I thought I had a fairly deep knowledge base about companies who go beyond lofty Code of Ethics statements to practice Integrity. I discovered my hubris when I found the Tata Group based in India.
Tata Group has more than a code of ethics, they have a Code of Conduct in which a Code of Ethics is embedded. Since it specifically addresses behavior, this is much stronger and further insures that ethical behavior will take place. I can say without hesitation, Tata is company that ‘walks the talk’ on ethics and integrity.
Tata is a rarity in the world community of corporations. They have been in existence for over 100 years due, no doubt, to their tenacious focus on ethics from the CEO to line employees.
Tata is a unique company even for India where there is government corruption. Its rigid ethical standards are so well established that corrupt officials typically don’t even bother asking Tata executives for bribes. The company has walked away from industries, like Bollywood films, known for questionable cash deals.
One of the reason for their laudable practices is the guidance from the CEO. Ratan Tata in an interview with McKinsey said:
What I feel most proud of is that we have been able to grow without compromising any of the values or ethical standards that we consider important. And I am not harping on this hypocritically. It was a major decision to uphold these values and ethics in an environment that is deteriorating around you. If we had compromised them, we could have done much better, grown much faster, and perhaps been regarded as much more successful in the pure business sense. But we would have lost the one differentiation that this group has against others in the country. We would have been just another venal business house.
Now that’s practicing what you preach. In addition Tata’s Code has teeth:
Every employee of a Tata company shall preserve the human rights of every individual and shall strive to honour commitments.
Every employee shall be responsible for the implementation of and compliance with the code in his / her professional environment. Failure to adhere to the code could attract the most severe consequences including termination of employment. (Tata Code of Conduct)
While this should be a strong employee motivator and promote compliance, Tata again goes further. Posted on their website is an article by the Chairman of Tata Industries. Here is an excerpt:
According to the Tata lexicon, good governance has to stretch way beyond staying on the right side of the law — and it has to come from faith rather than force. “Yes, we have a code of conduct, but ethical behaviour cannot be enforced by diktats and through written documents,” says Kishore Chaukar, GCC member and chairman of Tata Industries. “You have the Bible, the Bhagwad Gita, the Koran; they all tell you how to behave. Doesn’t help. The Indian Penal Code is clear about what constitutes criminal behaviour, but that hasn’t stopped the rapes and the murders, the felonies and the burglaries.
An implicit sense of ethical business conduct has been the cornerstone of the Tata way of corporate governance. Rules and regulations certainly have a place in this scheme, but they supplement rather than supplant the traditional values on which the group has been shaped. Good governance has taken root in and spread to all branches of the Tata Group. There’s nothing amorphous about that.
Except for their potential acquisition of Land Rover and Jaguar from Ford, there isn’t much written about Tata. Less yet about their business practices. I did however find an interesting article from the Ivey Business School Journal which addressed the ‘Tata Way’:
Why do so few corporations do business the Tata way? There is a catch. First, every single employee working for TATA companies, from the CEO to the most recent intern share in the deep values of their leaders, still a guidepost for every new project within the group. Second, Tata companies have evolved a collective commitment to evolving stronger connections between their values and first- in-class business practice – not by putting either one ahead of the other, but by finding mutually beneficial bridges between them.
I found another interesting aspect about Tata. Ever press the Values and Purpose section on a corporate website, if they have one? What you normally see is public relations dribble. Press Values and Purpose on Tata’s site and this is what you see:
Note the focus on Trust and the first core value is Integrity.
I can’t think of a more solid Code of Ethics. If this Code and the way it is communicated and embedded in the corporate culture doesn’t promote ethical behaviors, I am at a loss to find one that does.