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Contract Labour: The Maruti Way*

CASE STUDY, HUMAN RESOURCE MANAGEMENT
ET Cases - FLAME, 12 pages

Case Preview

Contract Labour: The Maruti Way

 

“Capital is dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks. The time during which the labourer works, is the time during which the capitalist consumes the labour-power he has purchased of him. If the labourer consumes the disposable time for himself, he robs the capitalist.”1

– Karl Marx and Friedrich Engels


On July 18th 2012, a charred body was found in the premise of Manesar2 plant of Maruti Suzuki India Limited (MSIL)3, later identified as that of Senior Human Resource Executive Awanish Kumar Dev, 51. The worst-ever incident at MSIL since its inception in India, which was an outcome of alleged mob violence by the workers of the Manesar plant of MSIL.

The unprecedented mob attack by workers at Maruti Suzuki’s Manesar plant in July 2012, raised the issue of excessive usage of casual and contract labour by the industrial world to get the routine operational jobs done at cheaper costs. The government also identified this as the primary reason for the recent increase in labour strife and violence in the manufacturing sector. Out dated labour laws, ironically which were established primarily to care and protect the interest of workers have been an important factor in compounding the problem of contract labour in India., Media and analysts blamed the management at MSIL for its insensitivity and inability to understand the pulse of its workforce at Manesar. The unfortunate incident not only caused a heavy financial loss of around INR 500-600 crore4 to MSIL, it also affected its image in the market, which was built over the years..............

 


  • 1 https://www.marxists.org/archive/marx/works/1867-c1/ch10.htm
  • 2 Industrial belt/town near New Delhi, Capital of India
  • 3 Indian arm of the renowned Japanese company – Suzuki
  • 4 INR1 crore = INR10 million

Teaching Note Preview

Contract Labour: The Maruti Way

 

Synopsis

The case describes the situation in which Maruti Suzuki India Limited (MSIL), which is one of the renowned and largest auto maker in India is facing a challenging situation related to labour unrest and the consequences associate with the same and has to take a call how to proceed further. The unprecedented mob attack at Manesar plant of MSIL on July 18th 2012, which claimed the life of senior HR manager, was a strong signal towards the excessive usage and miss-management of contract labour. Almost every newspaper and media report pointed out that the major cause of such a violence at MSIL’s Manesar plant was the unequal treatment between permanent and contract labour for doing almost the similar jobs, which is very much prevalent in almost all the manufacturing establishments in India.

The incident caused a major financial loss of around INR500-600 crore to the company. More than the financial loss, there was a reputation loss for a company who was known for good employee relationship and Human Resource practices world-wide. This was a biggest setback for the company as it affected its market share as well as relationship with the employees. After the incident company declared lockout and wanted desperately to sort out the issue in such a way that will help company to regain its relationship with the employees, who were ultimately the driving force of MSIL, and its image as a good employer. The issue in the case was how to manage workers, especially contract workers effectively.

The case study focuses on various issues related to employment of contract labour at MSIL and its impact on company’s growth, engaging them, profitability, trust and maintaining good & peaceful Industrial Relations.

Expected Learning Outcomes

• Understand the role of the various stakeholders of industrial relations, pros and cons of engaging contract labour and newer ways of managing and engaging contract labour
• Elucidate how to involve and engage contract labour in the mainstream of the organisation for peaceful and productive industrial relations
• Understand how environmental challenges to an organization dictates the type of human resource initiatives
• Understand how to align various HR initiatives (engaging contract labour in this case) with the organizational goals
• Illustrate how internal environment force HR department to respond quickly to cope-up with the challenges

Case Positioning and Setting

This case study is intended for MBA and Post Graduate Diploma in Management students. The case study can be used for modules in core course of Human Resource Management, as well as electives such as or Industrial relations or Strategic Human Resource Management, Effective Labour Laws, etc. ...........

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Product code: HRM-1-0039, HRM-1-0039A

Abstract


The news of Maruti Suzuki India Limited (MSIL) Manesar plant's GM (HR) burnt to death by a mob of workers on July 18th 2012 sent shock waves across the nation. This issue raised various concerns related to managing workforce effectively and keeping the right mix of permanent as well as contract workers. It also questioned the role of all the three stakeholders of Industrial Relations (Government, Management and the Union) to uphold peace and harmony in the company. This case study focuses on the implications of hiring more contract workers (in the light of Contract Labour Act, 1970) against permanent employment. On one side, MSIL enjoys various benefits of hiring contract workers, but has its own consequences too. What should MSIL do now to strike a balance, to benefit as well avoid such unfortunate incident, which led to loss of its image and trust?

The case study enables to understand the dilemma of the company that has suffered a major financial loss as well as a dent on its reputation. The case study also helps to explore MSIL’s next steps in hiring and managing workers, especially contract workers effectively.



Pedagogical Objectives

  • To explain the role of the various stakeholders of industrial relations, pros and cons of engaging contract labour and newer ways of managing and engaging contract labour
  • To elucidate how to involve and engage contract labour in the mainstream of the organisation for peaceful and productive industrial relations
  • To understand how environmental challenges to an organization dictates the type of human resource initiatives
  • To understand how to align various HR initiatives (engaging contract labour in this case) with the organizational goals
  • To illustrate how internal environment force HR department to respond quickly to cope-up with the challenges

Case Positioning and Setting
This case study is intended for MBA and Post Graduate Diploma in Management students. The case study can be used for modules in core course of Human Resource Management, as well as electives such as or Industrial relations or Strategic Human Resource Management, Effective Labour Laws, etc.




* FLAME CASE CONFERENCE 2015


This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)

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