A CASE ANALYSIS ON

PEOPLE MANAGEMENT FIASCO IN HONDA PEOPLE

MOTORCYCLES AND SCOOTERS INDIA LTD

A Case Analysis Report

Submitted to:
Mrs. Sabina Tuladhar
Faculty of Human Resource Management
SAIM College

Submitted By:
Manju Mahara

In Fulfillment of the Requirements for the

Masters of Business Administration (MBA)

Old, Baneshwar, Kathmandu

January, 2021
 Table of Contents

ABSTRACTS

ISSUES AND PROBLEMS

ANALYSIS OF THE CASE STUDY OF HMSI

RECOMMENDATION

CONCLUSION

REFERENCE
 1. Abstract

The Honda Motorcycles and Scooters India Ltd. (HMSI) was a wholly-owned subsidiary of Honda
Motor Company Limited (HMCL), Japan; the latter was the largest manufacturer of two-
wheelers at the global level. HMSI, which was established on 20th October 1999, employed
about 3000 employees in all. It provided many welfare benefits to its employees, and also met
its liabilities under various labor laws. The human resource (HR) policies of HMSI were in
alignment with the philosophy of its parent company, HMCL, which included two fundamental
beliefs: 1) respect for individual differences; and 2) the three joys: the joy of buying; the joy of
selling; and the joy of manufacturing. HR policies, among others, included constituting some
committees by management consisting of workers and management representatives.

The company’s three-monthly quarterly newsletter focused on targets, safety, achievements

concerning quality, safety and training programs on defensive and safe driving of two-wheelers.
Workers’ perceived unfair treatment for the first time in November, 2004, which got
accentuated with other acts of arbitrariness and nepotism practiced by Indian managers in
HMSI. They also felt aggrieved at the idiosyncratic attitude of a Japanese manager. So, workers
started a campaign for registering the union, and made exorbitant demands by submitting a
demand charter. The management tried in vain its level best to stop union formation and
registration. The union registration took place in May, 2005; it was affiliated to AITUC (All India
Trade Union Congress) ––a trade union wing of the Communist Party of India (CPI).

Some usual industrial relations (IR) tactics were adopted by both sides, which heightened the
tension in IR relations climate. There were also some cases of minor violence by workers. The
worst happened in the short IR history of HMSI when a violent battle was fought between the
HMSI workers and the local police on 25 July, 2005 at the office of the Chief of civil
administration of Gurgaon district where workers had gone to protest against the alleged
highhandedness of the HMSI management in what they described as, collusion with the state
agencies; this resulted in severe injuries to some 70 workers. Due to workers representatives’
pressure on the government, the state Chief Minister was directed by the Congress (the ruling
party) President Mrs. Sonia Gandhi to facilitate a settlement between HMSI management and
its workers.
On July 30, 2005 an agreement was arbitrated by the state chief minister, which provided that
the striking workers would resume duty from 1st of August 2005, suspended workers would be
taken back on duty, and that workmen would not raise any new demands during the next one
year. In the post-July 25 scenario, the management allowed several concessions to workers on
many fronts. None of the office bearers actually worked after the July 25 incident; they were
doing full-time union work Production targets were met only on one day after the violent
incident, even though they were met on each day before this date. Despite the losses, workers
could secure an impressive amount of money from management as bonus for the year 2004-05.
In the post-July 25 scenario, the management started sending managers to attend management
development programs (MDPs) in areas such as inter-personal skills; team-building,
negotiation, and conflict management. It decided to appoint a Senior Manager–IR. Union office-
bearers were given training by the HR department on building cooperative industrial relation.

2. ISSUES AND PROBLEMS

o The first labor unrest in November 2004 regarding the Diwali gifts.

o Movement Sheet for washroom Breaks.

o Management showed partiality in matters related to job posting.

o Strict attitude of the Japanese vice president.

o Too much of the workload in the form of handling multiple machines at the same time.

o Strict in granting leaves.

o Cross cultural difference between Japanese and Indian can be seen in HMSI.

o Strong organization philosophy but lacks implementation.

o In HMSI, there is perpetual difference between the levels of management.

o There exists improper communication and incorrect grievance handling procedures.

o HR policies adopted by the company was not in the context of Indian work environment.
 3. Analysis of the Case Study of HMSI

This is a comprehensive case study which clearly explains historical, human resource
management issues in the company – HMSI. HMSI carried out its management functions by
basing on the two key beliefs. These beliefs are the respect for differences of individual
laborer’s and what the company termed as the “three joys”. The company aimed at using these
tools for promoting all its members. Just like many other firms that are managed through the
modern human resource management principles, HMSI also carried out performance appraisals
on its employees. Workers were graded basing on a certain grade after which they were
rewarded according to the respective grade scored.

The study also explains the development of unionization activities in the company. These
activities emerged because of the differences between the employees and management as
regarding the human resource policies and implementation. The union activities took a long
course. They resulted in attempts to use dispute resolution methods like reconciliation to
resolve the problems. However, some of these problems escalated to violent confrontation.
This forced the intervention of the government to stop the violence and provide a strong
foundation on which a mutual agreement was built. The study explained how the unions and
management of the company adapted and coped after the agreement of stopping hostility
between employees and management of HSMI was reached. Finally, the study discusses the
lessons that were learnt by the company and how it can utilize these lessons as it focuses on
the future management. Company data, history and records; are distinguished when it comes
to betterment of the existing human resource management policies.

This study gives a deep insight of the management activities in HMSI since its inception. When
a firm faces challenges, the management should make decisions which will help in sorting out
the constraint facing the firm. The decisions that are made need to be well thought and widely
consultative; otherwise, they are likely to cause more friction in the organization. Any change in
an organization must be followed by restructuring decisions to aid in enforcing it. A clear
example is the decisions that were made by the president of HMSI in the year 2005 when the
company. The president wanted to see the company embarking on an expansion program that
was a bit aggressive which could see the company regains its operation as was before the
constraints. Confrontation in organizations can be as a result of the failure to attend to the
seemingly small grievances which later escalate to crises. One of the major functions of the
management of companies is the identification of issues from either within or without the
company which can result to divisive conflict in the organization. Crisis results in the loss of
productivity. The 2005 conflicts in HMSI resulted in the loss of sales of up to 1.3 million Rupees.
More often than not, restructuring is used to regain the image and the grounds of the
organization more so in the aftermath of a crisis. Restructuring aims at having a total overhaul
of the organization by changing a number of operations and organizational identities for
instance changing the name, logo, packaging and branding of products among many other
strategies. As mentioned earlier, the restructuring strategies must be systemic and deliberated
on by the entire organization. Failure of doing so by the management is likely to escalate the
problem already at hand. The management of firms increasingly understand the need to
expand the operational capacity of their firms by expanding into new operational areas by way
of opening subsidiary firms. HMSI began its operations in the year 1999 as a subsidiary firm of
the Honda Motor Company Limited which is headquartered in Japan. The subsidiary firms often
operate basing on the operational principles of their mother companies.

As part of its expansion programme, HMCL has opened more than 130 firms across the world
HMSI being one of these firms. Performance appraisal has become an integral part of managing
employees in organizations. It is one way of making employees feel appreciated by the
company for their efforts. HMSI recognized the need for this and put in place such a system.
However, this system had its own flaws which mostly resulted from the way it was
implemented.
 4. Conclusion and Recommendation

4.1 Conclusion

Most management of companies come up with different initiatives, which aim at improving the
performance of their organizations. With the realization that workers are often the most
significant assets for firms, the initiatives of management mostly center on workers. When
workers are satisfied with the organization, they raise their input, which automatically spills
over to the general output of the firm.

However, all human resource initiatives in organizations must be employee centered. The
employees must be actively engaged and or involved in formulating these policies or initiatives
as these initiatives directly affect them. Failure to engage employees in the plans of the
organization is likely to have grave consequences in the organization just as was the case with
HMSI management and its employees. Before a performance appraisal programme is run by
the organization, employees must be notified and trained on the assessment procedures and
the importance of such a programme.

Most modern labor laws allow employees to join labor unions. These unions act as tools of
negotiation with the management of organizations. Organizations must recognize these unions
and formulate proper channels of negotiating with these unions in order to avoid bitter
confrontations. Dispute resolution has thus become a vital part of the function of management.
Organizations, with the aim of surviving in the competitive industry must be aware of this. They
must craft exhaustive channels of resolving disputes with their employees. Communication is a
vital entity for the management of firms especially so the subsidiaries. Cultural noise can
negatively hinder the performance of a firm in the country where it is located because of
cultural disparities that come in between communication.

Thus, it is important for the company staff to receive mentorship on the culture of the business
destination. The company will have to consider this as it expands into new destinations globally.

The Hofstede theory helps in the understanding of how culture impacts on the company
activities in foreign countries. The main Honda mother company has good employee relations
because it operates within a single culture. When a company chooses to enter new markets, it
has to formulate and follow an adaptation strategy. This strategy helps in the blending of
different cultures in order to have a good working relationship.
The Honda Motors Company has Japanese cultures. Since it is operating in different cultures in
foreign countries, there will be a need for the adoption of cross-cultural models of
management. The adaptability to culture determines product development and thus it is
important for the company to capture the different dimensions of culture which include
individuals and business location among others.

4.2 Recommendation
o Top level management should keep in mind the cross-cultural issues while doing
business in host country about their values, belief and assumption.

o Performance Appraisal should be continuous process and two-way feedback is

necessary, so that employee can grow according to the needs of the company.

o Organization policies should be revised with proper implementation and review

approach.

o HMSI needs to place a high investment in HRM who can provide the training and
support for the Japanese and Indian managers.

o HR programs need to be redefined, such as the job posting process, to remote a culture
of fairness.

o Company should avoid autocratic leadership approach.

 References

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London.

Malonis, J A 2000, “Human Resource Management (HRM). “Encyclopedia of Business, Vol. 1.

Web.

Marieke de Mooij and Hofstede, Geert, 2010, Applications to global branding and advertising
strategy and research. International Journal of Advertising, vol. 29, No. 1. pp. 85–110.

Moffitt, M L, Bordone, R C, and Program on Negotiation at Harvard Law School 2005, The

handbook of dispute resolution, Jossey-Bass, San Francisco, CA.

Robert, L M 2011, Human resource management: Essential perspectives. South-Western,

Division O., New York.

Saini, D S, Management Development Institute (Gurgaon) and University of Hong Kong

2006, People management fiasco in Honda Motorcycles and Scooters India Ltd., Asia Case
Research Centre, University of Hong Kong, Hong Kong.