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Case Study Assignment

Samara Mitchell

Julian Horman

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Kenneth Guzman

Tata Power

History

Tata Power is the largest & oldest integrated private power utility for India. The company

originated in 1919 and was originally formed as the “Tata Hydroelectric Power Supply

Company. The core product focus consists of electrical power, natural gas, electricity generation

and distribution, natural gas exploration, and transportation. The company is highly driven by

innovation and leading edge technology. This drive for innovation has led Tata Power to

establish various public & private partnerships to aid in their focus of generation, transmission

and distribution. Tata Power holds strong leadership qualities which increases the value of both

their company, and the communities which they do business in.

Vision: To be the most admired integrated Power & Energy Company delivering

sustainable value to all stakeholders.

Mission: We will become the most admired company delivering sustainable value by:

• Providing world class power and energy solutions that exceed customer expectations

• Innovating and deploying cutting edge eco-friendly technologies

• Capitalizing on global opportunities and exploring synergy in entire value chain

• Empowering our employees and creating an environment for them to perform at their

highest potential

• Caring for the safety, environment and well-being of employees and their communities

• Ensuring profitable growth and enhancing value to stakeholders

Values: Integrity, Agility, Respect for People, Collaboration, Empowerment, Trust,

Care, Excellence,

Tata Power is also a company that believes strongly in corporate social responsibility.

Their main areas of focus includes: Environmental, healthcare, education, and sustainable

livelihood. In the environment, Tata Power has started environment awareness campaigns,

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helped to conserve water and other natural resources, to help better the environment. Their

healthcare focus is mainly centered on AIDS awareness programs, and Immunization/Health

checkup camps. Tata Power has built a strong culture throughout the company, as it pertains to

social responsibility. (Thompson)

Identifying and Analyzing Problems

According to the case study, Tata Power Company (TPC) is running its CSR activities

through the volunteering initiatives of the employees in various projects undertaken in each

thrust area. The employees voluntarily participated in various CSR activities in addition to their

regular working hours. (Deshmukh & Adhikar, 2010) Although the volunteer initiative worked

for TPC’s present CSR model, Tewari was aware that the company was looking to expand and

CSR activities would need to be a part of this expansion. He considered the value of adding a

separate CSR department vice leaving CSR initiatives up to the altruism of the employees. With

this decision would come other concerns. What would be the nature of its composition and its

deliverables? Should such staff be hired externally or should the department evolve from the

existing structure? Could the CSR activities that had until that point been carried out by project-

based organization (PBOs) or non-government organizations (NGOs) provide a possible

alternative to the CSR department? If the CSR department became a separate entity, how would

TPC monitor the costs and how would TPC assess the costs? How would the balance between

interests of investors and the interests of other stakeholders be maintained? (Deshmukh &

Adhikar, 2010)

How to manage Stakeholder interest

While attempting to remain a dominant player in its industry, Tata Power is also

challenged with the task of managing multiple stakeholder interests. Tata Power has a high level

of diversity in their CSR activities, and as a result, properly managing the interest of all the

stakeholders is a daunting task. Stakeholders for the company include: Employees, Stockholders,

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Foreign Governments, domestic & foreign customers, etc. Tata Power must recognize the

differences of interest, and formulate a strategy to mediate them properly. (Thompson)

Since the diversity of the CSR activities is high, first Tata Power should seek to prioritize

the stakeholders of the company. Listing the people and organizations that are affected most by

the operations of the company will help to narrow the focus when seeking to satisfy

stakeholders’ interest. The stakeholders’ prioritization can be measured on a scale of power, and

interest in the company. For example, if a stakeholder has high power and high interest, the

company should seek to closely manage and fulfill their expectations. While a stakeholder, who

has low power and low interest, will only receive minimum attention from the company. This

strategy of prioritization will help to increase Tata’s CSR efficiencies, and decrease resources

used on low prioritized stakeholders. (Thompson)

Next, Tata Power must move towards fully understanding their key stakeholders, in order

to properly manage them. Learning how to communicate, and engaging stakeholders in new

project initiatives are vital to the growth of the company, as well as CRS activities. Internal and

external surveying can be conducted, to gain valuable information for the company. Internal

surveys can cover topics such as: strategic planning, potential managerial conflicts, employee

growth, etc. in order to understand the thoughts of the employees and investors of the company.

External surveys will allow Tata to key in on key expectations of villagers who live nearby their

plants and areas of operations. Having this information will help to decrease any revolt against

any potential expansion plans of Tata because they will be able to adequately gauge the

responses of the community. By conducting surveys, Tata will be able to better understand and

win over both their internal and external stakeholders. (Thompson)

Potential Actions and Recommendations

Retaining the Employee Volunteer Structure

Increasingly, businesses are using the skills and talents of their workforce to meet their

CSR objectives. Allowing staff time off from work to volunteer for local charities can increase

their commitment and motivation, improve team-working and leadership skills, enhance staff

recruitment and retention and build brand loyalty. With a CSR structure built on employee

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volunteerism, TPC has embedded CSR into its culture. CSR is not the afterthought or an

infrastructure, but a tangible activity in which the employees are invested.

One of the problems with retaining TPC’s current volunteer CSR structure is that out of

the 3,430 employees only 259 are actively involved with the volunteer initiative; that’s

equivalent to seven point five percent of the work force actively engaged in CSR initiatives.

Tewari boasts that in addition to boosting volunteer numbers, TPC now has a mechanism in

place to keep track of employee voluntary contributions towards CSR activities and that this

tracking helps the company evaluate the contribution of each of the employees in terms of the

number of man-hours spent by each employee, as well as the areas of contribution. While it’s

great to know who is volunteering, the shareholders are probably more interested in how the

volunteerism is contributing to revenue for the company and how much these efforts are costing

them. This is not information readily available to a random volunteer force. Tewari described

employee motivation for volunteering: We believe in self-motivated small teams who are not

participating for the monetary rewards. Of course they get the due recognition as we

acknowledge their work, but then that should not be the motivating factor. The real motivation

should come from within for such kind[s] of social cause[s]. (Deshmukh & Adhikar, 2010)

While it is noble of people to volunteer for recognition, the fact that less than eight percent of the

employees at TPC are involved in the CSR activities should alert Tewari to the fact that he needs

to create new motivating factors. Tewari says that the company is expanding and TPC already

has 107 “key communities” they are socially actively involved with. Vivek Vishwasrao,

executive in charge of the hydro area, says of the “key communities”: These villages

demonstrate large variety in terms of income levels, standard of living, the state of development,

and even the level of aspirations among the villagers. Hence it is very difficult to cater to all the

villages through the single uniformed program. (Deshmukh & Adhikar, 2010) In his own words,

Vishwasrao states that the current CSR model is not effective in catering to all the villages.

While the effort of the volunteers is admirable, it is the successful execution of TPC’s CSR

activities that ultimately matters.

Creating a Separate CSR Department

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One potential action for TPC is to create an entirely separate CSR department. To create

this infrastructure, TPC can capitalize on the culture of CSR already developed at TPC with the

employee volunteer efforts, by selecting some home-grown employees to fill positions in the

new department. Key executive positions should be a mixture of internal employees already

familiar with the culture of TPC and outside leadership with a background in CSR. A sample

organization structure would be one Executive Vice President overall in charge of the CSR

department, (typically a Sustainability Officer), with three executive leaders below him to

oversee the three divisions that TPC maintains are its main CSR activities; community welfare,

environment, and energy. The responsibility of the CSR Department would be to define TPC’s

CSR goals and spread awareness, have requisite knowledge of sustainability and disseminate that

knowledge, to draft CSR policies and respond to CSR issues, ensure TPC’s business goals are

aligned with the company’s CSR activities, measure CSR performance, ensure CSR

transparency, and communicate with stakeholders; to name a few.

An advantage to creating this infrastructure is that the CSR department would better able

to produce an annual CSR report that could provide a complete portfolio of CSR efforts in one

place. Under the current structure, this type of report would have to be piecemealed internally

and externally and would require tremendous resources. This type of report is beneficial not only

to the company as a measure of whether they are meeting their goals, but also to the shareholders

as an indication of the value being added to the company through the achievement of social

activities.

An industry leader in CSR who demonstrates the successful use of a separate CSR

department is Starbucks. Starbucks created their CSR department “to oversee Starbucks’

involvement in literacy programs, community volunteering, environmental affairs, shade-grown

coffee, and international relief efforts” (Austin, 2004). At Starbucks, CSR served two roles

across the whole company. First, before any public decisions were made, it communicated with

all the relevant departments such as coffee purchasing, supplying and marketing, about steps to

bring social responsibility awareness center stage in the decision-making process. The second

role was “to make sure we do what we say we are going to do. (Liu & Liu, 2009) The successs

of Starbuck’s second role is measured by the company’s Global Responsibility Report. This

report lists all the goals set by the CSR department and details whether the goal was achieved, on

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track, or needs improvement. One of Starbuck’s environmental goals from last year was to

implement front-of-store recycling in their company-owned stores by 2015. They list this goal as

needing improvement. They reported that only 5% of Starbucks stores have front of store

recycling. (Starbucks, 2010)

CSR Department Disadvantages

The bottom line goal of any corporation is profit. One of the most common arguments

against creating a CSR department is the associated cost of creating and staffing a new corporate

infrastructure. With the current TPC CSR structure, there are no additional salaries or risks to

shareholders. A CSR department can be perceived as recognizing responsibilities to stakeholders

outside of shareholders. This would include customers, communities, employees and suppliers.

While there may be long-term benefits of the CSR department fostering core relationships,

shareholders are often deterred at the notion that companies will invest in anything that does not

create immediately obvious financial gain. With CSR, detecting measurable bottom line benefits

is a challenge as social and environmental programs are hard to account for with regard to

financial gain. (Kokemuller, 2011)

Another disadvantage is the perception that CSR executives are typically junior and don’t

have much authority to make decisions. This drawback is explained by Peter Klein, vice

president for Europe at CarbonView, a provider of software for measuring carbon emissions

across firms' supply chains. "It is because of the role's perceived lack of authority… what we

often see when we sit down with a company to look at their carbon strategy is that the CSR

department is not strong enough and as a result the different business units end up arguing."

Critics argue that setting up a CSR or sustainability department creates the impression that firms

are taking environmental concerns seriously, but in commonly failing to give the department

authority over other executives, firms often struggle to drive through genuine changes. Seb

Beloe, vice president for research and advocacy at environmental consultancy sustainability,

believes this lack of authority is a common problem. "CSR is generally a bolt-on, almost by

definition," he argues. "At best it is seen as a risk management or reporting exercise and

integration with the rest of the business can be pretty limited." He adds that in some businesses

the CSR department's influence is so limited that environmental campaigners and NGOs are

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rejecting them as a point of contact, and are instead trying to directly access more senior

executives. "The more sophisticated [NGOs] are not really interested in talking to the CSR

officer as they know they do not make the decisions," he explains. (Murray, 2007)

In creating a separate CSR department, TPC runs the risk of the department becoming

isolated in their social activities. What was once an embedded practice will now be the

responsibility of a few selected individuals which could possibly turn this into a departmental

silo. CSR can only be successful if it’s adopted/owned by everyone in the company as a cross-

departmental matter.

Create a Sustainability Council with an NGO partnership

Another potential action for Tata Power is to create a Corporate Social Responsibility

Council (CSRC) under the leadership of an Executive Director (ED) who reports directly to the

CEO whose sole responsibility is to devise, and implement, ways in which the company can

fulfill their social commitment seriously and conscientiously. The council should have a three-

way partnership between Tata Power, Government organizations, and NGOs. Additionally the

council should utilize the 'triple bottom line' (TBL) approach, as laid out by the Global Reporting

Initiative (GRI), which focus on financial, social and environmental performance.

Effective corporate citizenship creates goodwill and improves relations with local

governments and other important constituencies. (Porter) Therefore, the CSRC should consist of

top executive leaders from: Human Resources, Corporate Communications (Public Relations),

Operations, and Finance. The council should also comprise qualified/experienced social workers

who have a firm understanding of the needs of the community where projects would be

implemented.

The CSR Mission/Policy should focus upon: 1) Identification of societal ‘felt needs’ that

require intervention. 2) Possibilities for Public-Private-Government Partnerships. 3) Broad

program/project design guidelines. 4) Methodologies for talent identification in the community.

5) Leads for corporate R&D in the direction of these ‘felt needs.’ 6) Financial implications. 7)

Campaign, communication and presentation methodologies – Information, Education and

Communication (IEC). 8) Community feedback analysis. 9) Result mapping. 10) Future

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projections. 11) Inter-departmental synergy modules – HR/CC/CSR – to streamline CSR

initiatives. (http://www.reacha.org)

This CSR Mission/Policy should be drafted after a thorough assessment of the

environment in which the company works: 1) Employees, customers and clients. 2) Their

families and neighborhood. 3) The socio-cultural environment. 4) The ‘felt need’ in this

environment. 5) Ecological/environmental concerns. 6) Prevailing Political situation.

(http://www.reacha.org)

Establishing a symbiotic relationship with Government organizations will ensure proper

regulation guidelines are being met and will provide a strong foundation towards implementing

CSR initiatives. TPC also needs to partner with NGOs/Local grass-roots’ Voluntary

Organizations who are involved in ground level work; experts in the nuts and bolts of Social

Dynamics and possessing the experience in knowing what ‘works’ at this level. This is essential

in order to maintain the sustainability of CSR activities and critical that best suited NGOs are

partners. (http://www.reacha.org) The council also needs to take into account the objectives of

TPC and ensure that CSR activities will contribute to overall sustainability of the corporation.

In order to meet these objectives, the council should utilize the existing corporate culture

in place to attract employee volunteers for these initiatives. Corporate Volunteering should be an

integral part of CSR. This encourages executives in the various departments at TPC to take that

extra step to ‘reach out’ to the community by encouraging their employees to become engaged

with CSR volunteerism. It also provides an opportunity for managers to assess the skills of their

employees and could prove to be an important component of succession management.

Tata Power emphasizes promoting long-term partnerships between various stakeholders,

with the aim of jointly addressing challenges. (http://tatapower.com) In order to do this they must

take into account all of their various stakeholders and what they value. Tata Power needs to take

into account these competing demands and address each of their individual concerns in order to

ensure they are aligning expectations. Creating a CSR council and partnerships with NGO’s will

be the most effective and advantageous way to achieve these goals. Because this structure

incorporates the advantages of a separate CSR department while maintaining strong ties with all

departments and executive leadership, CSR initiatives will have the support they need to ensure

sustainability.

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Sustainability Council with an NGO partnership Disadvantages

A separate council will require top level executives to devote additional time and

resources that are outside the scope of their current department needs. They need to be passionate

about making a difference in the communities they serve and believe in the mission goals of the

CSR council. If there is not adequate leadership from the council, then the CSR goals won’t be

met and projects will fail to be sustainable.

The CSR Councils’ functions should not be considered actions of a separate department.

This would create disconnection within the corporate culture and would negate the advantages of

having a council over creating a separate CSR department. Failure to communicate that CSR

activities are a part of the functions of each division, will lead to this misconception.

Reliance on NGOs to help with the implementation of projects is a double edged sword.

If the wrong NGO is utilized and the project fails, Tata Power will be viewed negatively by the

public. There is a potential for negative publicity from a failed project but, if proper research is

completed before hand, these downsides can easily be alleviated.

Future Considerations

Tata Power’s relationship with society

Successful corporations need a healthy society in order to remain viable. Education,

health care, and equal opportunity are essential to a productive workforce. Safe products and

working conditions not only attract customers but lower the internal costs of accidents. Efficient

utilization of land, water, and energy, and other natural resources makes business more

productive. Ultimately, a healthy society creates expanding demand for business, as more human

needs are met and aspirations grow. (Porter)

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Generic social issues may be important to society but are neither significantly affected by

the company’s operations nor influence the company’s long-term competitiveness. Value chain

social impacts are those that are significantly affected by the company’s activities in ordinary

course of business. Social dimensions of competitive context are factors in the external

environment that significantly affect the underlying drivers of competitiveness in those places

where the company operates. Tata Power will need to sort social issues into these three

categories for each of its business units and primary locations, and then rank them in terms of

potential impact. These rankings will provide a base line for the CSR council to review which

projects will have the greatest ROI.

Tata Power needs to act as a good corporate citizen, attuned to the evolving social

concerns of stakeholders, and mitigating existing or anticipated adverse effects from business

activities. Many worthy local organizations rely on corporate contributions, while employees

derive justifiable pride from their company’s positive involvement in the community. The

importance of being a leader in social outreach projects is a vital role in TPC’s sustainability.

(Porter)

Tata Power must specify clear, measurable goals and track results over time. The Global

Reporting Initiative, which is rapidly becoming a standard for CSR reporting, has enumerated a

list of 141 CSR issues, supplemented by auxiliary lists for different industries. These lists make

for an excellent starting point, but Tata Power needs a more proactive and tailored internal

process. They need to approach the subject from two perspectives: Inside looking out and outside

looking in. By analyzing CSR initiatives in this way they will be able to have a better

understanding of the key societal issues they are best suited to handle and their impact on value

chain activities. (Porter)

Strategic CSR

Strategic CSR unlocks shared value by investing in social aspects of context that

strengthen company competitiveness. A symbiotic relationship develops: The success of the

company and the success of the community become mutually reinforcing. Typically, the more

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closely tied a social issue is to the company’s business, the greater the opportunity to leverage

the firms’ resources and capabilities, and benefit society. (Porter)

Few companies have engaged operating management in processes that identify and

prioritize social issues based on their salience to business operations and their importance to the

company’s competitive context. Even fewer have unified philanthropy with the management of

their CSR efforts, much less sought to embed a social dimension into their core value

proposition. Companies must shift from a fragmented, defensive posture to and integrated,

affirmative approach. The emphasis must be on substance not image. (Porter)

Conclusion

Strategy is always about making choices, and success in corporate social responsibility is

no different. It is about which social issues to focus on. The short-term performance pressures

companies face rule out indiscriminate investments in social value creation. They suggest,

instead, that creating shared value should be viewed like research and development, as long-term

investment in a company’s future competitiveness. Companies are called on to address hundreds

of social issues, but only a few represent opportunities to make a real difference to society or to

confer a competitive advantage. Organizations that make the right choices and build focused,

proactive, and integrated social initiatives in concert with their core strategies will increasingly

distance themselves from the pack. (Porter)

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References

Deshmukh, D. R., & Adhikar, A. (2010). TATA POWER: CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY. Ivey Publishing.

Kokemuller, N. (2011, March 07). What Are the Disadvantages of Corporate Social Responsibility? Retrieved November 25, 2011, from eHow Money: http://www.ehow.com/info_8031857_disadvantages-corporate-social-*/responsibility.html

Liu, S., & Liu, L. (2009). IMPLEMENTING CORPORATE EXTERNAL SOCIAL RESPONSIBILITY STRATEGIES THROUGH ORGANIZATIONAL DESIGN AND OPERATION. Journal of International Business Ethics, 82-83.

Murray, J. (2007, 11 02). Do We Need CSR Officers. Retrieved 11 25, 2011, from business Green Sustainable thinking: http://www.businessgreen.com/bg/analysis/1802895/do-csr-officers

Porter, M. and Krammer, M. (2006). Strategy & Society. The Link Between Compeative Advantage and Corporate Social Responsibility. Harvard Business Review, December, 78-93.

Starbucks. (2010). Starbucks Global Responsibility Report.

Thompson, R. (n.d.). Stakeholder analysis. Retrieved from http://www.mindtools.com/pages/ article/nerppm_07.htm

Vogel, D. (2008, October 16). CSR Doesn't Pay. Retrieved November 25, 2011, from Forbes.com: http://www.forbes.com/2008/10/16/csr-doesnt-pay-lead-corprespons08-cx_dv_1016vogel.html