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ASIAN CASE RESEARCH JOURNAL, VOL.

6, ISSUE 1, 55–84 (2002)

ACRJ
New Holland Tractors (India)
This case was prepared by
Devashis Rath, Doctoral Palani Kumar stretched himself over a cup of hot tea in his
Scholar at Management
Development Institute, unassuming office at Usha Bhawan, Okhla Phase III, New
Gurgaon, India under the
guidance of Professor R.K.
Delhi. It was around 7.30 p.m. and he had stayed back to
Gupta, Professor of Human muse over the happenings of the past few years. Those were
Behavior and Organization
Development Area, as an aid the years when life for him was awfully busy and chaotic.
to instructors in classroom Palani’s start-up organisation had, over the past few years,
use rather than to illustrate
either effective or ineffective grown in business with a steadily expanding manpower. His
handling of an administra- vision of building a process and team based organisation had
tion or business situation.
become a reality. However, there were causes for concern,
Please address all corre- which this inevitable growth was throwing up. His thoughts
spondence to Devashis
Rath, Management Deve- cradled the maze of intriguing issues, which were popping
lopment Institute, Post
Box #60, Mehrauli Road,
up every now and then. He had no inkling what was likely
Sukhrali, Gurgaon - 122001, to evolve in future. Removing his spectacles he placed them
Haryana, India, E-mail:
devashis_r@yahoo.com. on his table and stretched further to relax himself and in-
dulge in some reflection on the lessons his effort had taught
him in the last few years. He smiled to himself as he recalled
those initial days when he had accepted a challenge of set-
ting up a tractor-manufacturing unit for one UK based multi-
national major. He remembered how he had begun his task
almost all by himself — be it purchasing tables or chasing
the telephone department for a connection for the just-born
venture. Today, he could pride himself of having put in
place India’s most modern tractor plant, with products that
were technologically way ahead of competitors.

© 2002 by World Scientific Publishing Co.


56 ACRJ

TRACTOR INDUSTRY IN INDIA

History of the Indian Tractor Industry

Tractors are multi-purpose vehicles that are used primarily


for agricultural purposes. During the pre-independence era,
war surplus tractors were primarily imported for land recla-
mation and cultivation. The Central and State Tractor
Organisations were set up to develop and promote supply
and use of tractors in agriculture. Till 1960 demand for trac-
tors was primarily met through imports. Domestic produc-
tion of tractors began in 1961 with five players in the
industry. During the period 1971–1980 six new manufactur-
ers joined the fray. Out of these Escorts Ltd began to manu-
facture Ford tractors in 1971 in collaboration with Ford, UK.
By the end of the decade it had established high respectabil-
ity in the market. This period also witnessed considerable
improvement in credit facilities for farmers, which expanded
the tractor market in India. In the next decade five new en-
trants joined the industry, which had become fairly competi-
tive. A redeeming development in this decade was that
India, which was a net importer of tractors till the mid-
seventies, became an exporter to African countries in the
1980s. In 1992, the industrial licence for manufacturing trac-
tor in India was made redundant as a part of the
liberalisation process. This, coupled with a promising tractor
market, lured multinational majors in the industry to start
operations in India. Thus since 1997 India saw five new
manufacturers commence commercial production. In 1998,
Bajaj Tempo began tractor production in Pune. In April of
the same year New Holland Tractor (India) Pvt. Ltd.
launched production with a state-of-the-art plant at Greater
Noida in Uttar Pradesh. Larsen and Toubro also joined the
fray with a joint venture with John Deere, USA and set up a
plant in Pune, Maharastra.
NEW HOLLAND TRACTORS (INDIA) 57

COMPANY BACKGROUND

The Parents

The global parent of NHI was CNH, headquartered at


Racine, Wisconsin, midway between Milwaukee and Chi-
cago. Listed on the New York Stock Exchange, by the end of
1999 CNH was the number one manufacturer of agricultural
tractors and combines in the world. It was the third largest
maker of construction equipment and had within its group
one of the world’s largest equipment finance companies. It
had operations in 16 countries and sold its products in 160
markets through a network of more than 10,000 dealers and
distributors. In fact, CNH was the market leader in agricul-
tural tractors in most of the European and North American
countries and a major player in key markets of Latin
America and the Asia-Pacific region.

The Indian Subsidiary

New Holland’s association with Indian markets dated back


to 1950s, when one of its ancestors — Ford Motor Company
— was exporting its tractors to India. Subsequently in 1969
Ford signed an agreement with Escorts Ltd. to create a joint
venture in India, named Escorts Tractors Ltd. Ford 3600, 3610
and 3620 models became extremely popular with Indian
farmers. By 1994 the Ford brand accounted for more than 50
percent of tractors sold in the over-40 HP category and com-
manded a 9.4 per cent in overall tractor market in India.
Though at global level ownership of the parent company
kept changing hands through mergers and acquisitions fi-
nally giving birth to CNH, the joint venture in India kept
running successfully till 1994. The Ford name and logo con-
tinued to be used by New Holland even though in 1991 FIAT
had taken over the agri-equipment business of Ford. The
agreement between FIAT and Ford allowed FIAT to use the
popular and well-known Ford name and logo for the next
ten years in markets where Ford was already operating.
58 ACRJ

However, by 1994, the Indian economy was opening


up and was in the processes of liberalisation. As a coping
strategy Escorts was interested to consolidate its varied busi-
nesses under one umbrella, while New Holland was tempted
to play a greater role in Indian tractor market and thereby
enhance its visibility. Thus the 25-year-old joint venture was
formally terminated with FIAT and the name of Ford and its
associated technology was withdrawn. In September 1995,
New Holland opened its Liaison Office at Manor Hotel in
New Delhi. Mr. T.L. Palani Kumar, who had a good profes-
sional record in the erstwhile joint venture as its Executive
Director and C.E.O., was appointed as its Managing Director.
By January 1997 the first commercial activity was com-
menced with the launch of the distribution of Genuine Ford
Tractor Parts. Palani Kumar recalled:
Our first step in re-establishing our presence in
Indian market was to provide superior customer
support to the 200,000 Ford tractor owners existing
in our country, through a nation-wide support net-
work. This demonstrated our commitment to cus-
tomer and to customer service.
In the succeeding months NHI acquired a 60-acre plot
with 30,000 sq. meters of covered area at Greater Noida, ad-
joining Delhi. In June, Fiat Engineering commenced plant
construction work and in April 1998, NHI formally entered
the Indian tractors market, albeit through the high-end seg-
ment, by launching its 70 HP tractor. A year later on 11
March 1999, a state-of-the-art plant was inaugurated at
Greater Noida and the Ford 50 HP tractor was launched. In
fact NHI was credited with having set up the most modern
tractor plant in India in a record time of sixteen months. By
July 2000 New Holland had a 15 per cent market share in the
50 HP tractor segment, while in the same segment its market
share in Punjab was 24 per cent, in Haryana 25 per cent and
in Rajasthan 20 percent. In terms of units sold, while in 1998
NHI had sold only 350 tractors, in 1999 it sold 2600 tractors,
and in the first six months of 2000, the figure was 2700.
NEW HOLLAND TRACTORS (INDIA) 59

Philosophy and Mission

The basic philosophy of New Holland to re-enter India was


to improve and modernise Indian cultivation techniques
through effective use of appropriate equipment. “New Hol-
land and Indian agriculture industry’s partnership is based
on a common interest — to improve and strengthen farming
techniques through the effective use of technology”, said
Palani Kumar while reflecting upon the company’s objec-
tives in India. Accordingly, the mission statement read as
follows:
“To continuously create superior value for our cus-
tomers, shareholders, employees and business part-
ners, by together building and growing a sound
business network in India and achieving industry
leadership and world class standards in both prod-
ucts and processes.”
Based on this philosophy NHI differentiated its prod-
ucts in terms of new technology and new features, which
were much more useful in farm mechanisation. For instance,
for the first time NHI offered Indian farmers a tractor which
had oil immersed brakes to reduce excessive wear and tear.
Similarly, one important agenda of the Company was to
train Indian farmers to use modern farming equipment. For
example, by year 2000, the New Holland Baler 565 was
steadily gaining acceptance and helping farmers reap riches
from farm waste. It assisted the farmer to bale his crop resi-
due by making it not only easy to handle and transport but
also made commercial sense while helping to save the envi-
ronment from pollution. Palani explained:
While tractor is the prime mover, it is the imple-
ments used that bring about mechanisation. Hence
we train farmers how to use various implements in a
tractor.
60 ACRJ

PALANI’S THREE-POINT AGENDA

Palani Kumar was a B.Tech in Chemical Engineering from


the Indian Institute of Technology, Madras and an alumnus
of the Indian Institute of Management, Ahmedabad. He had
over 22 years of experience in Marketing, Operations and En-
terprise Management and was Executive Director and C.E.O.
of Escorts Tractors Ltd. at that point of time. He was quick to
accept the challenge. As Managing Director of NHI, he had
to build a world-class tractor manufacturing and marketing
operations in India. World class in terms of being at par with
other manufacturing sites of CNH, the global parent, and at
the same time meeting the unique requirements of Indian
farmers, so as to take on the existing giants in the Indian
tractor industry. Thus he chalked out a three-point agenda —
farmer’s education, right product selection and putting in
place a nimble, flexible and agile organisation.
Farmer’s education was viewed in terms of training
the farmer in how best to use a tractor, what kind of imple-
ments to use for different farm operations and in different
soil conditions, as well as benefits of using higher horse
power tractors, etc. The second strategy was to select the
right product for the Indian market. Palani knew New Hol-
land tractors sold in the West would not be able to cater to
Indian market realities. Hence they had to tailor make the
product for the unique requirements of his customers. A
team of engineers worked at their design and engineering
centre to evolve the right product. They worked hard to re-
move unnecessary frills like hydraulic and electronic systems
and put in features that were unique to Indian agriculture
like water proofing for paddy operations. This helped NHI
in selecting the appropriate technology for the Indian
market.
However, to Palani, the third point of his agenda was
the most challenging. Intuitively he felt that long-term com-
petitiveness of NHI would hinge on his ability to evolve a
lean, flexible and agile organisation. For that, he had to think
of something other than what he had seen in his previous
organisations — the hierarchical monolith. The best choice
NEW HOLLAND TRACTORS (INDIA) 61

that occurred to him, he said, was “to develop a collective


synergy from individual functionality through effective team
work based on well set business processes.” Justifying the
stand of the Managing Director, Rajesh Kharbanda, the Chief
of IS, said:
We visualised that a team and process based
organisational structure would enable NHI to estab-
lish a barrierless flexible organisation, enhance
greater communication for speed of decision and ac-
tion, focus on deliverables rather than on activities,
inculcate result orientation and establish clearly
defined measures of efficiency.
Palani believed that if he would succeed in his experi-
ment then he would be able to inject a greater degree of com-
petitive strength to the new-born venture. Thus in passionate
pursuit of his vision, Palani set out to operationalise this
idea.

THE PROJECT SETS OFF

Process and Team Orientation

At the very outset the Managing Director had to make cer-


tain basic concepts clear to his colleagues. Thus process ori-
entation, in NHI, came to mean de-emphasising individual
expertise for its own sake but to see that individual expertise,
initiative, drive, etc. get applied in the context of business
processes and team work. Emphasis was to put the right
processes in place, which would be handled by work teams
supported by a lean and flat organisational structure. Right
from day one high standards were set in every aspect of
business with team work acting as a guiding radar for all
other aspects of organisational building like culture, work
place practices, human resource policies, etc. Palani recalled:
In real terms a flat organisation means to me a team
of people trying to set up an organisation. This
means that there is no room for hierarchies. I made it
62 ACRJ

clear that teamwork will be given top priority and


the culture should develop into an open one where
anybody can work with anyone else across levels
and across departments. Therefore policies were
evolved that revolved round the core philosophy of
teamwork and were made robust enough to marry
local realities with demands from the global parent.
This was important since at that point of time a team
and process approach to organisation building was
not an established process even at the global level of
the parent organisation.
However, fortunately for him, the top team at the glo-
bal headquarters appreciated that Palani had a vision and
they gave him a free hand. It was an achievement for NHI
and a moral booster for its employees when the project team
launched the 50-hp tractor, one month before schedule.

A Flat Structure

NHI had only five designations to accommodate its employ-


ees — Chief Manager, Sr. Manager, Manager, Dy. Manager
and Executives. All blue-collar workers were called Associ-
ates and had no hierarchy among them. Appendix 1 shows
the administrative reporting relationships at NHI. About his
own designation Palani admitted:
I would have preferred a designation of say “team
leader” or “co-ordinator”, but for statutory require-
ments of having a designated Managing Director un-
der Indian Law.
He thus began to operate in an all-together different
operational structure designed to facilitate teamwork. Will-
iam Ray Shepherd, an expatriate and Chief Engineer at NHI
clarified:
Teamwork helped us to keep NHI a lean
organisation since cross-functional working made
people, including heads of functions, take on broader
responsibilities. This type of operational structure
NEW HOLLAND TRACTORS (INDIA) 63

facilitated in promoting in our people a holistic view


about the organisation without limiting them to their
functional identities only.
Needless to say work pressure was high. Murali
Krishna, Deputy Manager (Marketing) and member of the
prestigious Supply Chain Team admitted that due to high
work pressure he was forced to compromise with the inten-
sity of his participation in various teams based on his per-
sonal judgement about the importance of issues on the
agenda of team meetings. Sharing Murali’s concern was
Dinesh Bhrushundi, Manager Supplier Quality Assurance.
The stress level is high due to multiple accountabil-
ity. A team member is accountable to his team, to the
functional head, to numerous internal customers, to
process owners, etc. In fact accountability is both
vertical and horizontal with pressing time targets.
Therefore, at the time of recruitment senior people
made it clear to prospective candidates that the operational
design of NHI was such that there was very little scope
for heading hierarchies. Tejender Gera, Associate and co-
ordinator of Customer Quality Audit (CQA) team was beam-
ing with pride when he said:
The best thing I like about working for NHI is that
here we have direct access to Chief Managers. Here
we do not have supervisors to breathe down our
neck. Work becomes interesting and exciting when
we decide everything ourselves right from target set-
ting to problem solving.
It was a matter of pleasant surprise for Palani and oth-
ers when in two consecutive years, 1999 and 2000, Associates
recorded highest production, 35 tractors per day, when they
were asked to run the plant all by themselves. This hap-
pened on the occasion of the annual communication meeting
when all employees above the rank of Associates were away
from the plant, closeted with the Managing Director in some
hotel for one entire day.
Chief Managers played a role of integrating devices to
ensure that diverse team activities were performed without
64 ACRJ

losing sight of organisational goals. At the organisational


level, while they formed a part of top management team,
they were at the same time members in some cross-func-
tional teams while team leaders in others. At shop floor level
Associates had their own teams to address day to day con-
cerns affecting production. On the other hand at managerial
level, Sr. Managers, Managers, Dy. Managers and Executives,
sometimes independently and sometimes along with Chief
Managers, operated in diverse teams each addressing a issue
that contributed to the ultimate organisational goal of build-
ing high quality products at low costs in the right volumes.
Appendix 2 enlists some key cross-functional teams operat-
ing at NHI along with issues that were being addressed
by them.

Recruitment in Context

To succeed in such a new operational structure recruiting the


right kind of employees became a Herculean task for Palani.
Though there was a need for high calibre manpower, flatness
of the organisation became a bottleneck in recruitment. It
was difficult to approach senior people and convince them to
accept a designation not commensurate with the one they
currently enjoyed. For instance, a Vice President in one com-
pany would not take kindly to the suggestion to join NHI
with his visiting card proclaiming him as a Chief Manager, a
designation, which he might have passed through several
years ago. A young marketing executive, while in transit in
the company shuttle between corporate office in Delhi and
the plant at Greater Noida, explained with dejection to his
fellow colleagues the reasons for his decision to move away
from NHI after putting in around two and half years of
service:
I had to succumb to pressures from my family to quit
NHI for the simple reason that even after five years
of my total working experience my designation is
“Executive”. Back home in Maharastra, my friends
are enjoying better designations and it is becoming
NEW HOLLAND TRACTORS (INDIA) 65

difficult for my family members and me to explain


my status in this organisation.
Amidst this cultural constraint the Managing Director
went about picking and choosing people with maximum
caution and care. The effort was to identify, apart from req-
uisite skill level, whether candidates had an aptitude and
attitude required for working in teams. Reminisced Palani:
I felt that if anyone wanted to join NHI he must
be inspired enough with the mission of setting up
an organisation in a radically different fashion. I did
not want people to be lured by fancy designations
and pay packets, or the MNC label. Essentially
these were not the required organisation building
motivations.
It took great efforts, a lot of logical convincing and a
number of heart-to-heart discussions for the Managing
Director to get men of his choice to fill up slots in the top
management team representing functional areas like vendor
development, marketing, projects and manufacturing.
Palani’s strategy was targeted at attracting young talented
people from the automotive and engineering industry who
would be more flexible and adaptive to a new work para-
digm. This is reflected in the age and experience profile of
NHI employees. Seventy-five per cent of its employees were
below 30 years of age. Similarly, while forty-four per cent
of employees had work experience of below five years,
twenty-three per cent of employees had work experience of
between six to ten years. Needless to say the recruitment
process was rigorous, with multi-level personal interviews,
psychological tests, etc. S.Y. Siddiqui, Chief of Human
Resources, explaining the recruitment process said:
The interview process is split into three levels. First,
operational people in HR and the concerned function
meet the candidate. Then candidates are asked to
meet the functional chief and finally, they meet the
Managing Director as well. The assessment process
at all three stages is different. However, at every
stage, interviewers make separate notes about their
66 ACRJ

impressions and comments about the candidate and


pass it on to the next level for further exploration.

UNLEARNING TO LEARN

Even after all the care and caution that went into recruiting
people for the nascent organisation, which also included sub-
jecting candidates to a battery of psychological tests, Palani
had to face the cultural rigidity of his people who came from
different working cultures. He said:
We recruited people who had previous experience in
different company cultures like Bajaj Auto, Telco,
Eicher, Escorts, Maruti Udyog, etc. There was an
amalgamation of diverse work cultures, which gave
us enough indications of tough times ahead. Even
people with 4 to 5 years of experience exhibited ri-
gidity in their approach to work based on their prior
experience.
Adam Hart, Business Controller for Indian Operations
of CNH, expressed with equal concern another aspect of In-
dian work behaviour. With frustration writ large on his face
he said:
The attitude towards time is really poor with Indi-
ans. Even when the CEO calls a meeting at 10 in the
morning you will find just two Europeans, me and
Ray Shepherd, in the meeting room on time. If this
happens with senior people, you can guess the situa-
tion down below. That apart, culturally Indians
make promises, which they do not keep. If I want
something done and ask my subordinates, the reply
is invariably “yes” but when I call on them at the
appropriate time, the job is usually not done. This is
not limited to NHI, I have found it in the shopping
mall, airport and everywhere.
Thus Human Resource Department initiated a series of
sensitisation exercises to sensitise employees to a process and
team-based working culture. The process started with induc-
NEW HOLLAND TRACTORS (INDIA) 67

tion of an employee wherein new incumbents were made


familiar with the need and rationale for team-based working,
what is expected out of teamworking, key components of ef-
fective teams, when to team, etc. Further, they were made to
spend one full day in different functions so that they have an
opportunity to get a fair exposure to functions others than
the one for which they had been recruited. To sensitise em-
ployees with the customer and his expectations, they were
made to spend a day on a 40-acre farm, which NHI had
leased exclusively for training purposes. There inductees
were required to undergo training in handling a real tractor
on a real farmland using various farming equipment. This
apart, the initial 70 to 80 associates who were recruited for
shop floor activities along with engineers were also sent
abroad to New Holland plants at Basildon in UK, Antwerp
in Belgium, etc., which gave employees a first hand taste of
what world class manufacturing was all about. Further, com-
munication meetings were organised in which all employees
were updated about progress of the project apart from get-
ting a chance to express and clarify their ideas, doubts and
questions regarding team and process oriented operational
style and other common concerns. Chief of Information Sys-
tems, Mr. Rajesh Kharbanda, while explaining various initia-
tives taken to put in place a culture of team working, said:
We conducted a series of seminars to spread the
message of what, after all, a team and process based
organisation was all about. Top Management Team
conducted quarterly seminars on road maps for NHI
for all levels of employees. At various informal gath-
erings and forums the issue of working in teams was
deliberately raised and discussed so as to bring
about a fair amount of repetitive talk and help
people to internalise the concept.
Examples of successful team efforts were also high-
lighted in all communication meetings to inspire other em-
ployees to emulate ways of those teams. For instance, in 1999
NHI’s Spare Parts Operation Team bagged the Chairman’s
Award on Customer Satisfaction, competing against many
well-established competitors from various worldwide loca-
68 ACRJ

tions of CNH. This jewel in their crown was highlighted at


all levels in the organisation in every available forum. These
apart, a leading business school of India was contracted to
systematically train all employees on the theoretical aspects
of team and process working, behavioural aspects of work-
ing in teams, problem solving and conflict resolution and
other teamworking techniques. Ray Shepherd vindicated the
importance of training in helping employees from diverse
cultures to converge on a new way of working together by
saying:
I have been a long time member of the Early Warn-
ing team which looks into feedback from market
when a tractor is launched. This is a very difficult
team to work with since input to the team is unpre-
dictable, problems and issues are varied and to cap it
all there is a pressing need and urgency to fix prob-
lems at the earliest. In the beginning it was really
tough to work since people did not know their role
and were inexperienced in working together and
hence their response and attitude in team situations
was not to the company’s expectations. However,
after intensive training on how to work in teams,
performance of my team greatly improved.

EFFORTS AND EXPECTATIONS

Team building began in the design centre of NHI with one of


the first tasks of installing dynamometers being handed over
to a small team. This was a fairly complicated task, which
required experienced people from civil, mechanical and elec-
trical engineering. A team comprising four persons from the
design centre and a civil engineer, who was already involved
in developing the tractor, was formed and assigned this task
and the job was accomplished in-house. Such continuous
experimentation of working through teams culminated in a
series of contributions. As a result NHI was able to provide
Indian farmers with new farm mechanisation tools as well as
improve quality and efficiency of existing implements like
NEW HOLLAND TRACTORS (INDIA) 69

the baler, hydraulic operated reversible plough etc. Similarly,


people from design, manufacturing and vendor development
formed teams to develop parts. They visited vendors,
exchanged ideas and developed high quality parts with
appreciable cost structures. However, as NHI expanded and
more and more employees joined, a need to formalise team-
building processes was felt. N S Kohli, a Deputy Manager,
and a member of Capital Requirement Team, Bus Team and
Service Contract Team, cited an example while expressing
concern over team processes. Initially Service Contract Team,
of which he was a member, was meeting at 11 a.m. and the
meetings used to stretch till 3 p.m. and beyond. Though team
members realised the wastage of time, after a lot of brain
storming they put the upper time limit to a maximum of two
hours. Endorsing Kohli’s concern was P K Samanta, Chief of
Materials:
Usually in organisations daily production meetings
last only 10 to 15 minutes, where people do not even
have a place to sit. That should be the benchmark.
However, here team members do not come in time
to team meetings, in between a few members
who come on time start walking off and the team
lands up wasting hours for an agenda that should
normally take an hour.
Such concerns led NHI to formulate policies regarding
teamwork. Commenting on the team building process,
Siddiqui asserted:
In the last three and half years we have made an
organised effort to have a clear team template in
terms of announcement of teams, defining the scope,
objectives, membership, time frame, etc. It is no
longer a vague situation. Today there is a lot of clar-
ity among team members.
One critical issue, which the top management at-
tempted to address, was to identify as to when teamwork
was appropriate and when it was not. They feared that in
their over-enthusiasm employees could land up in a situa-
tion of chaos where team meetings may reduce to argument
70 ACRJ

sessions. Manoj Soni, head of PPC and Stores, voiced his


anxiety by highlighting:
Sometimes we find that multiple teams are working
on the same job, resulting in wasteful exercise. NHI
is into a lot of teams at various levels. There are
teams, which have exactly the same membership,
which indicates the scope of reducing the number of
teams.
Thus through team templates, two of which are exhib-
ited in Appendix 3, a paradigm was created to bring in some
boundary control to team building. An example of an-
nouncement and launch of a team can be seen in Appendix 4
in which the Managing Director himself has announced the
formation of ‘993 Project Team’ for developing 40 hp tractors.
This team successfully launched the 40 hp tractor in April
2001, much ahead of the scheduled launch in September.
Templates notwithstanding, by end of year 2000 around 30
cross-functional teams and a number of functional teams
were operating at NHI. Appendix 5 contains the names of
most of these teams.
Many organisational members involved themselves in
team processes with great zeal. They experienced clear, defi-
nite and identifiable benefits. For instance, what fascinated
Tejender about teams was the speed. He expressed his satis-
faction thus:
The greatest benefit which teamworking has ensured
for NHI is that of speed of problem solving. I do not
have to run around five different sections to solve a
problem. For instance, in my team I have people
from painting, rework and testing units. Thus when-
ever there is a problem, at once we have ten different
ideas to solve it. Further, since all participate in
teams no one feels superior or inferior to another,
nor do we feel neglected or ignored.
No wonder, NHI leveraged such team spirit to quickly
develop an effective partnership network with dealers and
suppliers. In just one-and-half years it developed 54 dedi-
cated dealers, in only six months’ time it came up with 36
NEW HOLLAND TRACTORS (INDIA) 71

stockists and in 8 months the company put in place 30


authorised service centres. Its product development team
successfully launched the 70-hp, the 50-hp and the 40-hp
tractors, which were not only technically much ahead of
competition but also ahead of scheduled launch dates.
Kohli admitted that working in teams was an alto-
gether new experience for him. His earlier experience was in
a functionally structured organisation and hence he could
find a stark difference at NHI. He confided:
I enjoy working in all these cross-functional teams
since it makes me feel responsible not only to my
narrow functional area but to the organisation as a
whole. The difference I feel is in the pride of contrib-
uting directly to organisational goals. This is in spite
of the hard fact that functional egos occasionally di-
lute team efforts. At times functional issues kept
coming in. This has led to delays and camouflaged
ego clashes among senior members.
Manoj Soni, thus succinctly put the advantage of work-
ing in cross-functional teams and that across organisational
levels thus:
Heterogeneity of team members has led to teams
having visionaries, communicators, catalysts and do-
ers all together. Each type of member plays an adhe-
sive role in sustaining team cohesiveness and
effectiveness. Had there been a cross functional team
composed of people at senior levels only, then
chances of it getting degenerated into a platform of
conflicts and tall talks would have been very high.
Jagarnath Singh, an Associate and member of the ‘5S
team’ disclosed that his friends in other companies were en-
vious since he was working in a supervisor-less plant, taking
his own decisions, and having ample opportunities to share
his ideas with his seniors and colleagues in team forums.
Pascal Gill, another Associate and co-ordinator of Quality
Improvement Team was full of enthusiasm when he corrobo-
rated his colleague’s feelings by pointing out the following:
72 ACRJ

One big advantage of working in teams is that we


learn not only how to do our job well but also get to
develop working knowledge of other functions too.
Hence we heavily cross-subsidise each other at times
of need like absenteeism, tight production schedules,
etc. not only at the intra-department level but also at
the inter-department level too.
For instance, on 6 June 2000 there was a problem in the
IVECO engine. Manoj Soni, as head of PPC and Stores, heard
about the problem. It did not concern him directly. There
was already a team handling the problem. However, Manoj
knew one of his boys was an ex-engine shop employee and
well versed in Italian language. He did not wait for anyone
to come to him asking for his boy. Keeping aside his func-
tional priorities Manoj promptly released his boy to assist
and contribute to the team already working on the machine.
Such reactions and experiences did not remain at the rhetoric
level only. They were amply testified in the market place too.
In about five years, NHI’s credibility and respect became
well entrenched among, not only its customers, suppliers
and dealers, but also among its competitors.
To ensure team participation by all employees Human
Resource Function formulated a policy, which made team
participation compulsory. For employees at executive level
and below, membership of at least one team, and any one at
the Deputy Manager level and above membership of at least
two teams was required. Furthermore, performance ap-
praisal was based on the evaluation of Key Result Areas
(KRAs) in both functional responsibilities as well as team re-
sponsibilities in a 60:40 ratio. Thus employees had no option
but to work beyond office hours and even on weekly off
days making valiant efforts to do justice to functional
responsibilities after having devoted better part of the day
for team related activities. The matter was still tougher for
those who had multiple team membership. Acknowledging
this issue Siddiqui said:
We are aware that there are people who are at one
time member of 5 teams. Though we would not want
that to happen, at the moment we are unable to ad-
NEW HOLLAND TRACTORS (INDIA) 73

dress the issue because of our limited key resources.


This is forcing them to be dragged on to too many
teams.
At one end while the evaluation system made employ-
ees responsible and put in systemic accountability on them at
the same time it unleashed a constant tug-of-war in the
choice between prioritising functional KRAs and teams
KRAs. This conflict got directly reflected in the poor atten-
dance of teams on one hand and on the other hand it also
affected the functional output of organisational members.
Ray Shepherd conceded that much of team performance
hinged on the extent of time, responsibility and authority
functional heads allowed their subordinates to devote to
team activities. A general dissatisfaction prevailed among
organisational members as regards the performance ap-
praisal system. While Ray Shepherd confessed that perfor-
mance appraisal was an area where NHI had to do a lot, in
the same breath he observed that Indians thought that there
was a God-given right to a pay rise and they expected it to
be automatic instead of being determined on competitive
basis. Siddiqui acknowledged:
We are yet to go fully formal in our evaluation of
team contributions. Right now the assessment is
done in terms of team attendance, team participa-
tion, team’s contribution, self-assessment and of
course the feedback which team leaders give to func-
tional heads.
Though HR played the role of a facilitator and support
function to team working it did not dictate team norms. Se-
lection of team members, clarified Kharbanda, depended on
the criticality of the role played by the individual in his func-
tional area, decision-making capability and most importantly
positive and pro-active attitude. Neither HR had any role to
play nor was organisational level a determining factor. Cor-
roborating this Siddiqui contended that it was individual ex-
pertise and its criticality to the context of the team, which
was the key factor in team selection. Teams set their own tar-
gets, which were more often than not stretch targets to push
74 ACRJ

teams into greater activity and achievement. Murali Krishna


vindicated this view when he said:
Though team targets are set through consensus
building, we keep ambitious targets so that we are
not pulled down by functional responsibilities at the
cost of team responsibilities.

INSIDE THE TEAMS

To make the teams truly effective NHI empowered them


with ERP software, well laid out business processes and the
requisite authority to make decisions. Palani asserted:
I could see the role of information technology as an
enabler of team and process working. My vision was
to leverage IT to build a culture of sharing informa-
tion and learning therefrom. Further it would give
the methodology to work as per process parameters
and definitions.
Thus NHI perhaps became one of the very few compa-
nies which implemented BaaN software even before the
project went on stream. Recalling the crucial decision to go
in for ERP, Kharbanda shared:
We took a strategic decision to implement BaaN
package in toto with no modification or custom-
isation. Rather, we modified our organisational pro-
cesses and functioning to suit the requirements of
the ERP system.
This decision however, put extra load on all
organisational members. Project pressure of creating every-
thing new was already there and on top of it defining pro-
cesses and aligning them with ERP solutions only added to
the existing pressure.
Closely on the heels of implementing BaaN was the
challenge of mapping processes so that team efforts would
not be constrained for want of information or understanding.
Palani assigned Kharbanda the task of initiating and moni-
NEW HOLLAND TRACTORS (INDIA) 75

toring the exercise of mapping various processes. Highlight-


ing the demerits of not taking a process view Palani said:
In most projects design people would keep the de-
sign and drawings only to themselves and pass it on
to vendor development people at a much later stage.
Similarly, vendor development people would share
the design and drawings with the supplier, and only
after the part was ready would they pass it on to
manufacturing people. As a result project deadlines
would keep on shifting.
Instead at NHI six key processes, enlisted in Appen-
dix 6 were identified and mapped, enabling employees to set
aggressive time targets and take collective responsibility in
teams. The mapping exercise was conducted by breaking up
processes into sub-processes and activities. For instance in
the supply chain process five basic processes were identified
— receipt to payment, shop floor control, order to execution,
inventory and transaction. Explaining the methodology of
mapping Manoj Soni elaborated:
The mandate was to inter-weave the ultimate cus-
tomer, who would buy our tractors, into the total
supply chain. So we had our customer being handled
by marketing on the front end and there was this
guy who received orders — the production planning
and control (PPC) man. He translates them into
manufacturing orders to the shop floor where they
get translated further into material scheduling,
which ultimately gets translated into raw material
scheduling for suppliers. The suppliers take sched-
ules and feed them back to the company and then it
gets integrated to make the final product — a tractor.
We broke up these processes into sub processes and
each sub process into activities and then formed sev-
eral sub teams from our Supply Chain team. These
sub teams attempted to understand each activity,
documented them, mapped them and finally inte-
grated them with BaaN processes.
76 ACRJ

Identification of particular activities to be mapped


mostly depended on employees handling them. For instance,
someone on the shop floor observed that his colleagues were
spending much more time than it was required on line rejec-
tion activity. He came up with an idea to map the activity
and automate it so that a better job could be done. He shared
his idea with his colleagues in other sections for reducing
non-value-added activity, which was appreciated and a
three-member team consisting of representatives from IS,
stores and line rejection section was formed to map the pro-
cess involved in line rejection activity.
To make teamworking worthwhile and effective, top
management also ensured that decision-making power de-
volved down to the teams. Siddiqui reiterated that teams
were empowered to make recommendations on policy re-
lated issues and make decisions in all matters pertaining to
operational issues. He clarified that this level of empower-
ment was possible because of clearly laid out processes.
Hence a culture of approvals or sanctions was systematically
prevented from creeping in. Citing an example of their level
of empowerment even at the shop floor level, Pascal Gill
elucidated:
When we find a defect in a tractor, we immediately
brain storm it in our team and try to fix its origin,
without waiting for anyone’s direction or approval.
However, there were others who felt differently. For
example, Kohli felt that he was not at all empowered to
make decision in teams. He believed his role was limited to
giving feedback to his functional head about facts of an issue
and wait for the latter’s decision and direction. Samanta,
reiterating Kohli’s contention, expressed:
There is role conflict between functional KRAs and
team KRAs since functional goal orientation is still
around. I do not see much support from our seniors.
In my earlier organisation the team’s decision was
final and was considered as the decision of the
Management. However, here it is not so.
NEW HOLLAND TRACTORS (INDIA) 77

Siddiqui shared that Management was aware of what


was happening inside teams and hence the focus of interven-
tions was shifting towards team efficiency and process effec-
tiveness. NHI had already started taking help from a faculty
member of a leading business school who was acting as a
team process observer and was giving feedback and training
to team members on how to improve team processes inside
teams. Siddiqui also shared his personal observation of a re-
duction of excitement in teams among the organisational
members.
APPENDIX 1

78
ACRJ
ORGA NISATION CHART OF NHI

M anaging D irector

E xecutive
S ecretary

D irector D irector Chief C hief C hief C hief C hief Chief


M arketing B usiness of of of of of of
D evelopm ent M anufacturing M aterials D esign & E ngg H um an Finance Inform ation
R esource System s

Chief S r. M anager M anager S r. M anager Spare P arts S r. M anager S r.M anager S r. M anager S r. M anager M anager M anager
of S ervice Training S ales &
Sales & M arketing
M arketing

Dy. M anager D y. M anager M anager Dy. M anagers M anager M anager M anager D y. M anager D y. M anager Dy. M anager

E xecutives E xecutives D y. M anagers Executives Dy. M anagers D y. M anagers D y. M anagers E xecutives E xecutives Executives

Associates Associate E xecutive Engineers Engineers Engineers

Associates

Note: The chart shows the administrative reporting relationships and does not purport to show the relative status of different positions.
NEW HOLLAND TRACTORS (INDIA) 79

APPENDIX 2

SOME OF THE KEY CROSS-FUNCTIONAL TEAMS AT NHI

SL NAME OF THE TEAM TEAM OBJECTIVES


1. Supply Chain Team ♦ To streamline business processes in BaaN and align
the physical process with the system.
♦ To work out MIS requirement for the Company.
♦ To carry forward BaaN usage in the face of changing
business practices in NHI.
2. Safety Management Team ♦ To insure safe working within the plant.
♦ To define safety policy.
♦ To benchmark and meet safety standards.
♦ To comply with all safety regulations.
3. Local Environment ♦ To understand the complexities and magnitude of
Management Team sensitivity of people/issues involved.
♦ To bring uniformity and transparency in NHI
approach.
♦ To have a pro-active approach in dealing with local
individuals/agencies.
♦ To have a cross-functional ownership for this
process.
4. Early Warning Team ♦ Maintaining field concerns.
♦ Quick resolution of field concerns.
♦ Quick implementation of product improvement in
manufacturing.
♦ Approval for field fix based on the above.
5. Territory Team ♦ Marketing / Service / Parts representation plan.
♦ Appointment of dealership / Stockists / Authorised
Service Station.
♦ Monitoring dealer’s performance with respect to
sales, spares and workshops.
6. Capital Procurement Team ♦ Planning and procurement of all capitl equipment.
♦ Timely erection and commissioning of the
equipment.
♦ Finalisation of all contracts related to infrastructure
and service in the plant.
80 ACRJ

APPENDIX 3

Template for setting up a team

ANNOUNCEMENT

Date:
Team Name:
Purpose A brief purpose of the team
Deliverables What do you intend the team to achieve
Scope What will be the coverage of the team achievements
Members List of members
Meeting Frequency of meeting
frequency
Performance Criteria for measuring the performance of the team
measures
Communication Who should be informed of the teams activities
Duration Target dates for deliverables
Issued By: :

Template for documenting first meeting decisions:

TEAM MEETING PROCESS

Date:
Team Name:
Attendance rules Define and get agreement
- every one to be present in time
- intimate absence in advance
- substitute in case of absence
Coordinate Nominate/choose and get agreement
/leader
Time keeper Nominate/choose and get agreement
Decision making Brain storming, voting, concensus, veto etc on cost/benefit,
method and basis judgement, company’s interest – define and get agreement
Ground rules Define and get agreement
Examples:
1. Every one must participate and contribute to deliverables
2. All ideas are welcome
3. Be present to the process –mentally and physically.
4. Openness is appreciated.
5. Every one to share information.
6. Avoid assumptions and pre-concieved notions
7. Underestimate other’s understanding
8. Commitments will be honoured.
Purpose Explain and get agreement of understanding
Threats Identify and list recovery method
Support Identify people who may be needed for support and inform them.
Roles Identify key roles in the meeting and assign to members.
Expectations Check with each member to get every one in sync.
Conflict resolution List modality and get agreement
Milestones Identify the milestones and celebration for achieving milestones.
NEW HOLLAND TRACTORS (INDIA) 81

APPENDIX 4

T.L. Palanikumar
26-08-99 10:39 AM

To: NEWHOLLAND INDIA TEAM (NOTES USERS)


cc:

Subject: 993 PROJECT TEAM { 35 / 40 hp TRACTOR }

In view of the importance and urgency of developing and launching the smaller hp Tractors, to improve
NHI Product Range and gain share in this large market segment, the NHI Sr. Mgmt. Team have
unanimously emphasised the need to form the 993 Project Team right away, to lead the organisation in
this task.

OBJECTIVE

The 993 Project Team will lead NHI effort in the successful design, development, validation,
productionising and market launch of the best - in -class 35 / 40 hp Tractors, within pre - determined
product definition, quality standards, costs and timing.

SCOPE

This will be a multi - functional Team working together in a concurrent manner, as per the NH New
Product Development Process, with full responsibility and commensurate authority, for planning,
implementing, verifying progress through milestone reviews, de - bottlenecking and consolidating
success in each
Phase of the Programme. They will ensure coordinated progress across several sub - teams and Depts.
who will be part of this massive effort. They will keep Chief Mgrs. / Sr. Mgrs. informed, and ensure
adequate resources and timely support from both within NHI & from NH Europe, wherever and whenever
required. The 993 Project Team will become operational right away, and function until 4 months after
Launch.

MAJOR TASKS

The 993 Project Team will make detailed plans for each Phase of this Programme, specifying goals,
responsibilities, work instructions and timing:-
★ Establish Engineering plan and obtain approval
★ Develop concept and demonstrate feasibility
★ Prove feasibility
★ Develop quality components, manufacturing processes and vendors
★ Pre - production and Field trials
★ Job - 1 and Productionising
★ Validation sign - off
★ Market Launch
★ Launch Review and early warnng

…contd. in next page


82 ACRJ

993 PROJECT TEAM MEMBERS

The following NHI Team members are being nominated as core members, with others to be coopted as
necessary:-

Sanjeev Arora
Tushar Banerjee
Amiya Verma
Abhijit Ghosh
Sanjay Vij
Sandeep Mathur
Dinesh Bhrushundi
M.L. Bapna
A.D. Joshi
M.L. Soni
Anil Seth ( facilitator )

It is envisaged that each team member will lead in his area of expertise.

Team Members will give top priority commitment, full participation and contribution to ensure the success
of this Project. The 993 Project Team should meet
within a week to begin work.

All NHI Team members are requested to provide wholehearted cooperation and support to the 933 Project
Team.

T.L. Palani Kumar

cc: all NHI Notice Boards


NEW HOLLAND TRACTORS (INDIA) 83

APPENDIX 5

SL. CROSS FUNCTIONAL TEAMS SL. TEAMS NATURE OF TEAMS


1 EARLY WARNING TEAM 1 COMPETITOR ACTIVITY TEAM DEPARTMENTAL (MKTG)
2 SUPPLY CHAIN TEAM 2 TRAINING IMPROVEMENT & PROD. DEPARTMENTAL
SUPP (SERVICE)
3 TERRITORY TEAM 3 DEMO PROCESS TEAM DEPARTMENTAL
(SERVICE)
4 TRAVEL MANAGEMENT TEAM 4 IMPLEMENT APPLICATION DEV. DEPARTMENTAL (MKTG)
TEAM
5 LOCAL CONVEYANCE TEAM 5 LOCAL PARTS COMPUTERIZATION DEPARTMENTAL
TEAM (MATERIALS)
6 SECURITY RESOURCE MGMT. TEAM 6 P O TEAM DEPARTMENTAL
(MATERIALS)
7 HOUSEKEEPING & COURIER 7 PACAGING HANDLING & STORES DEPARTMENTAL
MGMT.TEAM TEAM (MATERIALS)
8 GENERAL MAINTENANCE & RESOURCE 8 QUALITY IMPROVEMENT TEAM DEPARTMENTAL (MFG.)
TEAM
9 IN-HOUSE MACHINE PARTS MGMT. 9 REJECTION HANDLING TEAM DEPARTMENTAL
TEAM (MATERIALS)
10 CAPITAL PROCUREMENT TEAM 10 RUSH ORDER TEAM DEPARTMENTAL
(MATERIALS)
11 COMUNICATION TEAM 11 SALES PROMOTION TEAM DEPARTMENTAL (MKTG)
12 SWAP TEAM 12 SUPPLIER IMPROVEMENT TEAM DEPARTMENTAL
(MATERIALS)
13 BUS TRANSPORTATION TEAM 13 VALUE ANALYSIS TEAM DEPARTMENTAL
(MATERIALS)
14 UNIFORM TEAM 14 SERVICE BUSINESS DEPARTMENTAL
(SERVICE)
15 SCRAP TEAM 15 FARM MANAGEMENT TEAM DEPARTMENTAL
(SERVICE)
16 DEVIATION CONTROL TEAM 16 WARRANTY TEAM DEPARTMENTAL
(SERVICE)
17 LOCAL ENVIORNMENT MANAGEMENT 17 AGGREGATES DEPARTMENTAL
(SERVICE)
18 PRODUCT IMPROVEMENT TEAM ENGINE
19 QCAT HYDRAULICS
20 CANTEEN TEAM PAINTS / SHEET METAL
21 BALER TEAM ELECTRICALS
22 DCS/DMS IMPLEMENTATION TEAM TRACTOR
23 DEALER INFRASTUCTURE DEV. TEAM 18 PARTS WARRANTY DEPARTMENTAL (PARTS)
24 DUST PROOFING TEAM 19 HOUSEKEEPING ( PARTS) DEPARTMENTAL (PARTS)
25 IS REPRESENTATIVES TEAM 20 INVENTORY DEPARTMENTAL (PARTS)
26 PDI TEAM 21 SPMS DEV. DEPARTMENTAL (PARTS)
28 PARTS LOCALISATION TEAM 22 PRODUCT PARTS DEV. DEPARTMENTAL (PARTS)
29 COMPLIMENTARY MGMT. TEAM 23 CIRCULARS TONDEALERS/ DEPARTMENTAL (PARTS)
STOCKIST
30 PRODUCTION REVIEW TEAM 24 UNIT DOWN ORDERS DEPARTMENTAL (PARTS)
APPENDIX 6

84
ACRJ