31 July 2015 14:30:58 IST

The Case: Does motorcycle maker Falcon need top MBAs to help it soar?

Since 2010, Falcon’s products have been in great demand in the market; being more economical than Harley-Davidsons or Triumphs

“Rags, you know how young prople are these days. They are usually all over the place without contributing anything in depth. A management training programme is just an excuse for them to have a paid vacation!” That was Nishanth’s first reaction on hearing Raghav Misra’s idea to induct a batch of management trainees into Falcon Motors Ltd.

Raghav recollected the conversation word for word, because he was quite taken aback by what Nishanth Chitre had said.

He had broached the topic with Nishanth first because, as head of sales and marketing for Falcon Motors, Nishanth could absorb a large number of fresh MBA graduates into his team. Moreover, Nishanth and Raghav went back a long way, to the time they themselves joined as management trainees at Falcon in 1988. Though Raghav had pipped his batchmate to become CEO in 2011, they had had no problems working with each other, and Nishanth accepted Raghav’s overall leadership of the company.

Others in the top leadership team of Falcon were from the same batch (or earlier batches) of Falcon’s management trainee programme (Table 1). Having worked together for many years, the top team is quite close-knit and cohesive, which had helped the company come out of bad patches during the late-1990s and in the mid-2000s.

Since 2010, Falcon’s products have been in great demand in the market (Table 2); being more economical than Harley-Davidsons or Triumphs. 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 Falcon’s management trainee programme. Having seen the benefits of the programme, Raghav was keen to see a bunch of smart, young managers working together to secure Falcon’s legacy – maybe one of them would even go on to become the CEO later.

“Things have changed from our time, Rags,” said Vanchi, when Raghav talked to him a day after his conversation with Nishanth. “I have also been trying to get a framework for the MT Programme in place; the challenge is not only about how we can hire them, but also about how we prepare the people inside Falcon. We haven’t hired any fresh MBAs for the past 8-10 years, so our managers have forgotten what that variety is like. My plan is to have at least 30 fresh MBAs to start the programme,” he continued.

“You think so?” said 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 MT programme will not get the attention it deserves from the company. We should go big bang and have a sizeable number come in. That will also get the buzz going in the campuses.”

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

August 2012. A week later

“Love it. Management types. Get them to understand design. I’m on.” Shekar was his usual terse self after Vanchi’s presentation to the FELC (Falcon Executive Leadership Council). Vanchi had outlined the MT 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 members of the FELC 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 the FELC was excited about this initiative.

FELC Meeting, April 2013

“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 was on the warpath. “We are planning to bring in greenhorn kids at fancy salaries; salaries that our managers have reached after working for 8-10 years. I will have a revolt on my hands when they learn what the MTs 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. “I think that one good recruit will be able to replace three of the current ‘managers’ within a year’s time. Those managers should be ready to take on more challenges, or they will be history.”

“We can’t have such comparisons – the MTs 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,” Pankaj added, closing the discussion.

FELC Meeting, July 2013

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

“These are all good guys. They are asking very basic questions — actually a couple of my managers are now changing processes because of their questions. But many others are feeling threatened because they are not able to give convincing answers,” Venkat was genuinely admiring of the effect the MTs 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 FELC members in a nutshell.

What should Vanchi tell them?

What actions would you recommend that Vanchi Nathan takes to ensure that the remaining 22 MTs complete the entire programme? Should he train the managers of Falcon on how to handle the high-potential, high-achievement-oriented MTs? Or should he counsel the MTs to be more tactful? Are there any other actions he should consider? Write in your recommendations to blcasestudies@thehindu.co.in in not more than 700 words.