Participative Management: The inspiring turnaround of the tea estates at Munnar

   In the ET (19-10-10) I read an interesting article (by P K Krishnakumar) on workers’ participative management in the tea estates. I find it inspiring and worth sharing.

   “As per the report, in 2005, Tata Tea, the owner of Kanan Devan Hill Plantations estate in the picturesque Munnar (Kerala) decided to exit the business completely and handed over the management to its employees. Today, 98% of the 13,000 workers own around 68% of KDHP, while the remaining is owned by Tata Tea and others. Each worker has a minimum of 300 shares of Rs 10 each. In 2009-10, KDHP clocked a net profit of Rs 41 crore (as against Rs 8 crore losses in 2005). The turnaround is not only on account of buoyed tea prices, but is a testament to the change in company’s management structure and operational processes.

    Productivity has increased 58% from 33.3 kg per worker per day (in 2005) to 52.6 kg in 2009-10. The workers are a more prosperous lot, enriched by higher bonuses and dividends, besides capital appreciation of their shares. The employee-run KDHP model is making a show-case for the people intensive plantation business.

    The new management structure has also helped in a marked improvement in the physical and mental health of workers and their families. The infant mortality rate among KDHP workers has fallen, the birth rate has dropped, alcoholism is on the wane, and workers are now eager to come to work without supervisory checks. Unauthorized absence from work has also fallen.  

    Their workers today exhibit ownership in their performance. The workers are paid higher wages, if they perform above their average benchmarks, maintaining the quality of plucking.

    Apart from financial incentives, workers are motivated by that now they have a voice in the management, and being consulted in administration, welfare and other activities. The suggestions made by them for efficiency and cost savings are considered for implementation. This instills a sense of pride in them and they are encouraged to deliver more. They have also representation on the board, the selection being made on the basis of their performance. Decision –making, which was top-down under Tatas has now become bottom-up.”

    The above report outlines the evolvement of society as has been long cherished and dreamt by planners and visionaries. If you have been to Munnar, you may visualize the picture perfect setting in there.

    Skepticism would lead us to think that one sparrow does not make the summer. But the impact of changing aspirations of workers for a better life and redefining of the requisites for motivation are truly reflected in this case. It also confirms the belief in the theory ‘Y’, which advocates that the ‘employees enjoy their mental and physical work duties’. The unions being rendered redundant is a significant pay out of this management approach. But only brave hearts like Tatas would dare to be the first to tread on such untrodden path.

    Only posterity will tell how other industries / enterprises take cue from this model to cure their own ills.  

Strategy: Confidence building

There are products and services, which exude confidence of reliability. This is backed by sustained efforts by the company to be consistent in offering what they are perceived to offer.

   The collapse of Enron, Lehman Brothers, Barings Bank and the tricksters revealed in the functioning of Satyam, IPL and likes, have left us to wonder whether the definition of ‘business’ has been revisited to mean ‘making money and money’ alone. No body believes in business any more. It is not strange to understand this change, which has been witnessed in almost all professions, including the medical – where the doctors are expected to govern themselves by the ‘Hippocratic Oath’ and the noble profession of teaching -where schools are supposed to be temples of learning and not for extortion of money from students. We shall save the reading by omitting the much touted politicians, bureaucrats and self professed god men etc.

    If a business strategy has the spirit of ‘sustainability’, it must work to command the confidence of its customers and public at large. The business must be seen to be coming from a good and responsible corporate citizen. This is a continuous process and should be exhibited both in words and action and perceived the same by all the people, i.e., the employees, the customers and the persons affected by the operations of the company, overtly or covertly.

   If you feel that your company should be reckoned with the trusted brand equity, you can start by

·        Treating people with utmost humane approach

·        Bringing transparency in your dealings

·        Being bold enough to accept responsibility, correct yourself and move on

·        Taking the feedback as an opportunity to improve and not as criticism

·        Learning to give more value for money through R&D, innovations, and ‘Benchmarking’ etc., and

·        Ensuring that the environmental balance is not disturbed.

   You can do it. The time to start is now.