Can HAL survive its staffing crisis amidst soaring order backlogs?
Yes, more spanners in the work HAL's order book is expected to touch ₹2.5 lakh cr in FY26. That is eight times the FY25 turnover. The huge order backlog, coupled with facile assumptions about HAL's purported prowess in execution, drives optimism about the company. Execution is the key when faced with a mounting order pipeline, and that is where trouble is brewing.Over 37 years, HAL's turnover soared from ₹616 cr in FY87 to ₹30,118 cr in FY24, growing at a CAGR of 11.08%. Meanwhile, manpower shrank by 46%, from 44,123 to 23,766. This stark contrast has fostered a dangerous illusion - that cutting staff is the key to growth and profitability. Such a belief is not just flawed; it's a recipe for disaster.
At HAL, while there are severe shortages among workmen, the situation in the executive cadre is even more alarming. The organisational structure increasingly resembles an army of officers and generals - with too few soldiers to execute the mission. The shortage at the working level, particularly in the design department, is serious. At a review meeting in 2022, the head of a Lucknow-based HAL R&D centre presented the status of 175 line-replaceable units (LRU) design projects. There are only 75 designers to handle these. Ideally, each project should have one to two engineers.
There was a time when almost 350 designers worked exclusively for the Light Combat Helicopter (LCH) project in Rotary Wing Research and Design Centre (RWRDC), the centre of excellence for helicopter R&D. Today, with about 400 designers, RWRDC handles multiple projects such as Indian Multi-Role Helicopter (IMRH), Deck-Based Multi-Role Helicopter (DBMRH), and Utility Helicopters-Maritime (UHM) projects, along with other minor ones. In the design domain, knowledge transfer happens from generation to generation. The missing generation at the bottom means that when the middle-level designers retire over the next 10-15 years, there will be a crippling lack of knowledge and expertise. If this situation persists, HAL's capability to design and develop new aircraft and helicopters will be lost.As HAL's manpower has become half of what it was some time ago, and the number of projects has risen, the staffing is inadequate even if both the junior and middle levels are considered as one joint cluster. Today, both these layers are overburdened, fatigued and frustrated.Design outsourcing is a still-born idea. The existing designers will be forced to train greenhorns recruited by contractors to make them somewhat competent. Usually, owing to low salaries paid by vendors, most of these engineers leave once they pick up some competency. So, another set of rookies will come on board, and the training process will be repeated. This is a waste of time.Add to this HAL's inexplicable reluctance to implement any people-friendly initiatives such as flexitime or a five-day week. HAL conducts periodic HR surveys. However, except for HR staff and the top management, nobody knows about these findings and interventions done to address problems.If the present efforts to manage the shortage by hiring rookie engineers through contractors are pursued, it would be the death knell for R&D capability within HAL.HAL should do the following. Recruit 200 engineers yearly for the next 5 years for R&D centres.
Recruit 1,000 engineers yearly for the next 5 years for production and MRO divisions.
Implement flexitime of 1 hr for executives, and 30 mins for workmen.
Implement a 5-day week at least in design centres. CTC of entry-level engineers is less than ₹10 lakh annually. So, this recruitment plan will not add more than ₹120 cr a year, 0.6% of HAL's total cost of ₹19,919 cr in FY24. Additional staffing will not dent profits. The choice for HAL is clear. Recruit or perish. (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.) Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Why failed small businessmen die by suicide when those behind big blow-ups bounce back?
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