Unique Labour accord in a sick industryTurnaround Success Story
Series - 2: A Live Experience
By P. Senthilkumar, HR/IR Intervention Specialist
Background
As the Group HR Head of a struggling company taken over by a private promoter, I faced a daunting task in reviving the organization. The company was declared sick and referred to BIFR for rehabilitation. The new management inherited a multitude of labor issues, including excessive workforce, low productivity, and undesirable legacies.
The Challenge
The unions submitted a charter of demands, while the management proposed a 25% wage cut for four years. The unions rejected the proposal, leading to a stay-in strike and subsequent lockout. The situation demanded a multi-pronged approach to handle union issues, introduce VRS, and manage government liaison.
The Solution
After protracted discussions and conciliation meetings, the management introduced a Voluntary Retirement Scheme (VRS). Although initially met with resistance, the scheme gained traction as workers realized the gravity of the situation. A tripartite meeting convened by the Labour Minister facilitated a mutual understanding, leading to a Memorandum of Understanding (MOU) and a landmark settlement.
Key Outcomes
The settlement included:
1. Wage freeze: No annual increment for four years
2. Revised incentive scheme: Linked to productivity increase
3. Workforce reduction: From 500 to 300
4. Clearance of dues: Management to clear dues of relievees under the separation scheme within 30 days
This settlement was a testament to the power of collaborative negotiation and strategic HR intervention. And I was was instrumental in orchestrating this turnaround, leveraging my expertise in industrial relations, labour laws, and HR processes.
About the Author
P. Senthilkumar is a seasoned HR/IR professional with a rich experience of over 43 years in leading corporates. He has presented theme papers in national and regional seminars and has published articles in various newsletters and media/web sites. His core competency lies in human relations, and he has a proven track record of implementing best practices in challenging environments. He worked last for MRF Ltd as Cor[orate Head =Indutrial Relations for stint of 7 years and has made several path breaking contributions in the IR front
. He is now a freelance HR/IR consultant ba
From India, Chennai
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60Series - 2: A Live Experience
By P. Senthilkumar, HR/IR Intervention Specialist
Background
As the Group HR Head of a struggling company taken over by a private promoter, I faced a daunting task in reviving the organization. The company was declared sick and referred to BIFR for rehabilitation. The new management inherited a multitude of labor issues, including excessive workforce, low productivity, and undesirable legacies.
The Challenge
The unions submitted a charter of demands, while the management proposed a 25% wage cut for four years. The unions rejected the proposal, leading to a stay-in strike and subsequent lockout. The situation demanded a multi-pronged approach to handle union issues, introduce VRS, and manage government liaison.
The Solution
After protracted discussions and conciliation meetings, the management introduced a Voluntary Retirement Scheme (VRS). Although initially met with resistance, the scheme gained traction as workers realized the gravity of the situation. A tripartite meeting convened by the Labour Minister facilitated a mutual understanding, leading to a Memorandum of Understanding (MOU) and a landmark settlement.
Key Outcomes
The settlement included:
1. Wage freeze: No annual increment for four years
2. Revised incentive scheme: Linked to productivity increase
3. Workforce reduction: From 500 to 300
4. Clearance of dues: Management to clear dues of relievees under the separation scheme within 30 days
This settlement was a testament to the power of collaborative negotiation and strategic HR intervention. And I was was instrumental in orchestrating this turnaround, leveraging my expertise in industrial relations, labour laws, and HR processes.
About the Author
P. Senthilkumar is a seasoned HR/IR professional with a rich experience of over 43 years in leading corporates. He has presented theme papers in national and regional seminars and has published articles in various newsletters and media/web sites. His core competency lies in human relations, and he has a proven track record of implementing best practices in challenging environments. He worked last for MRF Ltd as Cor[orate Head =Indutrial Relations for stint of 7 years and has made several path breaking contributions in the IR front
. He is now a freelance HR/IR consultant ba
From India, Chennai
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P. Senthilkumar's approach towards dealing with labor issues in a struggling company is commendable and serves as a great case study for HR professionals. His strategic use of Voluntary Retirement Scheme (VRS), collaborative negotiation, and effective utilization of industrial relations and labor laws is an excellent example of problem-solving in a challenging environment.
In similar situations, the following steps could be followed:
1. Understand the gravity of the situation: Thoroughly analyze the company's financial situation, workforce strength, and productivity levels. This will help in charting out a concrete plan.
2. Open Communication: Maintain a transparent and open communication channel with the employees. Make them aware of the company's situation and the steps being taken for the turnaround.
3. Negotiation with Unions: Initiate discussions with the union. It may be difficult initially, but with persistence, a mutual understanding can be reached. A third-party mediation, like the tripartite meeting convened by the Labour Minister in this case, can also be helpful.
4. Introduce VRS: Introducing a Voluntary Retirement Scheme, as done by Mr. Senthilkumar, can be an effective way to address the issue of an excessive workforce. However, it's important to ensure that it's done in a lawful and ethical manner.
5. Regular Follow-ups: Regular follow-ups and meetings with employees and union leaders are essential to ensure smooth implementation of the strategies.
6. Legal Compliance: Make sure all actions comply with relevant labor laws. In India, laws like Industrial Disputes Act, 1947, and Trade Unions Act, 1926 are crucial in such situations.
7. Monitoring and Evaluation: Keep a close eye on the progress of the implemented strategies. Make necessary changes if required.
This approach not only helps in the revival of a sick company but also results in a positive work environment. Remember, the key to success in such situations is patience, persistence, and effective communication.
From India, Gurugram
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In similar situations, the following steps could be followed:
1. Understand the gravity of the situation: Thoroughly analyze the company's financial situation, workforce strength, and productivity levels. This will help in charting out a concrete plan.
2. Open Communication: Maintain a transparent and open communication channel with the employees. Make them aware of the company's situation and the steps being taken for the turnaround.
3. Negotiation with Unions: Initiate discussions with the union. It may be difficult initially, but with persistence, a mutual understanding can be reached. A third-party mediation, like the tripartite meeting convened by the Labour Minister in this case, can also be helpful.
4. Introduce VRS: Introducing a Voluntary Retirement Scheme, as done by Mr. Senthilkumar, can be an effective way to address the issue of an excessive workforce. However, it's important to ensure that it's done in a lawful and ethical manner.
5. Regular Follow-ups: Regular follow-ups and meetings with employees and union leaders are essential to ensure smooth implementation of the strategies.
6. Legal Compliance: Make sure all actions comply with relevant labor laws. In India, laws like Industrial Disputes Act, 1947, and Trade Unions Act, 1926 are crucial in such situations.
7. Monitoring and Evaluation: Keep a close eye on the progress of the implemented strategies. Make necessary changes if required.
This approach not only helps in the revival of a sick company but also results in a positive work environment. Remember, the key to success in such situations is patience, persistence, and effective communication.
From India, Gurugram
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Labour walfare Scheme.pdf
Voluntary Retirement.docx