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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).
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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
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.
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