Downsizing at Pennar industries limited

Abstract

In July 2000, Nrupender Rao, Executive Chairman and Managing Director of Pennar Industries Ltd (Pennar), was looking for a strategy to halve the company s wage bill to about Rs 4.5 million a month. The company, battered by unprecedented foreign as well as domestic competition, had no money to offer a generous severance package to the scores of employees who would be required to leave. Harsh methods of personnel reduction, however, were out of the question. He had made it clear to Rama Rao, General Manager-Personnel, that the Pennar values of caring for people should not be sacrificed at any cost. I can live with a 2 crore [Rs 20 million] loss, he said, but I can t let our workers be thrown on the streets. He considered himself a Theory Y manager and a people s man ; the employees had come to trust him to protect their interests. He wanted the parting to be painless for everyone including himself. BI