Read the case carefully and answer the questions.QUESTION :1. Was it ethical for the management to have different rates of pay hike at two units? 2. Would the pay hike of 8 per cent satisfy the workers? Discuss. 3. How far do you think that an organization can encash on the strategy of feeding lower figures of pay hike in the grapevine and then giving slightly higher figures in reality? 4. Do you think that the workers in the design unit were not contributing to the revenues generated by the organization? Cases of Indian Organizations469CASE 13: VARIABLE PAY HIKEoupAkshay Motors Private Limited was established in 1982 by Akshay Mishra to manufacturepassenger cars at Mandideep. Two years later, a small subunit for prototype designing andtesting was set up at a distance of 4.5 kms from the main plant. Both the plants had separateunions. In the small plant there were just 55-60 people who had better interactions amongthemselves. On the other hand, main plant had a strong union of 300 employees. In the smallplant, a variable environment existed due to flexibility in work, whereas in the mother plantsuch flexibility did not exist due to highly structured jobs. Whenever there would be anynegotiation with the workers of the company it was first negotiated at the small plant andwhatever the outcome, had to be agreed upon by the main plant union. The managementwould make the main plant workers agree on the pretext that there had to be uniformity inboth the units of the plant.In 1998, the workers in the small plant demanded a hike of 15 per cent of the basicsalary, to which the management did not agree. They wanted to give a hike of 5 per centonly since the plant could not generate much revenue out of its activities. And moreover,the activities of this plant were not quantifiable as the outcome of designs could be assessedonly after 3-4 years. Many roundsnor the union representatives could arrive at a solution. As a result, the members lost faithin the union and nobody was ready to take over union responsibilities. In due course of timethe demand of the workers fizzled out.negotiations took place but neither the managementMeanwhile, the union at the main plant took up the issue of hike in pay with themanagement. They were demanding a hike of 20 per cent of the basic salary. After fewrounds of negotiations, the management agreed to give rise on the basis of variable incomescheme, which meant, the hike would be proportionate to the individual's output. To this,the union did not agree in the first few rounds of negotiation. But later, keeping in mindthe fate of the workers at the smaller unit, the union agreed. Once the settlement at the mainplant was implemented, the unrest among the workers in the small plant started. In theabsence of any union, every worker approached Raman Kumar, the HR Manager. Anticipatingproblems from the workers at the small plant, he gave them an assurance that he wouldcommunicate it to the top management. The expectations of the workers started rising. Asuggestion from the workers came that all of them should give an undertaking that theywould abide by the decision of the top management and would not involve themselves inthe unionized activities. There was a strong belief among the workers that managementwould give them the hike similar to that of main plant since there had always been parityin the two units in the past whenever such occasions had come. Even after a long wait oftwo years, nothing substantial emerged despite occasional assurance from Raman Kumar.In October 10, 1999 the new executive director, Hritik Ranade, tookover. The day he joined,the workers showed their resentment by not eating food in the canteen. Ranade immediatelywalked into the canteen, to sort out the matter and assured them of an early settlement. Hethought that demands of the workers were genuine, but at the same time their output couldnot be quantified as compared to the workers of the main unit. After a period of three monthsthe workers came to know through grapevine that management was planning to give a payhike of Rs. 150 irrespective of the basic salary.One fine morning, the workers were communicated that there would be a 8 per cent raisefor everybody irrespective of the level. Since then, there had been no negotiations for thesalary and it was fixed by the top management.470Human Resource ManagementQuestions1. Was it ethical for the management to have different rates of pay hike at two units?2. Would the pay hike of 8 per cent satisfy the workers? Discuss.3. How far do you think that an organization can encash on the strategy of feedinglower figures of pay hike in the grapevine and then giving slightly higher figures inreality?4. Do you think that the workers in the design unit were not contributing to the revenuesgenerated by the organization?Source: This case was developed by S. Dhar, S. Johri, R. Mishra, M. Jain and U. Dhar andreproduced from Cases in Management, PIMR Monograph Series, 2001, with permission.

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