7/23/2019 Case - Crises at Marcopolo Tyres

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Crises at Marcopolo Tyres

Marcopolo Tyres is a tyre manufacturing firm based in Madhya Pradesh. The company has four

plants in different locations with its head office in Bhopal. For the last three years, the company has

been running losses. Under the influence of two vary strong worker unions in the state, the factoryworkers have made it difficult for the firm to carry on with business. There were seventy three

strikes in the last three years, almost two strikes per month. This was at a time when the economicstatus or environment of the country was not very good, and the country was going through a period

of high inflation. Politically too, the country was not very stable.

Managing director, Mr. waminathan was very worried and called a meeting of the firm!s board of

directors. "n the board meeting, waminathan shared his concern and asked the members for theiroptions. #alf the members were of the opinion that business at the firm should close down and the

other half was of opinion that such a step should not be undertaken without giving the firm one

more chance to succeed. $fter a couple of hours of discussion, the hoard finally decided to give thefirm one last chance. $ccordingly, undram "yer, a recently retired "$ officer, was offered the %ob

of &'( at Marcopolo. undram "yer very gladly accepted the offer and %oined with a lot of

enthusiasm and ideas to bring about change in the organi)ation.

undram hailed from Tamilnadu and his unbringing had been in a feudal family, where autocracywas the norm. $t the age of *+, undram went to a boarding school -oon chool where he

acuired knowledge in the areas of science and humanities. -uring his years in school, hedeveloped an interest in understanding the relationship between science and technology. This

understanding brought about a change in his mindset being open to reason rather than be guided

by traditions. $fter completing his graduation from the -elhi University, he wrote the civil servicee/amination, and was selected from the Bihar cadre. -uring his twenty year tenure as an "$

officer, undram had handled many assignments in different parts of Bihar. The e/posure helpedhim understand the comple/ities involved in interpersonal relationships, since he had to interact

with people from diverse backgrounds and with varied e/periences.

(n %oining Marcopolo, undram, to his dismay, saw the company!s balance sheet, low motivation of

employees, and the unrest among workers. "ndiscipline and casual culture prevailed in theorgani)ation. (f the employee, 0+ per cent were in their late forties and had been with the

organi)ation for 1234+ years, the other 4+ per cent were in their late twenties or early thirties, hired

from top management institutes. The Machinery in use at the firm was very old, production wasvery low in relation to the manpower, and the few people who were close to the directors were

dominating most matters. The rumour was that they were informers of the management. undramhas his task cut out for him with all these problems.

$s a bureaucrat, undram!s first move was to discipline the workforce. 5orms were prescribed forcompleting work in time. -isciplinary action was taken on non3compliance. #e set targets for

managers and closely monitored their progress. #e threw out the chairs kept in the &'(!s roommeant for workers and officers who came to negotiate with him, and refused to see anyone without

an appointment.

#e also decided to cut down costs and made a list of employees who had no performed well in the

last one year, and also calculated the money the company spent on them. #e formulated new leavepolicies and also developed the criteria on which employee performance would be %udged. #e took

all these decisions without consulting anybody, and implemented new policies and insisted on

compliance of decisions. #e also discovered through reliable sources that 6M Production, Mr.harma, was not performed well and that he was prone to attending personal meetings and taking

personal calls during work hours. #e called Mr. harma and asked him to resign from his post since

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he was found not conforming to the norms set in place, despite several reminders.

undram!s decisions disturbed both older and younger employees eually. The older employees

resisted compliance with the new demands of the &'( and argued that they has more e/perience in

the manufacturing of tyres and the workings of the organi)ation than him. They younger employeeshad a problem with his leadership style and felt ignored as he did not consult them even though they

where part of the management. The older employees were also very disturbed by his decisionregarding Mr. harma, but the younger employees were happy, as they saw a ray of hope, but they

did harbour a grudge against the &'( for not involving them while taking that decision. The two

unions that had so influenced the factor yworkers came with new demands for more wages andinsisted that undram revert his decisions.

undram felt that if he was accessible to the people, he could deliver better results in less time. #e

installed a direct phone line using which anybody from any department could contact him. This

telephone number was displayed at various locations throughout the organi)ation to makeemployees aware that the &'( was accessible to them. #e got many phone calls from the

employees and workers. This gave him an overview of the organi)ation right from his office.

(ne day, one such phone call brought to his notice a delay in the release of payment to a raw

material supplier. $s a policy, payment to the suppliers had to be released within seven workingdays. Ten months had elapsed since then, and the money had not been released. undram enuired

into the matter and came to know that the 7-& or lower3division clerk had already passed the fileon time but it had been retained by the accountant. #e also learnt that the accountant took bribes to

release payments on time. undram had the accountant suspended with immediate effect. (n

hearing how Mr. harma and the accountant fared, the older managers got scared and startedcomplying with the norms that were laid out, making sure that they met deadlines and started taking

their responsibility seriously.

undram!s ne/t move was to deal with the young managers. #e studied their background and needs.

#e found that they were intelligent people, but were dissatisfied with the environment in theorgani)ation, and many of them were contemplating th idea of leaving Marcopolo and %oining some

other organi)ation. #e called a meeting of the young managers and discussed his plans with them.#e was pleasantly surprised when some very good ideas were brought to the table by the

youngsters. #e drew a plant to implement the new ideas. $t this time, he felt the need to include

some of the older e/perienced supervisors and managers as part of their plan and use them asambassadors to prepare the people of the organi)ation for the change that were about to take place.

#e visited the factory colony and found that the houses in the colony were in a bad condition8 the

colony had broken street lights, no good education facility was available to the employees! children,there was no creche facility for working mothers either. undram met the older supervisors andmanagers and offered to make their living conditions better, and promised that all other necessary

facilities would be provided within one year, if they supported him in increasing the production.

"nitially, the older employees were skeptical and suspected this as another trick by the management

to e/ploit them. To show them how serious he was, undram did something he had not done so farin his tenure8 he shared with them some confidential information including the balance sheet. #e

also declared that every month, together they would review the balance sheet and whatever surpluswas left after meeting production costs, salaries, and other e/penses. 2+ per cent would be spent on

workers! welfare. #e appointed one of the senior managers as in3charge of the workers! welfare

account. #e also offered to give them company shares at the end of the year.

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undram shared his plans with the board of directors and asked permission to invest in new

technology. The board was horrified and reluctant to spend any money, since the company wasalready into deep losses. #e put his best efforts to convince them and even told them that he would

resign e/actly a year later if his plans did not take fruit. Mr. waminathan, the Managing -irector,

decided to give him permission on the condition that he signed a bond of 9s.2+ lakh, which hewould have to pay the company if he failed. undram signed the bond and started on his mission.

(n learning about the bond, the employees regarded undram with great respect. o great was the

acceptance he gained that a militant union leader who tried to call for a strike three time failed, as

workers willingly put their best efforts to increase productivity by 2+ per cent in a single year.-uring this period, undram sent high3performing managers for training, and formed teams to make

and e/ecute plans and everyone in the organi)ation worked hard to achieve their targets. undramhad achieved high productivity. The company was able to go beyond the estimated productivity

level.

'/actly after one year, a beaming undram presented his balance sheet to the board of directors,

along with his teams.

Questions:

:*. $nalyse the case and highlight the key issues involved.:1. (utline undram!s leadership traits and his personality in view of his professional

background.:4. -isucss the changes in Marcopolo Tyres!s culture after the new team initiatives were taken.

:;. $nalyse the personality aspects in older and young members of Marcopolo Tyres, especially

after the changes undram brought in.:2. -iscuss what other alternative decisions could have generated positive changes of

Marcopolo.:<. "dentify the various factors that would have been responsible for employee behaviour at

Marcopolo.