Bata India's HR Problems

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The management team implemented a massive revamping exercise in which more than 250 managers and their juniors were asked to quit. Bata decided to stop further recruitment. The management offered its staff performance based salary. In 1996, for the first time in Bata's 62-year-old history, the company signed a long-term bipartite agreement. This agreement was signed without any disruption of work. Recalls Majumdar: "We showed the management that we could be as productive as any other union in the country." In the six-year period 1993-99, Bata had considerably brought down the staff strength of its Batanagar factory and Calcutta offices to 6,700.

In fiscal 1996, Bata was back in the black with the company reporting net profits of Rs. 41.5 mn on revenues of Rs. 5.90 bn (Rs. 5.32 bn in 1995). In fiscal 1997, Bata further consolidated the gains with the company reporting net profits of Rs 166.9 mn on revenues of Rs. 6.70 bn. A senior HR manager at the company admitted that with an upswing in Bata's fortunes, even its traditionally intransigent workers were motivated to do better. In 1997, Bata workers achieved 93% of their production targets. The management rewarded the workers with a 17% bonus, up from the 15% given in 1996.

By the end of 1997, Bata still faced problems of a high-cost structure and surplus labour. Infact, the turnaround had made the unions more aggressive and demanding. Weston had failed to strike a deal with the All India Bata Shop Managers Union (AIBSMU) since the third quarter of 1997. The shop managers were insisting that Bata honor the 1990 agreement, which stipulated that the management would fill up 248 vacancies in its retail outlets. It also opposed the move to sack all the cashiers in outlets with annual sales of less than Rs 5 mn, which meant elimination of 690 jobs.

In 1999, the Bata management in a bid to further cut costs announced the phasing out of several welfare measures at its Batanagar Unit. Among the proposals were near total withdrawal of management subsidies, canteen facilities, township maintenance, electricity and health care schemes for the employees’ families. Other measures were aimed at increasing productivity, reorganizing some departments and extending working days for some essential services. On January 14, 1999, the BMU submitted their charter of demands to the management. The demands mainly revolved around economic issues. In the list of non-economic issues was the demand for reinstatement of the four dismissed employees.¹ The Union had also demanded the introduction of a scheme for workers participation in management. On the economic front, the Union had demanded a wage hike of around Rs. 90 per week, additional allowances as provident fund over the statutory limit by the management, increase in 'plan bonus' and introduction of attendance bonus for migrant workers.

In July 1999, BMU was finally able to strike a deal. It signed a three-year wage agreement that included a lumpsum payment of arrears of Rs. 4,000 per employee. The management agreed to include 10% of the 400 contract laborers at Batanagar in its staff.

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