Manufacturing requires stable manpower. The Manufacturing process has to be learnt by the team that is working on the shop. This includes the Workmen as well as the Staff. This team would eventually learn the process so well that they would be able to produce high quality products. Over years, the skill of these employees would become an Asset for the Company. I still remember the Shop Employees who used to just look at the Product and tell about the status of Quality of the product. They did not need any Quality instruments to check the Quality of the Product! That comes with involvement and experience. The relations among the employees was always harmonious. This is how the traditional Manufacturing used to work. Workmen used to join a company and they retire from the same company.
But in the past decade, the Companies started exercising various options of employing people that focused on keeping them for a temporary period and getting rid of them when the demand is low. The care for workmen started coming down. The Migrant labor has become a major part of the Employees for many types of organizations. Not just Manufacturing. Even if you go to a Restaurant in any City, you would see only Migrant Labor serving you. They are there in just about every industry.
The Workmen/Employees also are not having a great attachment to the Company as they know that they will be fired whenever the Market demand goes down. In many of the South Indian Companies the Supervisors / Managers do not even know the Hindi language that the Migrant Labor speak. There is no ‘relationship’ between the Company and the Workmen. Workmen go off on holiday whenever they want. They do not even care to inform their Company as there is no ‘relationship’.
Earlier even the MD of the Company would come to shop floor and be in continuous touch with the Workmen. There is always an emotional bond between the Employees and the Company. Now it is still there in some companies with permanent workmen. But almost every Company is employing temporary workmen in some form or the other. The Company does not have any relationship with these workmen. Workmen return the favor!
Our observation is that there is no winner in this game. Both sides are suffering. Let us see how.
Companies: Companies do have the option of firing the employees when the demand goes down. But they also cannot get the employees when they need. When there is huge Market demand and pressure from Customers, the Companies are not able to serve the full demand. Companies lose production for every major festival. Our observation is that Companies are losing the opportunity to do about 15-20% higher Top line just because they are not able to mobilize the people when they want. This is applicable to every industry. As the Employees do not have great attachment to the Company, the Quality of their work is not the best. Companies lose on this count too. The Quality losses due to this reason are at least to an extent of 3-5%. As there is high attrition, the Productivity of the Workmen suffers. Employees take a long time to come to 100% output level. Companies are losing about 30-40% output due to this. The nature of employment is one of the biggest reasons for the low Productivity of the Indian Manufacturing! Companies seem to simply ignore this and focus on short term gains!! Are there any gains at all? Companies are losing on Topline, Bottom line. Most of the Companies are in a hurry to show the short-term results and ignoring this elephant in the room!
Employees: Employees can jump from one company to the other at their will. They are able to find jobs. But they also lose them at the drop of a hat! When the Economy is down or when a calamity like the current one happens, the Employees are undergoing unimaginable suffering. The fate of Labor in the current COVID-19 Pandemic is pitiable and it troubles the collective conscience of the Nation. The People who are making the Country move are moving on their feet for 1000s of KMs to reach their homes! Many are losing their lives on the way! Even in the normal times the Employees do not have a longer-term idea of their status. They do not know when they would be stopped by their employer. They do not have an idea of how they will educate their children, nor they have an idea of how they will build a house of their own and so on.
So, who is winning? No one! There is a need for a larger solution that will take care of the interests of everyone involved and help India to improve the Productivity in its’ manufacturing.
Here, we are suggesting a Solution to this Problem.
We are not claiming that the Solution that we are proposing is the Best one. But we are pushing for ‘A Solution’. If the Powers that decide these Policies hear our voice, we will be happy. The current Government is having the Leadership and the mandate that are needed to take some bold steps! As a Country that is trying to step up to be a Developed Country, we need to address this area that is begging for attention. COVID highlighted many problems in the World. The issue of Temporary Labor in India is one of them.
National Employment Grid (NEG)
Today there are laws about Minimum Wages for every type of Industry. These are serving well. Government is updating them in line with inflation. So, we will not talk about how much to be paid. The Minimum Wages can definitely serve as the basis.
A National Employment Grid (NEG) for workmen should be formulated. This should be a Cloud based Grid that will allow every able person to register themselves as ‘willing to work’. To begin with this, Grid may serve the Workmen in every industry. It may cover the employees below a certain level in I.T and ITES industries too.
An Indian Citizen should be able to register himself/herself on this Grid with some documentation to prove their Citizenship. They can denote their preference for the Place of work. They may indicate their experience or Training credentials. There are several Skill Training centers across the Country. The qualifications that these Centers give and the basic Educational Qualifications that they have will be updated on to the Grid. The additional training / experience data will be automatically updated on to the Grid from the Companies / Training institutions. The Grid may use the Aadhar card and the Aadhar number as UID.
The NEG will address the following critical elements:
01. NEG is a must: Every Company wanting to engage Workmen have to go thru only the NEG. No Company can recruit Employees directly.
02. Mobility of Workmen: The Mobility of Workmen across the Companies is not discouraged. It is left to the free will of the Workmen. This will ensure that they are not tied to a Company and they will be able to choose the Company that they will work for in the region of their choice.
03. Wages: The Minimum Wages serve as the minimum Safety net from government. But beyond this, the Wages are determined by Demand and Supply in the respective regions.
04. NEG Core fund: Every Company that wants to use the Labor from the Grid will contribute a certain amount to the Grid for the Welfare of the Employees every year. This fund will be utilized for a few purposes that will be detailed later in this article. The Private Limited and Limited companies that have to spend on CSR will be encouraged to contribute to this Fund. Government may allow this as ‘spent on CSR’. The amount that a Company has to contribute will depend on their Turnover. The Companies that fire the employees most will contribute more. Those Companies that do not fire their employees will be asked to pay only a minimum amount. They will be encouraged to contribute more as it would be eligible as a CSR spend.
05. Unemployment allowance: The Companies can discontinue the employees when they do not have demand. But the Workmen will be paid a certain percentage of their Wages as ‘Unemployment allowance’. The amount of allowance will be directly related to the number of years of experience and Performance.
06. Annual Leave: The employees will be able to choose when they want to take their annual Long leave that may coincide with any festival of their choice. This will ensure that every Employees goes home, and it is not a surprise to the employer. Employer can balance their employees by taking those that have different preferences to ensure many people do not go off on leave at a time.
07. Record of Employees: The Performance record of every employee will be uploaded by the Company on to the Grid every Quarter. The performance may be measured on the basis of few indicators such as:
08. Independent Auditors: Government may appoint Independent Auditors to audit the whole system from time to time.
09. Skill Building: Government will open Skill Development Centers in partnership with Private Players to train the Workmen in various activities required in the Companies in various industries.
10. Continuous Education: Employees will be encouraged to continuously equip themselves with better qualifications. Government will subsidize the education through Skill Development Council. This will ensure that the Employees are upskilled in line with higher automation that will happen in every industry.
11. Housing and Education: The Employees will be provided with subsidized Housing and support for the education of their children wherever they are working. These benefits will be applicable to those Employees who fit certain conditions:
a. Those who have a good Performance Record across companies that they have worked for.
b. Longevity of their Service.
12. Higher wages for a Company that Is not able to retain its’ employees. A Company that is firing its employees frequently or not able to retain its employees as they feel the working conditions are not good will have to pay a higher Wage to attract employees. While partly the demand and supply will take care of Wages, the Government may penalize those companies that do not take care of their employees.
While the NEG will be supported by Government and the Industry, the critical factors of how long the employer will retain the employees, how long will an employee work at a Company will be decided by the larger forces at play. A Company will be able to retain Employees for longer time if they take care of their employees. If they are firing the employees too soon, they will have to pay higher wages, they have to contribute more to the NEG Core fund and they may not be able to attract the employees like they are able to do it now as the workmen will have a support structure to find alternate employment.
Employees will be encouraged to stay with companies and give good performance as that will decide whether the employee will be eligible for the Housing and Education benefits. Also, the next employer will take him/her only if there is good performance.
Funding: How will the NEG get funded? How will this be a feasible option? How can Millions of employees get Housing and Education for their employees? We believe the contributions from the Companies and Government can make it happen. Companies will gain from this system more than they contribute as there will be a stability in the Workmen. While workmen can leave and join another company, he will be encouraged to stay in one Company as he will become eligible for Housing and free education for his children if he puts up good performance in companies. If the Companies pay a competitive Wage, they can retain good employees.
Companies would gain in Top line, Bottom line (Productivity, Quality) by making NEG a success.
A Stability will come about for the Companies as well as the Employees. The Longer-term objectives of both parties will be addressed by a NEG.
We are sure that this suggestion can be improved in many ways. But we should look at solving this problem once and for all.
With the current situation of hiring and firing, no one is winning!
COVID-19 the Global Pandemic has presented a further toughening of the Business conditions for the Businesses across the World. Already the Businesses in most of the countries had been suffering due to slow economies. Now this Crisis is going to really push the Businesses to the brink.
Let us examine the Leadership aspects of such a situation. What type of a Leadership is required in this situation? How do you guide your Business with a Clear Head? Let us examine some aspects of it.
Indians are generally not very Rule abiding citizens. We violate rules in just about every sphere of life. From Traffic to Income Tax. The Current crisis requires People to practice Social Distancing. The Prime Minister had given a call to the Citizens to practice a Janata Curfew on 22nd March’20 from 7 am to 9 pm. So far, the response had been very good. There may be some amount of underlying fear with the Indians about the virus. But Modi’s clear communication also helped in a big way. You can only see probably 5% of the normal crowds on the roads as reported by TV Channels. This is a very good example of good Leadership in Crisis.
Support the Government
All of us have our own Political affiliations. I do not have any particular Political affiliation. I support whoever is doing good work. I do not try to be burdening myself with one Party as against another one. I do not support everything that Modi does and same is the case with any other Parties. I believe we should support the Political Leaders in the Country as they are the people who are leading us. We are electing them. I may or may not have voted for the Party that is in power now. We may not like their ideology. We should protest about that in the right forums. We should try our best to influence them. But when it comes to Nation Leading, we should support the government in Power. This is very much needed to ensure Governments have fair chance of succeeding and doing something for us.
Leadership in Crisis
Right now, the Businesses are in a deep crisis. The Order cancellations / Holds are happening as you read this article. The Businesses are scrambling to tackle the situation. Every Company requires good and Clear Leadership now.
Every Leader will have to address at least two areas:
a) Taking care of your Employees in the current situation.
b) Taking care of your Business and giving the Leadership it requires.
First things first, you need to take care of your Employees immediately.
It is quite possible that you may be confused about where to begin and what decisions to take. Most of the Companies might not have had similar situations. So, there are no precedents.
Right now, all your employees would be filled with a certain fear and uncertainty. You need to address that first.
We need to work out the revised way of working for all the employees. Do not ignore this. Do not behave as if it is work as usual. Do not wait for the employees to start protesting. Be Proactive in this and address the fears.
Some of the following decisions may have to be taken:
- How will the Employees come to work? If they are coming in their own cars / Two wheelers the risk is lesser. But if they are using Public transport, then you need to provide them with alternatives. The number of Buses is cut down in many cities. The Buses that are there may be crowded. If they can work from home, it is a good solution. If they cannot, then you need to bring them from home. Do not hesitate in spending this money. The Employees only are going to help you come out of this crisis. No one else.
- What precautions to take? Take the help of Experts in training your Employees about the precautions to be taken by them and their families. There is overload of information on the net. Everyone is an expert now on the subject of Corona! Take the information from authentic sources.
- Introduce new practices at work. On the basis of what you learn from the Experts introduce new practices and behaviors at work. These practices may involve washing the hands more frequently, using hand sanitizers before after meetings, not shaking hands, having more remote meetings than face to face and so on.
- Do not be ‘Top down’ in these decisions. While you should definitely lead the progress in the area of Employees, it is better for you to involve more employees in deciding what all specific measures to be taken. Let not HR be the only function that will decide everything. We can avoid the ‘Not invented here’ syndrome and avoid negative fallout from employees. It is after all their working conditions that we are defining. Let them participate actively.
Try and reduce the risk of exposure to your Employees to zero. You may not arrive at all the measures in one day. But keep reviewing the progress every day. You have to make the Employees comfortable again. It is very important.
Address your Business
Many Businesses are suffering now. There may be cancellations of orders / Postponements. You need to lead your Company in this area too.
The Sales of March and at least the first quarter of next year will get affected. That is for sure. But you cannot accept a meek surrender to the situation.
If one door closes, surely there will be another Door that can open. Consider some of the following:
- Right now, the Hospitals will require a lot of Products to handle the spike in the activity. There can be big business waiting in terms of the Hospital equipment like X-Ray equipment, BP Apparatus and several other equipment, Support equipment like Air Compressors, Hospital clothing, Bed linen are all required in big numbers. The Hospitals are bound to be overburdened now. So, any products that help them to set up temporary hospitals quickly will be helpful. If you are not in this area, you may not want to get into this equipment now. But if these are related to your Businesses, then you can contribute a lot to the situation by producing more of all these.
- If you do not have anything to do with the Hospitals and their equipment, still you can look for opportunities to expand into. What can be the New Products that you can launch? What are those Products that you wanted to launch but not able to due to pressing commitments? Prioritize them now and bring out a bunch of New Products that will give you additional Sales once the current crisis diminishes.
- If you had been planning to get into New Markets, it is time to do the background work now. If you have to prepare some products for these new markets, this is the time to prepare. You may not be able to get your team to the new markets right now. But all the planning and background work can happen now.
- If you had been struggling to reduce the Costs, now this is the time to make progress on certain Projects with Task forces working on Cost reduction. Create an internal competition with Cost Reduction Brainstorming Sessions. Try to make big progress in the area of Cost. You can aim at re-engineering your Costs during this period of Crisis.
- If you had been planning to implement Skill Based Training, this is the right time for it. Define skills for various functions in your Company and start taking the help of E-Learning to skill up your Employees. E-Learning is the right tool for training Employees in this situation. It will not require employees to group in to one room. Your team should be able to deliver much more by the time Business comes back. Set up the Online Training school for your Staff and Workmen.
- If you had been planning to implement Industry 4.0 to improve efficiency on your shop floor, this is the time to implement Specific projects in Safety, Productivity, Quality Improvement and so on.
It is good to reorient your Goals for the year 20-21. You can prioritize areas business other than top line alone. As earlier said, you cannot meekly accept the going down of the Turnover in the next year. You should find alternative ways of growing. You should infact discover a few more areas of growth and overall emerge as stronger company from this disaster!
When I checked with a HR Head of a Company recently about how they are handling COVID19, his response was that probably there is some amount of overreaction and Social media hype about it. But looking at the rapid spread of the Infections, maybe he changed his mind by now. COVID19 is declared as a Pandemic by WHO and India declared it as ‘Notified Disaster’. I think we need to take it seriously to ensure we stay in control.
Why a response is needed from Corporates?
COVID-19 is currently coming from People who travelled abroad. Corporates contribute to a good proportion of the Foreign travel. Foreign travel either for Business or for pleasure by the Employees of the Corporates. If we include the Children of the Corporate Executives studying abroad, the Corporates contribute to a lot of Foreign travel. Hence, Corporates can play a very important role in controlling the spread.
Indian Companies are perennially in Crisis!
If you look at the Eisenhower Time Matrix, most of the Indian Corporates are perennially spending a lot of time in the Q1. ‘Urgent and Important’. There are too many Crisis and we keep handling the issues right at the brink. Not a good thing. But we keep doing it. Indian Corporates are experts in living at the edge of the Chaos. We don’t quite get into full time Chaos. But we keep going in and out of them just like experts!
My experience with the Indian Corporates is that when a Project is taken up, we ask for a lot of time. We fight for more time for the Project with the Boss. You would think the team would really do a great job by working on it systematically over the period of time taken. But most often I start getting calls from the team two days before the Deadline agreed. They would be asking for clarifications about the Project. They work very hard over those last few days and Complete the Project. It would never be a Perfect job. But it won’t be a bad job either. I am not saying 100% of Companies and 100% of the Executives work this way. Maybe you do it much better in your Company?
Because of this dubious ‘capability’ to work well in a Crisis, I expect the Indian Corporates to do a very good job.
But what is Critical is that they should identify it as a focus area and attend to it. A Clear Leadership is required for this Pandemic / Notified Disaster. Otherwise everyone will be busy with their existing Crisis situations and wait for COVID-19 to become ‘Urgent and Important’ !!
What are the areas for focus in this Disaster?
There can be at least 4 areas that a Corporate should address.
a) Your Employees: First focus area has to be your Employees. If you take care of your Employees, you are maintaining a big group of Healthy Citizens who can do more in this situation. Even if you do not do anything for the Society directly, maintaining your Business and contributing to the National GDP in this situation is a good enough contribution. Many companies are slipping on their growth right now.
b) Your Vendors: Second focus has to be on your Vendor Partners. If you are a Big company having several small vendors, then you can contribute a lot by helping these vendor partners to face the Challenge. It would also help you to keep the Production going without supply disruptions.
c) Your Customers: Then comes your Customers. If you are able to keep your Employee flock together and healthy, have uninterrupted supplies you can take care of your Customers. You would contribute to Economic growth in this challenging time.
d) Your City / Society: Then the City in which you are operating. If each corporate can contribute to taking care of part of the city that you are operating in, it can be a great help to the Government.
There can be more angles to a Corporate’s Circle of influence. But let us start with these.
What can you do?
01. Recognize the Problem: First of all, we need to recognize this as a Serious Problem. We cannot be lost in our ‘Urgent New Product Projects’, ‘Customer Line stoppage issues’ and so on. Please look at handling the COVID-19 as in the same direction as attending to all the Business Emergencies that you have. You are only modifying your approach and attending to an underlying issue for every project in your Company. Special effort is required for Corporates to recognize it as Problem as we are used to responding in the last minute. This is one problem that you would not like to respond in the last minute.
Data says that just a month back there were just 4 cases of the Infection in Italy on 21st Feb’19. On 13th March, there were 15,000 with 1400 deaths! Containment is the critical action that you can take. There is right now no medicine for this Virus.
02. Learn about the Problem: It would help to learn about the Problem from Experts. You may not be generally in touch with these Experts. You may have to contact someone in WHO or AIIMS or any of the Private Corporate Hospitals where the knowledge may reside. Invite an Expert to your Company and let your teams understand the Problem and the precautions that we need to take.
03. Formulate Teams: Formulate teams to address the four groups of Stake holders that you want to address. Depending on the resources that you have, you can prioritize in the Stake holders. Have clear leaders for the teams and Objectives that they have to focus on.
04. What can be the Goals: Single biggest Goal is for everyone to stay healthy. But the Process goals have to be the New Behaviors that you want the Stake holders to Practice. Some of the new Behaviors can be as follows:
a. Spreading the knowledge about the Problem and the seriousness.
b. Not shaking hands. Practice Namaste instead.
c. Working in Shifts to reduce the density of the employees.
d. Using Video conference even for local meetings.
e. Maintaining some distance between you and your colleagues.
f. Avoiding non-essential travel.
There can be many more practices that you may define in your Company. This article is not meant to define a complete list of Best Practices anyway.
05. Create Champions for monitoring: Some of our Colleagues are naturally more disciplined and keen observers. Eg. Audit department colleagues, Quality Department colleagues and so on. Use their services to monitor the practices that you have defined. As these are new practices / behaviors that we are trying out, there are bound to be violations. These Champions have to identify the violations and keep talking to the Teams.
06. Quick Decisions: In a Crisis, there have to be quick decisions. There can be a small team of Senior people who can be authorized to take decisions as needed. The Teams have to be informed about this.
07. Communicate, Communicate and Communicate: Communication is another important aspect that is very critical in this situation. It would be quite okay to over communicate. Let the Problems and solutions be known to everyone in the Company. Maintain transparency. Especially in the light of Bad news. Whatever is construed as Bad news can be screened before relaying. This is to ensure spread of undue panic.
Through your efforts if you can keep your Employees healthy and also create Soldiers who can contribute to the immediate society around you, then you have done a great job!
You would have also trained your Team to handle a real Crisis before it really hits you hard!!
How are you responding to COVID-19? Please share so that Others can learn from you!
Act fast and Prevent the spreading of COVID-19!