Automobile Industry: Critical HR Challenges

April 22, 2019

Indian Automobile Industry has grown well over the years. With the rise in income of general citizens, there has been a strong demand from across the board. However, with growth, there come challenges. The recent spate of product recalls it has shaken the confidence of the industry somewhere or the other. The problems and difficulties associated with the Automobile industry have a human dimension too.

Automobile industries need effective HR management to build and maintain teams.  The Human Resources (HR) department manages all employee related activities like employee recruitment & selectionQuality staffingemployee payroll management and employee skill development training 

Let’s analyze some of the critical challenges that are currently faced by the Automobile Industry.

Talent Availability:

All major HR studies have indicated that there is a critical shortfall of talent in both technical and commercial level in the Automobile industry. The shortage is quite high. Due to the unavailability of proper expertise, the companies are sometimes forced to compromise on the quality of skills. Also, there has been a lack of seriousness from the industry side to address this issue, at least that’s what the studies reveal. There is an urgent need from the bottom of the industry to address this issue.

Low Compensation:

Compensation is another area, where the industry is facing an issue. The annual increase in compensation in the Automobile industry is even smaller than the manufacturing industry. The increase is lower by 1% – 2% at CXO and sub-CXO levels putting a further strain on the stability at these levels. The attrition has risen from 8% – 10% earlier to around 13%- 14% now. However, lately, there has been a realization of the need for bold new thinking, initiatives, original research, product development and an increased focus on people issues.

Based on the reverse analysis, it found that the Automobile and Automobile-component industry has been ranked fourth in its ability to attract talent from related sectors.

It has been found that among young engineers today; the Automobile industry ranks way behind in their preferred career plans.

Communication Gaps: 

It is evident that in many companies there is an inherent mismatch between the organizational initiatives announced by the top management and those that are understood by the CXO and sub CXO professionals. There is a communication gap in the Automobile industry in India as the strategies of the top leadership to enthuse the future leaders are not getting properly communicated. The professionals are unable to comprehend and appreciate the actions, with which the core benefits of the company are associated. This ultimately leads to unfulfilled professional aspirations.

Also, there is a lack of structured career growth plan for senior management that focuses on building cross-functional capability.

To put all these challenges in simple words, though the Indian Automobile industry is growing well and is expected to become the third largest industry just behind China and USA, however, experts point out that there are growth pangs all-around through inadequacies in the senior management pool that is not ready for the upcoming future. The automobile industry in India is caught in a quagmire of problems like rapid ramp-up of production, sales, lean manufacturing and cost-cutting initiatives coupled with some unusual restlessness in the human assets. The industry in India needs to align with the global best practices and not only that, the industry needs to manage its strategic priorities and uncertain government policies, which would require some realignment of talent matrices. However, there has been a process of course correction already introduced in many of the Automobile companies in India, and things may start to look positive very soon.

If your company does not have people with the required experience or expertise in a particular function, outsourcing HR services to a trusted third-party vendor may be the best solution.

Share this post