[Nissan1180]

Cost Cutting through a reduction in headcount- yep- experienced this already in the industry that I'm working (Paper) in as well. It helps the company become leaner, bring in automation and enables the management to outsource the non-core jobs.

I have a question which I've always thought about

What is the percentage of revenue spent on employment of manpower in the automobile/ancillary manufacturing sector? In process industries, the industry standard is around 4-6 %.

[dhanushs]

Tata doesn't lack the technology to build good cars. Its just that, with the current work force, the 'on paper' technology, by the time it rolls out of the factory is.. well... what can I say?

IMO, in a way, its good that existing employees make way to the "change". If its intended in a good way.

[RSR]

Originally Posted by Saanil

How does this VRS work? What if too many employees leave? Is VRS only offered to employees which the company wants to remove? What if those employees do not accept it?

I guess private companies (& PSUs) can always tailor the conditions of the scheme so as to make the VRS eligible primarily for employees of certain ranks or those working in certain departments where staff re-sizing is required.

Private companies can set their own conditions for their VRS schemes, as long as it adheres to certain basic rules stipulated by the government. PSUs can also do the same, but they must obtain prior permission from the government before rolling out VRS for their employees.

In India, the Industrial Disputes Act,1947 puts restrictions on employers in the matter of reducing excess staff by retrenchment, by closures of establishment and the retrenchment process involved lot of legalities and complex procedures. Also, any plans of retrenchment and reduction of staff and workforce are subjected to strong opposition by trade unions. Hence, VRS was introduced as an alternative legal solution to solve this problem. It allowed employers including those in the government undertakings, to offer voluntary retirement schemes to off-load the surplus manpower and no pressure is put on any employee to exit. The voluntary retirement schemes were also not subjected to not vehement opposition by the unions, because the very nature of its being voluntary and not using any compulsion. It was introduced in both the public and private sectors. Public sector undertakings, however, have to obtain prior approval of the government before offering and implementing the VRS.

A business firm may opt for a voluntary retirement scheme under the following circumstances:-

http://business.gov.in/manage_business/vrs.php

You may be able to find answers to all your queries in the above link.

[condor]

Originally Posted by Saanil

I have a stupid question - How does this VRS work? What if too many employees leave? Is VRS only offered to employees which the company wants to remove? What if those employees do not accept it?

VRS schemes are normally structured to target the senior-most (age-wise) employees. It can be structured for specific categories of employees - in this case, the shop floor. Hence, if the senior most workers on the shop floor take the scheme, they will move out and the same work can be assigned to younger workers who would be drawing lesser salary. You will also then have a younger & generally more agile workforce who can be trained / re-trained as required.

The structure will have a cut-off for 'x' years of service completed, the younger workers wont be able to take up the scheme. In the event that too many (senior) people leave, the company can actually recruit younger workforce from the market.

One downside - the loyalty that would be seen in senior folks would be often missing in the new generation of workers.

[MunnabhaiMBBS]

As a result of an undisclosed vertical's inability to meet expectations, Mahindra 2 Wheeler has given the voluntary retirement scheme to 250 workers from this vertical. A formal announcement will be made in the next couple of months.

Director Pawan Goenka said that they were unlikely to exit the 2 wheeler business despite the blow of 12.7% in 2015-16. He also confirmed the participation of Pininfarina, an Italian design firm it acquired the last year in the development of new vehicle.

Earlier, it decided to reduce the workforce from 1,100 to 400.

Source : http://auto.economictimes.indiatimes...rkers/53081157

[basubhatta]

Tata Motors, India’s largest automobile maker, has started rolling out a voluntary retirement scheme (VRS) for its management employees as part of its organisational restructuring exercise. This management restructuring at Tata Motors comes at a time when the company has been constantly losing market share in the passenger vehicle segment while also seeing competitive pressure in commercial vehicles, where it has enjoyed a lion’s share for decades.

The new structure will be in place from April 1. So far, approximately 500 executives have been offered VRS, which roughly includes one year’s salary, among other benefits, sources said. The company, however, did not confirm the details of the VRS package or how many were offered VRS. “To facilitate this, a number of roles distributed currently across the company are being relocated in the Global Development Centre (Pune). We expect significant benefits in cost, service quality and process efficiencies,” the company said.

According to reports, from a 15-16-level hierarchy, the organisation is moving to a flat five-level hierarchy. Earlier, Tata Motors had three levels in the supervisory grade, five in the managerial grade and around six or seven in the executive grade. Now, there will be five grades, L1 to L5, with L1 being the highest. Above these levels, there will be executive directors, presidents and the managing director. The exercise has been completed only for the L1 and L2 levels. (source)

[chncar]

Very much overdue, it has to be said. The main issue with Tata motors was entrenched middle management and some senior management who refused to adapt and improve.

[Lalvaz]

Originally Posted by chncar

Very much overdue, it has to be said. The main issue with Tata motors was entrenched middle management and some senior management who refused to adapt and improve.

Middle management really? I could have sworn the issue was with the top management. Ultimately they're the ones who take the credit for the achievements and they should take the blame for the mistakes. Of course that never happens.

Think about it, would a middle management guy take a strategic decision on the model lineup?

[chncar]

Originally Posted by Lalvaz

Middle management really? I could have sworn the issue was with the top management. Ultimately they're the ones who take the credit for the achievements and they should take the blame for the mistakes. Of course that never happens.

Think about it, would a middle management guy take a strategic decision on the model lineup?

The problems are not limited to the model lineup, even basic QC, vendor management and customer support were major issues and middle management are directly involved in those activities. Basically the issues at TM point to incompetent hangers-on at multiple levels.

[Dry Ice]

The top man should lead by an example, but doesn't seem to apply to TML. Boss man comes back like a boomerang after retirement and expects subordinates to throw in the towel. Interesting.

Why call it voluntary if it's a 'forced' decision from the company?

[Amey Kulkarni]

Is it really VRS or CRS (Compulsory Retirement)?

TML decisions have been very slow and the basic reason is that the rule setter is enforced to follow the rules set himself as well. So this has been very conveniently procrastinated till now.

There was a similar "De-layering project in Tata Steel" run back in 1999.

Link - http://www.neilsonjournals.com/JOBE/sTataSteel.pdf

Cheers,
Amey

[GTO]

The dark side of VRS - man jumps from the 15th floor! Sad. Depression is a disease that needs proper treatment. My heart goes out to his family.

Full Mumbai Mirror Article

A 43-year-old man, Prashant Sibal jumped to death from the 15th floor refuge area of his residence, Kalpataru Habitat in Parel on Friday morning. According to police, Sibal had lost his job as a General Manager in the Sales department at Tata Motors in April and had been depressed ever since.

A spokesperson from Tata Motors said, “We are deeply saddened by the passing away of Mr Prashant Sibal, a former employee of Tata Motors. He had opted for VRS from services of the company in April 2017. Our thoughts and prayers are with his family and we will provide all the necessary support. We are fully cooperating with the concerned authorities investigating this matter.”

[Sawyer]

In India, the reality is that every VRS is a CRS. The package offered cannot ever be adequate to motivate anyone, except those with a very short time left to retirement, to subscribe to it purely on financial merits. But if we want all the benefits of liberalised economies, this is the other side of the coin; we can't have both things.

This is a past top leadership created problem, but the present leadership is left to solve it. In the past, since salaries were a low percentage of the total cost structure, overstaffing was rampant everywhere. The real problem with overstaffing is loss of agility in making and executing decisions; again, a loss that mattered less in pre liberalisation. But today, an elephant like Tata has to dance to survive and it cannot do so without losing weight. Not so much for cost reasons, but for the needed agility.

[dailydriver]

Trouble seems to be brewing fast at Tata's truck manufacturing plant in Jamshedpur. 6,000 of the total 10,000 employees have gone on strike, at first citing discrepancies in pay and later demanding regularisation of temporary staff, reports TOI.

The strike which began on September 6, is said to have resulted in production being halved from usual 80 trucks per day. Hope the matter sees an early and conciliatory resolution.

[Latheesh]

Only 300 employees, not 1500, opted for VRS at Tata Motors

http://www.moneycontrol.com/news/bus...24539.html/amp