Honda Case

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Case Analysis

People Management Fiasco In Honda Motorcycles and Scooters India Ltd.

Submitted To :

Dr. Madhumita Chatterji

Submitted by:

Swagatika Sarangi

People Management Fiasco In HMSI

INTRODUCTION: HMSI was established on October 20th 1999 with an aim to produce world class scooters and motorcycles in India. The state of the art HMSI factory, located in Gurgaon, was spread over 52 acres. The initial installed capacity was 100000 scooters per year, which was scheduled to reach 600000 scooters by theendof2005.  A number of issues were confronting Honda Motorcycles and Scooters India Ltd. (HMSI), following the July 2005 altercations with its workers. Honda Motorcycles and Scooters India Ltd. (HMSI), a wholly owned subsidiary of Honda Motor Company Limited, Japan, established its plant in India in 1999 and made mistakes in handling people-management issues. Neither the president of HMSI, nor perhaps any of the members in his organization could have imagined that worker’s grievances would turn into a war-like situation, as they did in July 2005. 

LOSS OF PRODUCTION : The company had suffered a production decline resulting in a loss of Rs. 1.3 billion as a consequence of the strike and go-slow tactics by the workers, especially during the months of May and June 2005. But there was much more at stake than just the monetary loss.

HMSI WORKFORCE : HMSI operated on the principles that were followed by all Honda companies worldwide. HMSI had about 3000 employees in all: of these 2000 were in the worker category, 1300 were confirmed workers while 700 were contract workers. The other 1000 employees belonged to the supervisory and managerial staff. In addition, 700 persons were working as trainees and 300 were apprentices under the Apprentices Act 1960. All trainees, after successful completion of their training, normally got absorbed into the regular workforce, whereas only about 5% of the apprentices were able to get a job with the company after their apprenticeship. The human resource policies of HMSI were in alignment with the philosophy of its parent company, HMCL. The latter considered itself a unique organization, having adopted some distinctive employment and production practices.  HMSI had the reputation of being a comparatively good paymaster. In October 2005, monthly wages for workers ranged from Rs. 8150 for unskilled workers to 11,200 for skilled workers, which included a Rs. 2000 allowance for home rental.

HMSI’s PHILOSOPHY : HMSI’s philosophy advocated two fundamental beliefs: respect for individual differences and the Three Joys that it wanted to promote for all organization members. The three joys: the joy of using world-class products, the joy of selling and the joy of manufacturing high quality products The Company claimed that its policies are focused on developing each individual’s capacity to think to reason and, most importantly to dream. 

EMPLOYEE WELFARE INITIATIVES : The employees were called associates and the HR department made sure that the employees were trained so as to promote the Honda way among the employees. In line with its HR policies, all employees at HMSI, including the managers wore similar uniforms. HMSI also had taken several initiatives in the area of employee welfare, which ranged from subsidized canteen facilities to attractive hospitalization reimbursement for all employees.  ( It also provided transport facilities to and from worker’s residences, provided at subsidizedrates .

( The Company also had a sports club for employees use at Sukhrali village in Gurgaon, which had facilities for both outdoor and indoor games.

( As most of the HMSI workers salary had crossed the maximum salary limit for coverage under the Employees State Insurance scheme under the ESI Act, 1948, the company covered such employees under the Paramount Health Care Facility. In addition to outpatient department facilities, this scheme provided the re-imbursement for...
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