The case study explores the circumstances in which a leading Indian pharmaceutical company, Welldome Ltd.* implemented a Voluntary Retirement Scheme (VRS). Welldome had acquired a smaller, loss-making pharmaceutical company and wanted to shed some of its workforce, in order to make the merged entity much more efficient and profitable. The case examines the resistance to the VRS from a section of the workers and the tactics utilized by the company to tackle the crisis. Thereafter, details of the VRS are provided along with information on how the scheme was marketed to the employees. Finally, the results of the VRS implementation are examined.
In
an attempt to be lean, thin, and mean in today's
competitive market scenario, VRS has become a key tool
at companies. Especially under instances where mergers
and acquisitions render it unavoidable. Under VRS,
employees are encouraged to `retire prematurely' (or
leave) from the company after receiving an attractive
monetary package for the separation. The rationale
behind a VRS scheme is usually of `a company facing
financial problems and a profitability crunch.'
Quite
expectedly, such companies typically cannot afford to be
carrying flab or deadwood in terms of employees and need
to shed the same. Even the heavy `price' that needs to
be paid in terms of the monetary package is willingly
accepted since the companies involved expect to recover
their investment in the future via savings in the wage
bill and an enhanced bottom line resulting out of the
implementation of the scheme.
Welldome
Limited, Ahmedabad, a leading pharmaceutical company,
was one such company to go through the process of a VRS.
It had bought out and taken full control of a
medium-sized loss-making company Medha Pharmaceuticals
Limited, with a large workforce of about 1,000 workers,
staff and managers.
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