March 15, 2011: Shekhar Arora
The executive director, Human Resources, Ashok Leyland, on his company’s strategy to create a sustainable talent pool. An interview by Brian de Souza.
Let me start by asking you what your priorities are as ED, HR?
Let me give you the larger picture. At Ashok Leyland (ALL), we are on an aggressive and well-thought-through growth plan. We are doubling capacity, upgrading technology and very serious about going international. We want to compete with international players on their own turf.Growth is more than just capacity; it is about entering into new business. Therefore, we are entering into LCVs in alliance with Nissan and into construction equipment with John Deere. We have acquired companies in Europe and the US and these will be part of an integrated strategy. Our plans for the coming five years have been thought through. We want to be a serious player in the global market. In our execution, synergy and integration are the watchwords.
So what does that mean for the HR function?
It is easy to add numbers but what is paramount is culture. As we get into different businesses, we are going to deal with customer-centricity like never before. There are many organisations where customer loyalty does not exist with a particular company. I firmly believe that customer-centricity drives culture. In such a scenario, every individual, not just HR, has his or her bit to do. We have managed recessions, we have ramped up after the recession. As we go for customer-centricity, we need a process whereby we go to the market and capture the customer’s voice before others do so, work on it, conceive products and devise a business plan. We cannot get an entire company to transform immediately. Our agenda will only be actualised over four to five years. So at ALL, we have created organisations within an organisation. We work on a matrix form of an organisation which is cross-functional. So we hear the customer voice, ascertain the specs and determine how it will be delivered. We then identify the required competencies which bring in the best from finance, marketing, project planning and product development and what is set up is a business unit. This organisation is then tasked with achieving cost, quality, volume, design and other related targets, and deliver a product. Alongside, we work on the transformation of the company.
How is this worked on the ground?
Take two events – the migration to Bharat Stage III and the U-Truck – which we did through the matrix organisation. We did this through GENMOD, a new process of product development. About 150 people worked here and five programmes were done including the U-Truck, new engine development, global bus and emissions to mention a few. Each is a fulltime organisation in itself. There is a project manager at the top, along with core people from other functions who are pooled in as well as people who aren’t part of the core but supported it from their location/function in the company.There is also a strict review that involves the top brass of the company and the project customer. Customer-centricity demands this. We have to deliver a product to a customer’s specific needs, and with speed. Once this is done and accepted by the market, the organisation is disbanded and the people go back to their respective functions till they are required again. We have done this over the last two years and have decided that over time, we will have a fluid and well-networked organisation.
As you do this you have to face attrition. How do you handle that?
Attrition has always been an issue as companies scale up and more players come in. The job market has become very buoyant. Foreign companies are willing to poach people at irrational salaries. Not only auto but other companies such as leasing, insurance – where there is a need for engineers – are affected. So we have had to look to hiring people from different backgrounds. Our strategic plan is in place and so we are aware of the road ahead and the road blocks too.Our attrition rate at 8.5 percent is the lowest in the industry and may close at 10 percent or so. However, what we have done is to put in place an internal leadership pipeline, looked at future requirements, which employees have them, their potential and performance. We have mapped out critical roles in the company. We have looked at people who may have the competencies but not the commitment to the job/goals. We have also looked at competencies that may be required down the line as well. We then identified a critical talent pool and we asked ourselves how do we retain this so that our strategic plan is not affected.
So what did you find?
We found that there are young employees who develop aspirations and look for a change every two years. We relied on our matured exit interview process conducted over three to five years and found that all good talent that leaves says ALL is a good company and that we are leaving with a heavy heart. When asked why, the reason that came up was that you have taken care of my ratings and increments but when asked what happens to me in the coming four to five years, I get subjective answers. I do not get the answer that I want, they said. In sum, they wanted defined, visible and committed career plans. So that translates into a higher order of challenges, promotions and designations. They want labels to put to that growth.But can one commit promotions in advance? That’s not technically possible. But we did just that and have lowered promotion cycles in our 60-year young organisation to about three years from what they usually were at five to six years.And for the internal leadership, we introduced the Development-linked Career Plan. Those executives taken under this plan are called Quad I executives, Quad 2 who are top-ranking on potential and criticality. To them I said I am ready to commit career growth to you but as we go ahead we are looking at new products such as hybrids, electronics and telematics and that will require extensive training, overseas trips, more courses and we are spending money on you. If you leave us in between, that will affect us in our preparedness cycle. So I made a commitment to take care of their aspirations and we worked out an arrangement in which they commit to give us five years to the company and they signed an agreement with us. Of course, we determined that these people were proud to be with us and were passionate about their jobs.
How do you determine a person’s passion?
Following an external assessment, a survey with Gallup and an in-house questionnaire, I found that those who are confident, high on performance and who believe in themselves and are not insecure are the ones who signed the statement of perception.We told them that even if you do not sign the DLCP growth scheme, it will be available. If you do well, we will recognise you. In these five years, we will, in a focused way, develop you to a level of competence and will add to your development on futuristic and managerial skills. Coupled with this, I shared with them the total succession status of the organisation wherein 15 percent of senior management are due for superannuation over five years and that those slots would be available to them. If one knows Leyland, this 15 percent cannot be hired laterally. They have to be homegrown. Combined with our credibility that we have over the last so many years, that helped us get 153 people to commit five years of their career to us. We will invest Rs 10-15 lakh on them and their plans have been charted out based on our requirements and individual requirements. Of 153, two left and I believe they wish to return. We hope to expand this to 300 to meet our needs for the absolutely critical roles.
Shifting track, 'Improve' has moved overseas?
Improve is a celebration of achievements. We celebrate the integration of cross-functional teams within the company. In every Improve, we attempt to hear the voice of the employee and go off-site so that day-to-day business does not intrude. Improve is used to listen to an employee’s aspirations and indeed, to make promises. We then decided to broad-base Improve and our managing director R Seshasayee promised three years ago that if we could increase participation to 10,000 people, we would host Improve overseas. That happened and we conducted the last Improve in Malaysia.
Has Ashok Leyland entered into tie-ups with technical institutes to hire skilled labour and are such tie-ups effective?
We currently have an experiment underway at the Pantnagar facility that, going forward, could well be emulated by other companies. This scheme called Blessings was chosen for the Pantnagar plant because it is a new unit. Its overall genesis lay in the fact that we wanted to create a class-less set-up in the company.We identified some 'pain' areas, one of which was labour laws which protects even low-performance and indisciplined workers. Now as a part of Blessings, we have a workforce at Pantnagar who are not our employees. They are students of an institute called NTTF, a Bangalore-based Indo-Swiss collaboration that set up a campus at Pantnagar. They enroll the students and follow a curriculum that includes theory and hands-on work developed in conjunction with ALL. The laboratory of delivering the curriculum is Pantnagar. No labour laws applyAfter four years of work, these students will get a diploma from NTTF in manufacturing management. Typically, they work for five days and attend classes on the sixth. Moreover, an external agency we identified to work on 10 cultural pillars and felt that a self-directed team would be the best vehicle to achieve this.In two to three years, we hope they can be a supervisor-less team and they will decide productivity, targets, identify grievances and solutions and are an organisation to themselves.
This sounds like worker gangs, doesn’t it?
Well, our legal advisor thought I was crazy and said the government would definitely shoot it down. But I had several meetings with government officials and tried to convince them. Take it as a form of CSR if you will and allow this arrangement as we need these skills. There's huge industrial growth in Pantnagar with companies like Tata, TVS, Nestle and others setting base. But what about development of people? We are basically skilling the unskilled and in two years, we should hopefully, have a plug-and-play talent situation. Well, the CM’s advisor was impressed and emailed our MD lauding the scheme. The scheme is now called Ashirwad. We have signed an MoU with the government. We have no labour exploitation here. We follow labour laws at a higher level of quality. We are talking about ESI, safety, PF, job security and welfare, all of which has been incorporated so we made sure no laws are being bypassed or that we are exploiting cheap labour.We spend at least Rs 12,000 on these students and this is not to save money but to establish a culture that can benefit the auto sector at large.
Will you replicate it in other company facilities?
We hope to replicate it in Hosur where we will hopefully implement a variant of what we have done at Pantnagar. We hope the government will support it and we will try and convince them about this scheme.On other collaborations, we also have an in-house university with BITS Pilani campus for seven years now, an arrangement for marketing management programmes with XLRI and in Coimbatore, we have an arrangement with PSG where we take BSc students and convert them into engineers through an 18-month course that we sponsor. They are part of the management team. Therefore, as an organisation today, we do not feel insecure that we will have a paucity of talent, skills and talent.
Lastly, in today’s world of social media, how does a company listen to the voice of the employee?
We must do whatever it takes to know what even the lowest employee feels. We have something like Facebook, I imagine, called Soapbox and all our employees and even those on the shopfloor who can access a computer can log on. They are free to make suggestions, complaints or observations and this can even go right down to commenting on canteen food. About 50 percent of issues raised on Soapbox concern HR and rightly so – we get brickbats, which we welcome, and bouquets as well.Each of us in HR has to respond in 48 hours or indicate a timeline in which a response will be given. There were reservations about this initially but that I believe that has been overcome. So sitting here on the seventh floor in Chennai, I am linked to all our locations worldwide. Soapbox enables me to feel the pulse of the company.
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