry out the re-deployment exercise smoothly.

We must however, look beyond the immediate problem. By a copy of this letter, I am requesting the Group General Managers to let me know if, in our other operations, there exists areas of 'weaknesses/competitive threat' where we may run into a similar situation in the foreseeable future. Early identification of products which we may be forced to discontinue to manufacture in the months and years to come, would help the company do some forward planning with regard to the manpower that may be rendered surplus. It would enable all of us to do some thinking regarding the 're-training' of such employees and their most effective re-habilitation.

With kind regards,

Yours sincerely,

H.C. PAREKH

INFORMATION-SHARING

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).

24 Jan 1983

To:

Dear friends

INFORMATION-SHARING

We neither  have a structured  forum nor a  systematic effort to share information with our employees.  Well, not quite:

We have,  over the  years, tried  to share  information about events through the pages of:

L&T Newsletter Powai Pageant etc.

Productivity-committee   meetings   (both   Powai-level   and Unit-level) have been an  useful forum during the  last 3-1/2 years for sharing some information about:

productivity

production-targets

costs

Demand

Shop-loading

Methods-changes

Raw-material problems

Absenteeism

Employee-attitudes etc. etc.

But this is not a comprehensive list of subjects.

And all over Powai,  there are thousands of employees  who do not get to participate in these meetings.

And  honestly-speaking, I  myself do  not have  a  clear idea about:

"What is it that employees would like to know?"

If  I did, I  could write a  book with  a title  (lifted from where-you know. ):

"All that you always wanted to know about ... but never dared to ask."

Perhaps not  all that  employees want  to know  - but may  be almost-all!

But  by the  time, I   figure it  all out,  I may  be due  to retire, so I decided not to wait.

So  this is  the  first of  a series  of bulletins,  I  have decided to  release for your  information.  In turn,  you may wish to share this information with  your colleagues.  Please feel free, there is nothing confidential about the data.

You may turn around and ask:

"Then  why   not  send  the   bulletin  to   all  the employees?" 

I asked myself:

"Shall  I send  this bulletin to  all the  employees, just because  the contents 

are not confidential  and just  because  it  costs  so  little  to   print  and

distribute?"

And the answer was, "No".'

I do  not know whether all  employees are interested  in this information.  No point sending it  to those who will throw it in the garbage-can, perhaps, even without reading.

On  the other  hand, if  You feel  that  groups of  employees working  under you  may be  interested  in this  information, phone Mr. D'cunha  (Ext: 598) for an over-head  projector and the  slides.  He  can even  assist you  in making  a  "Slide-presentation" and in answering questions.

In this first bulletin, I enclose some charts regarding:        

"Skill-wise population-mix Trends".

The charts are fairly self-explanatory.

Almost  across   the  groups,   the  percentage  of   US/SSB/ population is  decreasing and the percentage  of ssa/sb/sa/hs population is increasing, over the last 4 years.

Many questions come to my mind:

1.  Will this trend continue?   If yes, at what  rate?  What   will be the percentages after, say 4 years?

2.  Is this trend  disturbing?  Are we getting  "top-heavy"?    Do we need so many people (%) in the SB/SA/HS category?

3.  For each manufacturing group:     

-  the "products" dictate the manufacturing processes     

-  the "processes" dictate the "skills"     

-  the "skills" dictate the "range" in each "trade".

4.   If new  products, added by  us over the  years, required      us  to  use,   more 

      or  less  the   same  manufacturing      processes    (machinery,   equipment,  

      methods,  tooling,      layout,  material  handling  etc.),    then  the  logical     

      conclusions would be that:

·     the types of "skills" and

·     the "mix" of skills

required  by us,  should also  remain more  or  less the same.

What has, then caused, these ratios to be disturbed?

5.   In  the  years  to  come  what  would  our  "people-mix"      (skill-mix) look

  

       

I am  sure some  of you  have questions  not listed  above (I hope some of you' also have answers'.).

Whatever,  write  it  down  and  handover  to  the  concerned manager from your area, who is  connected with the "charter -of-demand" negotiations.

And  if you  have any  suggestions on  "information-sharing", send me a small note.

With regards.

H.C. PAREKH