By the turn of the century it became apparent to the top management of Ashok Leyland Ltd. (ALL)-India's second-largest manufacturer of commercial vehicles-that the company needed to undergo a complete transformation if it had to remain a significant player in the rapidly evolving market place.
From just two players then the industry was all set to get crowded with the proposed entry of foreign truck majors such as Volvo and MAN AG. Most importantly, the mindset of customers had begun to change. They were no longer willing to wait for the delivery of vehicles and customer loyalty could not be taken for granted anymore. In short, the commercial vehicle industry was moving from being a sellers' market to a buyers' market.
It did not take the ALL brass too long to figure out what the company needed to do. It had to become aggressive and more agile with a strong focus on innovation instead of remaining content with the number two position in the industry and a reasonable profit year after year. They also understood that in order to bring about this change ALL needed to turn younger.
This transformation, the top managers rightly surmised, would not be possible with an executive team whose average age was around 50. By combining the exuberance of youth who are typically experimental, tech-savvy, vibrant, and energetic with the experience of seniors who have depth, maturity and validated knowledge, ALL wanted to turn itself into a modern outfit and offer a serious challenge not only to Tata Motors, the market leader, but also to the other global majors who were planning an entry into the Indian commercial vehicle market.
But the story did not run according to the script.
The Human Resources (HR) department began to notice an increase in attrition levels among the newly recruited young executives. What was initially a trickle (4.8 per cent in 2003-04) soon became a torrent (13 per cent in 2005-06 and 21.3 per cent in 2006-07).The various employee feedback measures in place, apart from climate and perception studies commissioned by HR, revealed the reason-culture shock! The youngsters, to their rude surprise, found ALL to be a very different creature-a compliant organisation where juniors (often seen as inexperienced) seldom questioned the seniors who, for their part, demanded a culture of reverence from their subordinates.
It was a company where freedom was not a given thing, transparency in decision-making not often practised and knowledge sharing, if at all it happened, was within departmental silos. But fresh from college and belonging to what is often referred to as the "restless generation", the youngsters had no qualms in questioning what they thought was incorrect.
They gave more importance to knowledge than hierarchy and sought immediate results. They also wanted clear KRAs (key result areas) and goals and were unwilling to leave their career in the hands of their bosses. On the other hand, the seniors, who were used to a different environment, resented and resisted the approach of the youngsters and this, in effect, led to a generation gap. The young executives felt left out and unwanted.Though R. Seshasayee, MD, ALL, had anticipated higher attrition levels among the young executives, the reasons that caused them to leave deeply worried him-after all the company's transformation hinged on the youngsters and he firmly believed in their role as a catalyst for change.
"We realised that it was important for us to challenge the young executives at work and through that reinforce the reasons for them to stay on,'' he says. It was then he decided "if the organisation had to change to suit the youth, so be it" and launched "Mission YEs" (acronym for young executives) in 2006.
Mission YEs, says Shekhar Arora, Executive Director, Human Resources, was conceived to engage, enable and empower youngsters who were feeling isolated and ignored. Under Mission YEs, banner projects, which were important to the company, were given to crossfunctional teams of young executives.
"The teams work on these projects, over and above their routine responsibilities, and come up with recommendations that are then presented to the management committee,'' explains Arora. For instance, a team draws up the annual management plan and budget (MPB) while another, called Mission Summit, works on frontier technologies. eMitr (mutual improvement through relationship) looks at enhancing customer-relationship management and another cross-functional team works on 21st-century factory credo.
"Through these projects we engaged the youngsters. By offering them management time and lots of data (even confidential information) we enabled them to come up with a solution. Finally, when their recommendations were considered seriously and accepted, they felt empowered,'' says Arora.
The youngsters grabbed the opportunity and, in their typical style, began to engage the top management. The MPB team, consisting of 23 young executives, while drawing up the annual plan for the year 2007-08 questioned the production capacity of one lakh units drawn up by the managing committee.
They claimed that the capacity could be stretched by 10 per cent to 1.10 lakh units. The team explained to the senior management how capacity could be raised through de-bottlenecking production at various units. The management committee accepted the recommendation (which came at a time when demand was booming and capacity was the constraint), and implemented it.
Similarly, another team designed a modern bus (they called it i-Bus) for city transportation in nine months flat-from concept to prototype. The implementation of eMitr proposals for incentivising channel partners online saw spare parts sales rise by about 20 per cent in the Chennai and Vellore regions. It is now being rolled out nationally. ALL also formed "Mission YEs Organisation", which is run entirely by YEs with an allocated budget. It conducts events, knowledge-sharing sessions, comes up with innovative ideas which then become a banner project.
As these efforts began to capture the imagination of the young executives, ALL rolled out a development-linked career plan (DLCP). The plan sought out highperforming youngsters, identified their aspirations and committed to help them get there in the organisation. For that, the employee commits five years of his career at ALL, and the company, in turn, promises a growth of at least two roles above the current position in that period. Over 150 executives have signed up so far.
But the importance given to the young executives (Seshasayee admits that he spent a disproportionate amount of time on the agenda of making ALL youthfriendly) triggered another round of culture shock within the company-this time, among the seniors, who felt left out. It was then the company decided to rope them in as mentors. Having learnt things the hard way when they joined the company, seniors took to mentoring passionately. Today, many of them have come to be rated as ace mentors (an honour given based on the feedback by young executives).
These measures have broken the ice between the youngsters and the seniors and both have come to respect each other. The results are beginning to show.
"Attrition rate which was 21 per cent when Mission YEs was launched has since declined to 11.2 per cent (in 2008-09). Young executives have begun to take up leadership positions in the company. Not only that, the employees on the shop floor are now seeking a similar process for themselves, and most interestingly, many senior executives want the age criteria of 35 years removed so that they too could participate in Mission YEs,'' says Arora.
But the challenge for ALL is far from over. "Some parts of the organisation still need loosening up," admits Seshasayee, adding that "it is a continuous process."
The immediate challenge for the company, though, is to ensure that youngsters grow as promised. Arora is confident that this will happen as the senior management team, with an average age of 54 (retirement age is 58), will vacate lots of positions in five years' time and the DLCP is dovetailed into succession planning.
But the company has also hedged its bet on growth to move up the young executives. With the market environment turning adverse, the company has been forced to scale back or delay its expansion and diversification plans. A quick market revival, it appears, is a necessity if ALL has to walk the talk.
The initiatives taken by Ashok Leyland (ALL) to connect the younger generation with business realities are apt and appropriate. The interventions planned are very relevant to balance the expectations between baby boomers, GenX and GenY.
The culture of candour being developed will need consistent support from senior management, and hopefully, that should not be a problem. Mission YEs is really a bold and courageous one that will give talented youngsters multifarious opportunities to challenge themselves, grow up to shoulder higher responsibilities, and in their own way, contribute to creating a new and responsive ALL of the future.
Amongst the various steps, what I liked the most is the mentoring scheme with the mentees, who are youngsters, evaluating the mentors. The rating system of mentors and classifying them as ace mentors etc., will go a long way in helping the sustainability of the scheme. This will also put pressure on mentors to connect a lot better with mentees and play a meaningful role to support the mentees in their crucial phase of career.
The processes put in place by ALL are landmark ones but the challenge would be sustaining the commitment of senior management on a longterm basis. Also, how the youngsters will respond on a long-term basis is to be seen.
However, looking at the planned manner in which the whole process is being handled I have no doubt that ALL will achieve its objectives. The way markets are evolving, ALL will have youngsters who understand the customer and the way the future has to be shaped with the ability to identify and encash on opportunities apart from contributing for building a totally new and agile ALL.
Senior Vice-President of Human Capital, Mahindra & Mahindra, and Chairperson, Auto Industry Human Capital Group, SIAM
Identification of the problem and hiring, engaging and empowering younger executives as part of "Mission YEs" show that HR interventions were in place. Launching cross-functional teams, giving the youngsters authority and responsibility and later involving seniors may be a good strategic initiative to turn around the company.
If further examined, however, we may notice that even though the overall strategy seems good, it actually created a rift between younger generation and seniors, as the experience of seniors was sidelined in the beginning, until the company realised and made efforts to integrate the two. This initial effort was in contrast to what actually ALL planned to do and they later had to change strategy to resolve the crisis. This may be termed as reactive (and not proactive) approach.
The management should have integrated young and the senior/ experienced employees from the beginning. Mentoring should have preceded the empowerment of youth. The management could have adopted a bridging method with the senior management being incorporated in the transition even as the younger generation was being absorbed at a rapid rate. This would have led to a more inclusive growth.
The present policy may face challenges, especially with the market showing signs of recession, mainly due to a real or perceived lack of strategic vision among the youth and a sense of insecurity among older employees. Yet another challenge or pitfall is that the present star performers are all under the age of 35; they will reach their peak by 40-45 after which the management will face the problem of accommodating these high performers at senior positions, as the retirement age is 58.
Thus the limited growth opportunity for youngsters for top/senior positions in future may lead to dissatisfaction and attrition.
Associate Professor, HR Management, IIM-Lucknow