The Hindu Business Line : Tata Steel: Downsizing minus the tears

Hyderabad, Aug. 25 While VRS or CRS (voluntary/ compulsory retirement schemes) often result in heartburn for many families, Tata Steel, the fifth-largest steel manufacturer in the world, has managed to halve its staff strength in the last 13 years without giving much scope for tears.

Relating the saga of ‘managerial innovations in transforming Tata Steel’, Dr J.J. Irani, Director of Tata Sons, said when the company decided to reduce the number of employees, it evolved a VRS plan taking care not to cause any heartburn.

“We offered them 1.2 times of their monthly salary for the rest of their service in the form of cheques. The scheme also comprises the insurance rider — in case of their death, their family would continue to get the benefit,” he said.

Mr Irani was speaking at a lecture organised by the Hyderabad Management Association at the Administrative Staff College of India (ASCI).

The company also spent a considerable amount in identifying those eligible to take the offer. “The number of employees has been reduced from 77,448 in 1994 to 52,167 in 2000 and to 39,658 in 2005,” he said.

Punctuated by humorous anecdotes that drew appreciative laughter from the audience, the lecture traced the transformation of the steel behemoth into a world-class manufacturer.

Mr Irani also dwelt on aspects such as cost-cutting, benchmarking against the best in the world, and increasing efficiencies.

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