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

• What happens to all such companies resorting to massive layoffs as regards image and long-term standing? Do you think people would excuse them for being treated as inanimate objects especially during such trauma times?
  Companies in dire straits have had to resort to such measures; this has not been a rule across the board. It would be good to hear more about those who have persevered to protect and even enhance jobs at this time. And there are many companies who have, including Apollo Tyres. But you are right there is an immediate image issue that companies face in such situation. The only upside, or even downside if that’s how you prefer to see it, to this is that when performance is good, public memory is short.

• Even giving benefit of doubt to the companies’ pursuing lay off policies, what happens to the morale of all those who fortunately manage to survive (because they happen to be the ‘best’ employees) and hold on their existing jobs? Can companies expect best performance from their ‘best’ employees?
  You are right. Such actions not just have an impact on those leaving but also leave a psychological scar with those remaining. Actions such as those you mentioned, if not managed properly and communicated well, often result in the best people leaving immediately after the downturn is over or as soon as they get another job. And of course it affects morale of all employees and creates a feeling of insecurity.

• Do you think layoff is the only answer to manage the downturn? Geoff Colvin argues (Fortune, March 30, 2009) that the costs of a layoff – Brand equity costs, leadership costs, morale costs, Wall Street costs and rehiring costs – should be guarded against. Given these inevitable costs and cost-saving-exigencies, what do you think should be a company’s policy towards layoffs?
  As I mentioned earlier, every situation brings its unique circumstances. For some may be, a certain amount of layoffs was the answer. This could indicate also that the company was carrying more people than it needed to – and that can be for various reasons – and therefore it was imperative to take this action.

  Our way has always been to look at various options. At Apollo, we have used two methods extensively – redeployment and scaling back on manufacturing. We redeployed people across functions and locations and also decreased the total days of manufacturing to enable us to keep both manpower and inventory costs low.

• People are trading off their jobs for wage cuts and other measures. What is the efficacy of other job saving schemes like shifting to shorter working hours, temporary work suspensions at factories, work-sharing programs and lower pay in exchange for tacit job guarantees? The bigger question however is can they be sustained?
  Exactly what I am talking about. These are all measures that can be deployed during tougher times when the production volumes required are lower than usual to ensure gainful employment. And yes they can be sustained for a period of time to tide over tough times. However, as you will understand these are not measures that are required when goods are selling and production is working on full capacity.

• Cutting working hours also adds to the bigger macroeconomic problem currently hammering the world economy: lack of demand. Pay cuts eat into consumer spending, which in turn amounts to more bad news for a world economy in need of stimulus. Therefore, how do you expect the government and the companies to make concerted efforts to make sure that one’s solution does not become another’s problem? Or is it inevitable?
  In today’s world not only is the personal related to the economy but also one nation to another. Today we live in a far smaller world and nothing takes place in isolation. Some of this is inevitable. However, if you see how the Indian government has acted, we have a lesson here. It has tried throughout this period of bring down inflation, thereby bringing down the cost of good by using means at its disposal like lowering excise rates. The government has also given a certain amount of fiscal incentives to sectors which can push demand. It has attempted to bring down interest costs both on corporate borrowing as well as areas like housing loans. The government is also ensuring that rural demand does not flag. All this adds up to having a positive impact on individuals at every level, in some way or the other.

• Send workers home without sacking them, is another often-suggested solution. Companies are increasingly putting in place telecommuting policies to cut costs and increase productivity. Of course, this might just work largely in service and highly individualized sectors and may not work in manufacturing and where physical presence is essential. However, what are the challenges in allowing employees to work from home (WFH) and what precautions do you suggest companies should take before adopting WFH policies?
  Work from home or flexi hours are all great alternatives in sectors and functions where they are possible. I would always recommend these measures. This brings down costs both at the corporate and individual level. Utility costs can be brought down by companies and individuals save on commuting and other costs. Of course there are multiple challenges to such measures. But I have always seen that majority of individuals tend to behave in a responsible manner, if they are given a responsibility. There will be some who will buck the trend, but does that mean we will stop trusting everyone else or not implement something that is beneficial to all parties concerned?