Hul Asignment – Case Study1

1. Employee benefits and Long Term Settlement Although initially positive about the move, the ICU workers had begun to demand more money to compensate for the increased travel costs and the more expensive food at the TF. (case study p. 5) The issue was escalated to the corporate head offices who decided that ICU employees would be granted a cafeteria premium of Rs. 25 per day but not a conveyance allowance. (case study p. 7) The three units had different policies for: Tea breaks Lunch breaks Holiday lists Festival advances Pay structures Designations Working timelines: ICU – seven days in three shifts TF – six days in two shifts TIU – five days in a single shift The LTS also covers machine speeds, productivity, medical T&Cs, prayer times for religious groups. (case study p. 8) Factory unions present their charter of demands to the factory management. Factory management negotiate with the Central Industrial Relations Committee for an overall package that the committee would sanction as a pay out. Local management then negotiate with the unions and it is signed off once the majority of unions agree. (case study p. 8) Each day after 28th of February that the LTS is not agreed the employees lose out on whatever salary increment the agreement contained. (case study p. 8) Older workers are more concerned with pensions, newer workers want to increase take home pay. (case study p. 9) (case study p. 9) The current LTS is for the Tea Factory, the LTS for the TIU expires in 2010 and for the ICU in 2011. Any agreements in the TF LTS will set precedent for future settlements. Consequences There will be uncertainty and unrest amongst the employees until the issues are resolved. Need to improve employee engagement. Precedents will be set for future settlements. So considerations should be given to how working conditions can be best standardised. LTS negotiations have in the past become violent resulting in the breakdown of communication and adverse effects on the business. (case study p. 8) Employees are losing out on benefits while waiting for this to be sorted so it is in everyone's best interest to resolve it quickly. Solutions A good package will be an effective tool for recruitment and retention of colleagues and help to sustain staff motivation and engagement. According to Bratton and Gold (2007, p. 364) â€Å"the reward system is an important consideration when the organisation is trying to attract suitable employees, and once workers are members of the organisation, their task behaviour and levels of performance are influenced by the reward system. † A recent article by Manisha Chada of the people matters from India has noted the concept of rewards is gaining increasing popularity, particularly due to the diverse needs of an evolved workforce. Other factors that should also be considered are competitive salaries, comfortable lifestyle, job security, career enhancement options, and work-life balance Effective communication with employees plays a vital role during the restructuring period of any organisation as it helps to properly inform the employees about the changes. This helps to remove the uncertainty and allay fears amongst employees and therefore may overcome any resistance that may result thereof. Casio (2002:96) believes that â€Å"open and ongoing communication is critical to a successful restructuring effort†. Paton and James (2000:45) believe that â€Å"effective communication that is designed to inform, consult and promote action will help in overcoming both resistance and ignorance amongst employees†. Owning shares will provide employees with financial incentives that will make them more committed to the organisation and more motivated at work. If the company is more profitable, employees will gain financially through dividend payments and an increased share price. Many companies in India such as †¦ have employee contribution pension schemes so employees can choose if they want to put money into the pension or keep it in their take home pay – a certain amount of salary can be allocated and company would match up that to a set limit. This would give the older employees the option to put more money into their Relocation of workers – we feel that it is unfair that colleagues have been relocated and now have extra travel costs and travel time. The company could arrange a bus to pick up employees from certain agreed points and ferry them to the Tea Factory. This could improve colleague commitment as it would show that takes on board their feedback. I would suggest that the management team should put in place a core package for all employees that can be replicated for the ICU and TIU. Additional benefits could be added dependant on grade and performance. According to an article on Employee Satisfaction in the Journal of Industrial Management and Data Systems, this would contribute to colleague engagement and motivation. Policies on tea breaks, lunch breaks, festival advances, holiday policy and prayer times could be standardised for all colleagues. It would be wise to carry out a review of the grading structure of all three parts of the Tea Factory and to standardise grades and job titles and pay for colleagues performing similar roles throughout the organisation. Arguments How are we going to persuade the CEO and management to agree to an improved package. What about the younger people, will they realise the importance of a pension scheme? – Perhaps it would be a good idea for the company or unions to educate the employees about the pension scheme. It would also be a good idea to allow employees to amend the percentage that they contribute at certain times. The management have already declined to pay travel costs individually –could help to build relations between employees and gain confidence from the employees. 2. Issues between the management and the unions The challenge of managing the disparate workforce will fall to the Factor Manager, the Commercial Manager and the HR Manager. The HR manager, is female, 26 and this is her first assignment. (case study p. 2) There was no HR team in place when Suchita arrived at the factory. All previous managers had been male, native to the state and had four to five years of experience. One worker had said to her â€Å"you’re younger than even my daughter, and I don’t like the fact that I have to report to you. † Suchita has hired an experienced local man onto the HR team to ease relations with the workforce. (case study p. 6) The leader of the TF Union C is argumentative, and the union is more uncooperative than the others. The leader barged into Suchita’s office on her first day in the factory and threatened to strike if an issue was not resolved. case study p. 5) The ICU unions had not been part of a large multinational before and were wary of standardised processes. They also felt that they were not compensated on a par with other HUL unions and looked to the upcoming merger to gain a significant pay out for their people. When Suchita arrived, the TF and ICU had separate factory managers. Just after she started the ICU manager quit and t wo months later she learned that the TF manager would move to another role in Dec 2008. The abrupt change in managers increased the union’s unease. case study p. 6;7) Union leaders have highlighted the differences in working T;Cs amongst the different units. (case study p. 8) ICU employees became more resistant and reluctant to change as the move drew nearer. (case study p. 8) Management have adopted a tough stance on negotiations – see p. 8. As the older workers were replaced inter union rivalries resurfaced. (case study p. 9) Unions are becoming increasingly possessive of their members in order to preserve their group identity and importance. (case study p. 9) Consequences If the unions are not organised effectively there is a potential that they will strike. The issues with management structure such as the change in TF and ICU managers are leading to unrest and need to be resolved. The ICU unions possibly need help to integrate into the TF structure as they are becoming very wary about the changes and could cause unrest and protest amongst the employees. Union rivalry is increasing, could be bad for the business therefore it would be better to stabilise the structure as soon as possible. Change management. Integration. Solutions To reduce issues between management and unions: Employees should be allowed to take part right from the beginning of restructuring process. Employees are more likely to be supportive of any changes if they are allowed to genuinely take part in meetings and workshops where the envisaged changes are discussed at the outset Every attempt should be made by management to share all the necessary information with employees accurately and at appropriate times. This will create an atmosphere of trust and commitment amongst employees and will also enhance the integrity and credibility of management and their intentions; Employees must always see some benefits coming out of the change process and management must ensure that these gains are clearly understood by all the relevant employees. Reward structures that are clearly understood by employees as well as facilities such as the cafeteria must be reconsidered as important elements of the change processes A strategic human resource blueprint for retention, re-skilling and movement of employees to new roles and functions must be developed and be made known to all relevant parties. More coaching and training for the local managers including HR manager. Equality and diversity policy and provide training to the colleagues. According to an article by Kathy Gans it is important to gain a good understanding of how changes will impact the workforce. It would be a good idea to conduct surveys to gauge the feelings of employees and then analyse the results to put together a plan. Gans identifies that it is important to spend time with managers, supervisors and union leaders to establish their buy in to the process as they will play a significant role in influencing colleagues. Gans also identifies that communication is key to successful change management. It is important to communicate the reasons for the change to the workforce. In this case, we believe that the move of the TIU and the ICU will be beneficial for the company as a whole but will also bring benefits for the employees such as greater stability and job security. Regular, targeted communication will help develop employees’ understanding of the process. Changes do affect organisations and employees. Employees become insecure, confused about their jobs and therefore, less productive. According to Anderson and Anderson (2001:1) the success of 21st Century organisations will depend on how successful leaders are at leading and managing this change. They argue that most organisation leaders are found wanting when it comes to leading change successfully. Andersons Nine- Phase Change Process Model could be utilised. One to one communication with employees would also help them to voice their fears whilst allowing management to challenge any misconceptions. In 1993 Lloyds bank merged with TSB – this is a good example of communication to employees. At the start of the process they made a promise to their employees that they would be open and honest with them, whether the news was good or bad. This helped to build trust with employees at the start of the process and we would recommend it as a strategy. Union forum – structure a communication process between the unions and management. Suggest that the unions from the ICU and TF merge – these two have similar processes and are both factory based. The TIU work is completely different and the unions are national rather than local so it may be best for them to remain separate. 3. Company Cultures – unified culture and the cafeteria issue The integrated factory would be occupied by 250 workers reflecting three distinct cultures and seven different organised trade unions. (case study p. 1) Biswaranjan Sen (head of project) is concerned that there is a need for a â€Å"one factory† way of doing things that tapped the best of the three cultures. (case study p. ) â€Å"The underlying philosophy with which this company has been run for many decades is the belief that what is good for India is good for us,† maintained HUL’s CEO and Managing Director Nitin Paranjpe, adding , â€Å"the only way you can succeed is to remain relevant to the society in which you operate. Therefore, social and societal needs and contexts, as they changed in this country, have been at the forefront of what we’ve done. † (case study p. 2) The CEO’s main concerns were about plans to bridge the cultural gap. (case study p. 9 ) Suchita was not sure whether it would be better to integrate the TF and the ICU immediately or to wait. There were business benefits to integrating the units. The two business cycles are different, ice cream peaks just before summer while tea peaks in winter. The integrated units would provide an opportunity to train workers across different businesses and to break the physical separation of workplaces. (case study p. 9) Tea Factory (TF) The workforce at the Tea factory is aging (53+ years) and they have previously experienced challenging times. They were positive about the change of strategy to use the Tea Factory as a central hub. New initiatives were embraced and inter-union rivalry played out in the background. case study p. 3;4) The TF workers were put out by the changes made for the TIU workers, one Union leader complained â€Å"We work in 40 degree C on the shop floor in the summer; they sit in air conditioned offices. Our food, too, was made better only after the others came. What are we, their poor country cousins? † (case study p. 4) Between 2005 and 2008 many workers, including some of the union reps, retired. New colleagues came in who were not as affected by the issues of the past and the culture began to change. Union rivalry increased. (case study p. 5) There are three unions (case study p. ): Union A – one of the stronger factory unions, composed mainly of veterans with almost 20-25 years of experience. Union B – the factory’s oldest and at one time largest union – though now smaller than Union A after some of its most powerful and respected leaders had retired. Union C – the forceful and argumentative style of its leader was reflected in the general uncooperativeness of the union. The factory unions have on a number of occasions demanded to know why they do not receive the same privileges as the ICU. (case study p. 9) Tea Innovation Unit (TIU) Previously located in the Regional Corporate Office, the two unions agreed to move to the Tea Factory on the condition that their office space was maintained with similar standards for food and other benefits. (case study p. 4) New plush air-conditioned offices were installed with a separate entrance creating two separate units with distinct cultures. (case study p. 4) There are two unions that are structured and hierarchical like British unions. They are not local unions, they have a structure, maintain offices and function like an organisation. They are efficient and progressive and don’t relate to the factory unions. case study p. 5) Ice Cream Unit Acquired by HUL in 1998. HUL introduced many of its standard systems and policies – such as quality assurance and workplace safety but the culture and way of working had not changed. Job promotions were not standard, and even designations and titles were different across grades. The working culture was very laid back and r elaxed. (case study p. 4) The set up was familial, workers lived nearby and new each other’s families. Workers often went beyond the scope of their work to deliver what the business needed and supported management’s efforts to increase production efficiency. The relationship between management and the two unions was cordial. (case study p. 4) The ICU workers were initially pleased with the announcement that they would move to the Tea Factory as the TF had better facilities for employee welfare and recreation. One union leader remarked â€Å"By bringing more things here you are strengthening the entire unit and improving our job stability. † (case study p. 5) The two ICU unions are affiliated with the State political parties. Because of the cordial relationship with management they were the most approachable. They had not been part of a large multinational before. They have a different approach to the LTS, treat their existing LTS as a guideline only. Cafeteria Issues When the TIU relocated to the TF the canteen food was upgraded at greater cost to match the better meals at the Regional Corporate Office. The TF unions refused to pay any more for their food so despite the fact that all other cafeterias were operated on a no profit, no loss basis, HUL agreed to subsidise the difference. (case study p. 4) ICU workers argued that the food at the TF was more expensive than their previous cafeteria and wanted compensation for the difference. (case study p. 5;7) The issue is important to workforce as food is culturally significant and is interwoven into the social, religious and artistic lives of the people. (case study p. 7) The ICU workers were granted a premium of Rs. 25 per day. This increased tensions over the cafeteria(case study p. 7) The TIU unions argued that the cafeteria was a basic condition of employment in relocating to the TF and their terms cannot change. (case study p. 7) The TF unions stated that management increased the menu when the TIU came in, now they want to water it down when the ICU comes in. Is it fair that it changes each time a new unit comes in? case study p. 7) The factory unions would almost certainly resist management’s effort to change the cafeteria’s full lunch subsidy, and the other unions had already made it clear that they were adamantly opposed to separate menus. (case study p. 10) Consequences How to build greater transparency and trust with employees? If the cultures are not integrated r ivalry and jealousy between the units will continue to increase which could lead to strikes and a mistrustful and de-motivated workforce. An unhappy workforce is less productive and less supportive of management initiatives so solutions need to be found. The employees are unhappy about the cafeteria for various reasons. Solutions The organisation cannot function properly with several dominant cultures. One dominant culture will therefore have to be adopted for the new organisation. it is imperative for managers to equip themselves with conflict handling techniques to enable them to effectively manage the change process. An organisational restructuring process will only be successful if it aligns all the aspects of the organisation. Johnson and Scholes (2002:534) argue, â€Å"If change is to be successful, it also has to link the strategic, operational and everyday aspects of the organisation†. Before SmithKline merged with the British-based Beecham Group a few years ago, the Philadelphia-based drug manufacturer wanted to find out whether the corporate cultures of the two firms were sufficiently similar to make the merger succeed. During the merger, over 2,000 people from both firms were divided into more than 200 teams to figure out how to integrate their respective structures, systems, and cultures. â€Å"From the very beginning, they were learning how to work together,† Integration integrate the corporate cultures of both organizations. This involves combining two or more cultures into a new composite culture that preserves the best features of the previous cultures. Raytheon is applying an integration strategy as the defense and aerospace conglomerate develops a new culture for the half-dozen companies that recently merged or were acquired. 56 Integration is most effective when the companies have relatively weak cultures or when their cultures include several overlapping values. Integration also works best when people realize that their existing cultures are ineffective and are therefore motivated to adopt a new set of dominant values. However, integration is slow and potentially risky, because there are many forces preserving the existing cultures. Separation A separation strategy occurs where the merging companies agree to remain distinct entities with minimal exchange of culture or organizational practices. Insignia Financial Group, a South Carolina real estate firm, has applied a separation strategy to its more than 30 acquisitions over the past decade. â€Å"When we buy the companies, we leave the infrastructure in place,† says Henry Horowitz, Insignia’s executive managing director. â€Å"We’re buying a successful company. Why would we want to disrupt something that works? And the morale becomes terrible if you start decimating. †Separation is most appropriate when the two merging companies are in unrelated industries because the most appropriate cultural values tend to differ by industry. Unfortunately, few acquired firms remain independent for long because executives in the acquiring firm want to control corporate decisions. Therefore, it’s not surprising that only 15 percent of acquisitions leave the purchased organization as a stand-alone unit. Cafeteria to offer a range of food at various prices of the colleagues can pick and mix their meals and pay as much or as little as they want to. There is no staff development scheme in place, perhaps factory workers could develop towards a role in the Tea Innovation Unit – could help to break down the barriers between the units and dispel rivalry. Could include training relevant to role e. g. health and safety, equlity and diversity (Motivation and engagement) Listen to the employees not everything through the unions, employee forums and possibly one to ones with colleagues to develop two way communication between management and employees. Colleague engagement surveys Allow feedback from employees on managers, develop psychological contracts with employees. Staff social events to break down barriers Multiskill the workforce, perhaps ask for volunteers at first then roll out further. Allow employees to work flexible patterns. 4. Colleague issues – development, motivation, staff levels Tea Factory In the ‘90s HUL adopted a strategy of regionalising tea production. As a result production at the Tea Factory decreased and between 1989 and 1998 there were eight rounds of voluntary redundancy. (case study p. 3) Workers heard stories of those who had taken VRS and had not done well. As a result some higher level employees voluntarily downgraded to ensure job security. case study p. 3) In the 90’s the workers perception was that the company made a lot of money and there was no need to worry. There was reluctance to acknowledge that although the company as a whole was profitable; their unit might not be contributing to that performance. (case study p. 3) Management need to replace the many worker who retired between 2005 and 2 008. They are concerned about the emergence of a new set of opinion leaders. (case study p. 8) Newer workers who had not witnessed the downturn of the Tea Factory were less restrained in their demands. In the old days, the workmen would come in on Sunday for training, even without overtime pay, although they didn’t know how it would benefit them. †¦ they were that motivated. Now, we have to persuade the new recruits to come in on a Sunday. And we pay them overtime! † (case study p. 9) Consequences Management need to replace the employees who retired as the rest of the workforce will be under pressure to cover until the positions are filled. Newer workers are no longer motivated by fear of losing their job so a way needs to be found to motivate them. Colleagues need to be kept informed of the performance of the unit so they can act accordingly. Solutions Consider perspectives and experiences of local employees. Consider interventions that could bring the best out of the employees e. g. introduce a reward and recognition scheme to reward performance. (Motivation) Create a performance culture – introduce targets, regular one to ones, plans for output an deliver against it – link output to bonus Older employees bring a diverse range of skills, could use them in a different capacity e. g. coaching and mentoring the new staff.