1- CEO is concerned about the business only and not about the people. He does not seem to understand well laid legal processes and unmindful of the legal consequences of any ill prepared people related move. It also appears that Business pressure has taken away his ability to look at the problem in rationale manner. He is not that kind of a leader who facilitate, extend support and protect his HR head.
2- Current employee relations scenario appears to be normal. However, Union seems to be strong as company has seen many ups and downs in the past in employee relations front. Union has strong political connections of the ruling party and in such a situation, Union would not give in so easily when it comes to taking something from the Union.
Root cause of the problem is badly negotiated wage settlements which company has signed in the past. Company gave very high increments during hey days of the company and never considered the long term future implications of the higher wages. It also never gave a thought as to how to tackle the situation when business will be low in the future.Company did not negotiate well with the Union for enhanced productivity/OEE (overall equipment efficiency), rationalisation of manpower, outsourcing/ contractisation of some processes to reduce the cost in the past Long Term Settlements.
3- Current HR Head is not to be blamed for the mess created by his predecessors. HR Heads of the past did not study/work on towards enhancing productivity/OEE, rationalisation of manpower, outsourcing/contractisation of some processes to reduce the cost. The inability on the part of the HR Heads of the past to address the above resulted into such high unaffordable wage cost as well as unproductive workforce.
4- If, I were the HR Head, I would have made the following step by step proposals before the CEO as under:
- Explain senior leadership of the Union about the business situation of the Company and take them into confidence.
- Develop good liaison/relationship with the government agencies.
- Communicate regularly with all the section of employees through Notices, emails, meetings and letting the employees know about bad business condition.
- Initiate pressure tactics:
a. There are always a few workers in every company who are having very bad attendance records. Company should make list of such workers whose attendance records are not good and initiate domestic enquiries against them and terminate their services as per the finding report of the enquiry.
b. Management should initiate disciplinary action against unproductive workers and they be transferred to other business locations as company has plants at other locations also. As Company does not have new orders and relying now on service/maintenance of machines supplied earlier, such transfers are very much logical and legal and company can transfer their employees as per the terms and condition of the employment and as per the needs of the organisation. Such workers, under threat of being transferred, may opt for VRS and company can get rid of such workers without much of trouble.
c. Launching of VRS after transferring of such employees.VRS amount will be a moderate one and will be as per the local market conditions.
d. Company can also identify the physically handicapped/long sick workers and counsel them to opt for VRS. As a strategy company should link VRS with Wage Settlements and it should be told very clearly to the Union that Long Term Settlement discussions will start only after successful implementation (achievement of target) of VRS. This way Union will be under pressure and they will support Management in these actions.
e. Negotiate with the Union in the Wage Revision Settlements and reduce high aspiration of the workers and the Union. Management must spell out the condition before the Union that whatever savings they make, a portion of which will be distributed to the workers. One has to be tough when you are running a business.
- Company should make its 'Counter Charter of Demands' and demand from the workers for their involvement in TPM, TQM, 5 'S' activities and improvement initiatives like Kaizen, Suggestion Schemes, cost saving measures etc.
- No new induction of contractual employees against the retirement of permanent workers as there is no new work order. Higher productivity to be demanded from the Union in order to take care of the vacuum created due to retirements.
- Workers to be given a moderate hikes in future LTS as per the savings they give to the Management and Management will not incur any financial burden.