Indian Auto Industry And The Talent Crisis


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Innovative ways for the Indian automotive industry to attract and retain talent.

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Indian Auto Industry And The Talent Crisis

  1. 1. Page 1 of 3 Date:29/09/2006 URL: Back Auto boom and the talent crisis Achal Raghavan Given the global nature of the automotive industry, the time is ripe for players in India to look outside for hiring talent — to "top up", so to speak. These are exciting times for the automotive industry. It is clearly in the fast lane, but will it get enough people to keep the accelerator pressed down? With a talent crunch looming, the industry must think up innovative ways to draw the young and the experienced. The news from the automotive industry is exhilarating. A look at some of the recent headlines: "Auto sector could grow to $145 billion by 2016: Minister"; "Auto companies primed for explosive growth"; "Auto industry seeks tax holiday, export sops"; "Tata Motors' Rs 12,000-cr expansion plans"; "Delphi to make India its R&D hub"; "Hyundai Motors India to step up exports"; "Suzuki, Nissan seek Govt support on infrastructure". They go on. These are exciting times for the automotive and auto-components industry in India. After decades of struggle, the industry is finally getting its share of attention and growth. The Government is showing all signs of extending structural support. The industry slogan could well be, "Let's roll!" So, what is the problem? What is the "looming crisis"? The looming crisis In one word, it is people — the impending talent crunch that the automotive industry will have to face and overcome, if the growth strategies have to succeed. The "Balanced Scorecard" approach (from Kaplan and Norton) clearly underlines the importance of innovation and growth — represented by motivated and talented people — as the starting point for implementing any strategy successfully. From where is the automotive industry going to get its people? The Information Technology industry continues to mop up fresh graduate engineers by the thousands. Having exhausted the talent pool in larger metros, IT firms are now going talent- hunting to such smaller towns as Dharwar, Mysore, Coimbatore, Jaipur and elsewhere. Talent management, retention and attrition head CEOs' agendas. Mr T. V. Mohandas Pai, Director, Human Resources, Infosys, talked about the talent crisis in the IT industry at the recent "Connect 2006" organised by the CII. This may seem ironical, considering that the country's population exceeds one billion. But, then, quantity and quality are very different things in a competitive industry. Competing for talent If this is the situation with the IT industry, where does the automotive industry stand, as a 8/27/2009
  2. 2. Page 2 of 3 competitor for talent? At the moment, it is the poor cousin in comparison, at least in the eyes of today's youth. The automotive industry will be hard-pressed to match, let alone beat, the IT industry in salaries. In any case, the rapid rise in salaries will quickly erode any cost- competitiveness the auto industry currently enjoys in the global setting. The answer, therefore, lies in looking beyond money, without underestimating the importance of a decent pay package. The talent strategy The need of the hour is a creative "talent strategy". The IT industry is facing the current crisis because it could not forecast the astounding growth it has achieved. The auto industry has to learn from that experience. The industry is getting to be very good at selling its cars and bikes. It now has to expend similar energy and invest similar money in "selling itself" to a different stakeholder altogether — the future employee. At the school and college level, while the manufacturers enjoy some brand visibility, the auto component industry does not. Studies show that today's generation values "continuous learning" and "exciting work" as critical factors in choosing a job and staying in it. That could be the central theme for the long-term talent attraction strategy. By happy coincidence, the automotive industry today does offer learning and excitement, with cutting-edge technologies still in a state of evolution. The target segment is both the high school student and the college-goer. The auto industry is familiar with using focus groups of vehicle owners to understand what their needs and aspirations are — why not use the same methodology to find out what excites today's young people in a job? Peer group aspirations are also a major driving force. The supply side On the supply side, while some colleges do offer good automotive subjects, the availability and variety have to be expanded significantly. Auto majors and educational institutions have to hold regular collaborative discussions on course design and delivery, including distance learning. Starting specialty colleges could well be a viable backward integration strategy for the manufacturers. While the primary focus could be on engineering design and manufacturing, they should not forget the place where the action finally takes place — the dealer's showroom. With the retailing boom just around the corner, the automotive industry will be competing for talent here too. Course design needs to take this into account. Given the global nature of the automotive industry, time is ripe for players in India to look outside for hiring talent — to "top up", so to speak. Cultural diversity has its own value in shaping the organisation's DNA, and India is no longer the hardship posting it used to be. The IT industry has already shown that this is a workable strategy. Countries such as Malaysia, Thailand and the Philippines would be good starting points — English-speaking, and auto-savvy. The value of experience While the focus will clearly be on attracting young talent, let us not overlook a complementary strategy that the auto industry could follow. I am referring to the critical need for middle-management talent and work experience, at times of rapid growth. Here again, the auto industry can learn from the travails of the IT/BPO industry, where there is an acute shortage of mature mid-level managers. 8/27/2009
  3. 3. Page 3 of 3 Most companies in India still mandate retirement at 58 or 60. This is a legacy of the past. Given improved life expectancy, nothing stops companies from pushing this limit to 65, or abolishing this criterion altogether — and going instead by merit and productivity. The `seniors' will draw larger salaries — but chosen well, and on merit, they can deliver much greater value by way of sheer knowledge, maturity and managerial capability. Exciting and youthful talent, blended with mature wisdom — that is the magic formula for the automotive industry. And the time to act is now. (The author is a strategy and business excellence consultant based at Bangalore. He was formerly Executive Director, Ingersoll-Rand (India). He can be contacted at © Copyright 2000 - 2009 The Hindu Business Line 8/27/2009