TVS group has never faced a labour problem

It is a 100-year old group with a unique achievement - it has never faced a serious labour problem. The first company of
the group, TVS & Sons, set up in 1911, has a strike-free record. So do most of the other 30-odd companies, including
Sundaram Finance (started in 1954), Wheels India (1962), Sundram Fasteners (1966) and Sundaram Brake Linings
(1975). Only four companies have faced one strike each - Sundaram Clayton, Lucas TVS and Brakes India were briefly hit
by a strike in 1977, while TVS Motor Co. shut down for a few days in1992. But all these strikes were triggered by external
factors, such as the efforts of rival political parties - most TVS unions are affiliated to the Indian National Trade Union
Congress, or INTUC, the trade union wing of the Congress party - to take control of them.

Industrial relations at TVS are indeed extraordinary. Soon after Independence, for instance, the then undivided
Communist Party called a nationwide strike, shutting down production for three days. But employees at the TVS workshop
in Madurai chose to lock themselves inside the premises - as travelling back and forth might have invited reprisals - and
continued to work.
Nearly 60 years later, during the global financial crisis of 2008, the management at TVS & Sons sought to temporarily
reduce workers' wages, but left it to them to decide how much they would forgo. Far from protesting, employees agreed;
while the management had expected a five per cent reduction proposal, the employees sprang a surprise by suggesting a
15 per cent cut. "The company has always stood by us. We saw this as an opportunity to help it tide over a temporary
crisis," says S Ramasamy, manager, IT Systems, TVS & Sons. When the downturn ended, the pay cut was restored.6.

Rules of engagement
This unique relationship with its employees has played a significant part in transforming the TVS Group from a small
family business running a rural transport service in the temple town of Madurai in southern Tamil Nadu into a $4-billion
(Rs 18,000-crore) conglomerate with a wide range of business interests - from auto components, scooters and auto-
rickshaws, to financial services and logistics. The group, with 25,000 employees, has operations spread across India, the
United States, Europe, Indonesia and China.

The relationship has been fostered by the management's conviction that its employees are not just workers, but members
of its extended family. "I make it a point to directly interact with workers across all our factories at least three times a year.
A frank interaction helps build enormous trust," says Suresh Krishna, Chairman and Managing Director at Sundram
Fasteners. Venu Srinivasan, chief of TVS Motor - one of India's largest two-wheeler makers - too says he has been
following the same practice for two decades. The interaction is followed up with concrete action in redressing workers'
grievances and looking after their needs.5

The group has also always been ahead of the pack in providing workers' benefits. It started a provident fund scheme in
the early 1940s, before it became mandatory for private companies, after the Provident Fund Act was passed in 1952. 14

Similarly, it began paying gratuity to its employees from the mid-1960s though this became statutory only from 1975. It
has always striven to give as much bonus as possible - much more than the legal minimum requirement of 8.33 per cent.
"We have paid maximum bonus for many years, even when we did not have enough profits," says Krishna.

Other employee welfare efforts include a health food section started recently at the Sundram Fasteners factory canteen -
providing only health food at subsidised prices. Indeed, all the TVS Group companies ensure their employees consume
healthy food at the workplace: the choice of cooking oil, the quality of the rice used and the quantity of spices used at
office canteens are all monitored closely.7

Long-term relationship
The TVS Group's relationship with an employee does not end once he retires. "I worry about the employees even after
they leave. They are still part of the family," says Srinivasan. Members of the top management meet employees when
they retire; HR departments of the group companies help them plan their post-retirement finances, If an employee dies
while in service, his dependents get not only his dues, but also the proceeds of a 'death fund' created for him, to which
every employee of the company concerned contributes a day's salary and the management matches the contribution."We
keep asking employees if they are happy at work," says R. Dinesh, Joint Managing Director, TVS & Sons.14

Are they? "The management is very pro-active on our behalf," says S. Chinnasamy, a quality control inspector at
Sundram Fasteners who was a union leader for over 20 years. "Medical costs, including that of employees' family
members, however high, are borne by the company. It also offers scholarships for our children. We cannot be in safer
hands."

Not surprisingly, the unions too are ready to cooperate with the management. In the early 1990s, for instance, Sundaram
Clayton wanted to make major alterations in its production process which would have required a single worker to handle
several machines. Unions then were committed to the principle that a worker should only specialise in handling one kind
of machine. "But our union agreed to the new work process when the need for the change was explained. It did so without
asking for any additional benefit for the workers," recalls Srinivasan.13,1

Again, while most labour unions invariably protest if the management takes punitive action against unproductive or errant
employees, TVS unions identify such employees on their own, and seek to correct them. If they fail, they themselves bring
the worker's conduct to the notice of the management. 3

There are other intangible reasons as well for their happiness. "Errors of judgement are condoned while dishonesty is
dealt with severely here," says T.T. Srinivasaraghavan, head of Sundaram Finance - a financial services company with
over 500 branches and an asset base of Rs 12,000 crore. 3

Employees here enjoy rights rarely provided elsewhere: at Sundaram Finance, for instance, all executives who have
worked for four years or more have the authority to sanction loans. The TVS Group also avoids lateral recruitment at
senior levels, thus offering ample opportunities for career advancement within the companies.

"The last time I recruited a senior person was 15 years ago," Srinivasraghavan adds. Himself a professional recruit, the
Sundaram Finance head joined the company 28 years ago from the banking sector. Keeping its labour force happy has
benefited TVS in many ways. The first four Indian companies to win the Deming Prize, a prestigious international award
for total quality management, were all from the TVS Group - Sundaram Clayton, Sundaram Brake Linings, Brakes India,
and TVS Motor.12

With cooperative employees, TVS companies have had no problems introducing modern manufacturing practices such as
total quality management, total productive maintenance and lean manufacturing, enabling them to compete better.
Sundram Fasteners was a consistent winner of the best global supplier of the year award from General Motors for years
till a change in classification excluded it from qualifying.5

Attrition levels at the group are low as well. Wheels India, for instance, has an attrition level of 10 per cent against the auto
component industry's average of well over 15 per cent. Sundaram Finance's attrition is about eight per cent; the financial
services sector's levels are almost twice that. Sridhar Ganesh, Director, HR, Murugappa Group, another family run
conglomerate based in Chennai, acknowledges that the TVS group fosters mutual respect, dignity and transparency, "the
core values for building a lasting relationship". "Very few companies have achieved this," he adds. 11

Future uncertain
Will the bonhomie last? Nurturing a familial relationship is getting increasingly difficult as the group grows in size and
geographical spread. TVS's paternalism worked in Tamil Nadu but will it be accepted in other parts of the country or
outside? "It cannot be replicated elsewhere. We have to find other ways," says Srivats Ram, Managing Director of Wheels
India.
"The employees of today are different. Their loyalty is not very deep and they resent a paternalistic approach. They expect
the workplace to be innovative, attractive and progressive, or else they leave," says Arathi Krishna, Joint Managing
Director, Sundram Fasteners and daughter of Suresh Krishna. However, her own experience belies the fears of TVS
managers. She has partially succeeded in her efforts to inculcate TVS values at the company's manufacturing facility in
China's Zhejiang province. After initially grappling with large-scale attrition - private sector Chinese workers are notorious
for switching jobs for a few dollars more - the company has been able to win over employees, and most of them have
stayed on for more than five years now.12
"Looks like there is some universality in what the TVS Group practices," says Arathi.
TVSs Harmony mantra:
Treat employees like family
Put employees' interests ahead of the company's
Constantly communicate with employees to build trust
Always honour assurances given to employees
Involve employees while taking major decisions
Empower employees at work
Condone errors of judgement but punish dishonesty
Extend relationships with employees beyond work
Do not pressure employees to engage in unethical acts
Adopt an open-door policy