lovelyShit: The curious case of Irani’s Tata Steel Downsizing

What would you do when faced with loss at your company? Downsize and get rid of employees that aren’t too useful?

Well, Dr. J J Irani thought differently – and on a fine morning, his downsizing offer came about:

Workers under age 40 would be guaranteed their full salary for the rest of their working lives. Older workers would be guaranteed an amount greater than their salary, from 20% to 50% greater depending on their age. If they died before reaching retirement age, their families would keep receiving the full payments until the worker would have reached that age.

No heartburns, no broken families, and zero employee dissatisfaction.

Sounds crazy?

Well, it really isn’t as crazy as you would think.

The deal was simple – while workers who take the offer would get their full salaries until 61, the amount would stay constant, as it would if they remained employed; nor would Tata Steel have to pay payroll tax or make retirement-plan contributions anymore. It was a major save – and Tata Steel was able to downsize from 77,448 in 1994 to 39,658 in 2005 – with tremendous success of one of the biggest layoffs in the history of downsizing.