Reference no: EM132681556

Case - Overcoming Absenteeism at Unique Schweppes Ltd

Unique Schweppes Ltd was multinational Public limited Company with its head office at London. The company's 51 % shares were held by Unique and 49% by Government financial Institutions and individual shareholders. Unique owns three factories and three partly manufacturing units i.e. they had 6 primary manufacturing units located at Jammu, Nagpur, Agra, Pune, Gorakhapur and Hyderabad. The total manpower in these six units was 1900, and was held by Mathew Thomas as managing director. Five directors looking after various financial areas like technical, operations, commercial, HR and marketing, supported him.

Agra unit was situated near Mathura with a manpower capacity of 450 employees, including 41 executives, 12 managers and remaining operators. A representative union was also registered in the name of Association of Chemical Workers in the company. This unit was working in 3 shifts and for all the seven days. The average age of the employees was around 30 years. Agra unit was the only automated plant among the plants of Unique India. It had a unique feature of cross-functional activities at the managerial level with the result a strong networking was observed. Emphasis on financial relations among the employees was given to promote simplified working and better understanding among them. Unique was known for its welfare facilities like - free canteen, free transportation, free uniform, medical re-imbursement up to 5% of the gross salary and all other benefits according to the statutory norms. They also provide with housing loan facilities to employees through HDFC and State Bank of India. Unique re-imbrued the interest amount on house loan exceeding 4%. The loan entitlement is dependent upon the income of workers. Inspite of all the facilities provided to the workers absenteeism was very high thus creating problems in the production. In July 1995, HR executive, Alok Gupta received a complaint from line supervisor, Prakash Sharma that production was suffering due to absenteeism in his department.

Alok Gupta was perplexed. The reason being that with 52 weekly off, 9 casual leaves and 22 earned leaves provided to the workers in line with Factory Act 1948 under Section 52, the absenteeism rate was still 18 %. In January 1996, a meeting was called by Alok Gupta and in consultation with Prakash Sharma, it was decided that warning should be given to cronic cases and the workers who had started remaining absent should be counseled. Inspite of doing this no change was observed until April 1996. Alok Gupta reported to Priya Kumar, Human resources manager about increasing complaints related to absenteeism. Priya Kumar, Alok Gupta and Prakash Sharma in a brain storming session concluded that punishment was not the solution. An Incentive scheme was felt to be the solution to the existing problem. Thus, the management offered the employees the scheme of doubling the amount of annual interest free loans from Rs 5000 to Rs 10 000 to those who were regular at their work. A plan chalked out for this:

(a) Employee who had worked for more than 280 days out of 365 days would get Rs 10,000 interest free loan. Employees who were present for more than 230 working days, amount of free loan would be Rs 5000. For less than 230 there would be no loan facilities.

(b) In a period of 4 months, if an employee availed no leave then he would be entitled for additional payment of Rs 500. If a half-day leave, it would be Rs 350 and for one day leave it would be Rs 250. Similarly, some workers who had not shown any improvement in their attendance, it was decided that charge- sheet would be issued.

However, when the charge sheet was issued to such cases the union members resisted.

A meeting called by Priya Kumar in which he briefed about the problem of absenteeism and justified the action taken by the management. Ultimately union members were convinced but insisted on counselling and introducing new incentive schemes instead of disciplinary actions alone. During counselling sessions management found some of the reasons which led to absenteeism were high salary, festival celebration, dual employment, very good family background, age factor and defective recruitment policies as fresher were taken from ITI and where less serious about their work and less motivated towards accomplishment of the organizational goals.

It was observed in the beginning of 1999, that the rate of absenteeism had decreased from 18% to 16 %. But it was not satisfactory and hence management decided to put in more efforts in the form of new incentives schemes which were best on social recognition like; tea party, attendance awards, recognition by senior executives at work place and celebrating family day on 17 September i.e., on Vishwakarma Jayanti. By the end of 1999, they had introduced all monetary as well as social benefits schemes yet three employees among the nine employees who had been issued the charge sheet in September, 1998 had not shown any improvement and remained absent for more than 200 days out of 280 working days. Therefore, the management finally decided to terminate them, and termination letters were issued to them. In the year 2000, a remarkable decline was found in the rate of absenteeism. It had reduced from 16% to 12%.

QUESTIONS -

1. In your opinion, which alternative steps would be more effective for reducing absenteeism?

2. What is the role of non-financial incentives over the financial incentives?

3. How do you evaluate the impact of termination on absenteeism?