INTRODUCING-THE CAPITALIST EMPLOYEES

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).

25 Feb 1987

To:

Dear Friends                

INTRODUCING-THE CAPITALIST EMPLOYEES                     

What would you do If your company was making losses year after year or It's profitability was declining year after year ?

While you are thinking for an answer, I will tell you what, at least, one

company did.           

The company is Jaipur Metals & Electricals Limited (JMEL).

BACKGROUND

1.   Started            ................    1943

2.   Promoter         ................     Kamani Group

3.   Location           ................     Jaipur

4.   Product            ................     Domestic Electric Power                                           

Meter

5.   Collaborator     ................     Japanese

6.   No.of Employees       ................           1300

7.   Profitability      ................           Good (Till 1971-72)

The Headache (?)

1.  Severe competition.

2.  Rapid rise In manufacturing expanses.

3.  Accumulated losses of Rs.74 lakhs (upto 1976-77).

Self-Prescribed "ANACIN"

Got Itself declared as a "Relief Undertaking" (to avoid legal action from Creditors/Suppliers).

Temporary RELIEF

 1980-82 Profits  .................... Rs.8.4  lakhs.

But If you have TYPHOID, taking self-prescribed Anacin does not help !

Things got worse and losses in 1981-82 went-up to Rs.580-6 lakhs!

Enter the DOCTOR

Government appoints Mr. Kavadia as a Director of the Company.

The DIAGNOSIS

Mr. Kayadia diagnosed the disease as follows  :

·     High manufacturing costs     

·     Expanded Wage-structure     

·     Improper Methodology of working     

·     LOW PRODUCTIVITY

(In our own Powai context, does this all sound very familiar ?)

THE MEDICINE

The Government of Rajasthan was expecting the patient to die (the closure).

But Mr.Kavadia thought that with some pretty strong medicines the patient could still be revived !

So Mr.Kavadia did some plain-speaking (polite but blunt) to the patients - 1500 of them - all the employees of the company.

Then he administered the following medicine  :

a)  Stopped free lunch

b)  Cut-off Government benefits & subsidies

c)  Retrenched 500 employees.

d)  Increased number of working hours per day.

e)  Stopped, all overtime.

f)   Froze wages for 5 years !

g)  Froze Increments for 5 years !

h)  Linked future wage-increases with productivity.

But alongwith all the bitter medicine, he also gave them some,

TONIC

20% share In profit of the organisation to the employees. In the form of equity-shares !

Share-holding

Before 23.06.1986

* The shares are held by an employees co-operative society and cannot   '   be sold In the open market.  When an employee resigns or retires, his   share In the society is transferred to other employees.  So the   share-holding remains Intact.

  

Kavadia says,

"The main reason for the success of the organisation  is not that the employees are now participating in the management of the"affairs  of the company.  The main reason seems to be the employees' stake  in the stake  of the company. There is a feeling of ownership amongst the employees and that seems to have a much better effect than all  the talk of low productivity and economic crisis.

I offered to employees a choice between,

1)    A bright future by surrendering a few privileges for a short time

         and

2)     Complete closure without any compensation.

The employees chose the first alternative and they are proud of having made the right choice at the opportune time".

FUTURE

Seems quite bright.  Management felt confident to introduce new products like

·     Cadmium - Copper wire        (for Defence)

·     Aluminium Alloy conductors   (for Railways)

·     Sllverised Brass strips      (planned)

MORAL OF THE STORY

In order to become profitable once aqain, must companies necessarily go through cancer-like sickness and bitter medicine (or even surgery - operation)

or

Can they actually take advance action of offering tonic to its employees in the form of "shares" to prevent the sickness ?

Friends :

I am not sure that it is such a simple issue.

I am not sure that giving shares to our employees, by Itself, will  help; us to get rid of all our problems. (Remember KOOR INDUSTRY  of Israel ?)

In our own case at Powai, I am not sure that TONIC alone will work.

To cure ourselves of our "high manufacturing costs", I am afraid  some bitter medicine may have become Inevitable, and If our ECONOMY  DRIVE does not prove to bo a strong enough medicine, we must soon  think of other !                                           

H. C.PAREKH

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).

20 Feb 1987

To:

Mr. S.V.Naik

General Secretary

Bharatiya Kamgar Sena

L&T Unit

Dear Mr. Naik :

SUB : PRODUCTIVITY

In the Settlement dated April 11, 1984, your Union and the Workmen had committed to make improvements in productivity, efficiency and quality,  in every possible manner. The Union and the Workmen had further agreed and undertaken to achieve within three months of signing of the Settlement, and to maintain the improvement of at least 25% over the productivity levels achieved during the currency of the 1979 Settlement In all areas of operations. For this purpose, the Company had furnished to the Union (vide my letter dtd. April II, 1984) statements showing productivity levels achieved during the currency of the 1979 Settlement.

I have now pleasure In forwarding to you what we have been able to achieve so far with the co-operation of the Union. I enclose herewith statements received from the Managers of -

(a)    Switchgear Standard Products operations.

(b)    Switchboards operations.

(c)     P-Pack operations

(The statement from Group II is expected to be ready within a week's time and will be directly forwarded to you by Mr .P.M. Mehta).

These statements show what we have managed against the target of 25%.

There can be any number of reasons why the actual achievements. In most cases, are falling far short of the targets. The question of apportioning the blame to a side does not arise because I have repeatedly stated my position that in the matter of productivity there can be no sides ! It is futile to talk of who could or should have done what. The most important thing Is to have a continuous on-going dialogue on the subject with the concerned Foremen/ Managers. Some problems can be beyond the scope of all of us at Powai but these. I

feel are few. The majority of the problems hindering growth of productivity I believe are within our own control and must be solved In the spirit of constructive co-operation and if it is futile to talk of managerial prerogatives it would be equally futile to talk of workers' rights. We must get everyone involved and make them real so the consequences of Increases In costs without more than matching increases in productivity.

By a copy of this letter I am requesting all Managers to -

(a)      Ensure employee participation thru on-going dialogue on the subject of increasing productivity.

(b)      Develop productivity indicators wherever these do not exist so that during the next round of negotiations we could have not only a meaningful data base but meaning­ful targets also.

With regards,

Yours sincerely

H.C. PAREKH

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).

11 Feb 1987

To:

Dear Colleague                      

SUGGESTION-SCHEME

A few days back I had a meeting with about 15 shop-representatives from various departments all over Powai.

Amongst the many things that we discussed, one was regarding employee-suggestions.

Whereas the shop-reps, agreed that not all suggestions can be implemented or rewarded, the general feeling was as follows :

(1)      The feedback needs to be speeded-up.

(2)      The "Rejection-Reply" should be worded positively, encouragingIy.

(3)      Foremen/Dept.Heads should take more Interest In understanding the suggestion and the logic behind the rejection and they  should take pains to explain this logic to the suggester so that he is convinced.

As far as I can see, this point is VERY IMPORTANT.  The suggestion-committee Itself felt very strongly In favour of this during its last meeting.

Every person feels that his suggestion is most brilliant and worth a Nobel-prize !  He derives greatest satisfaction in seeing it get implemented. This satisfaction, quite often is even far more important to him than the monetary reward.

This is not difficult  to understand. If we do a bit of Introspection.

All of us, throughout our working-life of 20, 30 or 40 years keep on suggesting ''changes", whether those changes pertain to

-      Information Systems (rules, procedures, etc.)

-      Physical Systems (manufacturing methods, storage, etc.)

-      People (recruitment, skills, training, organisation, etc.)

-      Policies (rewards, punishments, etc.)

-      Attitudes (love, hate, etc.)

-      etc., etc.

We make these"suggestions" (except that we do not consciously call them "suggestions" in dozens of encounters with our colleagues everyday -for perhaps 10,000 days of our working-life.

All of these, add-up to perhaps 100,000 or if you are very prolific, to may be a MILLION suggestions during the course of A  lifetime !

But how many of these get accepted ?

And of those that do get accepted, how many finally get Implemented ?

Perhaps an Infinitesimal fraction.

But despite these enormous odds (against our suggestions getting accepted), we do not get frustrated and give up making suggestions.

               Why ?                                                                    

Again not very difficult to see.

In a dialogue, a discussion, a group-meeting, others are quick to respond with counter-arguments and counter-logic.

There are more arguments (from the suggester's side) and still more counter-arguments.

The whole process Is very personal, live, open and transparent. You can see the feelings and touch the emotions.

And therefore, you understand. And when you understand, you do not resist - nor do you feel frustrated.

Perhaps you may even get a smalI satisfaction out of having been given the opportunity to Influence the thinking of the others.

If nothing else, you get a feeling of having "participated" in the process. To most of us this feeling, by Itself is a great motivator - the feeling of having been "seen-and-heard".

And so we keep-on making a hundred suggestions, day after day, for ten-thousand days '

But none of this life-drama is present when you send your suggestion, through a piece of paper and receive a "response" after a few months. on another piece of cyctostyled paper !

No Joy, no tears, no heart-burning, no exaltations, no voices, no emotions, no feelings !

Just some black dots on a white paper delivered through "mail" !      

"Dear Suggester :

Ref : So-and-so

Thank you very much for your Suggestion.  Wo have evaluated It in detail and regret to inform you that the same Is not acceptable  for the following reasons :

Now we are going to change these wordings and make them sound much more encouraging.

Suggestion-Scheme co-coordinators’ (Modh - Gr.lI, SVR - Group III, Solkhan-Gr-.IV, Saharia - EWAC, Sethi - PGM) will also attach the details of the suggestion itself and the details of the "reasons-for-non-acceptance"

to the reply so that you have a little better understanding of the whole matter.

But that may not be enough !

It is one thing to be able to convince a suggester regarding the "non-acceptance" but It is an altogether different thing to keep him motivated so that he keeps sending more and more suggestions.

And that is where you come into the picture.

You - and you alone - can bridge the gap (the communication-gap) between the seemingly Impersonal suggestion-committee on one side and the person sitting in front of you, on the other side.

That's Right !

-      No more "dellvery-thru-Mall".

-      No more mere "handlng-over" the letter. You must make him sit down comfortably and tell him,

"I did not know that you had sent in this suggestion.  Seems like  a good suggestion.  But of course, you know that the Suggestion- committee has to look Into each and every aspect, not the least

of which is ....................................................……………………………………………………….

………………………………………………………………………………………….     

 Next time you have a clever Idea, why don't you come to me first. May be I can help you to make the necessary sketches and the calculation of savings.  I am sure, one of these days, you are bound to come-up with a brilliant Idea and win a big prize - so why not look around and keep asking,

"Is there a better way of doing this ?"

A major objective for any supervisor (whether he be a first-line supervisor or a General Manager) is to bring out the "creative talent" which lies hidden amongst his subordinates/colleagues.  And "suggestions" received from your departmont/section Is a pretty good Indicator of how well you are meeting that objective.

Let this be your PRIME OBJECTIVE in 1987.

H. C. PAREKH