The Hindu Business Line : `L&T's young staff need to grow with the company'

THE man who says he keeps track of all the 65 businesses of Larsen & Toubro only because he has spent 40 years with the company and has seen many of these units develop from scratch, is now concerned about the shifting loyalties of its young employees.

"L&T is blessed with a cadre of people who are almost married to the company," says Mr A.M. Naik, Chairman and Managing Director, who will hold the position for another five years. However, he points out that the senior-most rung will all have retired by 2010 and "today's youngsters want to change jobs every third year."

What L&T does in engineering "being comparable to anywhere in the world," the company has become a cave of human treasure for raiders. "Its attrition rate is more than 20 per cent, in some divisions 30 per cent," says Mr Naik.

"Engineering services are now becoming `India-destination.' Now all the multinationals come here and put up product engineering services, not just programme engineering." The company best for recruiting from is L&T and there is a huge migration of people to multinationals — in India itself, then to West Asia, Malaysia and other South-East Asian countries. "I cannot cope with those salaries."

Increasing salaries means increasing salaries across the 14 grades of L&T employees, totalling 25,000 people, he says. "We are a more `social' organisation. We are trying to do as much as we can, trying to keep people with more challenging work, space work and other kinds of work (L&T has an MoU with the Indian Space Research Organisation), but at the end of the day what counts for the younger generation is money," says Mr Naik.

"The huge challenge is how to retain our engineers," he says. "I am looking for advice on this, but our best brains are not able to find a solution."

He points out that at L&T, matters are rather different from what exists at other manufacturing corporates, where the top 20 to 40 people can run the entire company. "A young engineer who is working on satellite design on an ISRO project is as important to us as a senior vice-president because he is working on something new in which L&T wants to grow and to excel."

L&T has around 12,000 engineers of who between 400 and 700 leave every year. Campus recruitment at IITs is fraught with the same problem. "Ninety per cent of IIT graduates go abroad, they get better pay and opportunities as well as quality of life. This is the tragedy of India. The biggest brain drain taking place anywhere in the world from any single country to the outside is from India."

According to him, the country may want to achieve levels of 10 per cent and 12 per cent growth in GDP, but it "does not have that much top-level leadership which can grow the country at these rates."

"I say that is my greatest challenge in the next five years, to create the succession (at L&T)." The roadmap for L&T, which consists of a strategic plan for the next five years, includes the creation of a string of global managers. "Cement has been demerged. Next week it will be out of the way. Our glass concern should also be out of the way in a week's time. Now we still have a very large canvas of engineering. In the next five years, we must bring clarity to which of the 65 businesses we shall excel and focus on and which will have the chance to succeed outside India." But all this is possible only with a cadre of people who will stick and grow with the company.

With respect to the managerial section, L&T's turnover is low, says Mr Naik. It is as low as 5 per cent at the lower management level, 3 per cent at the middle management level and almost zero at the senior management level

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