Tata Motors to save INR 400 crores a year by restructuring workforce

Reduced levels of management, scrapped cabins and other cost cutting factors are being resorted to by Tata Motors.

Growing competition in both private and commercial vehicle sectors, stiff competition from both Indian and foreign rivals and adverse market conditions has pushed Tata Motors to take some serious steps in restructuring the company.

It all started last year with the appointment of Guenter Butschek, Chief Executive of Tata Group, who was given the task of turning around the company. Butschek has not only spruced up the company’s passenger vehicle lineup but has also brought in several cost cutting factors and management revamps. If estimates are right, this could save the company as much as INR 300-400 crores per annum.

To help in this restructuring, Tata Motors has appointed Accenture to devise a new organizational structure while Aon Hewitt is signed up for compensation bench-marking. Development Dimensions International is in-charge of management audit apart from other companies who have been signed in to introduce and assess various systems.

Taking the total white collar work forces into account, 1,200-1,300 employees are being reassigned and shifted to other units or asked to leave. The company has also done away with 2,500 positions, reduced levels of management from 14 to 5 and scrapped various designations. Cabins for middle level managers are also done away with and only top two tiers of managers are entitled to cabins in the workplace.

Performance linked pay to plant workers has been introduced which has already seen results with a 25-30% increase in productivity. The company has also revamped the performance management system and a new system called ‘Loop’ will now measure executive performance at the end of the year with each responsibility clearly outlined.

This restructuring will make the hierarchy in the workforce much simpler, thereby resulting in efficient work environment.