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).

28 May 1984

To:

Dear Mr.

PLEASE, CALL A GATE-MEETING!

Sub: Productivity

I refer to my letter addressed to the Gen. Secretary of the BKS Union, L&T Unit, dated April 11, 1984 on the above subject, with copies to you and your Gen. Secy. and my subsequent  letter addressed to you dated May 9, 1984 with copy to Gen. Secretaries - Sena Bhavan &  L&T Unit, Powai.

As you are aware, all efforts are being made to achieve within three months from the date of signing the Settlement an improvement of 25% in productivity, over the productivity levels achieved during the currency of 1979 Settlement with the active cooperation of the local Committee members.

I am forwarding herewith copies of my recent letters addressed to the Shop Representatives on the same subject.

In the Powai-Level Productivity meeting held on 8th May 1984, the Gen. Secy. (L&T Unit) has offered to speak to the Shop Representatives in this matter and assured us of his team's fullest cooperation in the matter. He further assured that neither he nor his colleagues would defend such workmen who are unwilling to give increased production.

As mentioned in my letter to you dated May 9, 1984, I am convening the Powai-Level productivity Committee meeting on 8th June 1984 at Powai, and would greatly appreciate if you could make it a point to attend this meeting and address the participants on improving productivity to achieve the agreed levels.

I would also request you to address a gate meeting preferably on the same day to tell the workmen to live upto the commitment made by the Union at the gate meeting held on 29th March 1984.

To make it convenient for you, I am shifting the meeting of the Powai level Productivity committee to 1.30 p.m. in the afternoon, so that you will be in a position to address the gate meeting immediately thereafter. I assume you will issue the circular regarding the gate meeting.

Around the 4th or 5th of June 1984, I would be sending to you statements showing productivity levels achieved during the currency of the 1979 Settlement and April-May 1984 for your advance information which would be screened to the participants on 8th June 1984 meeting.

Thanking you,

Yours sincerely,

H.C. PAREKH

COMMUNICATION

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).

May 22, 1984

To:

Dear friend,

I am inspired to dialogue with you once again. In the months to come, you will hear from me and I do hope you will also talk to me. A dialogue is a two-way traffic !

If you are wondering why I was "silent" for the last one year or so, the obvious reason is that the Union office bearers kept me awfully busy  and you cannot blame them since they were merely following your wishes!

Coming back to what has inspired me again, someone asked me the other day in the worker Education Class.

"Sir, why have you stopped sending us "Japan Works O.K.","Britain Works O.K." etc ?"

I turned around and asked others what they thought of these write-ups.

There were several voices, all at one time, saying that they had enjoyed reading these articles  and that they really missed these! Yes, they would like me to share with them what is happening around the world in the matter of productivity and in the matter of industrial relations (to me, simply "human relations in the industrial context"). So here we go again !

This time it is a real-life report on the American car industry - all the way from the city of Detroit.

If you have an atlas at home, try this evening to locate Detroit on the map.

Way back in 1956, I spent one summer vacation in this city, working as a draftsman in a tractor manufacturing company. Every Sunday (Saturdays I used to work overtime!) I used to take a long walk on a road called "Grand River Avenue". Mile after mile after mile, on either side of this road, one could see yards filled with thousands of second hand cars -some of these hardly one or two year old models and none more than 5 years old !

The thought that used to pass my mind was - How cheaply are Americans able to manufacture brand-new cars so that they can afford to buy a new car every third year? Apparently they were able to produce them fast (in fewer man-hours than any other country) and produce them cheap (at a lesser cost than anyone else).

This was 28 years ago when many of you were not even born and I had not heard the word "Productivity".  In those old fashioned days, the Americans simply worked "hard" and worked as a "team". They just had to be "best" and the "first" and in this one matter there was no difference of opinion between the Unions and the managements.

From the enclosed article you will notice how the American car industry has completed one full circle in these 28 years - from excellent Union-Management cooperation of 1956 to total confrontation of 1970's and back to the cooperative mood of 1984.

But then it is natural to forget the internal differences and unite to protect yourself against an external enemy. Could it be that this recent show of unity and cooperation is only because the workers and the managers - both are equally concerned about saving their jobs ?

And if this is the reason, what would happen when the Japanese competition slackens? Will the Union and the Management resume their attitude of confrontation? Today, both the Union and the management regard Japan as "Enemy No. 1". When they have defeated Japan through increased productivity (brought about by increased cooperation), will they start fighting each other?

If this happens it would be indeed very sad.

Sad, because this repeating cycle (of hate and forced love) cannot go on very long before it completely destroys the industry. I hope the American managements and Unions realise this and learn to love each other naturally and permanently.

In L&T, our products are not facing any competition from abroad because imports are not allowed.

But competition from other Indian companies is getting fierce. If you wish to know how serious is this competition, request your production manager to invite the concerned Sales Manager to your next unit level Productivity Committee Meeting. He will tell you that the Indian customer today has many "options" - other than L&T.'

In L&T, can we take a lesson from Detroit, and learn to cooperate naturally while we still have time?

Hemen Parekh

THE TRUTH ON PAGE

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 May 1984

To:

Dear Shop Rep

THE TRUTH ON PAGE 3, PARA 4

Productivity

Months of negotiations are over and a copy of the Settlement is already with you – except that this time it is a cyclostyled copy and the colour is light blue!

I assume that you have read the Settlement carefully. You are expected to study and understand the Agreement. When a worker approaches you with a problem, it is your privilege to explain to him the relevant clauses.

If you have some doubt yourself, feel free to seek an explanation from either the foreman or the manager of your department. And as far as consulting your unit Joint-Secretary is concerned, I don't think I even need to advise you on that !

But there is one clause in the Agreement which I personally wish to draw your attention to.

You have guessed it right; This is the clause on page 3, para 4.

By now, I suppose you have also guessed correctly what I am going to say next.

And do you know why you were able to guess correctly ?

Because you know the TRUTH;

-     the truth regarding page 3 para 4

-     the truth that it is a commitment for increasing productivity by 25% within 3 months of signing of the Agreement.

-     the truth that relatively there is very little improvement in the productivity-levels anywhere in Powai during the 5 weeks since we signed the Agreement.

-     the truth that an L&T worker is quite capable of  increasing productivity by not a mere 25% but may be even 50% (as I mentioned at the Gate-meeting) if only he made-up his mind to do so.

I have brought these facts to the notice of those who have made this commitment (see enclosed letter-translated for you from the original English version). I sent it because I think I owe them a feedback. I also furnished shopwise details at the Powai level Productivity Committee meeting held on 8th May 1984.

Now I am writing to you because I feel, you too, ought to know my grave concern at this alarming situation. I am sure your unit Joint-Secretary must have also. spoken to you regarding his concern - after all he has signed the agreement on your behalf.

The point is - if the union has bargained hard (and I should know how hard!) and delivered unprecedented fantastic benefits to the workmen, they have also committed, on behalf of the very same workmen, to deliver 25% productivity increase.

If they have done this on your behalf given their word of honour - staked their personal reputation - will you let them down?

But this is exactly what will happen if productivity does not go up, as promised, by 25% !

A feeling of let-down; And the Unit committee will not be alone in feeling this way. I too will feel the same way!

There is still time. Can we, for once, prove to ourselves that we are men and women - of honour ?

H.C. PAREKH

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