Tata Power : CSR and Sustainability

• Make a Brief detail of the case.• Is the company concerned about the

Triple Bottom Line? Identify instances in the case.

• Is CSR a part of long term planning of the company?

• Why Col. Prakash Tewari selected for the CSR initiative?

Tata Power : CSR and Sustainability Contd.

• Who are the different stakeholders identified by the company?

• What is the challenge of “Cultivating a sense of ownership”?

• Why a separate organization for the CSR was denied?

How far will these CSR activities help the TPC with the long term sustainability?

What do you think, what is the level of maturity of the activities performed by the company?

Gartner’s Maturity Model

In light of the expansion plans and the vision and mission statement of TPC, sound processes are one of the prerequisites.

• Organizations that do not have a specified process and clear deliverables: Adhoc stage.

• Role of the strategic manager (Tewari) : Adhoc Stage• People and processes are not well-defined and

integrated in a coherent manner. • While he mentioned taking care of people who lived in

project areas, he also mentioned economic value addition. In the “triple bottom line approach” (Speech), the economic value comes first followed by environmental causes and some social activities.

• Visible even from the organizational structure (Exhibit 1). • In the context of CSR, long way to go in order to integrate

CSR with the aim of long-term sustainability.

CSR was an integrated part of the HR department in TPC until now. CSR activities were spread out across the functional departments. Participation in CSR was voluntary and was treated as one of the key result areas (KRAs) for every employee.

What are the arguments in favour of having a separate CSR department or having CSR activities integrated with other functional areas?

Arguments in Favour of CSR as a Separate Department

• Higher accountability of the employees associated with the department.

• The department will have to work closely with the other departments and thus will have higher levels of interactions with the stakeholders.

• Sustainability ideas can be addressed more scientifically and professionally.

• Since TPC will have independent budget allocated for CSR activities, the return on the CSR activities can be accounted for and effectiveness can be measured.

Arguments in Favour of CSR as a Separate Department

• Power structure would be independent, hence Tewari will have power to execute CSR activities independently.

• In the organizational design, such a separate entity would ensure deliberate action and the performance appraisal for the people involved.

Arguments in Favour of CSR Through Integrated Activities

• Expenses will be lower, as activities will be done by the integrated departments. The company will save on the direct costs associated with maintaining a separate department.

• The operational departments working in various areas such as Hydro area, License Area and the Eastern Region projects in Maharashtra better know the needs of the local communities.

• These employees interact with the local communities day in and day out, hence CSR activities done by these departments can help the company in building the brand image as well.

Arguments in Favour of CSR Through Integrated Activities

• The employees from the departments involved in CSR activities open the doors for networking, which can aid in creating better vendor relations.

• The involvement of the employees from the existing departments gives them a sense of pride and self-esteem, which acts as a motivational technique (stated in Maslow’s theory of motivation).

With massive expansions in the company, the existing organizational structure is experiencing change. How should the CSR department position itself in order to synchronize its activities with the company’s mainstream functions?

Synchronization and Alignment Issues

The existing organizational structure of the top management is hierarchical, with four ladders in descending order. After the board of directors, the next in the hierarchy is “leaders in the current business,” followed by “leaders in growth” and finally the “leaders in functional excellence.”

As the company is growing, there is every possibility that the people in the third ladder today — who are in the phase of growing business at new locations (Mundra, Eastern Region and Indonesia, as mentioned in the Tata Power Company section of the case) and in new ventures (such as nuclear power and renewable energy) —may overtake the leaders of the “current business.”

Synchronization and Alignment Issues

In such a situation, the “change management” in the organization is going to be a crucial task. In this changing phase, the “leaders of functional excellence” can act as the change agent to bridge the gaps; thus, people at this ladder (including Tewari) have the opportunity to play a crucial role in the change management by integrating CSR activities with the existing as well as growing business.

While positioning the CSR department, the strategy in the short-run should be to have a full-fledged department rather than excessively outsourcing to PBOs/NGOs. This will help the company to build a strong team, especially for the rehabilitation and resettlement, which is the most important need for the company.

The second option would be virtual organization. In virtual organization, a core organization (which is generally small in size) outsources major business functions and concentrates only on what it does (i.e. its core business). For example, companies can outsource activities to advertising and public relations agencies or independent research and development consulting firms. In the context of CSR, what Tewari is considering is in line with establishing a separate trust or tie-up with NGOs. Such arrangements similar to the virtual organization can be encouraged in the long-run when the company attains a certain level of maturity as mentioned in Gartner’s model.