For the past two months, sleepless nights and anxiety-filled days have become a staple for many senior managers at Tata Engineering. It’s not downsizing nor the company’s well-publicised Rs 500-crore loss in the last fiscal that has contributed to this discomfort.

Instead, it is a management restructuring programme by the Tata group across all its key companies that’s turning the Rs 6,803-crore company’s senior executives insomniac.

The programme, which centres on a "work level study", is part of the Rs 40,000-crore, heavy engineering-to-services conglomerate’s efforts to transform itself from an unwieldy behemoth to a racehorse.

As the exercise in Tata Engineering, on which we have chosen to focus, shows, this is no conventional de-layering process that simply cuts down the chronic bureaucratic hierarchies and renders people redundant. The objective is to re-define job content more meaningfully.

"The purpose is to rejuvenate the organisation by defining richer jobs with fewer hierarchical levels of reporting," explains R Gopalakrishnan, executive director, Tata Sons.

This is clearly a long-term and painstaking exercise, but there’s an urgency within the group to revamp its operational structures. Through the nineties, the impact of recession and globalisation has made itself felt across the group.

According to a report in Business Standard Weekend, half of the top ten companies in the group currently have market capitalisations lower than their 1991 levels.

Gross over-staffing was a key problem, but so were huge, unwieldy management structures that were established in an era when markets were protected.

The group has partially addressed the first problem with large-scale voluntary retirement schemes (VRS). It is the second exercise that is likely to pose the biggest challenge.

Its implementation could well end up seeing several executives "downgraded" in accordance with their job profile, and it is this that has employees worried.

Tata Engineering is the fourth group company, after Tata Chemicals, Tata Sons and Indian Hotels, to undergo the exercise, which defines the different levels of job content among the management cadre and slots them into six levels, ranked A to F.

In the last two or three years the company has seen bursts of realignment either by selling parts of its business or by slashing the workforce and reducing its number of offices all over the country.

For instance, in 1998-99, Tata Engineering transferred its construction equipment business unit to Tata Construction Equipment Company Ltd (TELCON) and in 1999-2000, it transferred its machine tool division in Pune and its gear box and axles division in Jamshedpur to subsidiary companies.

In 2000, Tata Engineering initiated a VRS option by which approximately 3,500-odd employees, including 600 officers and managers, opted out. But just reducing head-count wasn’t a solution.

The company also had to increase the productivity of the existing staff. This meant the company had to address reporting structures as well as mindsets.

To get an idea of the problems, consider this. Tata Engineering’s operations are spread across three production facilities in Pune, Jamshedpur and Lucknow.

Its 24,100-strong employee base is scattered across the company’s 40-odd area offices all over the country. Each of these offices report to one of the four regional headquarters (Mumbai, Delhi, Kolkata and Bangalore).

Management structures are essentially functional, which makes coordination difficult. For instance, sales and after-sales service are separate functions.

Currently, the sales manager and the manager in charge of after-sales service at an area office report to the area manager.

The area manager follows a dual reporting structure, one to the regional manager and the other to the functional heads at the corporate level - like the head of heavy and medium commercial vehicles, head of light commercial vehicles, of annual maintenance contracts, and so on.

In effect, then, the area manager has no decision-making powers. So decisions have to go back and forth. (Area managers aren’t covered by the work-level study yet, but their role highlights that messy operational structure within the company.)

But changing structures first required changing the mindset of its long-standing employees, who were inured to the Tata credo of employment for life.

That is why senior group managers chose to initiate the exercise at the managerial level rather than start with the unionised staff.

In mid-April 2001, it initiated steps to implement the work level study covering the top 450 managers in its 2,500-strong managerial cadre.

As the findings of the study (currently being undertaken by management consultants Shilputsi and A F Ferguson) start being implemented in the coming months, Tata Engineering will get its reporting levels down from the existing ten levels to six.

The changes will, however, go beyond the numbers. As with any conventional company, existing levels were identified according to their designations. After the work level study, levels will be defined on the basis of job content.

How does this change things?

"Empowerment is the idea behind this exercise," says V K Verma, general manager, corporate human resources, Tata Engineering. Translated, that means managers below the line could have the scope to function more independently.

In turn, this is expected to give them a faster route to growth and result in better career development.

At the moment, Tata Engineering is undertaking what Verma explains as, putting "the jobs in place and not the job holder".

First, job contents are being defined and classified into levels by taking into account the dimensions involved in each job.

These dimensions include the level of impact of a job, the time horizon of decision-making, the financial dimensions, the strategic dimension and the external and internal contacts required for each task.

As these dimensions are identified, each of them will be assigned weightages. Based on the weight each job carries, it would then be fitted in with levels A to F. Obviously, the more weight a job carries, the higher it would feature in the work level.

To initiate the activity in Tata Engineering, meetings were set up between the consultants and senior officials like Ravi Kant, executive director, Tata Engineering, and Gopalakrishnan. This discussion helped the consultants understand the company and the way it functioned.

These meetings helped the consultants identify several overlapping layers of hierarchies within job functions. But this wasn’t enough. A point of view from each of the employees was essential to make the process "fair and balanced".

V Krishnan, vice president, corporate communications and a member of the steering committee, says, "Any process that you do with people involves sensitivity and a change management process has to be very clearly explained."

To this end Gopalakrishnan, then, made a presentation to the 450-odd managers who were being covered in the work-level study. An eight-member steering committee was also formed within Tata Engineering.

This committee held half-a-day communication workshops with the 450 managers, by dividing them into smaller groups of 20 managers.

Each member of the steering committee addressed the managers and explained the process step-by-step and distributed training kits and FAQs (frequently asked questions) sheets.

The communication session also served as a meeting point where basic forms to initiate the study were distributed. These communication sessions were spread over almost a month.

The most crucial part of the study then followed. Each of the 450 executives had to prepare a document based on the forms provided at the communication session.

The document was to provide information on the routine jobs that the executives performed. This document included the reporting structure of the executives, their day-to-day tasks, the importance they attached to the relative elements in their tasks, the roles they played, the contacts they maintained in connection with their jobs and the kind of meetings they attended.

It was a useful exercise since it encouraged executives to think about their jobs - but it also gave them a reason to worry.

According to a senior manager in Tata Engineering’s Pune unit, "We are being interviewed and we’ve to justify the very need of our job and the value it adds to the company."

The executives were worried that should they fail to justify their position in the organisation, they could be categorised as misfits and shown the door.

Is this a possibility?

Senior Tata Engineering executives categorically rule out any downsizing as a result of this exercise and say that those who add less value through their jobs would simply fall into a lower level - though this, too, can be a source of worry.

Admits Verma: "The communication sessions have reduced anxiety among employees to a large extent. However you cannot say that a manager is not worried. Anxiety levels will remain till the final results are delivered."

On the basis of the documents submitted by these executives, the consultants assess the data and conceptualise the levels in which each role fits in.

Over the last month, almost all the senior executives across distinct jobs in Tata Engineering have been met by the consultants for discussions related to the documents. Even two out of six junior managers handling specific functions are being met.

Once this part of the study is over, Shilputsi, which handles Pune and a large part of Mumbai, and A F Ferguson, which handles Lucknow, Jamshedpur and a part of Mumbai, will exchange their findings and present a consolidated report. After this, Tata Engineering will take steps to implement the findings of the study.

As the work levels are implemented, the top jobs in will be the ones which have a high level of strategic content while people involved in work with a large portion of operational content will find themselves in the lower levels, irrespective of current designations and salary levels.

Another fallout of the delayering exercise will be in putting a stop to the promotions that take place without any real change in the job content.

Assistant sales managers, for example, can no longer take it for granted that they’ll become sales managers after a stipulated passage of time, though they’ll continue to do the same thing.

But the company claims that it has not firmed up plans on the designation of its employees post the work level study.

However senior and junior managers who played superior and subordinate roles earlier could find well themselves in the same work level.

From the organisation’s point of view, the process will make decision-making faster, as it cuts across barriers that do not add value to a decision, and simultaneously empowers lower levels of management.

This means top levels of management will be able to devote more time on their strategic job contents rather than adding rubber stamp value to issues that can be managed at the lower level.

Importantly, the exercise would ensure cross-mobility within the Tata group and help in creating a talent pool.

For instance, managers handling functions of finance, human resources, logistics, purchasing and information technology (defined as functions without a sector bias) in companies like Tata Engineering could easily be shifted to other Tata group companies by taking their work levels into account.

This means even executives in the lower levels of bigger companies could manage key positions in smaller group companies.

For instance a manager in the ‘C’ level of a company like Tata Engineering could probably become the CEO of a smaller Tata group company.

None of that has happened yet, which is why there’s still more worry than anticipation at Tata Engineering.

More to the point, it’s a long-term exercise, the impact of which will be evident only five to ten years from now.

Will the company and group have the staying power?