Tata Motors reshuffles senior management for a leaner structure; Reduces number of management layers to 5 from 14

Tata Motors CEO MD Guenter Butschek

Mumbai: Tata Motors Ltd is reshuffling the roles of its top executives as part of a restructuring exercise it initiated a few months ago to make the firm more efficient, said three people aware of the developments. All of them declined to be identified.

Details of the new roles and responsibilities were shared by Guenter Butschek, managing director and chief executive, with employees in an office circular on 25 January, said the people cited above. In the first phase, the programme is aimed at reducing the number of management layers to improve speed of decision-making.

The former chief executive at plane-maker Airbus Group SA, who completes a year at the Tata group flagship on 15 February, has been tasked with turning around the fortunes of a company that has seen domestic passenger car sales and market share roughly halve in the past two years, with profit boosted mainly by its UK unit, Jaguar Land Rover Automotive Plc. In his first interaction with reporters on  18  March,  Butschek  had emphasized on the need to make Tata Motors agile and “future ready”.

The new structure, which allocates roles based on product lines, will be effective from 1 April, and reduces the layers to five from the current 14, said the first of the three people, cited above.

Girish Wagh, who heads the project planning and programme management in the passenger vehicle (PV) business unit, will head the medium and heavy commercial vehicle (CV) business of the firm. Ramki Ramakrishnan, who is vice-president for the CV business, will become head of customer care and after-sales services for CVs. Anil Sinha, head of manufacturing operations for passenger cars, will head the quality function of the company’s CV business, he said.

Under the new structure, the top two levels (L1 and L2) of managers will be responsible for execution of strategies formulated by an executive committee, comprising the managing director, function and business heads. Tata Motors has picked close to 120 high performers for the L1 and L2 positions, said the third person.

Executive committee members Mayank Pareek (president, passenger vehicle business unit) and Ravi Pisharody (executive director of commercial vehicles at the firm) will become sole custodians for the PV and CV businesses, respectively, and will be responsible for the execution of strategies. Executives under both the PV and CV business, who are heading sales, marketing, product planning, product development, customer care and after-sales, will report to them. In addition, Pareek and Pisharody will also appoint operational heads, one each for the two businesses.

Wagh, who will become an L1 category employee on 1 April, will report to Pisharody.

“The idea is to have a more focused job evaluation approach rather than being hierarchical—it reduces time-to-marketing, and does away with bureaucracy,” said the third person cited above. “They will now go through an astronaut-type, on-board training session and then decide L3 and L4 below them, he added. The maker of the Tiago and Nano cars is also likely to announce the bifurcation of roles within the passenger vehicle units based on product lines, said the third person.

A Tata Motors spokesperson declined to comment on specific roles as it’s an “internal exercise and in progress”. He, however, confirmed the firm has finalized and recently announced the new management levels for L1 and L2.

This, he said, was done after conducting intense and extensive workshops for the past couple of months and the decisions were made based on a review of each individual considered for the placement of a particular role.

The new structure aims to further strengthen Tata Motors’ position in the CV business, particularly the medium and commercial heavy vehicle (MHCV) segment, where it enjoys a leadership position and has been the company’s cash cow, said the first person cited above.

But the company has ceded some ground to rivals in recent times. In the first nine months of this fiscal, Tata Motors’s market share in the MHCV segment dropped to 52.47% from 55.42% a year ago, according to lobby group Society of Indian Automobile Manufacturers.

The Tata Motors’ spokesperson said the new structure will lead to synergies through optimal utilization of resources. “Through this exercise, TML (Tata Motors) is aiming to become a lean, agile organization, by empowering its business units with clear accountability, strengthening functional leadership and oversight, ensuring faster and effective decision making, and improving customer focus,” he added.

The structure seems an initiative of Butschek, drawing from his experience at Airbus, said an analyst at a domestic brokerage who declined to be identified. “It also signals the start of a leaner top leadership set up.”

Note: This story has been modified from its original version to clarify on responsibilties of Tata Motors’s executive committee members Mayank Pareek and Ravi Pisharody.

Source: Livemint

Author: Prasanth Chunduri

I am an Independent Financial Advisor advising about mutual funds. Apart from my profession I am interested in cars and bikes.

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