Honda Hr Case!

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At the onset of 2006, the president of Honda Motorcycles and Scooters India Ltd (HMSI), who was also its chief executive officer, had to make some radical decisions on a number of issues confronting the company following the July 2005 altercations with its workers. Not only did he have to repair the damage to the companyís image, but he also had to develop a strategy for long-term co-operation with its employees. As he reflected upon the bitter memories of the last twelve months, he wondered if the company could achieve targets laid out in the aggressive expansion plan developed before the unrest. This included tripling the Gurgaon plantís production capacity to 0.6 million motorcycles and 1.2 million two-wheelers by the end of fiscal 2007ñ2008.

Neither he, nor perhaps any of the members in his managerial team, could have imagined that workersí seemingly minor grievances would turn into a war-like situation, as they did in July 2005. The company, despite all its efforts, had not been able to prevent the union formation, that too with an affiliation to All India Trade Union Congress (AITUC), which was the trade union wing of the Communist Party of India. With the events taking a nasty violent overtone, the adverse publicity might have done perhaps irreparable harm to the public image of the company. In addition, the drop in the companyís sales was also worrying. The company had suffered a production decline resulting in a loss of Rs 1.3 billion1 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. While choosing the companyís logo of the wings, the company had aimed to fly high by taking a dominant role in the Indian

1 US$1 = 45 INR on May 1st 2005.

Dr. Debi S. Saini, professor and chairperson, HRM at Management Development Institute (MDI), Gurgaon, India, prepared this case for class discussion. This case is not intended to show effective or ineffective handling of decision or business processes.

The author thanks the many people who helped in construction of this case. The three union office bearers of the HMSI union who visited MDI at his request twice to give interviews; Mr. M. R. Patlan, the Deputy Labour Commissioner of Gurgaon, and his staff, who shared information and provided other help to reconstruct some of the nuances of the case; some anonymous persons who also shared useful information that facilitated cross-checking of the claims of the HMSI union and in building several new formulations. The author also thanks Rakhi Sehgal, a doctoral scholar in sociology, American University, Washington, for helping him establish contacts with many respondents.

© 2006 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be reproduced or transmitted in any form or by any meansóelectronic, mechanical, photocopying, recording, or otherwise (including the internet)ówithout the permission of The University of Hong Kong.

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407-065-1 06/309CPeople Management Fiasco in Honda Motorcycles and Scooters India Ltd

two-wheeler industry, simultaneously taking advantage of the rapidly growing Indian economy. Given the unexpected turn of events,...
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