The union leader promised the workers that he would ensure that they were given a 20% salary increase during the Annual Wage Agreement later that month. “If the management does not agree, we will go on strike,” he declared. The workers cheered!
3 days later, he sent the company’s Chairman a letter demanding 20% salary increase for all employees as part of the Annual Wage Agreement.
2 hours after receiving the letter, the Chairman telephoned the union leader and invited him for a meeting the next afternoon to discuss the Annual Wage Agreement. “I’ll certainly attend the meeting, but there’s nothing to discuss. We will not accept anything less than 20%,” the union leader said.
The next afternoon, the Chairman asked the union leader, “You said you’ll not accept anything less than 20%, but can I offer 35%?” The union leader was too stunned to reply!
The Chairman continued, “Our workers can get 35% higher salary, but only if they help the company generate the additional money to pay them that 35%. I’m offering 10% salary increase, 10% Attendance Incentive, 10% Productivity Incentive, plus a 5% Turnover Incentive. Of course, they will continue to get 8.33% Bonus, Leave Encashment and other existing benefits. Please discuss my offer with the workers and let me know the response. All details are here in this file.” The union leader took the file and left the Chairman’s office.
Two days later, the union leader told the workers that this was the first time in the last 22 years that any management had offered more than the union had demanded. He explained the details of the Chairman’s offer and explained why he was convinced that it was a genuine offer with no hidden surprises. The workers agreed that the union should accept the Chairman’s offer.
The Annual Wage Agreement was signed by the Chairman and the union leader two days later.
The company’s turnover increased by 50% the next year without any increase in the number of workers, all due to near-zero absenteeism and a substantial increase in efficiency and productivity. As agreed, the workers also earned 35% higher salary than the previous year.
Proactive Indian 