Ashok Leyland Limited: Building Competitive Advantage Through Generational Diversity

Ashok Leyland Limited: Building Competitive Advantage through Generational Diversity

“Future is always in the present; it is lurking somewhere and has the tendency to show up in a manner that is not foreseen by everybody”¹

“We realised that it was important for us to challenge the young executives at work and through that reinforce the reasons for them to stay on. If the organization had to change to suit the youth, so be it.”²

-- R. Seshasayee, Non-Executive Vice Chairman of the Board and Ex-MD, Ashok Leyland Ltd.

Since the beginning of the new millennium, Ashok Leyland Limited (ALL), India’s second largest manufacturer of trucks and buses, had been setting itself in a new course to compete and be at par with global standards. Till 1991, ALL was operating in a duopolistic market. Later, the Indian Medium and Heavy Commercial Vehicles (M&HCV) market became more competitive with the opening up of the Indian economy and ALL realized the need to be agile and stay relevant. The company figured that it could only become agile by turning itself young and began recruiting younger workforce. By 2003-2004, the company had 37% of young executives in its management. However, the attrition levels among these young executives increased as they felt left out due to the culture and generation gap that existed between them and the senior executives.

The company HR then took initiatives that empowered the millennial workforce and ensured their participation in crucial projects. The company also promised their growth within the company. With younger employees gaining importance, the company now saw a reversal of the problem – the senior executives now felt left out. The company then roped them as mentors to the young executives. Though these initiatives have broken the ice between the young and senior executives, the promise of growth for millennials within the company still remains to be addressed. The adverse market conditions and the cost cutting measures of the company in the recent years made ALL’s promise even more challenging..............

Ashok Leyland: Past Perfect, Future Tense

Company Profile and History

Ashok Leyland Limited (ALL) is an automobile manufacturing company based in Chennai, India. It is the second largest manufacturer of commercial vehicles including trucks, buses, emergency and military vehicles. The company is the market leader in the bus segment (19–80 seater buses) and the second largest in the medium and heavy commercial vehicle segment (M&HCV). Its presence extends to trucks ranging from 7.5 tons to 49 tons as well as Light Commercial Vehicle (LCV) segment which is less than 7.5 ton (Annexure I). The company owns six manufacturing plants in India, two in Europe, one in Middle-East and one Technical Centre in India (Exhibit I). During 2011-2012, the company had a market share of 25.7% (up from 23.5% in FY10) in the M&HCV space, 41.1% in buses and 15% in the LCV segment.³ During 2013-2014, the company earned revenues of INR 124.8 billion4 (Annexure II(a), Annexure II(b) and Annexure II(c)).............................

The origins of ALL can be traced back to 1948, when an independent India was trying to be self-reliant. With the persuasion of Pandit Jawaharlal Nehru, India’s first Prime Minister, Raghunandan Saran (Saran) established Ashok Motors (named after his son’s name) in Chennai (Madras) for the assembly and distribution of Austin A40 passenger cars from England. The company had its headquarters in Rajaji Salai, Chennai and a manufacturing plant in Ennore. Saran later envisioned that commercial vehicles were more in need than the passenger vehicles and had started negotiations with Leyland Motors of UK. But he passed away before the deal was struck........................

Exhibits

Exhibit I: Ashok Leyland’s Manufacturing Facilities

Exhibit II: Ashok Leyland Milestones

Exhibit III: Early Products From Ashok Leyland

Exhibit IV: Sales of MHCV Segment

Exhibit V: Ashok Leyland’s Sales Volume

Exhibit VI: Ashok Leyland – Competitor Scenario

Exhibit VII: Ashok Leyland Driver’s Training Centre

Exhibit VIII: Ashok Leyland’s R&D Expenditure (in million)

Exhibit IX: ALL’s New Products

Exhibit X: Ashok Leyland’s ‘Vikings’ for Cross-Border Services

Exhibit XI: HR Check at Ashok Leyland

Exhibit XII: Workplace Dynamics of the Four Generations

Exhibit XIII: Ashok Leyland – i-Bus

Exhibit XIV: Truck-on-Truck Mode of Delivery

Annexures

Annexure I: Ashok Leyland Product Range

Annexure II(a): Ashok Leyland: Financial Highlights

Annexure II(b): Ashok Leyland Financials (Estimated for FY2014-FY2016)

Annexure II-C: Ashok Leyland Financial Ratios

¹ R. Seshasayee, “Advantage India”, Vikalpa, Volume 32, No. 2, April–June 2007

² N. Madhavan, “Ashok Leyland Threatened by Generation Gap Among its Executives”, http://businesstoday.intoday.in/story/experiencevs-exuberance/1/4918.html, November 29^th 2009

³ “Ashok Leyland Losing Grip as Market Share, Profits Decline”, http://www.newindianexpress.com/business/news/Ashok-Leyland-Losing-Grip-as-Market-Share-Profits-Decline/2013/12/08/article1933845.ece#.U0t4RvmSw9k, December 8^th 2013

⁴ “Ashok Leyland”, http://www.moneycontrol.com/stocks/company_info/print_main.php

Ashok Leyland Limited: Building Competitive Advantage through Generational Diversity

Prerequisite Conceptual Understanding

Prerequisite Conceptual Understanding (PCU) material is the background material that would aid immensely in mapping the decision areas of this case study and bring a synthesis amongst the relevant concepts. The participants/students should be encouraged to read this material to benefit from the broader perspectives outlined in the case study.

• 1. Rishikesha T. Krishnan, “Linking Corporate Strategy and HR Strategy: Implications for HR Professional”, Emerging Asia: An HR Agenda, Tata McGraw Hill, 2005 – To understand the link between corporate strategy and human resources strategy such that HR professionals can contribute to better integration of corporate and business strategy with HR strategy
• 2. Sumantra Ghoshal and Christopher A. Bartlett, “Changing the Role of Top Management: Beyond Structure to Processes”, Harvard Business Review, January 1995 – To understand the larger role of processes in organizational change as compared to organizational structure
• 3. Donald N. Sull, “Why Good Companies Go Bad”, Harvard Business Review, July-August 1999 – To understand the reasons behind why some of the best companies fail with changing business environments
• 4. Jeanne C. Meister and Karie Willyerd, “Mentoring Millennials”, Harvard Business Review, May 2010 – To understand the concept of reverse mentoring and also the importance of feedback for Gen Y employees
• 5. Jacquelyn B. James et al., “Generational Differences in Perceptions of Older Workers’ Capabilities”, The Centre on Aging & Work, www.bc.edu, November 2007 – To understand the workplace behavior of people from various generations
• 6. “How Do Generational Differences Impact Organizations and Teams?”, www.birkman.com – To understand the impact of generational differences
• 7. Paul R. Dannar, “Millennials: What They Offer Our Organizations and How Leaders Can Make Sure They Deliver”, Journal of Value-Based Leadership, 2013 – To understand the workplace attributes of millennials

Synopsis

Quite contemporary in nature, this case study enables an engaging discussion on the concept of workforce/ generational diversity which hitherto was largely interpreted in terms of gender diversity. As the millennials started entering the workforce at the turn of the century, organizations were faced with a unique challenge of managing workforce comprising of traditionalists, baby boomers, Gen X and Gen Y or the millennials. A case in point is Ashok Leyland Ltd (ALL), one of the leading Indian commercial vehicles manufacturers. Faced with the problem of generation gap that threatened the growth of the organization, the company initiated very innovative HR initiatives such as Mission YEs, to bridge the generation gap and place the company on the road to success. The story of ALL highlights the significance of understanding the workplace attributes of the millennials. How are the millennials different from workforce of previous generations? In what ways can organizations engage the millennials to leverage their strengths?

Pedagogical Objectives

• • To understand and analyze Ashok Leyland Ltd.’s (ALL’s) business landscape and the emergence of its strategy curve in context to how the structure (the environment) forces a company’s strategy
• • To understand the reasons for generational disconnect at Ashok Leyland Ltd.(ALL) and analyze the same in the light of millennials’ characteristics
• • To discuss and debate on the initiatives taken by ALL to bridge the generational gaps to create a unified and purpose-oriented workforce and analyze the efficacy of the initiatives
• • To contextualize the role and efficacy of corporate culture and cross-functional teams in effecting a lasting organizational change

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Positioning and Setting

This case study can be used for the following programs/courses:

I. MBA/ Executive MBA Programs

This case study can be used in the MBA programs for either of the following courses:

a) HRM course – Workplace diversity/managing millennial workforce modules

b) Organizational Behavior course
• Corporate culture (the need and importance of engulfing, encompassing and inclusive corporate culture in the light of millennial workforce)
• Cross-functional teams

c) Strategic HRM – How a company’s corporate strategy is linked with HRM. In this case, how important it was for ALL to align its HR strategy with its corporate/ competitive strategy
d) Strategy course

• Emergent vs deliberate strategy – How a company’s grand strategy emerges over a long time horizon and to understand the importance of flexibility

• How structure shapes strategy + 5Ps of strategy

II. MDPs (Management/ Executive Development Programs) – How to manage generational gaps and leverage the generational diversity

Before the Case Discussion
a) The participants were asked to read the articles given as PCUs
b) The participants were also asked to speak to their parents or their seniors about the style of working in their respective offices

Case Analysis

As a warming up exercise, we asked the participants (as all of them belonged to millennial generation/Gen Y) to share their expectations from the workplace when they join an organization after completing their studies. They were specifically asked if they would like to have a work life like that of their parents. With this, a discussion on the case study on “Ashok Leyland Limited: Building Competitive Advantage Through Generational Diversity” was initiated. The classroom discussion was facilitated under three broad segments as explained below. The accompanying questions under each segment are suggestive trigger points for classroom discussion............................