Executive Interviews: Interview with Tapan Mitra on Managing Downturn without Downsizing
September 2009 - By Dr. Nagendra V Chowdary

Tapan Mitra
Tapan Mitra,
Chief of Human Resources, Apollo Tyres

• Should every other country emulate these two countries’ practices? In fact, OECD expects unemployment in Germany to rise from its current 8.6% to 11.5% by the end of 2010 – higher than many of its European neighbors. Japan’s unemployment rate is expected to rise, although less dramatically, to above 5.5% next year from 4% in 2008.
  As I have mentioned above, each government’s response will be shaped by two things. One, the crisis and its potential fallout. And two, governance policies and needs of the situation. Given the diverse countries across the world, there really cannot be a single formula which everyone can follow.

• OECD’s chief economist, Klaus Schmidt-Hebbel argues forcefully that governments should do more to retrain workers and overhaul their labor-market policies to ensure that once recovery comes, new jobs are created in sufficient numbers to swiftly bring the jobless rate back down again.
  I agree. Actually all parties have a role to play in situations like this – the government, companies, unions, employees and even the financial or banking system. How effective the impact will eventually be is a direct fallout of coordinated action amongst all these diverse groups of people and systems, swiftness of action and proactive play. Even though it is one of the possible solutions, it is surely not an easy one to implement with success.

• There’s immense political pressure on authorities to do something to slow growing joblessness. For instance, when Jet Airways (in India) laid off 1900 employees, the Civil Aviation Minister, Mr. Praful Patel said that “ministry would certainly not be very happy with the approach of Jet Airways.” Similarly when the French oil company, Total announced the closure of two refineries and the consequent loss of 550 jobs, it attracted a furious public outcry including denunciations from two government ministers. In both the cases, the companies had to withdraw their decisions. Do you think it is right to force the companies to continue to save jobs even when they are bleeding from the downturn bruises?
  I agree with your argument, however in any nation jobs are a very sensitive issue and needs to be handled with a lot of sensitivity. I will not be right on my part to comment on either of these two cases since I am not familiar with exactly how they were handled internally, what was said, how it was undertaken, what the individual and community level communication was, were all the regulatory authorities and the unions taken into account, etc., – all these play a role. At the end of the day, two parties need to find ways to work towards a solution which minimises the pain across the board. We have seen across history that unilateral decisions favoring only a single party do not have a high shelf life.

• What do you think should be the greater and broader role of governments in such situations? Should they adopt job-preservation-schemes or should they concentrate more on job-creation- schemes?
  As you have seen with the Indian government, our focus has always been on job creation. These have come in many ways, rural schemes, incentives to industries to move to backward areas, state incentives to invest in a particular state of industry, softer loan agreement and others. For the longer term this is the way to go. However, at certain points in time there is merit in undertaking limited job preservation schemes also, for a certain period of time to enable job seekers to find new avenues. This need not mean that people get paid to do no work – that really never works since it ends up impact the longer term work culture and morale of people. What works is redeployment. Moving people from non or low productive areas to higher impact, high productive areas, sectors, regions.

  However, all said and done, I would reiterate that none of this is easy to implement, especially in a government context where the government’s focus should be on good governance.

• Following Mr. Barack Obama’s economic stimulus package, every government has followed the suit. It’s more than four months since those packages were announced and disbursed (at least partially). But the recovery seems to be getting delayed beyond expectations. When do you think people can expect a positive recovery from this downturn?
  Stimulus packages, especially large packages, will take some time to have an impact. Here we are not talking about one company and its people. We are looking at a nation with diverse needs and sectors. I think, in India, a certain amount of recovery is on its way. 2010 will overall be a tough year which we have to find ways to ride out. In the Western world where the impact has been far higher, the recovery time will also be longer.

• At the beginning of this century, every where there was talk of talent management prophesying time and again that people are the key assets. And everyone complained of talent crunch. Now that there is cash crunch, in the name of either managing a downturn or restructuring, every company resorts to sacking the employees mercilessly. In fact, some CEOs advocate their divisional heads not to be emotional and sentimental and take a knife and chop off. Why this U-turn?
  I would not agree with you here. Let us not get taken in by a few newspaper reports here and there. Yes, some of what you say may have happened, but it is difficult for us to appreciate the position that those people may be been in at that time.
  I reiterate that people are our asset, and our key asset – there is not doubt about this. In that, talent is the most priceless commodity. The next is the fit between talent and the requirements of the job. These will continue to be any HR manager’s challenges going forward.