To trim manpower costs, Tata Motors lets go of 600 staff

Those being asked to go with severance packages of a few lakhs of rupees (worth a few months’ or a year’s pay), include both executives and workers across the company’s six plants and regional offices. Tata Motors, part of the $97 billion salt-to-software Tata Group, employs over 30,000 people.

The company has made an ‘Early Retirement Offer (ERO)’ to several executives, which however, is largely compulsory in nature, sources said. Those who have received the ERO have over 20 years of service, are over 45 and have had the lowest appraisal rating of ‘Contribution Needs Improvement (CNI)’ in the last cycle. Some, however, are junior executives. One such employee claimed that he was forced to accept the offer although it was an ERO. A Tata Motors spokesperson said the scheme provides for a financial package and additionally, continuing benefits including medical and other post-retirement support.

The move to rein in manpower costs was started by Tata Motors’ late MD Karl Slym, who had also put in place other measures such as combining the sourcing of components for both the passenger vehicle (PV) and commercial vehicle (CV) businesses. Slym also integrated the sourcing for British subsidiary Jaguar Land Rover (JLR) and the number of vendors supplying to the company has gone down. Moreover, he had also asked executives to keep expenses on travel and hotel stays in check.

“The ERO serves the dual purpose of offering an option of early retirement to those who want to avail of it to pursue other interests and also addresses our concerns on headcount and cost. The process will offer long-term benefits to the company,” the spokesperson said. “The early retirement applications received will be screened for alignment with our manpower plans with the near-term organisational goals and business realities. The early retirement option is not specific to any location,” the spokesperson added.

Tata Motors’ decision to sharply cut the workforce follows subdued volumes in CV sales over two years. FE