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.
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