How to lay-off employees!
The TATA way…
In the 1990s, Tata Steel faced a serious financial and existential problem.
Their options were painful but clear – either they close down completely, or take the radical and unprecedented decision of reducing the workforce by half, from 80000 to 40000.
It was a tough decision. Jobs were always guaranteed at Tata Steel, sometimes even for the next generation of employees.
But it had to be done!
Tata Steel then came up with an employee separation scheme which became a benchmark of humane approach to layoffs.
As part of the scheme, all employees who are going to be separated would get the following benefits:
1) Full salary till their notional date of retirement
2) Medical insurance for themselves and for their families for the entire lifetime
3) Continue to live the company-provided quarters for 3 years till they found alternate accommodation.
Many industry veterans strongly discouraged this scheme. “Are you guys crazy?“ they asked.
However, being who they are, the TATAs went ahead with the scheme.
That was another example of business ethics from the Tata Group.
Later, Fortune listed this as one of top 10 best industrial decisions ever in the world.
This story had to be told today. Ratan Tata leaves a legacy behind him that will be hard to emulate.
Debashish Ghosh
#RatanTataPassedAway #RatanTata #tatagroup #layoffs #culture
The TATA way…
In the 1990s, Tata Steel faced a serious financial and existential problem.
Their options were painful but clear – either they close down completely, or take the radical and unprecedented decision of reducing the workforce by half, from 80000 to 40000.
It was a tough decision. Jobs were always guaranteed at Tata Steel, sometimes even for the next generation of employees.
But it had to be done!
Tata Steel then came up with an employee separation scheme which became a benchmark of humane approach to layoffs.
As part of the scheme, all employees who are going to be separated would get the following benefits:
1) Full salary till their notional date of retirement
2) Medical insurance for themselves and for their families for the entire lifetime
3) Continue to live the company-provided quarters for 3 years till they found alternate accommodation.
Many industry veterans strongly discouraged this scheme. “Are you guys crazy?“ they asked.
However, being who they are, the TATAs went ahead with the scheme.
That was another example of business ethics from the Tata Group.
Later, Fortune listed this as one of top 10 best industrial decisions ever in the world.
This story had to be told today. Ratan Tata leaves a legacy behind him that will be hard to emulate.
Debashish Ghosh
#RatanTataPassedAway #RatanTata #tatagroup #layoffs #culture
