HRM Case Study 1 Bata and Its Employee Relations Issues Bata India Limited (Bata) always managed to hog the headlines in the 1990s as far as employee relations were concerned. The company was headed by Mr William Keith Weston (Weston), who had a track record of turning around many sick companies within the Bata group. On 30 September 2000, Bata was headed towards a major labour dispute as Bata Mazdoor Union (BMU) had requested the West Bengal government to intervene in what it considered to be a major downsizing exercise. Throughout its history, Bata was plagued by labour problems with frequent strikes and lockouts at its facilities. Huge employee expenses were incurred due to the labour issues. For years, Bata priced its shoes reasonably well compared to other brands in the market in India and in the USA, the UK, Europe and Middle East. Its headquarters was at Kolkata and it employed over 15,000 employees in its manufacturing and sales operations. It manufactured 33 million pairs per year in five of its plants located at Batanagar (West Bengal), Faridabad (Haryana), Bengaluru (Karnataka), Patna (Bihar) and Hosur (Tamil Nadu). It had around 1,500 retail stores and 27 wholesale depots. The management team implemented a massive revamping exercise in which around 250 managers and their juniors were asked to quit. They had decided to freeze recruitment. The company signed a long-term bipartite agreementwhich did not result in any disruption of work. The union tried to show the management that they too could be as productive as any other union in the country. They bought down the staff strength in two of their factories to a great extent. By the end of 1997, they still faced problems of a high-cost structure and surplus labour, the turnaround had made them more aggressive and demanding. Weston had failed to strike a deal with the All Indian Bata Shop Manager Unions since the third quarter of 1997. The shop managers were insisting that Bata honour the 1990 agreement and they wanted them to fill up the 248 vacancies in its retail outlets. It also opposed the move to sack all the cashiers in outlets with annual sales of less than 5 million, which meant elimination of 690 jobs. The management also decided to phase out several welfare measures at its Batanagar Unit management subsidies, canteen facilities etc. Other measures were aimed at increasing productivity, reorganizing some departments and extending working days for some essential services. In the beginning of January 1999, BMU submitted their charter of demands to the management. The demands mainly revolved around economic issues and the non-economic issues contained the reinstatement of four dismissed employees, introduction of a scheme for workers participation in management, wage hike for around 90 per week and some additional allowances. In mid-1999, the BMU finally struck a deal and signed a three-year wage agreement that included a lump sum payment of arrears of 4,000 per employee. The management also decided to include 10 per cent of the 400 contract labourers at Batanagar in its staff. The West Bengal State tribunal justified and upheld Bata's action of suspending and dismissing of three executive members of the BMU. In July 1998, Weston was severely assaulted by four workers at the factory at Batnagar, while he was attending a business meeting. A member of the BMU met Weston to discuss the issue of suspended employees. Dutta, the Union Leader, got into a heated argument with Weston and when Weston got up to leave the room, the workers turned violent and assaulted him. Earlier in 1996, the Chief Welfare Officer was assaulted too. The management dismissed the three employees on grounds of indiscipline and violence. The employees accepted the dismissal letters, but provoked the other workers to go in for a strike in protest against the management's move, the strike continued for two days. The management then decided to put on hold to the expansion of the plant at Batanagar. Questions: 1. The role played by the BMU is of a destructive nature. Comment. 2. Why has maintaining good IR been a problem for Bata? From your perspective, what advice could you give them to maintain sound IR? Source: Gupta, V. 2001. Bata India's HR Problems, ICMR Centre of Management Research, 40122.