ECD Vs. ECD

Synopsis: Communication For Productivity Letters written to some 7500 Workers / Managers / Union Leaders, following a period of strike / Go slow / Murders (1979 - 1987), at Mumbai factory of Larsen & Toubro Ltd. This direct / open / honest communication led to a remarkable atmosphere of trust between Workers and Management, which, in turn, increased productivity at 3% per year (ave).

13 July 1986

To:

Dear Friends

ECD Vs. ECD

If this title sounds like India vs.  England that means you have been watching TV.

But test-cricket is being played in far away England and is normally entertaining.

Whereas,

ECD Vs.  ECD is going  to be played  right on our  home-ground (that is,  Powai) and  it is  going  to be a  grim battle  for survival.

Now if you are curious what is this all about, let me explain.

You have already heard about the first ecd - which stands for Employee Convertible Debenture.

Last year. Government of India announced a  Scheme under which a Company may offer  such debentures to  its employees.  Under this Scheme,  an employee may  deposit every year,  either Rs. 500 or Rs. 1000 or Rs. 2000.   At the end of the 5th year, the total amount  is converted into  company's shares  (at a fixed price decided by  the Govt.).   The employee cannot  sell such shares to anyone for the next 2 years.

The  whole idea  is  to make  an  employee  feel that  if  the company prospers, his investment also grows.  So it  is in his self-interest to see that the company prospers.

But how can an employee help the company to prosper ?

I will come to that a little later, but first let me complete the story of the first ECD.

On  27th March  of this  year,  L&T, our  company, became  the first  Indian company  to request  the existing  share-holders for permission to allot 500,000 shares to the employees .'

I  am  not  surprised that  the  share-holders  approved  this proposal without  any discussion.   It only shows  their great faith  in L&T's Corporate  Management.   They firmly  believe that   whatever   proposal   Corporate   Management  wish   to implement, will definitely make the company grow and prosper.

But what  did surprise me  - somewhat - is  the fact that  our Management thought of this proposal  in the first place  - and having thought, they decided to implement it.  On the  face of it, there was no need.

Issue  of ECD  (Employee Convertible  Debenture =  Shares) was neither a collective bargaining  issue nor a requirement under any law !

But then  there was no need  to be surprised.   After 27 years in L&T, I should know better ! In whatever they decide - and do -  L&T Management  has  always kept  in mind  the long-term interest of its employees !

And that brings us to the second ECD.

And this ECD stands for Economy (Co- operation) Drive !

And so  that there is  no doubt in  anyone's mind,  let me say this at the very outset,

"This decision  to launch an  Economy (Co-operation) Drive  is also in the long-term interest of the employees".

And if  in the process,  some short-term  benefits have  to be sacrificed - then these have to be sacrificed !

This ECD  was launched  by our Chairman  on 5th  June when  he told a group of General Managers,

"  For some  years  now,  our  costs have  been  rising,  the    competition growing,  our  margins are  shrinking and  our    profitability  (ratio   of  Profit-before-tax   to  Sales)    continuously  declining.  We  must  reverse these  trends.    We must fight, like hell to

-      cut costs

-      improve capacity utilisation

-      increase employee-productivity

-      eliminate waste

-      increase market-share

-      work harder/work smarter,    etc.   ".

On 2nd  July, at  Powai, Chairman conveyed  this message  to a larger group of managers and their commitment was sought.

On 5th July, Chairman spoke  to managers at Madras and on 10th July to our managers at Delhi.

More meetings  are planned,  both in  Bombay and at  other L&T locations, during the next few weeks.

Managers,   everywhere,  are   being  asked   to  give   their suggestions for cutting costs and improving productivity.

But clearly  that is not enough  !  When it comes  to managing productivity-improvement, every employee is a manager !

And that  is why  "Co-operation"  is the  middle-name of  this second ECD - Economy (Co-operation) Drive !

So it is. ECD vs. ECD.

As I said  earlier, it is going to be  a tough fight  - and it must be  fought in  every place where  an L&T employee  works. And it must  be fought with grim determination.  We  must make it a "no-nonsense" fight.

For the  last 6 years,  I have been  sending these  letters to you -  pointing  out the  dangers on  the  horizon.  Now,  the danger is  at our door-step!.'  It is time  to dig in our  feet and fight back.

We must fight,

-      Lethargy

-      Absenteeism

-      Lack of discipline

-      Complacency

-      Unproductive (or obstructive) employee-practices

-      Wasteful work-practices, etc.

But we cannot fight these things,  if we keep fighting amongst ourselves.

It is high  time we forget our  differences - if we  have any. It is  high time  we  forget our  narrow, selfish,  individual interests and, in whatever we say and do, first ask,

"What is in the best interest of L&T ?".

More  than  40 years  ago,  Netaji Subhas  Bose  had  told  his soldiers,

"Give me your blood and I shall give you freedom"

Today our Chairman seem to be saying

"Give the company your ECD and the company will give you ECD".

I am sure we will not be found lacking !

H.C. PAREKH