Firmly laying past ghosts to rest, the Taj group marches ahead with an extensive restructuring plan
THE Fool's Day on April 1, 1998, is going to be a serious occasion for the underpaid employees at the Rs 577-crore Indian Hotels Company, better known as the Taj group, the country's largest chain of hotels. That will be the day when a new personnel management system developed by consultancy firm A.F. Ferguson will be introduced. For the 12,798 employees of the group, this will be sweet music: compensation packages are expected to match industry norms.
This upward revision of salaries is only a small part of a dramatic restructuring that the new Taj management led by managing director R.K. Krishna Kumar and deputy managing director S. Ramakrishna has undertaken. Says Krishna Kumar: "We expect much greater accountability and job satisfaction to come out as a result of this new system (
see interview )".
With this restructuring, Krishna Kumar will fin-ally lay to rest the ghost of former chief Ajit Kerkar, ousted ignominiously in September. The exercise touches every aspect of the company's business and all the 42 Taj hotels around the world. The aim: long-term competitive advantage. "The reorganisation, hopefully, will address more than the current issues of low tourist inflow, and macro-economic sluggishness," says Krishna Kumar.
For starters, sales and marketing divisions are being separated. Sales are to have a greater regional thrust with central coordination, marketing will get completely centralised. It will also set up a brand strategy group to strengthen the umbrella Taj brand and sub-brands like Residency and Gateway. Sales will be responsible for more immediate concerns—targets, pricing, discounts. Together, the two divisions aim to achieve what Krishna Kumar calls "a fine balance between long-term thinking and short-term action".
A specialised standards cell is also being considered. At the company's torrid annual general meeting in October, chairman Ratan Tata had hinted at deteriorating standards in some of the hotels. The standards group will undertake a benchmarking exercise that would interact on "the quality axis". A centralised materials cell will help standardise quality by purchasing for the entire group.
Archrival Oberoi group has always held an edge over the Taj as far as attracting the business traveller is concerned. So January 1 will see the launch of the Taj Club, an exclusive facility targeted at tycoons, originally Kerkar's brainchild. An investment of Rs 300 crore has already been made in six hotels. Says Pankaj M. Baliga, vice president, sales and marketing: "We are planning to provide the best personalised services offered anywhere in the world." These include complimentary airport limousine transfer, use of the meeting room on the Club floor free, gymnasium, steam and jacuzzi, personal electronic safe in the room, and rooms and business centres renovated with remote-controlled curtain-raisers and electronic lighting.
But nowhere is the restructuring more apparent than in the Taj's senior management levels. Krishna Kumar is a product of the elite Tata Administrative Services (TAS), and most of the specialised cells will be headed by TAS cadre. A radical reshuffle is going on at top levels. Camelia Punjabi, executive director looking after marketing operations, has reportedly been offered the post of managing director of Titan Industries; current CEO Xerxes Desai may move to Mumbai to join the Tata Sons board. Another executive director, Lenny Menezes, has apparently been asked to join Tata Exports as deputy managing director. And Prasun Sen Gupta, a close Kerkar aide and a senior vice-president has been transferred to TAS.
Punjabi, Menezes and Sen Gupta are among the 35 Taj staffers who have reportedly been asked to move. Sam Bhada, heading the Taj group's Hotel Lexington in New York, has been transferred to New Delhi as area general manager. Not all are happy. It is believed that Sen Gupta has even put in his papers.
ACCORDING to a large shareholder of Indian Hotels, through this reshuffle, Krishna Kumar is trying to break Kerkar's cartel. The new management suspects that there may have been a lot of corruption within the Taj group, with well-entrenched top managers running their own fiefdoms. The now-planned centralised purchasing system and the management reshuffles will change this state of affairs. "Many managers have been in the same position for long, some for decades. The change will, we hope, enable the management staff to have the opportunity of refreshing themselves," says Krishna Kumar.
He cannot be faulted on his logic. But some Taj staffers privately call the management reshuffle a witch-hunt against Kerkar loyalists. Says one disgruntled executive assistant: "Whatever Kerkar's faults might have been, he was a people's man and there are a lot of us who would still swear by him. But that doesn't mean we won't be true to our jobs." However, others point out that in any company, whenever a new management takes over, such transfers and movements are routine.
The tourist season has started, and the challenges are many. The new facilities the company has introduced should go some way in meeting them. So would the reshuf-fles. And the problem of a falling morale would be offset by the oncoming pay hikes. Meanwhile, the first half of 1997-98 has seen flattened earnings and falling profits. However, at the macro level, the falling rupee has spruced up the company's prospects—about 60 per cent of Indian Hotels' earnings are in dollars.