Succession Planning of the Tatas

8/22/2019 Succession Planning of the Tatas

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Succession Planning of the

Tatas

1 PREAMBLEThere are two types of CEO transitions and, although they share some key

elements, they differ in the challenges they present to the Board and in how they

are implemented. One is the planned transition in which the CEO notifies the

Board of an intent to leave, enough in advance to allow the Board and the

organization to prepare. The second is a sudden departure whether by suddenchange in circumstances, illness, death or termination by the Board.

In either case, the organization needs to be prepared. Selecting a new CEO may

well be the most important task ever undertaken by the Board. It is a pivotal

opportunity.

Two issues emerge (a) whether in their succession planning, theyd consider

external candidates and (b) whether theyd consider non-Indian candidates.

On the first issue, it seems quite clear that Indian firms prefer recruiting for topjobs from within their organization. In the TCS example, Mr. Ramadorais

successorChandra was long seen as the heir apparent. With respects to having

a non-Indian at the helm, there arent many examples but the obvious one that

comes to mind was that of Alan Rosling, who Ratan Tata appointed to coordinate

strategy at Bombay House, the TATA HQ in India. There was a look of horror on

other industry veterans, when Rosling was appointed and had to represent TATA

in global industry platforms.

2 WHAT IS SUCCESSION PLANNING?Definition- Succession Planning is a process by which one or more successors are

identified for key posts and career moves and/or development activities are


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planned for these successors. Successors may be fairly ready to do the job or

seen as having a long term potentialBy Wendy

It is classified broadly into three types:

a. Management Succession Planningb. Business Succession Planningc. Family Business Succession Planning

Broadly, it is the process of identifying and preparing suitable employees through

mentoring, training and job rotation to replace key players. A succession plan

clearly sets out the factors to be taken into account and the process to be

followed in relation to retaining or replacing the person. Succession Planning

involves having senior executives periodically review their top executives and

those in the next lower level to determine several backups for each seniorposition.

It is not easy to give up power, particularly when you have been the object of so

much adulation. I must say that Infosys has done a good job in bringing two such

transitions before I leave the portals of this company, said Mr. Narayana Murthy

in his farewell speech before he stepped down from the board in 2011 and

became Chairman Emeritus.

At the Tata Steel annual general meeting (AGM) in mid-August 2011,shareholders tributes for chairman Ratan Tata were louder than usual. Tata Sons,

the holding company of the Tata Group, had just set up a panel to find a successor

for Ratan Tata, who was the then chairman of the group and several of its larger

companies. Dont leave us, implored one shareholder. We cannot lose our

Ratan (jewel in Hindi), said another. Ratan Tata hoped that he will have some

presence after that as someone sitting in the audience asking questions, he

told audience members at the AGM. Thus Succession Planning is a bit of a painful

process for both the Management and Shareholders of the Firm or Conglomerate.


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3 WHO SHOULD IT BE?THE NEED TO LOOK OUTSIDETraditionally, in India and elsewhere, the insider has had the edge. Outsiders are

about change: insiders are about continuity, saidCappelli. So when things are

going fine, insiders are preferred. When they are not, outsiders come in. AddsSingh of Bain: For most companies, an internal candidate makes sense. Not only

do they know the business very well, but they are also completely in tune with

the culture, which is essential. However, in those situations where a

transformation is required, or where performance has been lagging for some

time, an outsider may be the right person to shake things up, to bring in new

perspectives, to break some sacrosanct shackles, and to inject additional external

talent into different parts of the organization. Notes S. Raghunath, professor of

corporate strategy and policy at the Indian Institute of Management Bangalore(IIMB): The outsider can make a huge difference when a company needs radical

change. The insider may not see how much needs to be changed. The insider

would be more focused on implementation issues. According to Amit, External

candidates have a lot of cost associated with them. They may not know the

company and the industry, and people may not be happy with the way an

external candidate leads the company; people dont like change.

Former Citibanker Mukerjee lists the reasons why companies go outside to find a

CEO:

- Change of strategy, business models or nature of business that require asignificant change from the way the organization ran earlier;

- No one successor clearly identified;- Identified successor not ready;- As part of good governance, looking for the best person rather than only

from within; and

- For enhancing the image of the organization by hiring a well-known CEOfrom outside.

- There is another reason that some observers cite: to keep talent fromleaving the company. If three people are in the running for the CEOs job,

two would probably quit when the third is appointed. Getting an outsider

which is often regarded as a temporary arrangement postpones the


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fight and flight to another day; it keeps the hopes of the prospective CEOs

alive.

4 THE DOWNSIDE OF INSIDERSABROADER PERSPECTIVEThe downside of appointing an internal CEO can perhaps be seen at ICICI Bank.

After it was publicly made known that Chanda Kochhar would be the next

managing director and CEO, there has been a hemorrhaging at the top. No

organization can afford to lose so much top talent in so short a time, said

Mukerjee. But it does depend on your bench strength. Added Singh of Grid

Consultants: The leadership pipeline has to be full.

Bench strength doesnt just happen; it has to be created. Says Chittoor of ISB: In

well-managed companies, there is a focus on developing a long pipeline of talent.

In such companies, managers are groomed for senior management positions right

from the time they join. Just as there are other forms of capital, I believe

companies also possess what I call talent capital. The talent capital of the

company is determined on the depth of management talent it possesses, though

many companies do not pay attention to this. In companies that are well

endowed with talent capital, there are multiple candidates-in-waiting for each

senior management position, including that of the CEO. CEO succession planning

in such cases boils down to selecting the best candidate among those already

identified and groomed for the job.

Some people dontfeel that naming an insider as a successor should necessarily

lead to the departure of those who are not selected. In fact, they point to a

retention advantage in communicating that internal candidates are being

considered. Its a fantastic way to retain talent by communicating that there is

the chance for you to be the CEO, they sayof a well-orchestrated succession

process.

What about those who dont make it? K. Ramkumar, executive director ICICI who

looks after HR, said that people put two and two together and make 10; it is just

coincidence that so many top-level people left ICICI in the months after Kochhar


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took charge. Of the list *who quit ICICI Bank+, there is only one person who left

because she was in the reckoning with Chanda Kochhar for the top job, he noted.

Irrespective of who was selected, the others would have left. This happens time

and again in all global organizations. It is naive and idealistic to expect anything

else. The others were talented, but some had interests which ICICI could not havemet given its institutional charter, a few had misplaced notions and thought

themselves bigger than the organization. They were asked to move on by

former CEO Kamath, and not Chanda Kochhar. They had no place in the way ICICI

Bank was chalking out its future strategy.

Ramkumar has his own take on the broader issue of insider vs. outsider. There

comes a time when every organization has to fearlessly de-clutter its leadership

and put in place a team which is relevant for the future, he says. Jack Welch,

Paul Polman, Ratan Tata and Kamath, to name a few, have shown the way to do

it. Purging and de-cluttering leadership is an important part of succession

management and enabling the organization for the future. The key question here

is: Does the organization have sufficient leadership depth and bench? If it is like

GE, Unilever, Tata and ICICI, then it is possible to carry out this strategy. Look at

Unilever. In 2008, the company appointed Paul Polman from Nestle but

originally from archrival Procter & Gamble as CEO. He brought in a new chief

financial officer Jean-Marc Huet. This is a clear case of an outsider taking over

and creating enormous disruption in the system. If one examines theperformance of Unilever over the past few years, the company clearly required

that disruption. This is positive disruption.

When Ratan Tata took over the Tata Group, he was an insider. In the early days,

he was pilloried for taking on the satraps. In the first five years, he created a huge

amount of disruption. It was needed. Similarly, Jack Welch spent his early years at

GE cleaning out the cobwebs. Kamath at ICICI Bank was an insider-outsider.

[Kamath had joined ICICI -- then the Industrial Credit & Investment Corporation of

India, a development financial institution -- straight out of business school in1971. He left in 1988 to join the Asian Development Bank. He was wooed back to

ICICI as managing director and CEO in 1996.] Kamath also was a disruptive

influence. He brought in a focus on technology and innovation. He continues:

The point I am trying to make is that the debate should not be about insider vs.

outsider. What is important is the context. What matters are the time and the


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environment. Was Gandhiji an insider, outsider or insider-outsider? Does it

matter? If Gandhiji had returned to India 20 years earlier when the political

landscape was dominated by strong-willed people like Bal Gangadhar Tilak he

would never have been the leader of the freedom movement.

5 APEEP INTO THE HISTORY OF SUCCESSION PLANNINGThe Tata case is interesting. From what is publicly known, succession planning was

not a strong point until the late 1980s. In the late 1970s, the unsuccessful

succession planning attempt by Voltas is etched in the public mind.

The Tatas have gone down this road before. In 1981, group company Voltas hired

a search firm to find a CEO. There was a worldwide search, saidP.N. Singh, who

was in charge of HR at Voltas when the exercise took place. A global agency wasemployed. There were ads in global media and people were asked to apply for the

job of CEO. Chairman Tobaccowala initiated a high visibility, open search which

resulted in the recruitment of Ramesh Sarin of ITC as the CEO and finally, Sarin

from tobacco-to-hotels major ITC was chosen as MD. The experiment worked for

only a few years. Subsequent events proved that Tobaccowala had no intention of

giving up his executive power and authority. Inevitable clashes followed and Sarin

fell out and moved on. It was a question of culture and control, says Singh, who

is now chairman of Grid Consultants, which conducts Blake & Mouton gridseminars. ITC had a different culture and Tobaccowala had a different idea of

control. He was unwilling to let go. Tobaccowala was an entrepreneur and Sarin

was a manager. So the two should actually have worked well together.

But something positive by way of process must have happened during the last 20

years under Ratan Tata. It is known that Ratan Tata set up a group HR function as

part of his re-organization plan in the 1990s. The intent was to introduce good

practices within the companies with respect to talent management and

succession planning. While there is not much outside information about howmuch progress the companies have made, something right must be going on. The

succession transitions are impressive from an outsider's perspective. Further, the

board directors seem to be involved and to drive the leadership changes in the

companies.


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In Tata Steel, Jamshed Irani became CEO in 1991 amidst tumultuous

circumstances of the Russi Mody departure. In earlier interviews, Irani had

mentioned that by the late 1990s, he presented to Ratan Tata a comprehensive

review of possible successors; together, they zeroed in on a few possibilities.

From this list, B. Muthuraman emerged as the CEO in 2001. Muthuraman, it islearnt, did a similar exercise and discussed it quite early on with Ratan Tata and

the board while choosing his successor in 2009. He too accomplished a successful transition.

In Tata Consultancy, S. Ramadorai took over from the legendary F.C. Kohli in 1996.

He was filling big shoes. He grew the business dramatically over the next decade

and a half, including the IPO of the company. By mid 2000s, he is reported to have

made a short list of potential successors for discussion with Ratan Tata and the

board. From this list emerged N. Chandrasekharan. Ramadorai walked out of his

TCS office on the date of his retirement so that his successor would have a free

hand.

In Tata Chemicals, change was sought in 2001. Outsider Prasad Menon was

recruited to succeed Manu Seth. Perhaps because of what he had learnt at ICI, his

earlier company, Prasad Menon started to think about succession early on. Apart

from pacing potential, solid internal leaders, the leadership brought in a young

TAS officer into the company and tested him through hugely challenging

assignments. All the identified candidates were watched, coached, talked about

and nominated to Advanced Management Programmes. Finally a choice was

made by selecting R. Mukundan, with a short bridging role by veteran Homi

Khusrokhan.

The successful transitions completed in the listed Tata companies during the last

two decades are impressive: Titan (where Xerxes Desai gave way to Bhaskar

Bhat), Voltas, Rallis, and Indian Hotels. The conclusion is that whatever the

process, the Tata group seems to have got succession about right - not perfect,

but it seems to be effective and deliver positive results.

In 2011, Tata was in the midst of the mother of all successions, finding a successor

to Ratan Tata. Instead of focussing on the possible candidates, it is purposeful to

reflect on the streamlined and effective process of succession they had

announced.


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Firstly, a search committee was appointed with its composition and membership

placed in the public domain. The choice of candidate was kept wide open: man or

woman, Indian or foreigner, internal or external. Secondly, the search committee

provided brief public updates of the status; it wasntsurprising that the details orcandidates were not revealed. Thirdly, the search committee set itself

approximate time targets so that their work inadvertently did not become

desultory. Lastly, they internally adopted relevant criteria and a methodology,

taking the assistance of a specialist firm. There seemingly wasnt much else to do

by way of a process.

Based on the recent track record of successful transitions and the transparent

process for the chairman succession, the Tata group did have a good chance ofgetting the succession right. People had no choice but to wait for the search

committee to complete its job rather than to keep speculating on names and

individuals.

6 EARLY YEARS OF MR.RATAN TATA &THE EXIT OF THE SATRAPSRatan Tata was a surprise choice to head the group after JRD (as J.R.D. Tata was

popularly known).

He studied at Cornell University, specialized in architecture, and had an offer from

International Business Machines Corp., but returned to India because his

grandmother was unwell, and joined Tata Steel Ltd (then known as Tata Iron and

Steel Co., or Tisco) as an apprentice on the shop floor of its Jamshedpur plant. The

year was 1962.

In 1971, he was appointed director-in-charge of the ailing National Radio and

Electronics Co. While Tata managed to turn around the firms fortunes, it was to

be a temporary success.

In 1977, he was asked to turn around another troubled company, the Mumbai-

based Empress Mills. Tata managed to do so, but was refused an investment he

thought was required. The Mumbai textile workers strike led by Datta Samant

also hurt the company, which eventually closed down in 1986.


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Maybe because of these failures, few people understood why he was chosen as

the person who would replace JRD in 1991. At the time, Tata was still perceived as

an outsider in Bombay House, the groups headquarters.

Several group companies were also led by individuals who had been given

considerable autonomy by JRD and were, sometimes, more closely associated

with their companies than the groups chairman himself.

Among these executives were Russi Mody at Tata Steel; Darbari Seth at Tata Tea

and Tata Chemicals; Ajit Kerkar, who transformed the Taj group (Indian Hotels)

into a major hospitality chain; and Nani Palkhivala, a director on the boards of

several Tata companies and chairman of the erstwhile Associated Cement

Companies (ACC Ltd), in which the Tata group was one of the original promoters.

It had been widely expected that one of these individuals would succeed JRD, andTatas appointment resulted in some bitternessand not all of it remained

unvoiced. Mody sparred openly with Tata. Kerkar and the new chairman had

different views on the management of the chain.

J.R.D. Tata had around him a team of senior managers, all of them people of

substantial understanding in their respective spheres, Tata said in an interview

posted on the Tata group website on 6 December for some time before being

inexplicably taken down. While they may have acceded to his wish that I take

over the chairmanshipand this happened suddenlyI must confess that I did

not feel any sense of joyousness on their part, because some of them had

aspirations to have the job themselves.

In 1993, Mody was sacked after a messy scrap involving the appointment of

senior executives. In 1997, Palkhivala quit, citing ill health. And Seth retired in

1995 and Kerkar in 1997, after Tata brought in a new policy that set the

retirement age for directors at 70 and senior executives at 65.

In my personal view, when JRD saw this scramble among the company chiefs tosucceed him and the unpleasant innuendos that surfaced, he may have appointed

someone who understood the Tata ethos, which was always very important to

him; and, perhaps, he thought Ratan Tata was someone who could uphold this

ethos, Piramal said.


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She added that the concept of succession planning was nascent in JRDs time. Its

only in the last five years that large business groups have realized the need for

this, she said. Indeed, perhaps because of the rocky start that he had, Tata

appointed a five-member selection committee, comprising N.A. Soonawala, Shirin

Bharucha, R.K. Krishna Kumar, Cyrus Mistry and Lord Kumar Bhattacharya, toidentify his successor.

In hindsight, Tatas ascension in 1991 was the best thing that could have

happened to the Tata group, according to a business historian and writer.

Tata, like every Indian company, was suddenly in a new environment. It could

not keep operating under the old market rules, the old certainties, said Morgen

Witzel, a UK-based management writer and author of Tata: The Evolution of a

Corporate Brand.Ratan Tatas strategy was to change Tata to help it keep pace with a changing

India, he said.

And, after spending nearly five years quelling the challenge of the satraps, thats

just what Tata did.

7 BUILDING THE TATA CORPORATE BRANDAGROUP IDENTITYOnce the dust over the succession issue settled, the conglomerates new chief Mr.Ratan Tata came into his own. His primary focus was the improvement of the

operational efficiencies of several of the groups manufacturing companies and

reiterating the very conglomerate nature of the entity.

The main beneficiaries of the focus on operations were Tisco and Telco (Tata

Engineering and Locomotive Co.). The former soon emerged as one of the lowest-

cost steel makers in the world. The two companies were also renamedTisco as

Tata Steel and Telco as Tata Motors.

Simultaneously, Tata convinced group companies to pay royalty to Tata Sons for

the direct or indirect use of the Tata brand name. He also moved towards

increasing the promoters shareholding in key group firms. Until then, the

promoting firms held minority stakes in most group companies, making them

vulnerable to takeovers.


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The group also exited businesses such as cement, textiles and cosmetics even as it

increased its focus on others such as software, and entered telecommunications,

finance and retail.

These divestments and investments helped the Tata group shake off the slightly

fusty image it had built up in the 1980s and make it fit for purpose in the modern

world, according to Witzel.

Indeed, today, the Tata groups most profitable company is information

technology firm Tata Consultancy Services Ltd (TCS), which boasts around $10

billion (around Rs.54,700 crore) in revenue and serves customers around the

world.

I think the creation of the corporate brand was quite important. The Tata

corporate brand is one of the worlds most valuable global brands because itharnesses the power of the whole group and creates a strong image in the minds

of the stakeholders, Witzel added.

Tata himself sees the re-establishment of the group identity as one of his

achievements. In the interview that was posted on the groups website, he said

one of his most satisfying moments as chairman was the welding of the

organization together in a more cohesive way than it had been in the past that it

was able to identify itself more as a group.

And, even as some of these efforts to establish himself, improve the operational

effectiveness of some companies, and reiterate a group identity were bearing

fruit, Tata went out and made a big-ticket global acquisitionthe Tetley group in

2000.

8 ACQUISITIONSLOOKING WITHOUTIn the mid-1990s, Tata Tea had tried and failed to acquire British tea maker

Tetley. In 2000, it tried again and succeeded. The acquisition was meant to

harness Tata Tea and Tetleys synergies. Tetley had a well-established distribution

network and experience of selling tea bags in markets such as the US, UK, Canada

and Europe. Tata Tea was strong in countries like India and in the Middle East,


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according to Tata LogEight Modern Stories From a Timeless Institution, a book

by Harish Bhat, managing director and chief executive of Tata Global Beverages

Ltd (earlier Tata Tea).

The groups biggest acquisition to date is Tata Steels purchase of Anglo-Dutch

steel maker Corus Group Plc in 2007. The company has since been renamed Tata

Steel Europe. The acquisition of Corus, which was Europes second largest steel

maker, catapulted the company into becoming the worlds seventh largest steel

producer, although it hasnt been as financially remunerative as stock market

analysts would have liked.

Another acquisition, and more fruitful than the Corus purchase to date, was Tata

Motors acquisition of the iconic British car maker Jaguar Land Rover. The

acquisition provided a hedge against the weakness faced by the companys

domestic passenger car business.

There have been several other acquisitions: TCS bought CMC Ltd; Tata Sons

acquired a controlling stake in state-run Videsh Sanchar Nigam Ltd (now known as

Tata Communications Ltd); Tata Motors bought the heavy vehicles unit of


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Daewoo Motors in Korea; Tata Steel acquired Singapores NatSteel; and Indian

Hotels Co. Ltd took over management of The Pierre in New York.

But if globalization reflects the buy side of the Tata story, then efforts to

innovate indicate the make side of it.

9 INNOVATIONSLOOKING WITHINOne day in January 1998, Ratan Naval Tata, chairman of Tata Motors Ltd and head

of the Tata group, walked out onto a brightly lit stage in a hall in New Delhis

Pragati Maidan to announce something that would forever change the fortunes ofIndias largest truck maker.

The dimensions of a (Maruti) Zen, the cabin size of an Ambassador and the fuel

efficiency of a Maruti 800that was the promise with which Tata announced the

Indica, the companys car.

The launch was presided over by then industry minister Murasoli Maran and Tata

dedicated it to India. The symbolism wasnt lost on anyone present at the launch

during Auto Expo, Indias biennial car show: Maran was fighting a bruising battle

with Suzuki Motor Corp. over the management of Maruti Udyog Ltd (now Maruti

Suzuki India Ltd) in which the state and the Japanese firm were equal partners.

Later that year, bookings opened for the car, and a little over 100,000 people

signed up and paid an advance for the Indica.

Despite the manufacturing and quality problems the initial lot of vehicles ran into

(and the Rs.500 crore loss Tata Motors declared in 2001), the Indica became a

best-seller and marked the real entry of Tata Motors into cars, although the

company had already signaled its intent with the launch of the Sierra, whichwould be called a cross-over vehicle today, and the Estate, a station wagon.

I bought one of each for my Mumbai house, a technology entrepreneur who

moved from Mumbai to Bangalore once said in a conversation with a Mint editor.


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They werent good, but I told myself, Its an Indian company, its doing

something; we should support it.

The Indica would change the trajectory of Tata Motors, but it was also more than

just a car. Recent history is partial to the Nano, the Rs.1 lakh car launched by

Tata in 2009, but it was the Indica that started it all.

The launch was a sign that Tata Motors had made the transition to serious car-

making, an indication of the manufacturing and operational renaissance that

characterized the Tata group in the late 1990s and the early 2000s.

In many ways, the Indica started a trend in the Tata group. Every year since, Ratan

Tata has feted individuals or teams that have worked on an interesting project

even if it didnt succeed, under a programme called Dare to Fail.

The Nano is, of course, the pinnacle of this innovation journey, but there have

been other successes as well. Among them is Swach, a low-cost water purifier

aimed at making clean drinking waterhard to find in rural areasavailable to

the economically weak. Swach began as a corporate social responsibility initiative

by TCS and soon became a business idea, commercially viable on its own.

He (Tata) has played a strong role in encouraging innovation, but he has not

been alone in this, Witzel says. Tatas leadership style is to suggest ideas, offer

encouragement and motivation, not to lead the charge.Its clearly an approach that has paid off.

The groups aggregate sales at the end of 2011-12, at Rs.4.51 trillion, are 43 times

the turnover in 1992-93, the first full fiscal after Tata took over as chairman. Net

profit growth in the same period has been even more spectacular, rising 51 times

to Rs.33,664 crore.

The aggregate market capitalization of the group at Rs.4.54 trillion in fiscal 2012 is

33 times higher than it was in 1992-93. In the same period, the Sensex, thebenchmark equity index of BSE, grew nearly eight times.

The Tata groups closest competitor, in terms of turnover, is the oil-to-yarn and

retail conglomerate Reliance Industries Ltd (RIL). RILs net sales in fiscal 2012 were

Rs.3.58 trillion and it had a net profit of Rs.19,747 crore. Though RILs revenue


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growth in these two decades has been much higher than the Tatas, having grown

90 times, its net profit growth is lower.

The result of Tatas strategic thinking reflects in the groups market

capitalization, Piramal said. What Tata did after taking over wasnt very

different from what Kumar Mangalam Birla did with the Aditya Birla Group after

his fathers death.

Kumar Birla took over as chairman of the group in 1995 at the age of 28 after his

fathers sudden death and is credited with transforming the Indian business group

into a multinational conglomerate.

10THE DOWNSIt hasnt always been smooth sailing for Ratan Tata or the Tata group. A case in

point is the Corus acquisition of 2007, which wasnt panning out too well for the

company. Sales and profitability at Tata Steels European operations hadtaken a

hit, due to the 2008-09 financial meltdown and the subsequent euro zone crisis.

Company executives did not expect the situation to improve soon.

The Nano wasnt a huge success either. Tata, in his interview on the group

website, said the Nano was marketed like other cars, but as a minimal

automobile at a low price.I would love to have a chance to implement a new marketing plan for the

product, if that were possible, Tata said.

The emergence of a strong rival to Tata Motors in the passenger car segment,

Mahindra and Mahindra Ltd (M&M), was another cause of concern articulated by

Tata at the companys last shareholders meeting in August. We should do a

great deal of introspection as to why M&M is ahead of us. I have great respect for

the company. But we should look at this in sadness that we let that happen, Tata

remarked.

The conglomerate was also sitting on a debt pile of $26 billion (around Rs.1.42

trillion), a number that was causing concern among some investors. This needed

to be seen in the context of the 29 listed group companies combined net worth


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of Rs.1.43 trillion, and cash and cash equivalents of Rs.36,289.38 crore, according

to data from Capitaline.

11THE TATA GROUPASUM-UP OF YESTER-DECADESTatas had 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 groups 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 Tatas tenure, the group improved its focus on the business

horizon. In tune with the changing times, TOMCO, Lakme, Merind, ACC, NerolacPaints and others got hived off. Businesses like IT, telecom and financial services

got added to the groups portfolio. TCS became a flagship company, leading

Indias 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


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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

groups 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.


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12CONCERN FOR ENVIRONMENT &CSRAS CORE VALUESIndustrialists 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 Indias first steel plant during the early 1900s in what was then apredominantly 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), other than a massive plantation of trees

of all kinds, a deer park was also set up. The Accounts Department was often

twiddling its thumbs to figure out if the cost incurred on the animals upkeep was

reasonable!

13FOCUS ON PEOPLEThe average Tata manager is sober, knowledgeable, mature, restrained, dignified,

humane and downright ethical. He 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 had 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


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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 groups 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.

14ETHICS &VALUESAHIGH MORAL QUOTIENTJob rotation, technical training and job knowledge apart, the exposure to the nuts

and bolts of business ethics left an everlasting impression on the psyche of

employees.

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 madethe error of judgment of offering a bribe to a government servant for securing a

permission was publically rebuked and persuaded to leave the company. Instead,

a junior officer then, was sent to accomplish the task without any speed money

being paid. Luckily, he happened to manage this feat, though the company ended

up incurring a cost of five times the bribe amount on his trip alone! Ethics

mattered and it still does matter to the Tatas.

Humata, Hukhta, Hvarshta - These words form a part of the Tata crest,

designed by the founder Mr. Jamsetji Tata. In the ancient Avesta language, thesemean 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.


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15AIMING FOR PERFECTIONAs 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 alwaysmaintained that You cant 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 groups activities.

16THE TATA GROUPTODAY AND TOMORROWMr. Jamsetji N. Tata was the founder of the group. In 1904, he handed over thebaton 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.

Mr. Ratan Tata was barely 54 when he assumed control of the Tata Group in

1991. His successor was searched for, keeping in line with a whole lot of other

Tata company managing directors who were then in their 40s. The group had

brought people in their 40s and 50s to run some key companies. Observers said

that the next leaders will be from among them. They included Tata Power MD

Anil Sardana, TCS MD Natarajan Chandrasekaran, Tata Chemicals MD R

Mukundan, Tata Teleservices MD N Srinath, Tata Global Beverages head Peter

Unsworth, Tata Motors MD Carl-Peters Forster, India Hotels chief Raymond

Bickson and Tata International MD Noel Tata.


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The activities of the group were and are overseen by two bodies. The Executive

Office reviews business activities of all group companies. Besides Ratan Tata, it

had R Gopalakrishnan, Ishaat Hussain, Kishor Chaukar and Arunkumar Gandhi.

Then there is the Group Corporate Centre, which reviewed policy issues related togrowth and took decisions on entering new areas. It also promoted the Tata

brand and provided advisory services to group companies in human resources,

finance and legal affairs. It comprised Ratan Tata, JJ Irani, R K Krishna Kumar, R

Gopalakrishnan, Ishaat Hussain, Kishor Chaukar and Arunkumar Gandhi. The

members of both these groups were then in their 60s and 70s.

Tata Steel's acquisition of Corus, Tata Motors buying Jaguar Land Rover and TCS

going public were some of the significant milestones after Mr. Ratan Tata took

over from JRD as Chairman of the group.

The Tata Group comprises over 100 operating companies in seven business

sectors: communications and information technology, engineering, materials,

services, energy, consumer products and chemicals. The group has operations in

more than 80 countries across six continents, and its companies export products

and services to 85 countries. The total revenue of Tata companies, taken

together, was $83.3 billion (around 379,675 Cr INR) in 2010-11, with 58 per cent

of this coming from business outside India. Tata companies employ over 425,000

people worldwide. The Tata name has been respected in India for 140 years for its

adherence to strong values and business ethics. Every Tata company or enterprise

operates independently. Each of these companies has its own board of directors

and shareholders, to whom it is answerable. There are 31 publicly listed Tata

enterprises and they have a combined market capitalization of about $77.44

billion (as on November 17, 2011), and a shareholder base of 4.3 million. The

major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services

(TCS), Tata Power, Tata Chemicals, Tata Global Beverages, Indian Hotels, Tata

Communications, Tata Teleservices and Titan.

Mr. Tata has taken the group to great heights and we hope the new Chairmanwill take it to greater heights, said an official closely associated with the selection

committee. The five-member committee held 18 meetings over the last on-and-a-

half years and interviewed a large number of candidates, both Indian and

expatriates.


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Mr. Tata had a tougher clean-up exercise where there were many powerful

individuals who were running their own fiefdoms. He managed to do this while

carving out a new global agenda for the Group. The new Chairman will have a

relatively easier job on his hands, an industry veteran said.

Much like the few erstwhile Kings who chose a successor based on merit alone,

the group had invariably followed the principle of meritocracy when choosing a

successor in the past. What the new Chairman would have had to take over from

Mr. Ratan Tata was a much more well-knit and cohesive group, united by a shared

philosophy, vision and identity.

17THE CHALLENGES THAT WERE BEFORE THE MAN-TO-BEThere is always a lot of hoopla surrounding the succession planning of leaders.

Whenever a visible leadership change occurs, the image of the incoming leader

appears to be much less than the exiting leader. The fallacy lies in our tendency to

make an unfair comparison between the embellished profile of the outgoing

leader and the unclear profile of the incoming leader. That is why Lal Bahadur

Shastri initially looked inadequate as a replacement for Jawaharlal Nehru, Homi

Sethna looked inadequate compared to Homi Bhabha and Vikram Sarabhai, and

Ratan Tata was thought to be less than J.R.D. Tata. But all of these turned out to

be successful transitions.

There were many challenges ahead for the young Chairman-to-be.

STEEL

Weak demand and decline in global steel prices were the key challenges faced by

Tata Steel's European operations. This was even as the prices of raw materials

such as coking coal and iron ore ruled high as compared to 2010. Tata Steel had

reduced its capacity utilization marginally in line with weakening demand and

may have had to resort to production cuts if demand did not improve in Europe.

Even in India, the company was up against weaker demand from sectors such as

construction and automotive, but expected volumes to grow by eight per cent for

the year 2011.


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AUTOMOTIVE

The big disappointment was the Nano which was clocking modest numbers. The

car business needs to rev up though commercial vehicles had been doing well.The Tatas were and are the market leader in trucks and buses but a lot depended

then on the state of the economy over the next few months.

TELECOM

In the telecom sector, the Tatas had their hands full with major challenges for

both Tata Teleservices and Tata Communications. Tata Tele was now the fifth

largest telecom player in a crowded market with as many as 14 in the arena. Butthe overall telecom sector was witnessing disturbing trends over the past year. All

the operators' revenues, including Tata Teleservices, were stagnating, profitability

was declining, and investments were slowing and costs were rising.

Tata Teleservices undertook a major restructuring exercise in bid to cut costs and

rationalize operations. The Successor had to ensure that this paid off in the long

term.

Apart from the tough market conditions, there were a whole host of regulatory

issues especially those related to spectrum. Tata Teleservices still did not have

GSM spectrum in key markets like Delhi. The company's 3G roll out was also

under a cloud with the Government raising questions over roaming agreements.

On the Tata Communications front, the worry was to bring the company back into

profitability. The company, which once had a monopoly over the international

long distance segment, had to reposition its strategy with more focus on foreign

markets. While this paid off to some extent, the then ongoing dispute with the

Government over funding and land sale put the company's expansion plans onhold.

Another immediate challenge for the new Chairman was to be able to steer the

company away from all that happened with Ms. Niira Radia and the 2G scam.

Although there were no business implications, the Tatas had taken a major hit on

its image, which the new Chairman would have had to build.


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IT SERVICES

The offshore IT/BPO players were grappling with macro uncertainties in key

overseas markets such as the US and Europe, and, at the same time, coping withcurrency volatility back home.

For TCS, the largest Indian IT Services Company, the challenge was also to sustain

its pole position in a market that had already started seeing a reshuffle in the

pecking order of Tier-1 vendors, said Mr. Sanjeev Hota, Associate Vice-President -

Institutional Equities at Sharekhan.

Also given its over two lakh employee base, TCS had to chase, perhaps even more

aggressively, the non-linear growth strategy (beyond adding employees). Deals

such as the recent $2.2-billion contract from Friends Life (a British financial

services firm) will be critical in this regardIf TCS wants to scale up further , it will

be important that the revenue growth outstrips the employee growth, notedMr.

Harit Shah, Senior Research Analyst at Nirmal Bang Institutional Equities.

Though the company had been growing at a scorching pace in the last few

quarters, the euro zone crisis and the rupee volatility were the key challenges.

Mr. Tata's acumen when it came to the business of technology was well known.

Would the new Chairman's lack of expertise in the technology space be adeterrent going forward? was a key question to be considered. I do not think

soat the top level people settle into their roles pretty quickly. Sometimes a

complete outsider can bring a completely new perspective to the business of

technology, TCS sources had said.

18THE RACE FOR SUCCESSIONThe committee set up to find a successor to Tata group Chairman Ratan Tata had

shortlisted around 11 candidates. Out of them, four-five were group employees.

The frontrunner in the Tata race appeared to be Noel Tata, Ratan Tatas half

brother who was then promoted to overseeing the groups international

operations. Some 65% of the conglomerates US$70.8 billion revenue (April-


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March 2008-2009) came from outside India, so this was a significant

responsibility. Additionally, Noel Tata was the son-in-law of Pallonji Mistry, who

owned 18.4% in Tata Sons, which made him the single largest individual

shareholder (most of the equity being held by charitable trusts).But others were in the race, too. The Economic Times speculated that the internal

candidates include Tata Sons executive directors Ishaat Hussain and R.

Gopalakrishnan; and B. Muthuraman, Ravi Kant and S. Ramadorai, vice chairmen

of Tata Steel, Tata Motors and Tata Consultancy Services (TCS), respectively. The

younger group included the CEOs of TCS (N. Chandrasekaran) and Titan (Bhaskar

Bhat). But they were long shots at best, observers had reported.

There was also a speculation that, given the groups increasing global focus, the

choice need not be an Indian. The Times of India said that the candidates couldinclude Indra Nooyi of PepsiCo, former Vodafone head Arun Sarin and Renault

Nissan chief Carlos Ghosn. The selection process would consider suitable persons

from within the Tata companies, other professionals in India as well as persons

overseas with global experience, saida Tata Sons press release.

Ratan Tata had also clarified that the new chief need not have to be either a Parsi

or a Tata. (The Parsis are a wealthy business community in India, and the Tata

chief has traditionally been a Parsi.) The Parsis are a shrinking community. Birth

rates are very low and women who marry outside the community areexcommunicated. There are now less than 60,000 Parsis left in India, and it is

inevitable that the Tata baton will pass on to a non-Parsi sooner or later.

It was evident that it would have to pass on to a non-Tata, too. The Tatas are a

small clan. Apart from Ratan, there was his 80-year-old French stepmother,

Simone, who was obviously not in the running for his job. His brother, Jimmy, who

was close to 70 and had retired from Tata Power. Aloo Tata (who was by birth a

Mistry) wouldnt have got precedence over her husband, Noel. And their three

children Liya, Maya and Neville were still studying. So, Noel was the onlyTata who was eligible.

The composition of the selection panel had some critics speculating that the

choice of Noel was pre-decided. It consisted of Tata Sons directors R.K. Krishna

Kumar and Cyrus Mistry (who was Noel Tatas brother-in-law), Tata veteran N.S.

Soonawala, group legal advisor Shirin Barucha and independent member Lord


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Kumar Bhattacharya of the Warwick Manufacturing Group of the U.K. There was

only one external member, said Pradeep Mukerjee, founder-director of

Confluence Coaching and Consulting. Mukerjee, who had worked for several years

in the HR area with Citigroup in the U.S., says that in the West, such selection

panels have many more external members. What good is a panel stuffed withinternal members? I wonder what the true purpose is.Thus, the panel did have

to face some criticism but it was worthwhile to keep a panel that was in keeping

with the core values of the Tata Group for such a strategic decision-making which

would bear fruit in the long run.

19CYRUS PALLONJI MISTRYCyrus Mistry, then 43, is the son of construction tycoon Pallonji Shapoorji Mistry.

Valued at $8.8 billion, Pallonji held an 18.5 per cent stake in Tata Sons, making

him the single largest shareholder.

Mr. Mistry is the younger son of Pallonji and is married to Rohika Chagla, the

daughter of lawyer Iqbal Chagla. He has an elder brother - Shapoor Mistry and

one of his sisters is married to Noel Tata, Ratan Tata's half-brother.

He had been a director of Tata Sons since September 1, 2006. He served as a

Director of Tata Elxsi Limited, from September 24, 1990 to October 26, 2009 and

was a Director of Tata Power Co. Ltd until September 18, 2006.

Mr. Mistry served as Chairman of the Board of Shapoorji Pallonji Group and

Afcons Infrastructure Limited before he became the Chairman of the Tata Group.

Mr. Mistry also served as Director of various companies including - Forvol

International Services Ltd, Shapoorji Pallonji & Co. Ltd, Cyrus Investments Ltd,

Shapoorji Pallonji Power Co. Ltd, Buildbazaar Technologies (India) Pvt Ltd, Sterling

Investment Corporation Pvt. Ltd, Samalpatti Power Co. Pvt. Ltd, Shapoorji Pallonji

& Co. (Rajkot) Pvt. Ltd, Shapoorji Pallonji Finance Ltd, Shapoorji Pallonji

Infrastructure Capital Co. Ltd, Oman Shapoorji Construction Co. Ltd and Muscat

Pallonji Shapoorji & Co. Pvt. Ltd.


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Mr. Mistry had been a Non-executive Director of Forbes Gokak Limited since June

23, 2003.

Mr. Mistry is Fellow of the Institute of Civil Engineers. He holds a BE in Civil

Engineering from Imperial College, London and a Master of Science in

Management from London Business School. He holds a Bachelor of Commerce

from Mumbai University.

An avid golfer, Mr. Mistry is also a founder member of the Construction

Federation of India. He is a trustee of the Breach Candy Hospital Trust, Mumbai.

He is also on the board of Imperial College India Foundation.

(Courtesy: PTI on Nov 23rd, 2011;

Published by the Hindu Business Line)

Cyrus Pallonji Mistry succeeded Ratan Tata at the helm of Tata Sons. He was

appointed as Deputy Chairman and worked with Mr. Tata for one year as per theplan chalked out for him as a successor, before taking over in December 2012.

43-year-old Mistry was a director of Tata Sons and Tata Elxsi (India). Ratan Tata

retired in 2012 when he turned 75. He joined the Tata group in 1962 and was the

Chairman since 1991. Mr. Cyrus Mistry took over from a man who over the last

two decades transformed the Tata Group into a global enterprise.


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Endorsing the appointment then, Mr. Tata had said, "The appointment of Mr.

Cyrus P. Mistry as Deputy Chairman of Tata Sons is a good and far-sighted choice."

(Courtesy: Press release from Tata Sons)

"I will be committed to working with him over the next year to give him the

exposure, the involvement and the operating experience to equip him to

undertake the full responsibility of the Group on my retirement," Mr. Tata had

added.

Mr. Mistry had said that he was deeply honoured by his appointment. "I am

aware that an enormous responsibility, with a great legacy, has been entrusted to

me," he had reported in a statement.

He announced that he will legally dissociate himself from the management of his

family businesses to avoid any issue of conflict of interest. Shapoorji PallonjiMistry, the father of the new deputy chairman, was owner of 18 per cent stake in

Tata Sons. The Shapoorji Pallonji Group is into construction, textile, water

treatment and other businesses. Cyrus Mistry was the managing director of the

two billion dollar SP Group.

Apart from the Tata Group, he also serves as a director on the board of several

other companies, including Shapoorji Pallonji & Co, Forbes Gokak, Afcons

Infrastructure and United Motors (India).

Mr. Mistry was also a part of a search panel appointed last year to find Mr. Tata's

successor. He withdrew himself when his name was suggested. He then entered

the process as a candidate.

The 5-member panel also comprised of N A Soonawala, vice-chairman, Tata Sons;

R K Krishna Kumar, non-executive director, Tata Sons; Lord Bhattacharya, a

businessman based in the UK who runs Warwick Manufacturing; and Shirin

Bharucha, a lawyer for the group. The committee is said to have met 18 times

before announcing the succession plan.


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20WHAT THE AFTERMATH OF THE DECISION SUGGESTSIf there is any class on succession planning scheduled, Ratan Tata will surely be

the one who rightfully deserves to give tutorials. For the man who took the Tata

group worth US$ 5 bn to US$ 70 bn, the decision to relinquish the control mustnot have come easy, followed by a tough job to search the right candidate who

could step in his large shoes.

The same retirement rule that saw some of JRDs satraps leave the group

mandated Tatas retirement as well. Some people have suggested that the

retirement policy should not apply to the chairman, Tata said in his interview on

the website. I have always believed that you dont make exceptions for yourself.

So I took the view that the rule should apply to me too. I realize that I have to live

by the rules that I have set and step down when the time comes. And that timehas come.

Cyrus Mistry had been working with Tata for a year before he stepped down, and

Tata had said the Tata Sons chairman-designate has the analytical skills to steer

the business forward and the integrity to uphold the Tata ethos. Later, Tata Sons

formally announced that Mistry would take over on 28 December 2012 and Ratan

Tata would become Chairman Emeritus.

Some of the challenges that lay ahead of Mistry were akin to those Tata facedwhen he ascended to the top job. The succession this time round was not as

acrimonious as it was during Tatas time, but with many of Tatas chieftains

nearing retirement, Mistry has had to scout for young talent from within the

group and outside to fill the void. He had already started doing that. Madhu

Kannan, a former chief executive officer of BSE, was his first hire.

You can live in a house, drive a car, make a phone call, season your food, insure

yourself, wear a watch, walk in shoes, cool yourself with air-conditioning, and stay

in a hotel all courtesy of Tata firms, said an article dated 1 December2012 in TheEconomist. The dilemma is that the group may not necessarily be making money

doing all of this. Tatas telecom business, for instance, was under severe strain

following the upheaval in the sector in the wake of the 2G scam, and its future

was uncertain. Elsewhere, though Taj was still one of the most respected names

in the Indian hospitality industry, Indian Hotels wasnt too profitable, with


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acquisitions weighing on the firm. Problems with Tata Steels European

operations persisted and the current dynamics of the steel business at home

werent too exciting either.

Tata Sons, a holding company (which is the only unlisted from among the group),

needed not just a professional executive but a smart fund manager as well at the

helm of affairs. Mistry had to manage to do both. While a year of working and

learning closely with Mr. Tata before taking the full responsibility of the group in

December 2012 did help, the responsibility was enormous. But to begin with, he

had showed good intentions by announcing a legal dissociation from the

management of his family businesses (Mistry was MD of SP Group which was into

construction, textile and water treatment etc.) to avoid any conflict of interest.

His selection was important in the sense it sent some important signals - TataGroup will choose the one it considered responsible and worthy enough to run

the group, even if it were a non-Tata (Mistry had been chosen over Noel Tata,

Ratan Tata's half brother who had served as the managing director of the retailing

company- Trent and is now serving as non-executive chairman - to merge some

Tata Group retailing operations). Especially then when Tata Group holdings were

high enough to be insulated from takeover threats. While Cyrus doesn't bear the

name Tata, he was no outsider to the group. He had served as a Director of Tata

sons and was expected to have a strong hold over the group values.

Besides, roping in someone who belongs to a family that has significant holdings

in Tata sons (Cyrus being son of Mr. Pallonjee Mistry, who has largest 18% stake

in Tatasons) made good strategic sense as shareholding is the key to control for

the group like Tata which is more global than ever.

Thus, Mistry didnt just have big shoes to fill, he also needed to hit the ground

running.


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21THE PARTING COMMENTS ON THE TIMINGDid Tata have his timing right? Says Cappelli: Im not a big fan of picking a

successor way in advance. I think the better approach is to develop candidates,

several of whom could step in. Then very near retirement if thats the changeevent the successor gets named in time for people to get comfortable. But the

downside of naming a successor is that if it turns out that things change and that

person is not appointed, then their career is really damaged.

Singh of Bain agrees that succession planning is a process, not an event. The

ideal succession planning is evergreen, he said. The formal announcement of a

successor depends on factors such as size and scale of the business. For a group of

Tatas scale and diversity, a long transition is required. For most companies, a six-

to 12-month overlap and transition would be appropriate. Announcing anythingearlier than this simply invites trouble for both the incumbent and the designee

and may lead to the unintended and costly departure of one or both, besides

resulting in dysfunctional organizational behavior.

In practice, though, there are often disasters. Why? Raghunath of IIMB said,

Failure of succession planning has its roots in the mindset that all termination is

an unpleasant act if not death and the ritual leading up to it is painful.

However, Mr. Ratan Tata, having handed over the reins in the able hands of Mr.Mistry, we conclude that the future of the Tata Group stands bright and is moving

on, on a high pedestal. Kudos!!!


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22BIBLIOGRAPHY AND REFERENCEShttp://www.ummid.com/news/2011/May/19.05.2011/tata_succession_plan.htm

http://www.equitymaster.com/tm/tm.asp?date=11/25/2011&title=Tata-

succession-Will-the-year-long-planning-pay

http://www.thehindubusinessline.com/companies/tatas-succession-for-cyrus-

mistry-the-challenges-ahead/article2653848.ece

http://www.livemint.com/Companies/n47iePUboPWvCqG5FM8IVK/Ratan-Tata-

A-journey-in-four-stages.html

http://knowledge.wharton.upenn.edu/article/tata-group-infosys-and-others-the-

painful-but-necessary-succession-planning-process/

http://vikaspota.com/2009/10/10/succession-planning-in-indian-companies-the-

tcs-way/

http://sureshine.blogspot.in/2011/12/succession-planning-for-corporate-

india.html

http://www.thenational.ae/business/industry-insights/economics/tata-looks-

beyond-the-family-and-sets-example

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http://www.firstpost.com/business/is-ratan-tatas-succession-plan-focused-on-

the-right-thing-16726.html

http://ashokbhatia.wordpress.com/tag/succession-planning/

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Documents

Succession Planning of the Tatas