Last week was quite eventful in the “Workshop of the World”. Foxconn, a Chinese manufacturer for companies such as Apple, Dell and HP, gave a 20% ad hoc raise to its workers after as many as ten suicides which called into question the working conditions at its plants. Fox Conn employs 800,000 workers in 20 plants across China.
Then it was Honda’s turn. Workers in Honda’s four factories in China struck work bringing all production in China to a halt. Yesterday Honda gave a 24% raise to workers, who were still not happy.
The strike in of itself was quite surprising. From FT
The right to strike was excised from the Chinese constitution in 1982, and attempts by workers to organise outside the official All China Federation of Trade Unions are frowned on by Beijing.
Amenities at Chinese factories like Foxconn are actually considered to be good. From Guardian
Foxconn is proud of the fact that it provides a swimming pool and other facilities to its staff, as well as organising chess, calligraphy, mountain climbing and fishing.
At both companies pay is not great but is above the legal minimum wage. Many workers make much more by working overtime.
How is this, in any way connected with the Indian IT employees’ angst? They are both about employees having nowhere to go with their problems.
Even though their demands and managements’ responses have been focused on pay increases, Chinese employees taking on their managements, is not really about salaries. How can it be when most employees come from the hinterland where wages are poor, that is, when there are jobs available? It is because the workers feel powerless. They are lost in these huge organizations. Foxconn has 800,000 employees. Honda also employs a similar number across its four plants. The “official” trade union is not elected and is really part of the establishment – a proxy for management. The workers have nowhere to go with their problems.
Cut to the Indian IT Services industry. Most of the successful companies of today are very centralized in how they operate. Historically, this was necessary. To scale up they had to build an organization which ran efficient, repeatable processes. For that it was necessary to have strong central control. But the very thing that helped them scale engineering and business processes, made the middle management powerless and weakened the bonds between the company and employee. It failed at the most important aspect of scaling a company – in building a loyal, motivated workforce.
When a company is small, the founders or the members of the top management know everybody themselves or with one degree of separation. They infuse the whole company with their values. Employees form a relationship with the company based upon these shared values.
But as the company grows, one degree of separation becomes two, three, four and more. Pretty soon what top management gets to hear is what they hear from their direct reports. What they have to say is said to a select few or to the media. How do you continue to build trust with your employees? You can’t do it yourself. So you must have your middle managers become interlocutors for you.
The problem is that middle managers are so disenfranchised that they feel powerless. They are the ones who run the delivery teams, who make the company tick. But they don’t have the leeway to solve their own day-to-day problems. When they take their problems to their superiors they discover that they too are powerless. So they just keep punching the clock. If somebody in their team comes to them with a problem, they just say, “I can’t help it, that’s the way it is”. When the rank and file IT worker starts griping about the company, some of these managers stay silent. Others join the griping. Nobody defends the company. They can’t. They don’t believe in it themselves. That’s where the battle is being lost.
In the case of Chinese workers, establishing a union that is truly representative might actually be the solution. Empowering middle management is less effective. In manufacturing there is a “class divide” between managers and workers, often based upon education and qualifications. Very few workers will ever be promoted into management. So the “us vs them” feeling almost guarantees strife, especially if as in the case of Honda, the Japanese managers earn much, much higher salaries.
But in an IT Services company every engineer has the qualifications to become the CEO of the company. It should therefore be easier to bridge the divide. Also, regardless of the quantity of outpouring on the internet, it still does not represent widespread disaffection.
Winning back middle management is the first step in turning things around with employee relations. Stuffing their mouths with money just pushes out the day of reckoning.