Bharat Petroleum: Long-Term Wage Settlement
(7 pages of text)
In May 2012, the director of human resources at Bharat Petroleum Corporation Limited was involved in negotiating a long-term collective agreement between management and the unions at the large public-sector oil corporation in India. The negotiations had begun in 2009 and were stalled largely because of wage issues. Due to time-bound promotions and open-ended pay ranges, workers’ salaries had spiralled out of control. When economic conditions changed from an administered price mechanism with government subsidies to one in which the corporation was expected to compete with national and multinational private-sector companies, the issue of high operating costs had to be addressed. After 13 rounds of discussions, there was still no agreement. The management team needed to decide which of the issues originally identified were essential for resolution and which were only desirable. The team also had to decide how to approach the negotiation in order to secure agreement from the unions.
The case is suited for a course on compensation management or collective bargaining. It also involves managing labour in a public-sector organization within the context of Indian labour laws and is useful for a course on public-sector management, industrial relations, or international human resources management. After completion of this case, students will be able to
- analyze a salary database and provide options to the unions for salary revision, while keeping in mind business realities;
- understand the complexity and dynamics emerging from a union–management negotiation during a long-term settlement;
- understand the dynamics of negotiating with multiple parties at one time; and
- understand the complexities of managing labour in the Indian context.
India, Large, 2012
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