Case Study: How L&T Komatsu's IR Strategies Prevented Layoffs in Tough Times

I am glad to enclose herewith my presentation at CII Bangalore on February 24, 2010, on How Lay Off was Avoided with Excellent IR Strategies, a success story of L&T Komatsu Ltd., Bangalore. In today's difficult IR scenario, this is a nail-biting success story.

Regards,
G Y Suhas
Head HR & IR & Administration
L&T Komatsu Ltd.
Byatarayanpura, Bellary Road
Bangalore 560092

Dear Suhas,

Your presentation was excellent. It is the duty of both the employer and the employee to maintain the well-being of the organization.

Thank you for sharing your ideas.

Regards,
Pranab

You guys have set an example for companies by considering employees as an asset rather than focusing solely on cutting costs. This approach not only helps the company save money but also enhances its reputation in the minds of employees.

Good presentation, I have my observations as detailed below which would help understand the whole effort better. Kindly revert with your thoughts.

1. How many top performers did your organization lose during this phase?

2. Were the top performer exits fewer than in previous years as a proportion of the whole?

3. To retain top talent, was there any specific intervention from HR?

4. Was reducing the insurance premium taken up year on year, which could have easily added a few more lakhs to the effort if not under ESI on GMIP?

5. Could the efforts made to process parts during a normal business environment save more? Was it taken or was it during this stint alone and discontinued?

6. What was the spending on product marketing activities? Per se, there were strategies from certain companies to increase their budgets rather than decrease, which had good results.

7. How did the HR team itself gear up to these tasks, given the facts that these major changes also called for proper orientation to employees at large?

As I go through the presentation, these were the things that cropped up in my mind. Do let me know your thoughts.

Warm regards,

Srinath G

Zonal Head HR Srei BNP Paribas South

Many thanks, Mr. G Y Suhas, for the post.

I have a few queries on terms of agreement.

• It was decided that 5 non-working days would be compensated by working on Sundays in the years 2009 and 2010.

I understand that 5 days and 4 days of working during 2008 resulted in additional offs to workers, and workers and management agreed to compensate them at 5 days a month by working on Sundays in the years 2009 and 2010.

My query is: This is possible only if the market situation improves in 2009 and 2010. If the market remains sluggish, then you may not be in a position to restore 6 days a week plus working on Sunday, making it 7 days a week. What has been your experience in the year 2009?

Secondly, how did you manage to work for more than 48 hours a week without a break/weekly off by contravening provisions of the Factories Act? Moreover, you may have to bear additional costs on overtime payment for working on Sundays, in spite of adverse financial conditions.

• Workmen agreed for adjustment of incentive hours for 5.5 days.

It is not clear what adjustment the workmen agreed to and what the incentive hours of 5.5 days are.

Please reply and help me in understanding the terms of the agreement.

Thanks & Regards

Many thanks, Mr. G Y Suhas, for the post.

I have a few queries on terms of agreement.

• It was decided that 5 non-working days will be compensated by working on Sundays in the years 2009 and 2010.

I understand that 5-day and 4-day working weeks during 2008 resulted in additional days off for workers, and both workers and management agreed to compensate for them at 5 days a month by working on Sundays in the years 2009 and 2010.

My query is: This is possible only if the market situation improves in 2009 and 2010. If the market remains sluggish, then you may not be in a position to restore 6 days a week plus working on Sunday, making it 7 days a week. What has been your experience in the year 2009?

Secondly, how did you manage to work for more than 48 hours a week without a break/weekly off by contravening the provisions of the Factories Act? Moreover, you may have to bear additional costs on overtime payment for working on Sundays, in spite of adverse financial conditions.

• Workmen agreed for adjustment of incentive hours for 5.5 days. It is not clear what adjustment the workmen agreed to and what the incentive hours of 5.5 days are.

Please reply and help me in understanding the terms of the agreement.

Thanks & Regards

Many thanks, Mr. G Y Suhas, for the post. I have a few queries on the terms of the agreement.

• It was decided that 5 non-working days would be compensated by working on Sundays in the years 2009 and 2010. I understand that 5 days and 4 days working during 2008 resulted in additional offs to workers, and workers and management agreed to compensate them at 5 days a month by working on Sundays in the years 2009 and 2010.

My query is: this is possible only if the market situation improves in 2009 and 2010. If the market remains sluggish, then you may not be in a position to restore 6 days a week plus working on Sunday, making it 7 days a week. What has been your experience in the year 2009?

Secondly, how did you manage to work for more than 48 hours a week without a break/weekly off by contravening the provisions of the Factories Act? Moreover, you may have to bear additional costs on overtime payment for working on Sundays, in spite of the adverse financial condition.

• Workmen agreed to adjust incentive hours for 5.5 days. It is not clear what adjustment the workmen agreed to and what the incentive hours of 5.5 days are.

Please reply and help me understand the terms of the agreement.

Thanks & Regards

Thank you all very much for appreciating the presentation. I would like to clarify your queries as follows:

During the recession, our company declared holidays for 20 days during 2008-09, especially on Fridays/Saturdays. Before declaring holidays, there was a meeting every week between management and the union to review the business situation. These holidays were compensated, after discussions with the union, as follows:

(a) To compensate by working 5 days (on Sundays) during 2009-10 after September 2009 when the situation improved (based on the prediction of the market situation). There was no additional payment for working on these Sundays as the work was in lieu of holidays availed during the recession and in pursuance of the agreement with the union to that effect. These Sundays were chosen from October 2009 till March 2010 in such a way that whenever a Sunday was declared to be a working day, a National/Festival Holiday would fall during that week. This was to avoid continuous working beyond nine days. As such, there was no contravention of the Factories Act.

(b) Since we had a good market forecast, we planned and agreed on Sunday work. However, if the market situation was not to improve, we would have given up the Sunday work. However, our well-calculated risk paid us rich dividends.

(c) Employees produce a certain number of machines during the month based on the market requirement. We have criteria of Base output (defined based on the manpower strength & standard hours for each machine). Any production beyond the Base output is called the Incentive output. The hours manufactured beyond the base output are called incentive hours. Such 5.5 hours were deducted from the Incentive hours after October 2009 till March 2010. Workmen agreed to this deduction of the amount.

In fact, the situation improved after October 2009, and we could achieve whatever was agreed to.

My contact address, email, and cell number are as follows, for any further queries on this.

Regards,
G. Y. Suhas
Head-HR, IR and Admin
L&T-Komatsu Limited,
Bellary Road,
Bangalore 560 092
Karnataka – India
Email: [Email Removed For Privacy Reasons]
Mobile: [Phone Number Removed For Privacy Reasons]

Thank you for an educative and inspiring account of the way in which you handled a difficult situation common to several organizations around the world. Your approach is innovative in the sense that a mix of techniques has been cleverly used, ranging right from rational explanation and seeking cooperation up to invoking the statutory authorities. Hearty congratulations on a commendable achievement and even more so for sharing the rich learning! I look forward to further interaction with you.

Best regards,
M Venkat Ram
(Former DGM TATA POWER, Mumbai)
Trainer, Certified Senior Assessor, and Business Excellence Champion,
CII Institute of Quality

"I am glad to enclose herewith my presentation at CII Bangalore on February 24, 2010, on How Lay Off was avoided with Excellent IR Strategies, a success story of L&T Komatsu Ltd., Bangalore. In today's difficult IR scenario, this is a nail-biting success story."

G Y Suhas
Head HR, IR, and Administration
L&T Komatsu Ltd
Byatarayanpura Bellary Road
Bangalore 560092