Post Graduate Programme in Management

Post Graduate Program in

CBN: Submission 3

DECODING

THE STRIKE AT
BAJAJS CHAKAN
PLANT
A NEGOTIATORS FRAMEWORK
An Analysis
From the Lens of the Article Titled
Six Habits of Merely Effective
Negotiators
Name
Anantha Ranganathan
Deepshikha Alice Aind
Makwana Rina Rameshchandra
Sameer Pedambhkar
Shubham Jhawar

Roll no.
2014PGP035
2014PGP100
2014PGP191
2011IPM065
2011IPM103

Analysis
The strike at Bajaj Autos Chakan plant may be largely attributed to high stakes and intense
pressure involved in a sequence of events that unfolded beginning with the managements refusal to
allow the Pantnagar plant to join the VKKS union at Chakan, Maharashtra, which ultimately
culminated in costly mistakes. These mistakes not only left money on the table from huge
production losses to the company, but also led to unpleasant deadlocks, damaged relationships and
recurring conflict. Much of this trouble could have been avoided, if the negotiators on both ends of
the table, viz., the management and the union, had exercised caution and steered clear of shoddy
negotiation practices, which may broadly be classified into six frequently committed errors:
MISTAKE 1: NEGLECTING THE OTHER SIDES PROBLEM
The first mistake arose from the fact that both the management and the union failed to address each
others problems as a means to solving their own. Rather than attempting to build a golden bridge
spanning the gulf between each others problems, both sides dismissed the others concerns as their
problem.
Management:
By observing hostile work practices such as strict regimentation on the factory floor and engaging in
union-busting tactics, management effectively threw the first stone. Preventing Pantnagar workers
from joining the Chakan union signaled a lack of support to workers. Although managements
argument may have been valid on legal grounds, it failed to empathize with the concerns of its
Pantnagar workers and their difficulty in obtaining a union registration in Uttarakhand. It would
have been ideal for management to attempt to understand and support its Pantnagar workers by
entering peaceful talks, and only resorting to legal recourse as a final course of action.
Management could have, moreover, garnered goodwill from the union by facilitating union
registration, possibly with the help of its political clout.
Union:
Rather than attempting to peacefully negotiate the matter, the union took bait and reciprocated the
lack of concern for the other side in equal measure by starting an agitation that only resulted in
suspensions and other forms of disciplinary action. Termination of the long-term agreement, goslow tactics and a refusal to understand managements productivity concerns only resulted in
diminished company performance which ultimately affected the workers too. By fixating on the
demand for shares, the union refused to acknowledge that issuing shares were more a matter of
company policy that did not allow even for management to own shares.
MISTAKE 2: LETTING PRICE BULLDOZE OTHER INTERESTS
Management:
It is worthwhile to note that management deserved some credit with regard to avoiding the
temptation to allow price to dictate terms. This is evident in their policies that attempted to create
value for their workers by benchmarking wages with the best players in the industry. The
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contentions of the management regarding issue of shares, moreover, revolved around the policy of
share issuing itself, and not the price.
Union:
The union, on the other hand, fixated not only on the issuing of shares, but even the price. By
refusing to understand the managements position or explain their rationale behind the demand, the
union failed to give due importance to the process of negotiation and focused on getting its demands
met at the risk of damaging the relationship, violating the social contract and therefore
undermining the spirit of the deal.
MISTAKE 3: LETTING POSITIONS DRIVE OUT INTERESTS
The Bajaj Auto case clearly illustrates how easily value can be left uncreated as both parties fixate
on positions and walk away refusing to budge. Instead of exploring the reasons and rationale behind
each others demands, both management and union stubbornly held their positions with a lack of
regard for the other side. This battle of positions and failure to reconcile management interests with
that of the worker union only led to the loss of some untapped opportunities.
Union:
The union steadfastly demanded an allotment of 500 shares each to a worker at a price of INR 1/- per
share, although the market price was INR 1900/-. Instead of attempting to understand managements
apprehensions, they issued demands, vilified management and resorted to agitation, strikes and
conflict to make their demands heard.
Management:
The management, on the other hand, adopted an adamant and suppressive approach. There was
little or no discussion, and the management appeared to prefer resorting to legal measures to address
any union problems, as exemplified by the unfair labor practice complaint lodged against the union.
Moreover, when the union demanded a scientific time study based on ILO norms, management
refused to accept the same, instead of entertaining a valid appeal to examine production processes.
MISTAKE 4: SEARCHING TOO HARD FOR COMMON GROUND
Although scope for searching for common ground appears to have been limited, and opportunities to
recognize value in differences abounded, both sides left money on the table by failing to identify
opportunities to complement and reinforce each others requirements.
MISTAKE 5: NEGLECTING BATNAS
Union:
The Union clearly underestimated managements BATNA. It failed to recognize that the
management was in a better position to cope with an extended period of strike. The union also did
not take into account that the management had more bargaining power because it could easily shift
its production from Chakan to one of the companys other facilities, which could result in a huge
loss of jobs for the Chakan workers. This miscalculation coupled with the slow realization from the
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union that it did not have enough support from employees culminated in the union succumbing to
pressure and calling off the strike after 50 days. The consequences were that workers were
unnecessarily suspended or laid off during this period, the wage losses and opportunity costs were
high, as also were production losses to the company which would, again, indirectly affect the
workers.
MISTAKE 6: FAILING TO CORRECT FOR SKEWED VISION
The Union:
The union appears to have held the management in distrust, and failed to acknowledge management
policies which were clearly in favor of the workers. Policies such as the earn while you learn
scheme and benchmarking wages with that of larger car companies should ideally have signaled to
the workers that management had their best interests at heart.
However, this message seems to have been lost on the union amid their partisan perceptions which
exaggerated their views of the other sides position. When workers at the Pantnagar plant were
denied association with the union at Chakan, the workers at Chakan polarized themselves in favor of
their Pantnagar counterparts and began to perceive management as the enemy. These biases
ultimately led to self-fulfilling prophecies that caused management to adopt an equally biased,
colored view and act in its own self-interests in turn.
CONCLUDING REMARKS: SOLVING THE RIGHT NEGOTIATION PROBLEM
The strike at Bajaj Auto is a telling example of negotiation gone wrong. The problem lay in each
party vilifying the other, thereby resulting in partisan attitudes that focused on exacerbating the
problem, issuing ultimatums, levelling allegations and accusations, rather than negotiating a
mutually beneficial settlement.
The situation may have been better addressed by adopting an approach that attempted to understand
and shape the other sides perceived decisions, and consequently expanding the pie to achieve a
positive-sum outcome.
An alternative would have been to recognize a middle ground by tying worker performance to
shareholder value, by revising policies to facilitate allotment of shares and incentivizing workers to
perform better, which would have been beneficial both to management as well as the worker union.
Better production numbers could possibly even have led to increased wages and improved working
conditions.

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