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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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.
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)
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
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