In an upfront interaction, G.S. Ramesh, Founder and Chairman of the Layam Group shares with Ashish Bhatia the need to scout for your opportunity in adversity, referring to the employment landscape in the automotive manufacturing and services sector.
Q. Give us an insight into how the Layam Group business has evolved over the years and how have you aligned to the present-day employment landscape of the automotive manufacturing and services sector?
A. Conceived over two decades ago, the idea was to leverage my experience in setting up the Hyundai Motors, Chennai plant. My observation is that Human Resource (HR) is prioritised on a need-based use case scenario instead of looking at with a long term lens as the standardised need of any organisation. We studied the outlook on human capital employment. It clicked to us that there was a dire need to sensitise people about the importance of HR. For me, HR needs are underlined by the practice of sustaining honesty in a relationship with the human capital brought on board to join the respective team. It has to be looked upon as the most crucial asset for any business.
When we looked at the employment landscape across the country, we found more than three and a half lakh candidates entering the market. They were not job-ready when seen through the conventional lens. They included dropouts (technical and or general). I started to focus on these candidates at a time no one bothered to create an opportunity for them. I created a business model for clients in the engineering industry, for instance. Allaying fears of unskilled labour impacting quality at that point and time, the company shortlisted these so-called unfit candidates and streamlined them to perform as contract manpower. While giving back to society in my way, the industry also began to reap the benefits of this additional manpower that was erstwhile sidelined.
Q. A recent report from the CEDA estimates the job loss in the manufacturing sector at 31.7 per cent for FY2021. How do see the landscape changing in the near to medium term?
A. The manufacturing engineering industry is market-driven. Here a push and pull factor dictates the rise or fall in demand for human capital. It’s a factor in an economy where supply and demand play a crucial role in driving the job market. For instance, if the value chain at the top senses a demand drop it leads to a chain of reactions and everyone is trapped in the vicious circle. The need of the hour is for the industry to create a more sustainable model. Today the industry is making do with retaining the critical manpower to keep the business alive. The business models need to be built such that we don’t wipe out human capital from the system on a need-basis. For instance, while making a hue and cry during the labour migration, perhaps we needed to be more sensitive about their needs beforehand to retain them. The need of the hour is to focus on strengthening the systemic structures, people, processes and performance.
Q. From an MSME perspective, with many struggling to sustain a working capital during the peak of the pandemic, did companies have a choice other than retaining the critical manpower?
A. In my opinion, such decisions were based on the criteria of the employee cost to the company. It either creates or kills! So you had to take austerity measures, you could have cut down on a stream of expenses over just trimming the human resource which is the easiest to save on. It cannot however be your go-to excuse. There has to be a survival instinct that seems to be missing in such instances. We have to relook at ourselves to align with Darwin’s theory of which suggested that organisms that best adjusted to their environment are the most successful in surviving.
I would also like to add that purely from a business perspective, these decisions have a cost attached. You are letting go of a skilled worker now from a short term perspective. It will impact the process and productivity especially when you restart. It could also be the window for quality issues to creep in. You need more instances of the OEMs or the principal employers taking care of the vendors and so forth.
Q. Having looked at the industry from close quarters, how do you look at the cause and effect on the entire value chain including tier suppliers and the ancillaries?
A. It’s a top-down approach. It starts from the OEM level because they are takers. Any disruption impacts the bottom tier with a chain of reactions. If the OEM cuts its requirement, there is bound to be a cascading effect down the value chain proportionately. The impact was bound to have been felt not only by the manufacturer but by the entire ecosystem. It impacted everyone. However, it was more panic that came through in the initial reactions, in hindsight. It was also about who handled it better. A panic reaction from the top hierarchy can never set a good example and will not instil confidence in the subordinates.
Q. Are there enough jobs in the market today and do you believe where there is adversity there is an opportunity?
A. I am with you 200 per cent on every adversity presenting an opportunity. In continuation, I would want employers to convert the ‘headcount’ to ‘braincount’. I’ll give you an example. I picked up an ordinary 10th standard pass out, trained him and today he is managing a team of 300 diploma holder, engineers. The need is to
go in-depth in human resource analytics to determine the extent of a candidate’s contribution.
Q. Does the impact apply equally to both the white-collar and blue-collar jobs in the manufacturing and services sector?
A. Yes. The blue-collar is a critical mass while the white-collar is a brain count. The latter is a limited mass which controls domains like research and development and general management etc. Many started thinking, it’s the right time to downsize and create a recall structure. It paved the way for a model where people with a higher cost to the company could be axed to lower costs in a bid to create a manageable situation. Perhaps the thought process was to take advantage of the situation and improve the bottom line. Whenever we talk of costs we first seem to think of trimming the manpower. Why did you recruit them in the first place? Maybe a rebellious question, but these sort of questions are in need of the hour. On an average, the attrition rate has been 20-23 per cent with some industries at a higher rate of 30 per cent on an average.
Q. Were there exceptions to this trend with new entrants able to join the formal workforce as well?
A. Yes. Some employers also saw it as an opportune time to hire given the higher availability of resources re-entering the talent pool. So there have been the lateral movements and they continue. It was perhaps also looked at as an opportune time to replace the less productive resources to restructure. Again there are three different streams of engineering candidates for instance basis the college, university, and course they pass out of. An estimated 25 per cent constitute the cream with the rest pooled in a general class. We are focusing on looking at this general class and fitting them in as contract manpower as discussed earlier.
Q. With this underlying opportunity, what are the skill sets most in demand for these re-entrants to the talent pool?
A. Emobility is a hot trend now. So naturally, there is immense scope for candidates with an electrical, electronics or mechatronics background. Also with manufacturers looking to set up a global Centre of Excellence (CoE), there is demand for candidates suited to the research and development exercises at such organisations.
Q. Is the automation and digitisation requirement in the value chain also creating opportunities?
A. On these fronts, the industry is yet to attain a certain maturity level and is still getting used to the requirements of the new normal. Automation, digitisation, IoT etc constitute nearly 25 per cent of the overall activities today. There is an investment attached to it but everybody is aware that it’s the future. Companies are working seriously on the front for the fear of turning obsolete.
Q. Do such trends threaten the blue-collar jobs especially given that they are in favour of lesser manual interventions?
A. While it must be looked at from industry to industry, on a case-to-case basis, it is true that blue-collar jobs stand to be impacted on the face of it. However, at this stage, we are not at the same time equipped to assemble 100 per cent electronically. We are yet to enter the robotic era in a big manner. It is still a work in progress. It could impact in the future but not enough to create a ripple effect in the near term.
One can negate the impact however by investing in re-skilling. Re-skilling and up-skilling have a major role to play here. It is crucial to scout for people with the right attitude in any organisation. It might not be a bad idea to skill these so that they stay on in the system.
Q. Your take on the debate of correlating engagement with employee willingness or hesitance to work from the physical office space?
A. Loyalty or perceived loyalty is a real thing. At my office, I had to conduct a poll to find out the general sentiment. In favour of or against work for home. I was shocked. 80 per cent of the employees voted in favour of working from office despite a raging pandemic. We had to force employees to work from home because for me life is more important. Yes, our infrastructure, our system, our culture, everything is not 100 per cent ready for it. Not everyone is from the IT sector and so perhaps a 100 per cent blanket approach might not be the best way to go about decision making. There are positives and negatives from either approach. If Covid-19 is going to stay around, we as an industry need to think deeper. While working from home is a good concept, the data has to be relevant to the industry to drive a decision for the foreseeable future.
Q. Is there a shift towards turning a gig economy?
A. It is all happening but again it appears to be very short-sighted. It is a short term gain and a long-term disaster business. You cannot create a resource with a need-based intention. If that’s the case, the output will be nowhere close to the desired 100 per cent. He or she will come to the office while starting to think about the next gig. If you really weigh the hygiene factor, which includes productivity, performance etc these will take a big hit. You are not writing a success story in my opinion, you are just running a show.
Q. At this stage, could you share with us instances where you turned around businesses going beyond meeting the conventional staffing and training requirements of organisations?
A. The objective was to give back to society by way of redesigning and redefining a certain model. So, I proposed a job contract model. Okay, the other was the contract manufacturing model, which is very rare and mostly a trend abroad. It’s also known as the outsourcing model. So I realigned the value chain, for instance, with a clear focus on the three pillars of people process and productivity. There is a school of thought that by outsourcing, quality gets compromised. At one of the commercial vehicle giant, I was able to write a real success story. We did it at Ashok Leyland, at Tata Marcopolo, where we worked out ways to increase productivity with the same manpower. I can proudly say, it improved productivity by more than 40-50 per cent. The idea was to not contract the manpower but contract the output instead.
Q. You were instrumental in fusing the Korean and Indian culture at Hyundai in your stint as the Vice President. Is there a lesson in there for global companies and their Indian partners looking to collaborate and attain high localisation levels?
A. From India perspective, it should be looked at as an opportunity by way of the collaboration in store. It is the concept of building a single unified culture. There are two aspects to it. At Hyundai, for instance, I told the Indians about the Koreans bringing to the table both the financial capital and the technology which in turn created job opportunities. The cultural differences will always remain but both sides needed to respect the individuality of each culture. So I went about creating a new brand – ‘Hyundai-In’ where everyone would work together. The localisation of culture is equally important in the total scheme of localisation. Again here, I would like to add, it is the foreign players who have globalised in the true sense because we are open to inviting
them and continue to work out of our own country.
Q. How crucial has the government intervention been over FY2021 with the renewed emphasis on ‘Skill India’ and ‘Make in India’ programmes in terms of creating opportunities?
A. I call it the new wave. Companies are breathing this psyche and it is bound to be a success story. For example, the government’s ‘Atma Nirbhar Bharat’ drive requires all of us to be a part of it. In the pandemic, the biggest learning outcome was to be self-sufficient over getting into a panic mode. We are still far away from being mature enough to tackle the sudden shift in concepts.
Q. How do you wish to persuade an employer and an employee in the automotive manufacturing and services sector to strategise for the long term?
A. We should at first get rid of the barriers created by such a description and distinction between the stakeholders. The stakeholders have to be considered at par with each other to work towards a common goal as one unified team. Mutual respect, appreciation and understanding are more crucial than ever today. ACI
Scan the adjacent QR code to watch the full video interview.
The need of the hour is for the industry to create a more sustainable model. Today the industry is making do with retaining the critical manpower to keep the business alive.
We have to relook at ourselves to align with Darwin’s theory of which suggested that organisms that best adjusted to their environment are the most successful in surviving.
A panic reaction from the top hierarchy can never set a good example and will not instil confidence in the subordinates
In the pandemic, the biggest learning outcome was to be self-sufficient over getting into a panic mode. We are still far away from being mature enough to tackle the sudden shift in concepts.
