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Talk of the public sector and visions of large, inefficient, overstaffed and slothful
behemoths come to mind. This impression is not always fair, but the fact remains
that there is a world of difference between government-run companies and their
cousins in the private sector. What, then, happens when a public sector
organisation crosses the privatisation Rubicon? The stories of CC and VSNL, two
public sector corporations acquired in recent times by the Tata Group, show that
the transition can be managed with aplomb.

CMC and VSNL have undergone a major transformation since joining the Tata
family of enterprises. The cornerstone of the change management in both has been
transparent and direct communications between top management and employees at
all levels. The condition on the ground and the set of challenges before each was
different, but the common link has been a smooth changeover where the emphasis
has been on valuing and empowering the intellectual capital in the two companies.

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In 2001, when the Tata Group acquired CMC, the company was not really in the
league of top-notch Indian infotech enterprises. The Tata mission was to build
CMC into a world-class organisation. This was a mammoth task by all accounts.
There was a silver lining, though. CMC had some outstanding achievements to its
credit.

No radical changes were instituted at the outset. All employees, including the top
management, were retained. The Tata Group brought in just three people from
outside, all from Tata Consultancy Services (TCS). R Ramanan, CMC's current
chief executive officer and managing director, joined when his predecessor retired.
A chief finance officer and a human resources expert were inducted in due course.

One of the first tasks was to end CMC's plain-sailing culture. Says Mr Ramanan:
"The challenge we faced was how to ready the company to face competition, and
to win, under the pressures of time, budget and quality. The real test was the
transformation of ability to agility."

The second challenge was to move from the protected sanctuary of government-
supplied contracts and build business development teams to penetrate the Indian
and global markets. Three years of sound strategy and implementation has seen
CMC successfully finding international clients of repute in Africa, the Middle East
and the US.

Major training initiatives were launched in three key areas: business development
to build up world-class marketing support, training programmes in client
management for project managers, and an information-sharing programme called
Laksh (learning and knowledge sharing). The three initiatives would in time cover
every employee of the company.

There were a number of other parallel initiatives. PAIS (performance appraised

information system) was introduced to recognise and reward good performance.
High performers are formally conferred the CMC Ratna Award and interaction
between CMC and other Tata companies were encouraged. One example of the
latter is u
 , the CMC-TCS joint bulletin that carries news of what's happening
in the two organisations.

The Tata Business Excellence Model (TBEM) was adopted and it helped CMC
build bridges with other Tata companies. Internally, there were restructuring
initiatives, aligning to market needs and introducing industry verticals and
practices. The SEI CMM Level 5 initiatives in TCS were replicated in CMC. This
apart, infrastructure and communications were improved.

On the human resources front, to make changes tangible, policies on performance

appraisal, performance recognition, the variable pay concept, etc were introduced.
The earlier government pay structure, with yearly increments, gave way to a
variable, qualitative compensation system based on individual, group and
organisational performance. Through performance recognition CMC has arrived at
industry-standard salaries for 5-7 per cent of its top employees. It hopes to cover
the rest of its staff on this issue over the next two years.

Initiatives in the organisation were fast and diverse. To make employees

comfortable with change, every initiative was publicly announced, and its
relevance was clearly explained and communicated through a number of open
forums. This transparency resulted in a greater acceptability of the changes that
were happening thick and fast.

Call it proper strategising or judicious implementation, the initiatives have all been
successful and have built a sense of pride and loyalty in employees. Now there is a
palpable energy within the organisation to grow rapidly and soar high.

    

Before it was privatised in February 2002, VSNL, though one of the public sector


, or crown jewels, had problems typical of government-held enterprises.
There were too many people with too little to do, the employees were mostly
generalists rather than specialists, the staff had little motivation and, as if all that
wasn't enough, the employees' union needed to be handled sensitively and educated
about the coming changes.

Emerging from the monopoly era, VSNL was ailing and it had problems of
technology too. In the event, managing technology did not require much expertise,
but managing people did ² loads of it.

First things first. VSNL addressed the issue of surplus manpower by introducing a
voluntary retirement scheme (VRS). This wasn't as difficult as it first seemed,
because people were expecting it and the union was supportive, after informal
discussions were held with it to create a scheme more attractive and acceptable
than the one offered by the government before privatisation.

The second initiative at VSNL was to recruit specialists for sales, marketing and
customer service. Earlier, in the absence of a recruitment process, all vacancies
were advertised nationally. Now, a systematic and professional recruitment process
is in place at all levels, and VSNL is hiring specialised resources from other
companies too.

The standard salary system of the government days was the next to go. Today
high-potential performers within the organisation are identified and rewarded
accordingly. The salaries of senior managers were also revised, bringing them on
par with the best in the industry.

A performance-oriented culture was introduced and a transparent appraisal system

was implemented. Earlier, like most public sector undertakings, no one knew the
exact criteria for advancement, because of the government system of confidential
reports. Employees' training needs were addressed and human resource policies
were revised to match those in the private sector.

At VSNL a major positive from the past was the good relationship between the
union and the management. The task at hand was convincing employees to accept
major changes while retaining their goodwill. The new management dealt with the
union in a sensitive manner, making the leaders understand the needs of the
changing market in terms of processes and human resource management.

Improving communications between the management and the employees was a

priority. The top management, including then managing director S. K. Gupta,
travelled to all branches and personally spoke to employees, reassuring them about
the various initiatives and their specific relevance.

In the absence of a dedicated change management team to manage the transition,

the senior management and divisional managers took charge. Though the process
has not been entirely successful, it has integrated various parts of the organisation,
increased operational efficiency and enabled the company to function more
smoothly.

With the difficult part out of the way, VSNL can look forward to a clearer
connection with success.
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 Change management in tata motors

Change is the only constant thing in life. Tata motors went through a period of
significant transition in 2001. A number of changes were worked out during that
phase with respect to customer expectations, innovation strategy, and regulations
governing safety and environmental protection and continual competitiveness in
terms of cost. These changes were and are brought about by the company
systematically driving its processes ahead through a high level of product and
process innovations. Tata Motors has a long history of investment in R & D. It is a
statement that has been corroborated by a very large number of business successes.
The road treaded by Tata motors in 2001 required them to take lots of crucial
decisions. At that point of time the company showed willingness to take risks and
drive itself aggressively ahead.

There is no doubt that Tata Motors will be at the forefront of the changes that will
be evident in the automobile industry of the future.

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Change management or change control is defined as the process during which the
changes of a system are implemented in a controlled manner by following a pre-
defined framework/model with, to some extent, reasonable modifications .Change
management in individual and organizational perspective Can be defined as
³Change management is a structured approach to transitioning individuals, teams,
and organizations from a current state to a desired future state´.
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Change management entails thoughtful planning and sensitive implementation, and

above all, consultation with, and involvement of, the people affected by the
changes. If you force change on people normally problems arise. Change such as
new structures, policies, targets, acquisitions, disposals, re-locations, etc., all create
new systems and environments, which need to be explained to people as early as
possible, so that people's involvement in validating and refining the changes
themselves can be obtained .Change must be realistic, achievable and measurable.
These aspects are especially relevant to managing personal change. Furthermore,
before proposing changes, it is important that leaders ask for the opinions and
reactions of their subordinates to the proposals, to make the changes beneficial to
all of the members of a particular corporation or organization.

There are many models in understanding the transitioning of individuals through

the phases of change management and strengthening organizational development
initiative in both government and corporate sectors. They are

1. ADKAR Model

2. Unfreeze-Change-Refreeze

3. Kübler-Ross

4. Formula for Change

5. PCI (People Centered Implementation)

 Organizational Change Management.

Organizational change management includes processes and tools for managing the
people side of the change at an organizational level. These tools include a
structured approach that can be used to effectively transition groups or
organizations through change.

These are some of three models that help us in managing and understanding the
change

1. Dynamic conservatism

2. John P Kotter's 'eight steps to successful change'

  

Tata Motors, division of one of the largest business houses in India has grown
significantly over the last 64 years since its establishment in 1945. Tata Motors Ltd
is India¶s largest automobile company with revenue of about 14 billion dollars. It is
the first company from India¶s engineering sector to be listed in the New York
stock exchange. Tata motors presence indeed cuts across the length and breadth of
India. Over 4 million Tata vehicles ply on the Indian roads since the first rolled out
in 1954. The company is going strong with its 23000 employees guided by the
vision to be ³the best in the manner in which we operate, best in the products we
deliver and best in our value systems and ethics.´ The Tatas are known and are
always sought to be a value driven organization. The 5 core Tata values being
Integrity, understanding, excellence, unity and responsibility.

The TELCO saga started off with Tatas acquiring an Eastern railway workshop to
build boilers and steam locomotives for railways. Then they ventured into
commercial vehicles in 1954 having entered into a partnership with Daimler-Benz
in Germany. In global context it caters to three main market segments: Passenger
cars, utility vehicles and commercial vehicles.

They followed the strategy of acquisition and joint ventures in its mid-stage and
launched new products at a rapid pace in different market segments. Through
subsidiaries and associate companies, Tata Motors has operations in the UK, South
Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business
comprising the two iconic British brands that was acquired in 2008. In 2004, it
acquired the Daewoo Commercial Vehicles Company, South Korea's second
largest truck maker.

Tata Motors is also expanding its international footprint, established through

exports since 1961. The company's commercial and passenger vehicles are already
being marketed in several countries in Europe, Africa, the Middle East, South East
Asia, South Asia and South America. It has franchisee/joint venture assembly
operations in Kenya, Bangladesh, Ukraine, Russia and Senegal.

A significant breakthrough for the company was the development and

commercialization of the truly Indian cars ± Tata Indica and Tata Indigo. Within 2
years of the launch, Indica became the India¶s largest selling car in its segment.
Ratan Tata had always been keen on entering the lower-end of the market as he
believed the big market lay there. He initiated steps to develop the Indica. Billed as
India's first indigenous car and kept as a secret for a long period of time, the Indica
promised much.

Unfortunately for the Tatas, the development of the Indica coincided with one of
the worst phases in the company¶s history. During the period 1995-1998, the
commercial vehicle business had been doing well and Tata Motors grew at 30-40
per cent. Then came the downturn in the economy and the market for commercial
vehicles suddenly shrank by 40%. The lost sales compounded by the heavy
investment for its entry into passenger car business, the cost of complying with
new emission standards and increasing threat from overseas competitors caused
Tata motors to shock the market by 5 billion rupees loss for the year 2001.
Realizing the urgent need to cut costs, the Tatas embarked on a major restructuring
exercise

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Tata Motors marks the biggest turnarounds in the history of Indian automobile
manufacturing industry which happened in 2001. This success story of Tata
Motors can be entirely attributed to the timely change adopted by the Tatas and the
then M.D Ravi Kant who led the change.

Drastic action was required. Over the next two years, the company shaved around
8 billion rupees from its cost base and nursed itself back to corporate health. Even
while keeping a tight grip on costs, Tata Motors moved to the offensive by
refocusing its investments on less cyclical products, including light commercial
vehicles, buses, and spare parts; making a successful entry into passenger cars; and
responding to opportunities presented by favourable social and economic trends.
These included the new mobility of young Indians, the government¶s substantial
road-building program, and generally buoyant GDP growth.

Today Tata Motors ranks as the world¶s fifth-largest manufacturer of medium and
heavy trucks²it has a 61 percent domestic market share in this segment²and has
taken the number-two position for sales of passenger vehicles in the Indian market.
It has also built a significant global presence, both through sales efforts in overseas
markets (such as the former Soviet republics, the Middle East, South Africa, South
Asia, and Turkey) and through acquisitions such as the takeover of Daewoo¶s
commercial-vehicle business in South Korea and the purchase of a 21 percent stake
in the Spanish bus manufacturer Hispano Carrocera. In addition, Tata Motors has
formed a joint venture with Marcopolo, the Brazilian bus manufacturer. With an
agreement in early 2006 to distribute Fiat cars in the Indian market and a more
recent memorandum of understanding with Fiat to establish a joint manufacturing
facility near the Indian city of Pune, Tata Motors has embarked on a wide-ranging
global partnership with the Italian group²an arrangement that both sides expect to
flourish.

Tata Motors was predominantly a manufacturer of commercial vehicles, and that is

a very cyclical business. The commercial-vehicle market in India shrank by more
than 40 percent, with massive consequences for both the top and, more
particularly, the bottom lines of the company. The 5 billion rupee loss in 2001 was
the first time something on this scale had happened in the company¶s history, and it
really shook everybody within the organization.

They tried to understand what had gone wrong and wanted to create a path for the
future to ensure that they never got into such a situation again. So in 2001 they
decided on a recovery strategy that had three distinct phases, each of which was
intended to last for around two years²six years in all.

Phase one was intended to stem the bleeding. Costs had to be reduced in a big way,
and that was going to be a huge challenge for a company that was not only the
market leader but had been used to operating in a seller¶s market and employing a
cost-plus approach to pricing. Phase two was to be about consolidating their
position in India, and phase three was to involve going outside India and
expanding our operations internationally.

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The key objectives were to move to a system of market pricing and to reduce their
break-even point, both of which called for major reductions in costs²variable
costs, fixed costs, and interest costs. They used many approaches to cost reduction,
including bench-marking our rivals. For example, they took apart vehicles to see
what they could do to modify the products and to lower costs. They went in for e-
sourcing, and today they are the largest company doing e-sourcing in India and one
of the leading ones in the automobile industry worldwide. In two and a half years,
they reduced the break-even from nearly two-thirds of capacity utilization to
around one-third, which meant that even if the market shrank by close to 60
percent, they would still be in the black. The whole organization really got together
to ensure that the bleeding stopped.

One of the major drivers of success at Tata Motors Ltd. (TML) was its ability to
fully exploit information technology to drive business goals and reduce cost. The
company was an early adopter of CAD and CAM systems. The company also uses
Siebel Systems to manage its vast customer relationship network and SAP® for all
critical business services, such as logistics, supplier relations management,
customer relationship management, human resources (HR), and finance. A remote
training network was utilized to deliver audio-video feeds for training, thus saving
costs on network and bandwidth. In order to support growth and globalization,
effectively manage its dealers, and gain downstream visibility, Tata Motors
launched a customer and dealer management (CRM-DMS) program in 2003. It is
this type of demand network, one that senses and shapes demand based on regional
differences, which differentiates the leaders from the laggards. Throughout its
transformation effort, the company partnered with Tata Consultancy Services
(TCS) for consulting and IT services.

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The concentration in phase one was indeed on cost reduction, but while this was
going on they thought about taking action in areas that would have an impact
during the other phases. For phase two, the concentration was on improving
product quality and upgrading product features so as to make the products more
competitive. They also started work on new products that would be required by the
market after three to five years and strengthened the position in the marketplace by
setting up a new sales-planning process, tightening credit norms, improving the
liquidity and profitability of the dealers, reorienting toward customer satisfaction,
and extending the reach of the distribution network. For phase three, the
concentration was on starting work on international markets by identifying key
markets and segments and developing a comprehensive plan to improve our
competitive position so as to get a respectable market share. They also started
looking at opportunities for inorganic growth.

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In phase the concentration was on starting work on international markets by

identifying key markets and segments and developing a comprehensive plan to
improve Tata Motor¶s competitive position so as to get a respectable market share.
They also started looking at opportunities for inorganic growth. International
diversification was such a key part of the transformation strategy. It was all part of
first, reducing the impact of domestic cyclicity ± cyclicity is present across the
world but in different phases in different places - and, second, seeking new
geographies for growth in the face of the limitations of the domestic market,
especially in commercial vehicles, where we enjoy a very high market share of
over 60 percent. Tata Motors wanted to leverage the market-leading products
internationally. By identifying about 12 countries as priority markets, rather than
the 60 to 70 countries they tried to tap previously. They grew international sales to
some 50,000 vehicles, against 7,000 to 8,000 four years earlier.

To facilitate globalisation, Ratan Tata reorganised the company. The previously

independent export division was merged into the passenger car and commercial
vehicle divisions. The independent international division that looked after exports
and overseas business was dismantled. In the early 2000s, Tata Motors made
several important moves in its efforts to expand and consolidate its global
presence. In October 2003, Tata Motors forged a tie up with MG Rover of UK for
supplying petrol-powered cars with the Rover badge and styling, labelled as the
City Rover. A major step in Tata Motors¶ globalization efforts was a bid for
Daewoo Commercial Vehicles Ltd (DCVL), South Korea. Tata Motors had started
exploring the South African market under a taxi recapitalisation programme, which
aimed at replacing 120,000 of the country's 16-seater buses by 2006 with close to
80,000 buses in the 18-35-seater range. The Tatas were also setting up an assembly
unit in Thailand which had emerged as the largest manufacturer of pickup trucks in
the Asian region and the second-largest market in the world. The Tatas tied up with
Khodro of Iran for passenger cars, which promised a potential off take of around
20,000 vehicles per year. The Tatas also had a presence in Ukraine, Malaysia and
Bangladesh.


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Generally, people with greater experience, especially in a successful company, are

often resistant to change because they have been successful doing things the way
they have been used to, not realizing that the context has changed.

The people were very dedicated, but the organization had become very inward
looking. The trick was how to expose people to the outside world to allow them to
see what is happening there rather than drilling change into them through speeches
and letters. They felt that would be very artificial and would upset intelligent
people. The most effective way to sustain change is to make those involved
internalize it rather than just getting somebody to come and talk about it. For
example, they had people listen to customers talk about the problems they were
facing and the suggestions they had for product improvement. They exposed
people to products of competitors by tearing those products apart and analyzing the
good and bad and comparing them with their own, thereby making people see why
customers buy someone else¶s products rather than theirs.

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The most frozen layer in any organization is the people with experience who think
they know best; who believe that nothing can be changed. When they started to
connect with the younger high performers, it was very different. They used to have
breakfast meetings with a dozen of them, and would invite them to give very frank
views. They soon realized that they were suffocated and that they wanted change.
So they started picking out some of these individuals and giving them challenges.

In fact, the whole cost initiative came from one of the breakfast meetings at an
operation in Pune. Everyone had been talking about cost reductions and thinking in
terms of one-half of a percent or 1 percent, but these young employees indicated
that they thought a target of 10 percent was possible they made the senior people
sit in front of the presentation, and it quickly became clear that 10 percent target
was indeed achievable. After this, the young employees to put together a bigger
team from Jamshedpur and Lucknow, to include representatives from sales and
marketing, and spend ten days working on the plan. That was the defining moment
because if they had tried to go only through the top, they might not have succeeded
as well, and the transformation might have taken much longer.

Despite initial hiccups, they succeeded in establishing a strong presence in the car
market through the launch of the Indica hatchback, followed by the Indigo sedan
and the station wagon. Today they are the second-largest manufacturer of
passenger vehicles in India. This has been achieved in an environment of intense
competition with most well-known brands in the world.