The incentive settlement for cell members in Plant-1 of Swaraj division was due after six years. In January 2007, it was found that the incentive policy was based on the components of individual performance versus business performance. The union was keen to continue with the abovementioned traditional approach; however, the management was uncomfortable with it. Negotiations started with the union on this issue but they stopped, leading to a dip in performance in Plant-1.
In order to compensate for this and to ensure that sales were not impacted, the production in Plant-2 was increased. After a year, the union members started asking for alternative schemes. The management wanted to align the cell members with the performance management system, and they proposed several permutations and combinations. They offered to protect the existing levels of income and to payout the incentive as performance pay through the balanced scorecard concept. After several meetings and awareness sessions with opinion makers and union leaders, it became clear that this was an opportunity for blue collar employees to become a part of management.
The series of negotiations led to the introduction of an innovative performance-based and customer-focussed culture for the cell members.