FREE MARKET

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).

To:

Dear Friends

In the enclosed article you will read that

1.  Political  leaders  of  Europe  are   adopting  "free-market"     policies (free imports and exports).

2.  European governments are reducing administrative expenses.                                   

3.  They are drastically reducing labour-wage increases.

In our  own country, we  see similar actions  being taken by  the new government of Rajiv Gandhi, e.g.

The new export-import policy announced by the  Government on 12th April will  permit liberal  (in many cases without  any licence!) import  of raw  materials required  to  increase production.   So that will help manufacturers like  L&T.  But the policy will also allow liberal  import of fully  manufactured items from  abroad -such as fertilizer plants,  chemical plants etc.  That would help users,  and that would also  mean L&T will have  to  compete with foreign manufacturers who are hungry for orders.!

This may mean that L&T may not  get a single order out of the six giant  fertilizer plants  which  are  to come-up  in  North India during  next 4/5  years'. The  orders  may  go to  a  European or Japanese manufacturer under the New Import Policy!

Can we  afford to  lose orders worth  Rs.80 - 100  crores in  the next 5 years?

Obviously the answer is         

"we cannot afford".'

On the  other hand, our  wages/salary have been  climbing rapidly at an average of

Rs.250 per month per employee        

EACH YEAR!

Proportion (percentage) of manpower  cost to our  total output at Powai is rising so  fast that many of our product-lines  may have to be closed down very soon!

If you have any doubt, see the following chart:

If you  do not  understand or  have any  doubts, ask  the nearest production manager  or personnel officer  and he will  explain to you.

We have 3 methods to survive:

METHOD I              :      Do not allow manpower costs to rise              

(i.e. a freeze on wages & salaries)              

but increase output.

                             

METHOD II                    :      If we cannot increase OUTPUT              

then reduce MANPOWER-COST (by              

accepting a cut in wages/salaries)

All over Europe and America, Managements

and Unions are adopting Methods I & II        

(See enclosed Article)

method III                    :      Allow Manpower cost to rise but,               

Somehow ensure that OUTPUT per employee

rises at a    faster rate. That means much higher

employee productivity - and NOW!

I am sure all of us (myself included) at Powai

would like to adopt this method - if only we

can make it work.'

And although employee productivity  has gone up between  5% - 20% in  different  shops  in   Powai  during  the   last  10  months, apparently  this increase  is  not  enough to  offset the  rising manpower costs.!

The chart is all too clear.  We can ignore it at our own risk!

There  is a  limit to  how much  of our  increasing costs  we can pass-on  to our  customers  in the  form of  increased  selling -prices.

And  I have a  feeling that  in April  1985 we have  reached that limit at Powai!

Before our  customers run away to  our competitors and  before we start losing orders, let us do some serious thinking.

Q. How can we increase our output rapidly ?

Q.  How can we decrease our Manpower cost ?

Q.  How can we decrease our manpower itself ?     

By  not  replacing   "separations"?  By  offering  "Voluntary     Retirement"  to   those  who   are  incapable  of   improving     productivity  ?   And  suppose  some   of  those  "incapable"     persons do not  accept Voluntary Retirement, then what  do we     do ?

Those who  do not  wish to  experience "Europe" in  Powai, please raise your hands !!

H.C. PAREKH

INTERNATIONAL MANAGEMENT

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).

23 Apr 1985

To:

Dear Colleague

I enclose  herewith  copies of  two articles  taken  from the April 1985 issue of "International Management".

Both articles deal with the matter of "change".

Ian  Christian  generalises  about  the  resistance-to-change prevalent in  the British Industry and  how Margaret Thatcher is pushing  for the idea of  "Survival of  the Fittest" under the  conditions of free  competition,  In her  grim battle on the question of closing  of unprofitable coal-pits, she seems to have won the first round and established the principle.

But winning battles is not  the same thing as winning wars! -especially  "wars  of  Ideology"  -   ways  of  thinking  and behaving which  call  for change  of attitudes  - on  part of both the Victor and the Vanquished.

And  the  first change  in  attitude  is  that  there are  no winners and  no losers.! In a  war of  ideology everyone must come out of a winner !

And  this is  what  Hirashi Shinto  (President)  seems  to be attempting at NTT - the  giant domestic telephone monopoly of Japan  which becomes  "privatized"  this month.   Very aptly, the  article calls it a  "revolution in  consciousness".  And at one place the article says,

"In  a   Shinto-inspired  cleanup  and   paper-saving  drive, employees  last  year  destroyed  6,600 tons  of  superfluous documents,  emptying  940 file  cabinets  and lockers.   They have also  been  ordered to  curtail their  use of  paper and photocopies,  which last  year  came to  1.2 billion  sheets. That's  worth  $  60  million  and  would  reach  almost  100 kilometres high if stacked".

Our  own   success  at  destroying  50   tons  of  superflous documents at Powai  last August, can at best  be considered a "superficial" comparison  between what seems  to be happening at NTT and what we are attempting at Powai.

As  I  carefully read  and  re-read  the  article,  I  got an impression that what  NTT is engaged in is  changing the very organization -  culture -and in the process  involving all of its 3,30,000 employees!

Let us  hope, we  too  can find  ways to  involve all  of our employees at  Powai for whatever  change of culture  we badly seem to  need to usher  us in the  21st century.  And  let us further hope  that those of us who  do find such  "ways" will go out and  experiment, and not  allow frustrations to hamper their enthusiasm - because the worst  bankrupt is the man who has lost his enthusiasm.

H. C. PAREKH

MANAGEMENT

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).

18 APR 1985

To:

Dear Colleague

Last week I sent you a copy of an article by S.R. Mohandas. In that article, Mohandas makes  mention  of the  problems faced by  the  management of  NOCIL.  Some details  of NOCIL issue  are   explained  by  Mr.  M.S.   Patwardhan  (Managing Director) in the enclosed news-paper report.

NOCIL has  an  internal union-leadership  and although  NOCIL management   seem   to' have   reached   more-than-reasonable settlements  with   the  union-committees,   committee  after committee  failed  to carry  the  rank-and-file workers  with them.   This  is what  Mohandas  calls  the  "implementing or delivery-capabilities" of  a union leadership in  contrast to their grievance "representation-capabilities".

We  have also  heard of  many  cases where  the workmen  have disobeyed  strike-calls   issued  by   the  union-leadership, whether  internal or external.   So  one point  is  clear: an internal leadership,  by itself,  cannot avoid  situations of confrontation.   Of  course,   it  helps  to  negotiate  with persons  whom you meet  and  talk to  daily.   You understand them  better  and they   understand  you better  -  and  both understand problems better.

So  we  succeed  in  convincing  the  union  leaders  of  our view-point and make  them agree that  our offer is  "just and fair".  So  you passed the  test of  your convincing-ability! But  what  about- their  ability  to  articulate  (not  sell) management-views to workmen at large?

Our  task therefore does  not  end with  "educating" a  dozen persons.    It   goes   far   beyond,    it   is   management responsibility to train/educate/enlighten not  only the union office-bearers but  all the shop-representatives  and finally all workmen.

It was with this in mind  that we started some 3 months back, 2-day   "Worker   &   Productivity"   programmes   for   Shop Representatives.    Our   idea   was   to   cover   all   200 shop-representatives within 10 programmes.   I believe, so far  we have  completed  7 programmes  and  covered 140  shop representatives! Obviously  we need  a far  more enthusiastic response   (from shop-foremen)   in  the  ensuing  programmes (refer enclosure).

And   very  soon,   we   will   have   3  lecture-halls   for worker-education  classes in  place of  existing  one hall  -enabling us to conduct  3 batches simultaneously.  (We do not conduct any programmes  during  July-August-September - being our final quarter).

I do hope you  will see the tremendous  potential of educated workmen  and compete, with  each other  to  see that  maximum number of your departmental workers go through these classes.

                                          

                                 

Circulation: DGMs, PMs/APMs, Personnel Managers/Officers             

(All locations). Foremen & Asst. Foremen

H. C. PAREKH

CAN YOU LOCK YOURSELF

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 April 1985

To:

Dear Friends

Can you lock yourself  "out" of your own  house -  even when you are holding the "key" in your own hands ?

This is  what seems  to have  happened at  IIL (International Instruments Ltd.) Bangalore, one year ago.

The owner of the company  Mr. Krishnan apparently believed in the  Gandhian  concept  of  "Trusteeship".  So  he  made  all workers share-holders of the company.  He must have thought,

"... if the workers own the Company  (even partially), surely they would work very hard and keep it competitive"

But that did not happen!

The  workers  paid  themselves the  highest  wages  (for  the instrument industry) - you see, they "owned" the company!

Material plus labour - cost added upto 81%. Many departments became uneconomical - sick.

So  when   the  Management  decided   to  close   down  these departments  (I suppose, to save  the rest of  the Company!), the workers went on a "sit-down" strike!

That  is what  I call,  "locking yourself  out of  your  own house."  it is, like punishing one's own self!

But let me  tell you one thing.  Competition does  not give a damn  whether  you  own  the   company  or  you  are  a  paid employee'. If you cannot compete, you are simply finished!

And much  as I would  like L&T-ites  to think that  it is the society -  the Nation -  which ultimately owns  this company, all  that  philosophical talk  of  "ownership"  is completely meaningless  unless we are  productive -  enough to  face the competition and sell our products in the market.

And   most  unfortunately,   when   we   are  facing   severe competition in Switchboards,  Dairy-products, Chemical plants and  many  other products,   I find  some  employees  raising petty, selfish issues  and obstructing productivity!   I hope they  will   read  this  article   and  cooperate   with  the Management  in making  ourselves competitive.   No  company -not even L&T - is beyond the threat of competition.

Educating   employees   and   persuading   them  to   give-up unproductive  practices  are  important  responsibilities  of management.

But then no  one can save a person who wants  to lock himself out of his own home!

H.C. PAREKH

COMMUNICATION 1

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).

April 5, 1982

To:

Dear Friends

Last  article  dated  15th  February,  brought  an  anonymous admonishing  letter which  I reproduce  below  (translated by me):

"Sir, Your "goal" is only to  "expect" from the workmen, not to find out what  they want and  what they don't  want.  You are  talking-down to  the workmen-for  example, you  have financially enabled  the Supervisors/Officers  to educate their  children.   Their children  should  go  to  better schools and our children should  go to municipal schools. Till such time you  cannot abolish this difference, there is  no use  your publishing  thousands of  such articles. First  improve your  behaviour -  then "expect"  from the workmen.

                                                                                       - A Worker".

From  the  fact  that   our  friend  has  chosen   to  remain anonymous, I get a  feeling that we still have a  long way to go before we have  an atmosphere  of "openness and  trust" at Powai.  On my  part, all  I can say  is that,  the sentiments expressed above  are perfectly  "human" and  could  have been expressed  openly  and  freely without  any  fear.   In  such matters, it  is quite possible  for us  to "disagree"  but as long as there  is a willingness to listen and  a constructive approach, fear. of "disagreement" need not bother us.

As  far as  the.- education expense  reimbursement scheme  is concerned, let me  assure our friend  that some good  news is on the way  for the non-supervisory  employees !   I do hope, he will read  the  following article very carefully  and then come back  (in person, I hope) and tell me  how we can foster the "Spirit of Wa" in our very own L&T'.

Hemen Parekh