CASE STUDY. Can top MBAs aid the flight of the Falcon?

“Rags, you know the kids these days. They are all over the place, but rarely display in-depth knowledge. A management training programme is just an excuse for them to have a paid vacation!” That was Nishanth’s first reaction on hearing CEO Raghav Misra’s idea of inducting a batch of management trainees into Falcon Motors Ltd. Raghav recollected the conversation word for word, because he was quite taken aback at what Nishanth Chitre, Executive VP – Sales & Marketing, had said.

He had broached the topic with Nishanth first because, as head of sales and marketing for Falcon Motors, Nishanth had the potential to absorb a large number of fresh MBA graduates into his team. Moreover, Nishanth and Raghav went back a long way, to the time they had themselves joined Falcon as management trainees in 1988.

Even though Raghav had pipped his batchmate to become the CEO in 2011, they had had no problems in working with each other, and Nishanth accepted Raghav’s overall leadership of the company.

In fact, there were others in Falcon’s top leadership team who had participated in the firm’s earlier management trainee programmes. Having worked together for many years, the senior management had become a cohesive unit, which helped the company come out of bad patches during the late-1990s and mid-2000s.

Since 2010, Falcon’s products have been lapped up by the market. Being more economical than a Harley-Davidson or a Triumph, and with a 60-year-old heritage of ‘Made by India, for the World’ motorcycles, Falcon has positioned itself in a sweet spot to take advantage of the projected boom in the leisure and lifestyle sector over the next few years.

It was to prepare Falcon for the coming years that Raghav had thought of resurrecting the management trainee programme.

Having seen its benefits, Raghav was keen to see a bunch of smart, young managers working together to secure the company’s legacy — maybe one of them would even go on to become CEO.

“Things have changed from our time, Rags,” said Vanchi Nathan, Executive VP, HRD, when Raghav talked to him a day after his conversation with Nishanth.

“I have also been trying to put in place a framework for the management training programme. The challenge is not only how to hire the new MBAs, but also how to change the mindset of the existing staff to adapt to the new dynamics. We haven’t hired any fresh MBAs for the past 8-10 years, so our managers have forgotten what these graduates can be like. My plan is to have at least 30 fresh MBAs on board,” he continued.

“You think so?” asked Raghav. “Maybe we should not bring in such a large group if we are not sure of managing the programme well. I was thinking of about 10 people in 2013. If it works well, we can expand the programme next year.”

Vanchi responded: “I think that, as a small-scale experiment, the programme will not get the attention it deserves. We should go big-bang and have a sizeable number come in. That will also get the buzz going on the campuses.”

“I guess you have a point there. I’m glad you’ve also been thinking about it. Why don’t you present your plan at next week’s FELC?”asked Raghav.

“Love it. Management types. Get them to understand design. I’m on.” Shekar Varier, Executive VP, R&D, was his usual terse self after Vanchi’s presentation to Falcon’s Executive Leadership Council (FELC).

Vanchi had outlined the training programme, with its two-months-in-each-function (design, operations, SCM, finance, HR and sales) rotation, calibrated learning structure and graduated compensation plans. The other Council members were in agreement. Vanchi had prepared the ground by having informal discussions with each of them before the meeting. Many of their concerns had been addressed and they were excited about this initiative.

“How can you deny my boys a decent hike this year? They have really slogged and are not going to be happy with an 8 per cent increase in compensation!” Venkat Malipeddi, Executive VP, Operations, was on the warpath.

“We are planning to bring in greenhorn kids at fancy salaries; salaries that our managers are getting after working for 8-10 years. I will have a revolt on my hands when they learn what the management trainees are going to be paid!”

“Venkat, that’s true for all our people. They should realise that if they want those kinds of salaries, they will have to work at a different level,” said Bilal Ullah, Executive VP, Supply Chain.

“I think one good recruit can replace three of the current ‘managers’ within a year. Those managers should be ready to take on more challenges, or they will be history.”

“We can’t have such comparisons — the trainees we have hired are top-notch. If the 26 who have accepted the offer all join us in June, Falcon will be a transformed company,” added Pankaj Chainani, Executive VP, Finance, closing the discussion.

“Gentlemen, the signs are not encouraging. Although all the 26 trainees joined us last month, we have lost four of them already. Vanchi and I had a feedback session with the rest of them two days back, and here is the gist of what we heard,” said Raghav, as Vanchi brought up a slide on screen (see Info-box).

“These are all good guys. They are asking basic questions — actually, a couple of my managers are now changing processes because of their questions. But many others feel threatened because they are not able to offer any convincing answers,” Venkat was genuinely admiring of the effect the young MBAs had had.

Nishanth was also appreciative.

“They have lit a few fires with our dealers and at the service outlets. My boys have had to raise the bar with their partners. These are good problems to have, but I only wish these chaps were more tactful when they ask questions. It almost sounds like they are ready for a fight!”

“But overall not good. For them, for us. We must recover. Vanchi, tell us what to do.” Sekhar put the feelings of all the members of the leadership council in a nutshell.

What actions would you recommend Vanchi should take to ensure the remaining 22 trainees complete the programme? Should he train the managers of Falcon on how to handle the high-potential, high-achievement-oriented trainees? Or, should he counsel the latter to be more tactful? Are there any other actions he should consider?