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Posts Tagged ‘The Tata Group’

Even though quite a few business houses from India had joined the World Economic Forum’s Initiative against Corruption in November 2012, not a single Indian company has so far become a signatory to the UN Convention against Corruption. This is deeply regrettable and projects the image of a corrupt business environment in India. It discourages foreign investments and erodes the brand value of Indian companies. In the absence of a level playing field, businesses shy away from potential opportunities. Mr. Ratan Tata’s lament on not having able to enter the field of aviation quite some time back is still fresh in our minds.

Companies can never be faulted for hiring Vice Presidents who are highly virtuous, law abiding and disciplined souls. Understandably, only those who follow high ethical standards and are in sync with the core values of the company would make the grade. However, in quite a few organizations, such qualities are merely necessary but not sufficient. When it comes to handling external agencies, incumbents who can either bend a few rules or interpret the fine print of law creatively to add to the bottom line of the company alone would be rated high and viewed with awe and reverence.

The Dr. Jekyll and Mr. Hyde Scenario

In other words, VPs should not only be ‘Virtue’ Presidents, but should also possess the flexibility of doubling up as ‘Vice’ Presidents while dealing with liaison matters. This stems from the core belief that businesses cannot be run successfully without back-stage dealing and wheeling, obviously with the aid of what many would euphemistically refer to as ‘appeasement initiatives’.

Appeasement of any kind is invariably geared towards either tweaking government policy to suit the ends of business, as also for specific time bound gains in the forms of large contracts, largesse, concessions and indirect favors. Organizations believe that advance knowledge of government plans, policies and rules is a great tool to deliver results to shareholders who not only look for long-term capital gains but also for better results quarter after quarter.

Sleeping with the enemy

If a professional gets stuck with an assignment which involves corrupt practices which do not match his or her personal core values, one option would be to escalate the issue. This would ensure that the matter is reviewed at a higher level in the organization.

If this option turns out to be impractical for some reasons – whether professional or personal – another one would be to start actively searching for career options with companies which value ethical practices in business!

A much better option, however, could be to work for a change from within the organization. This could be done either by presenting alternative business plans to management or by recommending an approach whereby the company could sidestep the issue by projecting its innate strengths in an aggressive manner. Let us consider some of the tactics in a professional’s arsenal which could be used to combat corruption in business deals.

Tackling Business Competition in the Market Place

The best strategy for a business to have is one which is based on avoiding government doles and concessions. By focusing on core competence and by fighting out the competition in the market place, the business can reduce its dependence on a wide section of the government policies. Surely this calls for rare qualities of leadership, statesmanship and openness. Inviting the government to play favorites and to resolve competitive business issues that are better dealt with in the market place could be a boon as well as a bane. However, this may not be possible in industries which are highly regulated.

Operating in an Unethical Environment

If one has absolutely no other option but to operate in an unethical business environment, the following steps might help to avoid corrupt practices.

  1. Building trust: An honest and humble approach, backed by a long relationship built on explaining the contribution of business can and does work. Investments made, employment opportunities offered and revenue generated are a few of the things that can be leveraged to secure favorable decisions without indulging in corruption.
  2. Reputation travels ahead: The fact that a business house does not stoop down to corrupt practice is generally well-known. It is a strategic advantage to have a squeaky clean image which ensures that a request from such an outfit is treated with the respect it deserves.
  3. Investing in underground cables: It never pays to flaunt one’s relationships. By keeping them underground, one not only wards off competition but also ensures that in case of a change of regime, the damage is minimal.
  4. Diversifying one’s liaison ‘assets’: One learns to be friendly with political opponents. In TN, one needs to be friendly with both the Dravidian parties. In WB, it is tough even if both CPM and TMC are one’s friends. In Maharashtra, Congress, NCP and both the variants of Sena must all like one for one’s business to make some headway.                                                                           Business history teaches us the same lesson. In the pre-independence era, Tatas were funding Gokhale and engaging with the nationalist elements while British officers retired from ICS were being employed by the group. JRD had excellent personal rapport with Nehru. G D Birla had been corresponding with Winston Churchill for a long time. Churchill’s dislike for Mahatma Gandhi was well-known; even though he was being supported by Birlas. They gave a job to one of his sons. It is a fact that he was assassinated while staying as a guest at Birla House in Delhi.
  5. Be courteous, humble but firm: Most government officers take a dim view of business executives. Firstly, they are not viewed as being dependable. Secondly, they are thought to be paid exorbitantly high and generate a feeling of awe as well as jealousy in a public servant. Now, if one walks in with one’s latest cell phone and/or tablet in his office and starts showing off the latest Rolex watch, one would be surely shown the door promptly.

Setting the Moral Compass Right

The UN Convention against Corruption is a laudable initiative and deserves to be given a serious thought by our present day business leaders. It binds an organization to (a) reducing corruption risk in procurement and contracts, (b) engaging in competitive and transparent procurement processes and (c) disclosing all payments made in procurement deals. The global panel already has names such as Coca-Cola, Microsoft, Siemens and Accenture.

It is not that India does not have shining examples of groups which have demonstrated the strategic advantage of pursuing business goals while staying the ethical course. The Tata group has been at it for the past 120 years or so. Liberalization of the economy appears to have thrown up quite a few scams, but companies like Infosys keep our hopes alive. As per Elaine Dezenski, senior director at WEF and the head of PACI, Infosys, Godrej Industries, Bajaj Auto, Genpact, Wipro and M&M are already signatories to the initiative.

As argued in an earlier blog (Getting a Moral Compass Would be a Sound Business Strategy for India Inc, published on December 9, 2012), companies in India would do well to seize the opportunity to clean up their business deals. A beginning can be made by persuading major political parties to make their funding transparent. Those in real estate business can come out with a time bound plan to rationalize stamp duties all across India, thereby making their deals more transparent.

Hopefully, progressive companies in India would see the strategic benefits of committing themselves to such initiatives soon enough!

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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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