Restructuring: Tata Motors Rolls out VRS, Moves to a Flat Five-Level Hierarchy

So far, less than 500 executives have been offered VRS, which roughly includes one year's salary

Tata Motors, India’s largest automobile maker, has started rolling out a voluntary retirement scheme (VRS) for its employees as part of its organisational restructuring exercise.

This is part of a human resources (HR) restructuring drive that is expected to transform the organisation into a much leaner company with a flat hierarchical structure. The new structure will be in place from April 1. 

So far, less than 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.

A company spokesperson said: “Tata Motors confirms that as part of the ongoing organisation effectiveness project, where we have already finalised the top two levels of our management structure, a proposal on VRS package has been presented and approved by the board. Since the exercise for selecting L3-L5 is still underway, it is premature for us to comment on any other specifics at this point in time.”

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. 

“As part of the restructuring, we have also identified roles, which are best located in a central, common service structure, providing service across the company through optimised and efficient processes. To facilitate this, the number of roles distributed currently across the company is being relocated in the Global Development Centre in Pune. We expect significant benefits in cost, service quality and process efficiencies,” the spokesperson said.

Tata Motors is aiming to become a lean and agile organisation by empowering its business units with clear accountability, strengthening functional leadership and oversight, ensuring faster and effective decision-making, and improving customer focus, the company had said earlier. 

Senior employees were made to undergo tests through an assessment centre, and sources indicate there has been considerable realigning of officers in different grades. 

Analysts say such an exercise is going to cut flab in a large organisation like Tata Motors and enhance accountability. 

The company is going through tough times, as its third quarter consolidated profits fell 96 per cent to Rs 112 crore. It has lost market share in the domestic market, from double digits in 2013 to less than five per cent in 2017.

TRIMMING EXCESS FLAB

• This is part of a human resources restructuring drive that is expected to transform the automaker into a much leaner company with a flat hierarchical structure
• Analysts say such an exercise will cut flab and enhance accountability

 

Reference - http://www.business-standard.com/article/companies/restructuring-tata-motors-rolls-out-vrs-moves-to-a-flat-five-level-hierarchy-117031401193_1.html