THE CONTRACT WORKERS’ CRISIS

LEADING A WAY OUT IN MULTI-STAKEHOLDER MAZE

TEAM CHEVIJAY

ARAVIND

SREE HARI

MERLIN

LAHARI

VIGNESH

NISHITH

Synopsis Dr. Reddy, Leading pharmaceutical company in India; having different branches

all over the world, manufacturing & supplying affordable medicine by using innovative

technology for gastro intestinal, oncology, pain management, cardiovascular, dermatology,

diabetes etc.

Dr.Reddy Laboratory has six FDA Approved Chemical Technical Operations units, manufacturing

Active Pharmaceutical Ingredients. Their sixth plant ( CTO IV) is located in Pydibheemavaram

(Pdb plant), Srikakulam district of the state of Andhra Pradesh .

CTO VI is the largest API manufacturing unit of Dr. Reddy’s, spread over 97 acres. This industrial

belt has a number of large pharmaceutical and chemical companies apart from Dr. Reddy’s, like

Aurobindo Pharma, Andhra Organics, Matrix Labs and Nagarjuna Agrichem .

CTO VI- has four categories of employees

a) Chemists with a Bachelor’s or Master’s degree in Science (BSc or MSc degree),

b) Permanent workers with high school and/ IIT who Engaged in Mfg Activity,

c) Contract workers with less than high school education who engaged in Supporting Activity,

and

d) Managerial cadre or executives represent the fourth category of employees.

Synopsis Multiple Contract Agencies are engaged in different supporting activities like kitchen, loading,

unloading , house keeping. They have employed around 500 workers as contract labours.

Size of contract workers increased over a period of time disproportionately to the size of

operations. Statutory Requirements like ESI, PF were offered to all employees. Other benefits

like meals also were provided to employees from all the four categories.

This Case mainly deals with interests of multiple parties: contract workers, contract labour

families, management, neighbouring company labour, CITU, political executives and the

mediator (Govt Officials).

First incident took place between contract workers and management, when workers listed a

charter of 25 demands to the management and they were ready to accept a few.

The second incident was between management and mediator, where it was agreed on mutual

terms that the wages will be revised and the regularization was on hold. Since they were not

direct employers, management refused to take part in direct negotiations with workers’

representatives.

Third was based on the DU PONT Report. Management decided to automate few of its existing

process , and workers staged a complete strike.

Synopsis Speculative Theory for staging the strike completely-

- Make CITU Popular among this Industrial Area

- Expected USFDA Audit in CTO IV would force the Management to accept the demands.

Management automated some of the processes to eradicate the unsafe working conditions; In

turn helped to run the plant without contract workers.

Union organized a region wide industrial bandh (shut down) on 4th November, 2011 and carried

out a protest rally in which more than 10,000 workers from 25 factories in the region

participated to express their solidarity with the contract workers of Dr. Reddy’s. The highway

was blocked and the mob turned violent. The police used tear gas and laathi charge to quell the

growing unrest. Rally Received national attention through Newspaper & TV Channel.

After mediated negotiation with Joint Collector, management agreed to increase the salary from

Rs 220 to Rs260 per day & the employment was as per the requirements. Workers refused to

agree to anything less than complete employment to all the 500 workers. Angered by the loss

of employment, all of them camped in front of the main gate of the factory with their families –

including women and children.

• Even though Management was ready to accept few demands of workers, workers were

adamant and turned violent and tried to harass regular workers and stop the normalcy of

plant.

• Finally the agitation came to stand still when management agreed upon demands even though

not entirely

Synopsis• Mr.Saumen, President of Human Resource, Visited PDb Plant to solve the Prolonged Issue.

• Further to successful discussions between the company's management and the contract

workers, Final Agreement was to engage contract workers as per the shift requirement on 17th

Nov’11 in front of district administration.• Union called off 3-month old strike and the plant resumed normal operations.

Psychology & Social

Psychology( Contract

Labor Strike )

AttitudesEmotions &

Mood

ValuesConflict & Negotiatio

n

Personality

OB Discipline : Psychology & Social Psychology

•Standard of Living

•Benefit & Salary

(same as Regular

Employee)

• Popularity for Union

Instrument

Con

tracto

rs/

Un

ion

Terminal Values

• Staging protest ( Strike)

under the guidance of CITU

• Union Using the Contract

Employee to gain Popularity

Man

ag

em

en

t

• Business

• Safety & High Productivity

( with Low Contract

Employee)

• USFDA Audit

• Dupont Audit & Automation

• Legal Compliance.

Contract Labor age between 25 to 60 : Dominant Work value

- Conservative, Emphasis on Comfortable & Secure life ( Socialist)

- Dislike of Authority, Rules, Want Financial Success ( Liberals & Xers)

- Regular & Contract Workers are from same village tend to have same

values in nature.

Values

Extraversion

Personality of Mr.Chappa Ramesh :

Greater Social Dominance

More Emotionally

Expressive

Complete Strike

Keeping People in Emotion

Agreeableness Low on Agreeableness Prolonged Strike

Openness Low on Openness

More Rigid

No Alternative

No Collaborative Approach

Emotional Stability

Negative Emotional

Stability

Hyper Vigilant

Looking for Problem

Not Allowing to Settle

ConscientiousnessLow on Conscientiousness

Disorganized & Unreliable

Building Distrust between

Management & Workers

Traits Why it is relevant ? How it affect this case?

Personality

Angry Disrupt

Destructive

Stopped Vehicle of

regular Employee to check

the ID Card

Camped along with

Family Member (In front

of Gate)

Staged the mass bandh

to attract the state

machinery attention

Which turned Violent

Negative Emotions

Emotion

Cognitive=Evaluation

Company treating the regular &

Contract Employees. It is unfair.

Equally Deserved for all benefit being

received by Regular employees

Affective= Feeling

Totally Hating way the company act

Behavioral =Action

Complaining to District Administration

Staging Protest and Bandh

Productivity

Loss

Employee

Dissatisfaction

Absenteeism

Safety Concern

( Loss of Life)

Attitude

Negative Attitude towards Company

Response to Dissatisfaction

Constructive Destructive

ActiveVoice

(Union Activity-listed 25 demands & Given to

management)

Exit( Staged- Strike &

Bandh)

Passive LoyaltyNeglect

( Absenteeism, Increased Error rate-

Safety Issue )

Conflict & Performance

Level of Conflict Type of conflictInternal Characteristics

Unit Performance

High DysfunctionalDisruptiveUncooperativeChaotic

Low ( Productivity Loss)

Conflict Rose between the Management & Union. Conflict Intensity Increased & Strike was announced.

It Shows that conflict reached the Upper Range of Continuum are always dysfunctional.

Negotiation Activities Started with the Help of Mediators. First , they followed Distributive

bargaining ( Motivation Win- Lose) . After Mr.Saumen- President’s Visit , their approach changed

to Integrative Bargaining ( Motivation Win-Win). Interests of both parties were discussed rather

than the issues. Mr.Saumen’s Attitude shows the promise of Integrative bargaining.

They used Conflict-Resolution Techniques like Smoothing & Compromise Techniques to resolve

the prolonged issue. Resulting the 100 days strike called off & normal operations resumed.

Organizational Outcomes

• Citizenship Behavior and Group Cohesion

The regular employees went beyond their role requirements to ensure the plant continued to function. The staff

and regular workers of Dr. Reddy’s stood firmly behind the management and willingly took on additional tasks to

ensure that the work normalcy was maintained.

• Productivity and Task Performance

All the same, there was negative impact on work performance. As the agitations started intensifying the

production started getting affected.

• Attitudes

A member of the operations group mentioned that the organizational plan of creating world class factory would

require specialized group for looking at management of infrastructure and technology. Activities like material

movement, loading, unloading, and housekeeping should be looked at with a fresh eye and automated

wherever

necessary to enhance safety, quality and productivity. The process engineering will be simpler in newer units;

This initiative will have a direct impact on the requirements of contract workers.

• Survival

– Automation was introduced for feeding coal into boilers. Housekeeping activities like cleaning of floors and

lawn mowing were mechanized. The food was cooked outside, transported to the plant, served to people,

and the soiled plates were taken to be cleaned outside. There was fresh thinking on how material must

move through the plant within the existing constraints of plant layout. As Kaushik Ray, the HR Head of PSAI

observed, “Necessity is the mother of invention. The crisis accelerated our learning in a number of areas,

which we later transferred to the other plants”.

– Narayana Reddy proposed a scheme of Voluntary Separation by making lump-sum payments to the

workers opting for this scheme. He added that this practice did not exist anywhere for contract workers.

The contract workers and the union would find this an attractive proposal.

– Kaushik said, “In our SMT proposal, our idea is to recruit youngsters from the neighboring villages with

high school qualifications after a rigorous selection process. They will be put through thorough training,

and then deployed on operational jobs. Our plan is also to support their learning while earning. We’ll

provide them every opportunity to study further including hostel facilities. Considering our growth plans,

we can take about 500 young individuals as a part of this initiative. We’ll be offering them a career, not

merely a job”.

Diversity in work Culture will be Ensured.

Qualification requirement for each category will be Defined & Followed.

Women & Men – Proportion will be Ensured.

Age of the Regular & Contract labor will be Fixed.

Proportion of Regular & Contract Labor will be fixed

Reputed & Competent Agencies/ Firm will be used to carry out the Non Core Activities.

Proper legal Contract will be Made to ensure the working Condition of Contract Labors.

Workers commitee will be formed to address their day to day Contract Labor Issue

Legal Team & Employee Relationship Team will be formed to address the rising Conflict.

Standardized Process will be Defined to ensure the smooth Negotiation.

Training will be Provided to handle the Conflict & Negotiation.

Process will be Standardized through out the CTO

If I am Consultant…

Selection Process

Outsourcing

Negotiation Process

Re Engineering

Thank You