I am doing a quick rewind here…., going back to some conversations around the KPL Bangalore Factory restructuring, eventually leading to its closure.
After the Management Committee (MC) of KPL made the decision on the closure of Bangalore factory and potential sale of land, Kulkarni summoned Swami to this office to discuss the strategy for closure. Kulkarni had no understanding of the Indian Labor Laws nor did he understand the psyche of blue collared workmen, as he had no past experience of having worked in India before. As Swami reconciled to the decision, he laid out the boundary conditions for executing a quick closure. The conditions were:
1. The management teams at Bangalore Factory, around 30 supervisors were the key to execution of the closure strategy. They needed to be provided a job guarantee at Gurgaon or a handsome severance package if they choose not to transfer.
a. Kulkarni agreed to the job guarantee and a severance on a case to case basis.
2. The 350 unionized workmen would not bite the VRS unless it was sweetened suitably to make it look attractive.
a. Swami made a recommendation to facilitate quick closure. Kulkarni did some quick calculations to check cost and they mutually agreed to a figure Rs. X per person.
Armed with the assurances from Kulkarni, Swami and his HR team got to work, landed into Bangalore to execute their strategy. Every element of the strategy was extremely well planned and execution machinery was put in place. Swami was a seasoned HR professional with deep expertise in restructuring and labor relations.
Swami addressed the Supervisors in a closed door meeting and disclosed the management decision on closure. There was a bust of emotion and anxiety. He leveraged his personal relationships and those of his other HR & business colleagues to influence / assure Supervisors of a job guarantee and larger company need to drive factory closure. After some inspirational talk by Swami, the supervisor team fully rallied behind him & the HR team.
Swami very courageously summoned all the 350 workmen on the shop floor and made an emotive speech announcing the management decision to close the Bangalore factory with immediate effect. A wave of emotion swept the shop floor and a few workmen broke down inconsolably. A few supervisors rushed to those workmen to provide them support. Swami spoke in the local dialect, welcoming questions, addressing concerns and announced that a VRS will be pasted on the notice board in the next 2 hours for workmen to consider. He firmly stated that closure was imminent to save KPL’s business in India and was non-negotiable.
After Swami left the scene the HR team and Bangalore factory supervisors spoke with groups of workmen to help them understand the rationale behind the management decision. As Swami returned to his office, he got a message delivered to him as follows:
Kulkarni has been required to fly out to London on some personal exigency. He has asked me to communicate to you that the VRS is Rs. Y per person. He has wished you & your team all the very best in execution of this plan. He would contact you towards evening to know if the goal has been achieved.
Swami looked at the message, looked at Rs. Y per person and sank in his chair. It was exactly half of Rs. X, that Kulkarni had agreed upon with Swami. Swami wondered why would Kulkarni leave for London, while KPL had no office there, his family was very much in India and why did he not mention about it even at 10 pm last night when they spoke? Questions…, questions…, raced in his mind. He called Niket, the Director – Legal of KPL to ask him what was going on? Niket calmly replied, Kulkarni is the CEO, an NRI and could face legal risk of arrest etc., if the closure went wrong. Hence I advised him to leave the country till the job was fully done. Swami was aghast…. What!! So what about us, my team …, we are all at risk too? Niket replied, “all the best Swami” and signed off the call.
There was no time for Swami to evaluate what Kulkarni or Niket were up to? He had a situation on hand, the fire was lit…, the factory was burning with people’s emotions running wild, the workmen were agitated, the supervisors were supportive but worrying about their livelihood / future, Swami’s HR team was working as there was no tomorrow….., there was no moment to reflect. Swami had to rise to the occasion. He made up his mind.
Swami called his HR team and told them that the VRS was Rs. Y. The team retorted, “Swami this will not sell, it is too little.” Swami asked them to try their best and leave the rest to him. The team was working hard to convince the workmen,…, the 2 hour time line was coming to a close.
Half-an-hour before the deadline Swami calls the CFO in Singapore and tells him, “Anupam, I am unable to reach Kulkarni. Not sure where he is? I just want to tell you that the VRS is about to fail. The workmen have refused to take Rs. Y. They have threatened to block the closure and burn the factory down. What do you want me to do?”
Anupam was the CFO for KPL, APAC region. He panicked with this message and asked Swami many questions. Swami stayed calm and said, “Anupam I am just letting you know. In next 15 min if I do not see the workmen take the VRS of Rs. Y, I will ask all the 30 Supervisors and the HR team to vacate the factory and abandon the factory. My priority would be to avoid any violence and save the lives of the HR team and the supervisors. I will also inform the local police to take charge of the factory premises.”
Anupam promised to call Swami back in 10 min and requested him to hold fort till then. Swami left the office and walked to the shop floor to assess the mood. The workmen were very agitated. They were offended with the offer of Rs. Y and were shouting slogans against the management. They felt cheated and pushed towards the wall. Swami’s HR team and supervisors were looking up to him for direction. He asked them to continue to persuade the people and informed a couple of Sr. folks that he is trying to get the figure raised. These words from Swami helped hold the HR team’s wilting spirit a bit longer.
While Swami was on the shop floor, Anupam was trying desperately to reach him. Swami deliberately choose not to pick the phone. He let Anupam try a few times. He could sense the desperation after the 6th missed call, as it never stopped ringing.
Swami picked up the 7th call.
Anupam: Is everything ok Swami?
Swami: Cannot get any worse. Anyway, what do you want me to do? I have just 5 minutes left. I have given a heads up to the team to be ready for my call to evacuate in the next 5 minutes.
Anupam: No no.., we should not do that?
Swami: I cannot risk lives Anupam. Why don’t you come here, the workmen will kill the management team. They are on the verge of turning violent and I cannot hold any longer.
Anupam: Oh.., ok, what amount do you think they will bite? I know you asked for Rs. X.
Swami: Yes, I had asked for Rs. X then. Now things have turned worse and beyond our control.
Anupam: Swami, I have convinced Kulkarni that we should give Rs. X. Can you make this work now?
Swami: I do not think so. We have missed our opportunity. We may need Rs. 1.2X now. I will try my best to keep it between Rs. X to 1.2X. But I cannot guarantee anything. The HR team and supervisors have lost trust in the management, so I am not sure if they will believe me anymore.
Anupam: No..no Swami. You should make this happen, we are relying on you. You know how important this is. I am approving Rs. 1.2X, please go ahead and close the factory. I will manage Kulkarni.
Swami: Please send an email and copy Kulkarni too. I will hold-off any further action till I see a written mail from you or Kulkarni.
Anupam: Hang on… here it is…, I am just sending…,, there.. it’s gone. Please try to close the factory peacefully with no violence.
Swami received the mail from Anupam confirming the amount as Rs. 1.2 X (much more than the initial Rs. Y intimated by Kulkarni or the Rs. X he had initially agreed upon). He put up a VRS notice with amount Rs. X on the notice board. Since the workmen’s expectations were set at Rs. Y, when they saw Rs. X, which was twice the amount, everyone leapt in excitement. The HR team and supervisors were able to convince everyone to sign the dotted line.
All the 350 workmen took the VRS and left the same evening with cheques in their hands. They took a group photography with Swami , the Supervisors and the HR team as a parting gesture. Many workmen cried and touched Swami’s feet (a gesture in India of respect) thanking him for getting them a good severance package from KPL.
KPL closed its factory, separated 350 workmen in a record 8 hours voluntarily, probably the one of its kind in the Industry. Kulkarni and a host of leaders of KPL from US called Swami to congratulate him on the impossible task he achieved for KPL.
However, a few questions still remained unanswered in Swami’s mind as he reflected on what happened that night after the closure:
1. Was Kulkarni an ethical leader? Did he run away or was this a strategy to save the CEO – what kind of leadership was this?
2. Were Swami’s values different from those of Kulkarni, which led him to question Kulkarni’s actions each time?
3. Was Kulkarni unethical as an individual leader or was KPL also an unethical company?
4. Going back on his committed package to workmen - was this a mere negotiation tactic that Kulkarni deployed on Swami to pressurize him to get a cheap deal with the workmen?
5. Was Swami himself unethical, in pressurizing the management at the final moment and made them succumb to his demands?
What do you think?
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