S Murlidharan

Employee car option

S. Murlidharan | Updated on July 09, 2013

Buy our car or else no parking

The house of Tatas has taken the extraordinary step of forbidding its employees from parking their cars in premises under its control unless the cars bear the Tata marquee. The peremptory order might kick in soon.

An employee of Apple would be embarrassed no end if he were to carry a Samsung galaxy smart phone to Tim Cook’s chamber and start working on it. Tim Cook, for all one knows, may even gently reprimand the employee sitting across from him for this act of disloyalty. In a more genial mood, he might in an act of self-effacement ask the employee how he finds the Samsung smart phone superior to Apple’s. But if the act of disloyalty is the norm across the organisation, he might, as its CEO, have to go deep into the matter because if employees themselves disown a company’s product, it would be very difficult for them to persuade wannabe customers to buy the same, especially if their job is marketing.

Cars cannot be hidden from the eyes’ of company bosses. So can’t smart phones and tablets. However, direct coercion may have to be applied where the products do not show up out in the open for the employer to see. To wit, Godrej would not be able to know if its employees and their families use the soaps and shaving creams manufactured by it.

Be that as it may, the moot question is whether the employees as a class should be coerced directly or indirectly into patronising the employer’s products and services. To be sure, they offer themselves as captive customers, so to speak, and thus constitute a low hanging fruit. To this extent, marketing and distribution expenses would be minimised. The Tatas are India’s largest employer after the Indian Railways. It, therefore, makes sense for the company to view its own employees as its oyster. To cynics and critics alike, this might appear to be a climbdown for a group which has been viewing the world as its oyster.

Car truths

Employee stock option has for its twin objectives employee retention and payment in kind rather than in cash. While the sustained lull in the share markets, especially the primary one, has considerably reduced its appeal and offer in India, it has indeed fostered employee retention, especially at the higher echelons, and optimised cash usage generally by and large. Can such lofty ideals be attributed to employee car option especially when the option degenerates into compulsion, direct or indirect?

A Tata employee might have inherited a car from his father or got one from his doting in-laws on the occasion of his marriage, which might not have emerged from Tata Motors’ factory. Should this poor chap be made to run helter-skelter and look for other parking arrangements away from the comfort of his own workplace when enlightened organisational self-interest demands that he focuses on his work rather than fret about parking early in the morning?

Inconvenience in parking is not the only reprehensible feature here. An employee is also a consumer, and his consumer rights would be infringed if he were to be coerced into buying a Tata car. Adi Godrej has gone on record saying that he bathes with Godrej soaps. Do the Tata honchos also travel only in Tata cars? Will the peremptory parking rule apply to them as well or will it apply only to lesser mortals in the organisation? Top-down approach works, especially when a desirable practice is sought to be set. The top management must set an example for others to emulate. Car loans on generous terms may have to be offered to bring the employees around just as buyback offers must be put in place so that cars do not become an employee retention technique, in addition to being an excellent marketing technique in an organisation teeming with employees.

Tatas indeed have found employees’ soft underbelly. They know parking has become an important factor impinging on the very decision to buy or not buy a car especially in a megapolis such as Delhi and Mumbai. Tata Motors might report a surge in car sales in the wake of this move but people would continue to wonder whether it was kosher in the first place.

(The author is a Delhi-based chartered accountant)

Published on July 09, 2013

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