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Posts Tagged ‘CSR’

Can a business be run without resorting to corrupt practices? This was one of the several questions attempted to be answered by management experts at a recent seminar organized by Sri Aurobindo Center for Advanced Research at Pondicherry (SACAR) at Pondicherry in India.1 Inaugural Session IMG_2266At every step, a business faces a choice – whether to indulge in corrupt practices to get what is its legitimate due, or face hardships and bottlenecks in meeting its obligations towards such stakeholders as its suppliers and employees.SACAR Dr ReddyThere are no simple answers to this vexed issue. However, there could be innovative ways of handling such challenges. A strong anti-corruption image helps. The conviction, that this is just not done, takes time to radiate to those who place such a demand on the business.

Another way to face such a challenge is to politely decline meeting an illegal demand. Instead, an offer to fund a legitimate activity which falls in the realm of CSR and shores up the image of the official/department concerned could get readily accepted. This could be by way of toilets being set up in schools, trees being planted and maintained on a main thoroughfare, or by investing in a scheme of social benefit.

???????????????????????????????The conviction emanates from an inner strength and a resolve to ensure that the dealings of the corporate concerned remain above board. Once adopted and marketed as a strategic choice, the business gains in the long-term – by adding value to its own brand equity and by gaining public trust. In turn, this could be leveraged to command better margins in the market place and also to attract better talent at a lesser cost.???????????????????????????????According to a business captain who addressed the participants at the seminar, the core mantra is to not to readily give in to illegitimate demands and to do simply what is in one’s control. The path of righteousness is not easy to tread but can be adhered to successfully if the top management has the necessary conviction. Decision making based on good values and an inner connection always helps a business person to strike this delicate balance in its operations.

Speakers at the seminar also touched upon VUCA and the increasing rate of change in the business environment. Studies which have proved that businesses which adhere to the basic values of honour, truth, beauty, justice and love were quoted do better in the long run. Participants were exposed to leadership lessons drawn from such Indian scriptures as Ramayana, Mahabharata, Thirukkural and also from Sri Aurobindo’s works.???????????????????????????????The value of meditation and resultant control of one’s mind was demonstrated. A panel discussion explained the likely changes in the business environment over the next decade and outlined the leadership and management attributes which would become more relevant in the times to come. The emphasis was on leaders who steer their businesses not only directed by an economic compass but also by a moral one.

The seminar, entitled ‘Preparing Future Business Leaders and Managers: An Inner Approach’, drew an enthusiastic response from business managers, scholars and students alike. It was addressed by Dr. Ananda Reddy, Director of SACAR, Mr. R. Mananathan, Chairman and MD, Manatec group of companies, Prof R. P. Raya, Dean, School of Management, Pondicherry University, Dr. Saikat Sen from SAFIM, Prof. Kisholoy Gupta, Mr. J. V. Avadhanulu, Mr. Ganesh Babu and yours truly;  a heady mix of management educators, lifestyle coaches, business thinkers and influencers.

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If you happen to be a professional to whom the allure of becoming a director on the board of a company is irresistible, here is a confidential note written by the Chairman of an imaginary company to one such aspirant, listing out the unstated terms and conditions of the offer.

From: The Chairman, XYZ Ltd.
To: A wannabe Independent Director

“Dear Aspirant,

I am happy to know that you aspire to be an independent director on the board of our company. Whereas a formal letter of appointment would soon follow, I write to you in my personal capacity to explain the real rights and responsibilities of an independent director.

1. You shall be hired only for your fame, your excellent contacts and your eminence. Your subject knowledge, competence and seriousness of participation in the meetings are important but secondary to the scheme of things.

2. Our company believes that machinations of the management (read “real owners”) are supreme. Our business is run on a quarter to quarter basis. PROMOTIONSAny talk of business strategy, etc, happens against this background. You shall always remain an embellishment on the board and shall conduct yourself with grace and equanimity accordingly.

3. Please appreciate that the Chairman and the President/CEO are advised by the best brains in legal and accounting matters. Their word is final and binding.

4. For the sake of excellent PR, as also to keep our market image shining and bright, the company has a set of clear guiding principles, a sparkling vision document, an exemplary code of conduct, a well spelled-out corporate philosophy, a robust governance framework, a sound CSR policy and a clearly articulated intention of zero tolerance to graft, corruption or sexual harassment. However, based on exigencies faced in the business environment or the seniority of the person involved, the management reserves the right to be flexible in its approach towards enforcing the aforesaid.

5. During your tenure, you may discover some creative accounting practices resorted to by the company. You may come across audit notes which point out the calculated risks we take while planning our direct as well as indirect taxes. You may also discover highly ingenious ways in which we interpret the laws of the land. You shall be expected to put across innovative suggestions to further refine such practices. You shall not be expected to raise any objection to the same, whether in private or in public.

6. You shall be encouraged to represent a group of shareholders, or appear to be partial to a group of stakeholders of the company; provided, of course, that your performance shall always be evaluated based only on the key deliverables – namely, towing the line of the management and ensuring that the company’s image is protected and its business interests advanced at all times.

7. Should you become involved in any legal hassle owing to having not registered a dissent on issues of either corporate governance or legal compliance by the company, an issue-based support may be provided. In such an eventuality, the company reserves its right to publically disown you and terminate its association with you forthwith.

8. Any attempt on your part to form a group of Independent Directors shall be treated as an act of dissidence and betrayal by management. As a matter of corporate policy, we do not encourage dissent, whether expressed or otherwise.

9. In respect of any matter pertaining to the operations of the company, you shall never take a moral high ground and start teaching us ethics and value YES-MENsystems. The last thing we need is a lecture from a glorified employee, the real capacity in which you shall serve the company.

10. The company expects you to observe complete confidentiality even after the end of your term as an Independent Director.

11. Post-retirement, you shall undertake not to become a whistle-blower and seek protection under any such scheme offered by the government of the day.

12. Advances, affiliations and activities of an amorous nature attempted by you towards directors from the other sex shall be frowned upon; unless, these happen to be dictated by the business needs of the company and have prior tacit approval of the management.

Even if you do not appear in the database of prospective candidates maintained by the Ministry of Corporate Affairs, we trust that you have so far been smart enough to ensure that your legal record is squeaky clean. We are sure that you shall continue to be vigilant on this score.

We look forward to a long-term mutually beneficial association with you. We welcome you as a part of the growing tribe of (perceived to be) independent directors in the country. We have no doubt whatsoever that you shall conduct yourself in a manner which would enhance the prestige and influence of this newly created labor market.

Yours truly, etc”

Background note:

Indian companies having a paid up capital of more than INR 100 millions and those whose aggregate outstanding loans, debentures and deposits exceed INR 500 millions are now required to have at least two independent directors on their respective boards. The new rules notified by the Government of India come into force from the 1st of April, 2014.

Likewise, some companies are now required to have at least one woman director on their board. For some, it is now mandated to spend 2% of their profits on CSR activities.

Hopefully, in the days to come, the newly emerging tribe of Independent Directors would play a far more effective role in ensuring that more companies conduct their affairs with better attention to transparency, ethical standards, gender diversity, environment protection measures and socially relevant investments.

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14As Mr. Ratan Tata demits office as a Chairman of Tata Sons and as a head of the $84 billion conglomerate of over 100 companies in the world-famous Tata group on the 28th of December, 2012, permit me to salute the group as well as its illustrious leaders who have led it to great heights in the field of business, as also in philanthropy and in socially relevant initiatives.

I am just one amongst millions of the group’s ex-employees who have had a stint with the Tata group.  The connection of my family with the group spans three generations. Way back in 1945, my father was associated with Tata Airlines. In 1976, I started my career with the Leather Complex of Tata Exports (now known as Tata International). Due to compelling personal reasons, I had to finally leave the group in 1993. In 2003, my son started his career innings with Tata Motors.

What is it that goes on to make the Tata group different from its competitors and contemporaries in the business world? With all humility that I can muster, here is my take.

Succession Planning

Mr. Jamsetji N. Tata was the founder of the group. In 1904, he handed over the baton to Sir Dorab Tata, who was at the helm of affairs till 1932, followed by Sir Nowroji Saklatvala who was there till 1938.

The group was then steered by Mr. J. R. D. Tata till 1991, when the charge passed on to Mr. Ratan Tata. It was on March 23, 1991, that Mr. Ratan Tata was told by his uncle that he intended to handover the baton of the group to him. Coinciding with the economic reforms unleashed by Dr. Manmohan Singh, the group has had a remarkable journey since then!

Mr. Ratan Tata took over the reins of the group at a time when it was an empire made up of several independent fiefdoms, run by stalwarts like Mr. Darbari Seth, Mr. Russi Mody, Mr. Ajit Kerkar and Mr. Nani Palkhivala.

Much like the King Bharata in Mahabharata who chose a successor based on merit alone, the group has invariably followed the principle of meritocracy when choosing a successor. What Cyrus Mistry takes over from him today is a much more well-knit and cohesive group, united by a shared philosophy, vision and identity.

A Conservative Outlook on Diversification

Tatas have often been criticised for not being enterprising enough to diversify into new fields. Mr. J. R. D. Tata himself attributed this in 1991 to two factors – an unwillingness to compromise on certain principles in the licence and permit raj prevalent then, and a long-held belief that the group’s principal role was to develop basic industries.

From textiles, hotels and a premier institute of learning, the group took a leap of faith to set up the first steel plant in India at the beginning of the last century. Then it ventured into hydro-electric power, soaps and detergents, cement, tin, soda ash, housing and commercial vehicles. Post 1947, when India gained independence, the group went in for cosmetics, steel tubes, refrigeration, fisheries, refractories and pharmaceuticals. Tea, watches, bearings and several others followed.

During Mr. Ratan Tata’s tenure, the group improved its focus on the business horizon. In tune with the changing times, TOMCO, Lakme, Merind, ACC, Nerolac Paints and others got hived off. Businesses like IT, telecom and financial services got added to the group’s portfolio. TCS became a flagship company, leading India’s march into the knowledge economy.

In 2000, Tata Tea took over UK brand Tetley. During 2007, Tata Steel acquired Anglo-Dutch rival Corus. The buyout of JLR in 2008 supplemented the core competency of the group company now referred to as Tata Motors. This move further established the global aspirations of the group – a segment which today contributes 60% of its revenues. Leveraging its strengths in the automobile sector, the group entered the territory of passenger cars, overcoming such hurdles as the Singur controversy. Nano is an innovation which has been taken note of globally.

Mr. Ratan Tata did not have it easy. Due to a negative business environment, the entry of Tatas in the field of airlines got aborted. It moved in time to save Tata Financial Services when the top management there committed fraud. In the telecom field, it had to grapple with a nascent industry which is still plagued by policy uncertainty. The controversy surrounding the infamous Radia tapes went on to show that what would have been considered a minor transgression by any other business house proved to be a demoralizing factor, somewhat sullying the group’s pristine white image.

Referring to the airline fiasco, he claimed in a press interview that he was rather proud of the fact that he could not handle political manipulations.

Concern for Environment and CSR

Industrialists complaining about environmental regulations and land acquisition issues today could surely learn a few lessons from Mr. J. N. Tata when he went about setting up India’s first steel plant during the early 1900s in what was then a predominantly forest area, inhabited by tribals.

In a letter written to his son in 1902, five years before the site of the steel plant was finally located, Mr. J. N. Tata laid down broad guidelines covering the design of the industrial complex which was to come up at Jamshedpur: “Be sure to lay wide streets planted with shady trees, every other of a quick-growing variety. Be sure that there is plenty of space for lawns and gardens. Reserve large areas for football, hockey and parks. Earmark areas for Hindu temples, Mohammedan mosques and Christian churches”.

When TELCO Pune was planned, thousands of trees got planted first. Since trees needed water, an artificial lake was created with a circumference of four kilometres. The factory buildings came up much later.

At the Leather Complex at Dewas (MP) that I was associated with, other than a massive plantation of trees of all kinds, a deer park was also set up. Our Accounts Department was often twiddling its thumbs to figure out if the cost incurred on the animals’ upkeep was reasonable!

Focus on People

The average Tata manager is sober, knowledgeable, mature, restrained, dignified, humane and downright ethical.  It does not boast of, but is quietly aware of, being part of a group which has always conducted its affairs in a transparent and ethical manner. There is an in-born self-belief that the values Tatas follow are not a mere statement of pious intentions; rather, these form a blueprint which guides and permeates all the activities the group.

Tata Steel has several firsts to its credit in the realm of labour welfare. An eight-hour working day was introduced in 1912 itself, whereas the law mandated it only in 1948. Likewise, free medical aid, establishment of a Welfare Department, formation of a Works Committee for handling employee grievances and leave with pay, provident fund, etc. were introduced much before the relevant laws came into being.

The social welfare measures across various Tata companies may vary, but the standards set by them somewhat exceed the legal requirements. Tax planning, yes; tax evasion, never. The group’s foray into education, fine arts and other socially relevant projects was planned and executed at a time when CSR norms were not even heard of.

How closely the value of compassion is cherished became very clear in the aftermath of the 26/11 terrorist attack on The Taj Mahal Hotel. The conduct of the employees during the attack and the subsequent support they received from the management is a case study in organizational behaviour and employee motivation.

I had a first-hand experience of this value of compassion in 1991 when I and a colleague of mine were mercilessly beaten up by a gang of misinformed workers of one of the small ancillary units of the Tata Exports. Prompt medical attention, legal support, counselling for the self and the family and a compulsory vacation followed automatically. A month later, Mr. Syamal Gupta, the then MD, nine rungs above us in the rigid Tata hierarchy, called for a personal meeting and instilled in us a sense of pride and fulfilment for having stood up to the rowdy elements in the work force.

The fact that I write this piece almost twenty years after I parted company with the group goes on to show the sense of belongingness I still – and shall continue to – carry with me!

Ethics and Values – A High Moral Quotient

When I look back at my association with the group, which lasted over ten years split over two phases, I am amazed at the rich learning I had. Job rotation, technical training and job knowledge apart, the exposure to the nuts and bolts of business ethics left an everlasting impression on my psyche.

A bribe was a simply not payable, whatever the commercial cost of keeping an entire manufacturing facility idle for three weeks. A senior manager who made the error of judgement of offering a bribe to a government servant for securing a permission was publically rebuked and persuaded to leave the company. Instead, I, a junior office then, was sent to accomplish the task without any speed money being paid. Luckily, I could manage this feat, though the company ended up incurring a cost of five times the bribe amount on my trip alone!

Aiming for Perfection

As per Mr. J. R. D. Tata, “One of the weaknesses of our country is that we are satisfied with the second or third best in everything. The basic attitude of chalega, ayega, dekhega. Therefore almost everything we do, we do it poorly”. He always maintained that “You can’t achieve high standards by aiming at those standards. You can only achieve a standard by aiming at something more. If you want excellence, you must aim at perfection”.

This implies painstaking attention to detail, a trait which permeates all spheres of the group’s activities. When a new factory block came up in the company, I asked my boss as to why a black stone slab was made a part of the flooring at the entrance to the shop floor. He was quick to point out: “That is the only way to ensure that we have minimum dirt and dust entering the floor; black colour will show any deviations without fail!”

“Humata”, “Hukhta”, “Hvarshta”

These words form a part of the Tata crest, designed by the founder Mr. Jamsetji Tata. In the ancient Avesta language, these mean “Good Thoughts”, “Good Words” and “Good Deeds”. The premium that the Tata brand enjoys in the market is the culmination of more than a century of efforts of the group, based on these principles and values preached as well as practised by the group.

As Mr. Ratan Tata henceforth channelizes his dynamism towards philanthropic activities and development projects, I have no doubt that he would come up with more innovations in the field of social entrepreneurship, so as to transform and upgrade the lives of millions in India at the bottom of the pyramid.

I once had the privilege of meeting him fleetingly at a Pragati Maidan Expo held in New Delhi in 1993. From what little I know of him, he is not the retiring kind. To him one cannot express the usual wishes of a peaceful and quiet retirement, howsoever well deserved it is. One may instead wish him long life, health, contentment and all the fun and excitement he can find in any activity he may choose to indulge in hereafter.

Likewise, one wishes Mr. Cyrus Mistry a great cruise ahead in these times of exciting business possibilities for the group! To quote a song from “The Sound of Music” – one of the greatest musical movies ever produced:

“Climb every mountain, ford every stream; Follow every rainbow, till you find your dream….!”

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