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