A Case On Wanson India Appropriate Industrial Relations

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					A Case On Wanson India
Appropriate Industrial Relations



Group 7
1/1/2009
                              A Case On Wanson India                                              2009




Case Background

Wanson India was incorporated as a private limited company in 1964, in technical
collaboration with Wanson of Belgium. It was a fairly well-known company engaged in the
manufacture of packaged boilers. Wanson India‟s factory was located in Chinchawad in
Poona.

The Beginnings

Bhathena, the company‟s founder, began work in the early 1930s as a young commerce
graduate for a well known Indian steel furniture manufacturer. At the end of World War II, he
resigned to start his own business – National Steel Equipment. His experience in steel
fabrication and marketing channelled his interests into the manufacture of Fowler beds
(adjustable eight position beds used mainly in hospitals). At that time there was no local
production of these beds and hospitals were forced to import.

From hospital beds and other furniture, National Steel Equipment expanded to high pressure
stainless steel sterilizers and water stills for making saline solution. These yielded a better
return on investment.

Gradually we developed surgical beds sterilizers,    babies‟ incubators, and water stills form
intravenous injections and so on”.

From hospital equipment Bhathena went into hospital appliances and alter into catering
equipments like cooking ranges, fully automated dish washers and bulk rice cooking
equipment.

Product Development

The collaboration agreement with Wanson Belgium was signed in 1964 and in 1965 the
company started manufacturing Vaporax. (Vaporax is a full automatic, forced circulation,
water tube, packaged boiler, which gives steam at full working pressure within 2-3 minutes of
a cold start). The first few units were manufactured in an old shed in Bombay, which was,
strictly speaking, unfit for making boilers. They shifted to Chinchawad-Poona, in 1967.




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The company‟s licensing agreement with the Belgium firm also covered Thermopac, which
supplies heat through heated oil.       The collaborators provided the design and indicated
applications for six to eight industries.

Wanson developed know-how not only in erecting and commissioning newer types of
boilers, but also on the process of transferring heat from one source to another – new ways of
heat transfer applications.     For example, in the textile industry, a machine known as a
“stenter” machine was used for treating synthetic cloth. This was a 30 ft x 90 ft, heat setting
machine on which synthetic cloth was dried and heat-set. All heat was supplied electrically.
Stenter makers themselves supplied the electrical heating equipments. The company‟s second
success with Thermopac was achieved in a similar manner. Thermopac supplied heat only up
to 290 degree centigrade. The company decided to use higher heat conducting oils to
produce a Thermopac with higher heating capacity. Third notable successes were in
developing spray paint drying chambers with air heaters. The market for the product
consisted of manufacturers of automobile and garage owners who needed facilities for spray
painting automobiles, scooters, etc. The product immediately found a large big overseas
market, particularly in socialist countries. Within India too, sales increased.

With the onset of the oil crisis in 1974, the company demonstrated its innovativeness by
being the first to produce coal firing boilers. The result was “MULTITHERM‟ – a range of
boilers which could be either oil or coal fired.

Other products developed by the company to implement its concept of “heat in process”
included:

      1. HYDROBLOC – a boiler for supplying hot water. Major customers were hostels and
         hotels, both in India and overseas.
      2. THERMOBLOC – supplies hot air, which the army needs in forward mountain areas
         and is also needed in large buildings in cooler climate countries. The company was
         trying to adapt it for drying purposes – particularly drying food grains and seeds.
      3. Vaporjet – a product sup-plying wet steam for cleaning purpose, manufactured in
         collaboration with Wanson of Belgium.
      4. Water treatment plants – to soften water before it is used in boilers.




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      5. INCITEX- for the destruction through incineration of waste material and refuse of
          every kind - biological, industrial and radioactive - conforming to antipollution
          standards and so on.

The potential for each of these 4 products in their respective markets was substantial




Production

By 1976, the company had increased in size substantially in terms of the number of products,
the diversity of markets, the complexity of technology, and the volume of production levels.

The broad objectives set for production included making more and better boilers are:
1.To stop development of further components indigenously and in fact to reverse the cycle, if
necessary, by starting to import some of the components which had already been developed
locally
2. The major focus in the company philosophy would be on dependability and safety and,
only secondarily, on cost.

The Field Organization

The company maintained branch offices in different parts of India. Regular meetings were
held, in which officers from such as product planning strategy, market forecasts,
arrangements for generating marketing information, factory-marketing relationships, product
profitability, long range plans, etc, were freely discussed. Ideas from personnel in the field
offices were encouraged. Inter-branch communications were encouraged by suggesting
reviews reports be exchanged between branches. There was particular emphasis on the “total
service concept” from the level of Managing Director downwards, under which it was
suggested that branch managers should make special efforts to imbue in their staff, from
receptionist to service engineer, the need for using better language, conduct, attitudes and
manners towards achieving “full customerization ”.

1976, Wanson had become an accepted entity in the boiler making industry. The Company
projected an image of a creative and innovative organization, intensely nationalistic in
character




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                               A Case On Wanson India                                              2009



Questions & Answers:

1. From the analysis of the case infer the concept of good industrial relations.

INTRODUCTION

Industrial relations has become one of the most delicate and complex problems of modern
industrial society. Industrial relations are the relationships between employees and employers
within the organizational settings. In the words of Lester, "Industrial relations involve
attempts at arriving at solutions between the conflicting objectives and values; between the
profit motive and social gain; between discipline and freedom, between authority and
industrial democracy; between bargaining and co-operation; and between conflicting interests
of the individual, the group and the community”. It is in the interest of all to create and
maintain good relations between employees (labor) and employers (management).



STRUCTURE OF INDUSTRIAL RELATIONS

An industrial relations system consists of the whole gamut of relationships between
employees and employees and employers which are managed by the means of conflict and
cooperation.Three main parties are directly involved in industrial relations:
Employers: Employers possess certain rights vis-à-vis labors. They have the right to hire and
fire them. Management can also affect workers‟ interests by exercising their right to relocate,
close or merge the factory or to introduce technological changes.
Employees: Workers seek to improve the terms and conditions of their employment. They
exchange views with management and voice their grievances. They also want to share
decision making powers of management. Workers generally unite to form unions against the
management and get support from these unions.
Government: The central and state government influences and regulates industrial relations
through laws, rules, agreements, awards of court ad the like. It also includes third parties and
labor and tribunal courts.




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WHAT ARE GOOD INDUSTRIAL RELATIONS?

A sound industrial relations system is one in which relationships between management and
employees (and their representatives) on the one hand, and between them and the State on the
other, are more harmonious and cooperative than conflicting and creates an environment
conducive to economic efficiency and the motivation, productivity and development of the
employee and generates employee loyalty and mutual trust.

 The objectives of good industrial relations are-
       Reductions in Industrial Disputes – Good industrial relations reduce the industrial
        disputes. Strikes, lockouts, go-slow tactics, gherao and grievances are some of the
        reflections of industrial unrest which do not spring up in an atmosphere of industrial
        peace. It helps promoting co-operation and increasing production.

       High morale – Good industrial relations improve the morale of the employees.
        Employees work with great zeal with the feeling in mind that the interest of employer
        and employees is one and the same, i.e. to increase production. Every worker feels that
        he is a co-owner of the gains of industry. The employer in his turn must realize that the
        gains of industry are not for him along but they should be shared equally and
        generously with his workers

       Reduced Wastage – Good industrial relations are maintained on the basis of
        cooperation and recognition of each other. Wastages of man, material and machines
        are reduced to the minimum and thus national interest is protected. Thus, it is evident



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    that good industrial relations are the basis of higher production with minimum cost and
    higher profits. It also results in increased efficiency of workers.

    CONCEPTS OF GOOD INDUSTRIAL RELATIONS

    1. UNITARY PERSPECTIVE

    Wanson India had a Unitary perspective. In unitary, the organization is perceived as an
    integrated and harmonious system, viewed as one happy family. A core assumption of
    unitary approach is that management and staff, and all members of the organization
    share the same objectives, interests and purposes; thus working together, hand-in-hand,
    towards the shared mutual goals. Furthermore, unitarism has a paternalistic approach
    where it demands loyalty of all employees. Trade unions are deemed as unnecessary
    and conflict is perceived as disruptive.

    From employee point of view, unitary approach in Wanson India followed the
    following practices:

            Working practices were flexible. Individuals were business process
             improvement oriented, multi-skilled and ready to tackle with efficiency
             whatever tasks are required.

            Employee participation in workplace decisions was enabled. This helped in
             empowering individuals in their roles and emphasized team work, innovation,
             creativity, discretion in problem-solving, quality and improvement groups etc.

            Employees felt that the skills and expertise of managers supported their
             endeavors.

From employer point of view, unitary approach followed the following practices:

            Staffing policies tried to unify effort, inspire and motivate employees.
            Line managers took ownership of their team/staffing responsibilities.
            The personal objectives of every individual employed in the business was
             discussed with them and integrated with the organization‟s needs.




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    2. NORMATIVE CONSENSUS

      Wanson India followed an excellent concept of Normative Consensus where the
      participation of workers in the management of the industrial unit was encouraged
      by making effective use of joint consultation and other methods. Improved
      communication between managers and workers, increase productivity lead to
      greater effectiveness.

      The essential concept in normative Consensus is legitimacy. If the employees do
      not legitimize the rules and regulations framed by their representatives normative
      Consensus can never be a success.

    3. ADAPTIVE COOPERATION

      There are four categories of patterns of industrial relations of which Wanson India
      followed Adaptive Cooperation where the underlying principle is of high trust and
      high flexibility.

    1. Cooperative Constitutionalism
    2. Antagonistic Constitutionalism
    3. Uninhibited Antagonism
    4. Adaptive Cooperation – Wanson India

    An organization with a pattern Adaptive cooperation exhibits the following features
    as also shown by Wanson India:

    1. Formal institutions are non-existent
    2. Scope of joint regulation is broad with no clearly defined limits
    3. Recording of statement is rarely done
    4. Minutes of meeting is seen as unnecessarily restrictive.
    5. Bargaining style is informal.
    6. Exploitation of tactical advantage rarely done.
    7. All type of information is shared.



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    4. TRUST AND BARGAINING RELATIONSHIP

        In Wanson India TRUST and JUSTICE were the foundations of bargaining
        relationship between the employees and the employer which is why
        COLLECTIVE BARGAINING was in the culture of company.

        Collective bargaining is process of joint decision making and basically
        represents a democratic way of life in industry.

        Collective bargaining involves discussions and negotiations between two groups as
        to the terms and conditions of employment. It is called „collective‟ because both
        the employer and the employee act as a group rather than as individuals. It is
        known as „bargaining‟ because the method of reaching an agreement involves
        proposals and counter proposals, offers and counter offers and other negotiations.
        Thus ,

        Collective bargaining is a collective process in which representatives of both the
         management and employees participate.
        Collective bargaining is a continuous process which aims at establishing stable
         relationships between the parties involved.
        Collective bargaining not only involves the bargaining agreement, but also
         involves the implementation of such an agreement.
        Collective bargaining attempts in achieving discipline in the industry
        Collective bargaining is a flexible approach, as the parties involved have to adopt
         a flexible attitude towards negotiations.

    5. OCCUPATIONAL HEALTH AND SAFETY

The major focus in the company philosophy is dependability and safety and, only
secondarily, on cost. Wanson India followed the following practices to avoid
hazardous accidents at workplace as it dealt with the manufacturing of boilers.

        ensuring all task are carried out safely and efficiently
        safety programs, policies, and plans
        safety processes, procedures, and practices


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          safety education and training
          safety communications to maintain a high level of awareness on safety



 2. Assess the approach of Wanson India to production and marketing as a part of total
 organization philosophy and policies.

        In business its not important merely to sell a product but to sell a service.

        Offering a dependable product at a reasonable price, supported with specialist service
         both before and after sales.

        A long term view of any situation - intention to stay in business for long and generate
         the resources each year to grow from strength to strength.

        Business not merely as a source of income or profits but as a way of life

        Business - a medium, for putting talents to good use and using it as an opportunity to
         be of service to the community. The profits must inevitably follow.

        Not ashamed of being considered small but would be ashamed to be looked upon as
         undependable or inefficient

        Greatest single investment of organization - not in land and buildings, machinery or
         stainless steel but in MEN and focus on the productivity of this investment.

        Men create all the other resources in an organization The profitability and potential
         for growth depend on the final analysis of the aptitude, resourcefulness, integrity,
         courage and dedication of the men.

        A positive attitude to business- Obstacles and irritations are there to be overcome, not
         to be made as an excuse for inaction.

        In dealings with customers, the State and the community at large, we Neither ask for
         or expect favors.

        We offer a service and we demand a price.




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      Members of our organization firmly believe in and indulge in the principle of
       “deserve and then desire”.

      We have confidence in the product we sell and in the organization help being a good
       salesman.

3. Examine how Mr. Bhathena was ahead of his times in people management and relations
with his employees.

We are taking of time when companies were more inclined towards profits, revenue, cost etc.
they were either less or not at all bothered bout their employees. When western culture
attempts at “influencing superior subordinate relationships”, enforcing discipline through
charge sheets etc. At that time, Mr. Bhathena believes that their greatest single investment is
not in their land and buildings, machinery or stainless steel but in their men and they stand or
fall in exact proportion to the productivity of this investment. His beliefs and views are
reflected in company‟s policies also. Like company placed great importance in recruiting the
right kind of people. While recruiting a person they try to see mainly two things:

(i) Does the individual have a kind of an inner policeman (monitor) within him so that
company do not have to employ external supervisors or policemen to see that he works in the
interests of the company. According to Mr. Bhathena keeping an external person to monitor
your work is a distasteful thing and this is not the right kind of management style. Therefore,
he says that we generally trust people and like to be trusted

(ii) They try to assess whether he has a high-pressure burner within him.

With the belief that his employees are trustworthy Mr. Bhathena encourages delegation of
authority in Wanson India and give equal opportunity to everyone to grow with the growth of
the organization. He also says to his employees that don‟t be afraid of making mistakes but
try not to make the same mistake twice; as we get bored with repetition of any kind and try to
learn from your mistakes. He encourages employees to gain knowledge, develop their skills,
and learns from mistakes and to share their knowledge and experience. With these views and
beliefs and such management style Wanson India was operating with 400 people in 1975 with
negligible employee turnover.




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4. What strategies Wanson India had adopted in retaining people. Do these policies form
   a part of good industrial relations? Examine whether these strategies, policies and
   philosophy are relevant to contemporary organizations? Do you think that they are
   timeless relevance? Justify your views from the case facts.

     The strategies adopted by Wanson India in retaining people are:

        Great importance in Recruiting
        Employee empowerment
        Trust
        Management is accessible
        Training Programs
        Constant Appraisal
        Help employees improve their market value


     The policies and strategies adopted by Wanson India form a part of good industrial
     relations, which is very well depicted in the case.


     Talking about the relevance of the policies with the contemporary organizations, Wanson
     India stands apart all the industries at that time for having very good industrial relations,
     and they were very good at people management. Wanson‟s employees were always happy
     with the management. All these shows that the strategies, policies and philosophy adopted
     are relevant to the contemporary organization.

     PHILOSOPHY and ATTITUDE – towards quality, and therefore tetrads their customers,
     towards their men, towards money and possession in general, towards society as a whole
     and towards themselves in the final analysis”.

     Timeless Relevance:

    Yes few of the above mentioned policies and strategies has timeless relevance like
     importance for recruitment, employee empowerment, training programs, after ten years
     also this will have relevance in the industry. As these are the important key factors for
     any organization and if they don‟t have good policies with respect to these areas it is very
     difficult for any industry to survive in the growing market



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    Some policies like appraisal system, training programs (up gradation of technical skills)
     may change according to time and growing industry and employee needs, we can‟t have
     a standard format or policies for these areas for all the time and for all the industries


5. Was Mr. Aga right in his assessment of the Company’s current business scenario and
     his proposals for its future? If yes, explain how and why.


     Mr. Aga was partly justified; however he was also unduly critical of the situation.
     Wanson India was way ahead of its time in people management and other practices. He
     begins by appreciating the company on its marketing efforts. He recognizes that the sales
     service is the best in the industry, with a wide network of service centers and provided
     training for customers and operators.


     His first area of concern was the poorly defined organizational structure, time was wasted
     in interaction rather than productive work, decision making was not institutionalized.
     Hierarchy less organization should not pose a big problem, as the success of the
     organization so far can be attributed to the open and decentralized decision making in the
     organization. In the book titled Maverick by Ricardo Semler, Chairman of „SEMCO‟
     discusses the success of his organization which is purely based on open people policies.
     SEMCO is also a large organization and if it could manage to handle growth by
     continuing to practice liberal people polices, same could be repeated for Wanson. Besides
     if they are to shift to a hierarchical system there will be issues of change management,
     creating problems for the organization and dissatisfaction amongst employees. However,
     his suggestion of operating as a separate business unit is welcomed. This will ensure
     better control and monitoring of different areas of business. He further suggested that
     each unit manage its own affairs and decision-making. This proposal can be adopted as it
     will ensure efficiency in operation and better management of growth.


     Aga‟s assessment of production unit is justified. The decision-making is poor, for
     example they initially were using electricity for boilers then shifted to oil and when faced
     with oil crises they moved to coal. They could have anticipated these changes in the
     external environment and be prepared for it. Though they dealt with it well under




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 pressure. His fears of the losing control over financial and organizational areas are not
 unjustified.
     However, his fears of creeping obesity in the organization and of a middle-age
 euphoria setting in, making people complacent is over reacting. The organization has
 always had an open culture and its employees are used to it. They know their
 responsibilities and would not get complacent. Besides they are expanding which is
 providing them with new challenges, which will keep them on their toes. Also, Mr. Aga
 ends with a lot of doubts but no suggestions or ways to overcome them. The disciplinary
 issue can be dealt with by having a framework of acceptable behavior, communicating
 this to the employees and ensuring that it is interpreted in the same context.




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