Developing Work Culture Through Collective Bargaining at Escorts Limited

Abstract

Escorts was facing unprecedented problems in the late nineties. Externally the company was facing severe competition and more was expected in the form of MNC. But the company was hardly in a position to face existing competition, leave alone the emerging ones. The company's internal operations were in shambles. Escorts limited had a history of intransigent union. The union was ubiquitous and unassailable. Productivity was low and management had ceded control of the worker to the union. From shop floor to marketing offices, the will of unionized labor prevailed. The management could interact with individual workmen only through the union. Productivity was abysmally low. Production norms were decades old and most of the machines on which these norms were based had been replaced by faster machines. Management decided to bring about wholesome changes in work practices and reduce the control of the union through the process of collective bargaining. Management had collected data to show that if a workman put eight hours of sincere work, productivity would be greatly enhanced. The company also wanted to do away with overtime and incentive system. But the management and union regularly negotiated salary and productivity through three year collective bargaining agreements. Escorts management decided to bring about all the changes through this collective bargaining agreement. After a pernicious struggle with the union, the management was successful in introducing production according to Industrial Engineering Norms and abolishing variable payoff overtime and incentives. A large part of the overtime and incentive payment was merged in the basic salary, and production norm was substantially hiked. But around the same time the tractor market crashed. The company needed and made tractors less than the norm, but it had to pay the hiked salary. In the new environment of low sales, the company would have been better off not concluding the new agreement. Though market forces reversed the advantage, the new practices have become a part of the work culture at Escorts.