Corporate Eye

TATA Group – A company that lives integrity

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:

tata values 300 TATA Group   A company that lives integrity

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.

 TATA Group   A company that lives integrity
Ed Konczal has an MBA from New York University's Stern School of Business (with distinction). He has spent the last 10 years as an executive consultant focusing on human resources, leadership, market research, and business planning. Ed has over 10 years of top-level experience from AT&T in the areas of new ventures and business planning. He is co-author of the book "Simple Stories for Leadership Insight," published by University Press of America.
 
Comments

You’ve got to give the Tata Group points for all the risk taking ability and the innovation quantum it has, but a recent, much hyped project of the Tata Group, the Tata Nano is too immature on their part, and it just kills the code of ethics they stand for.

I’m curious. Why does the Nano kill their code of ethics?

Found this from 1/18/2008 Christian Science Monitor –Indian roads are circuses of elephants, death-defying traffic maneuvers, and attempts to wedge as many cars across a three-lane road as Newtonian physics will permit. At the center of this carnival is the consummate Cirque du Soleil act: a family of four on a scooter. As Tata’s chairman, Ratan Tata, pointed out while unveiling the Nano, it is a ubiquitous sight: a young child standing in the footwell holding the handlebars, a father driving, and a mother behind (riding sidesaddle in her flowing sari, of course), holding an infant.

By this measure, the Nano could be a quantum leap forward in safety and reliability. Despite the much touted economic boom, only 0.8 percent of Indians own a car. And of all the vehicles sold in India from April to November of last year, 77 percent were two-wheelers – motorcycles, mopeds, or scooters.

Mr. Yameen says he came to the Auto Expo on a two-wheeler, and as he looks at the Nano, he says, breathlessly wide-eyed: “Very beautiful.”

Even among those more well heeled than Yameen, the Nano draws raves.

“This is beyond expectation. It is going to make a revolution,” says Pratishtha Dipathi, a well-dressed young woman.

Economists, however, question whether such a car can be profitable with such low profit margins: The day Tata unveiled the Nano, for example, its stock fell 6 percent. (Very Interesting)

In principle, though, Mr. Tata is attempting to do something akin to what Henry Ford did with his Model T. Rather than waiting for more of the population to rise economically to the point where they can buy a car, he has used his company’s engineering know-how to reinvent what a car can be. He hopes to turn a profit by sheer volume, tapping into those untapped, poorer reaches of the Indian market.

It is a quintessentially Indian idea. For decades, Indian technology has been focused more on practicality than pomp, hoping its use will help the country’s poor. The country’s space program, for example, has long concerned itself only with helping farmers and schools through weather and communications satellites.

Now, the country has a car to carry on the tradition, and its people below the famous-but-still-small upper-middle class are cheering. Says Professor Gupta: “These are the people who are really excited by it.”

As an Indian I feel proud of what TATA group has accomplished without compromising ethics. Understanding and appreciation such as this from the outside world is heart warming.

A bit over-the-top this article I think. There are two (many more than two, usually) sides to every story. Readers of “Private Eye” will be familiar with Tata’s so-called CSR/ethics. See in particular issue 1201, 11 Jan-24 Jan 2008 one year ago, under a banner called “Corporate Responsibility” which read:

“[Tata’s commitment to Corporate Social Responsibility] might surprise the farmers of Singur (…) where the car is being built. The 997-acre site produced three crops a year and provided a decent living to more than 20,000 people. But when Tata picked it for its new plant in 2006 (…) the chief minister of West Bengal (…) announced that the land was to be forcibly acquired. (…) Many of the farmers and sharecroppers dug in their heels when they realised the non-negotiable compensation would be half the market value.

“Others baffled by Tata’s claims to being socially concerned include tribals of Bastar in Chhatisgarh, fighting to prevent their ancestral lands being torn up for a Tata iron ore mine; and relatives of 13 tribal people shot dead by police at Kalinganagar in Orissa in January 2006, a village earmarked for a Tata steel plant.” A petition can be found here:
http://www.gopetition.com/petitions/protect-the-property-rights-of-poor-tribals.html

People starved to death when their livelihood was taken away by Tata’s landgrabs
http://www.telegraphindia.com/1070703/asp/frontpage/story_8008564.asp
or worse, 16 year old children raped and murdered:
http://www.thaindian.com/newsportal/politics/tapasi-murder-opposition-demands-buddhas-resignation_100117842.html
http://mediavigil.blogspot.com/2007/07/gangrape-murder-of-tapasi-malik.html
http://www.telegraphindia.com/1070703/asp/opinion/story_8001901.asp

And this is just the tip of the iceberg. Twenty-two African nations are campaigning to prevent Tata helping the Tanzanian government to build a soda ash extraction plant that will disturb the environment and threaten the lesser flamingos.

As I said, two sides to every story. Of course it’s good to see that some companies take CSR seriously. But to write such a brown-nosing piece such as this, really takes the biscuit, don’t you think?

Thanks for joining the discussion. Our intention is to comment on corporate websites, not to assess the performance of the company itself, and I quite take your point about the discrepancy between action and policy … which raises an interesting question.

Many corporates have dedicated sites to address concerns about their CSR performance – an example would be Primark, who updated their ethicalprimark.co.uk site overnight to respond to the BBC News disclosure last night about sweatshop labour in the UK. Some oil companies take a similar approach. I wonder if Tata have such a site? Material for another post, I think.

Or is having a separate site a cop-out? Should these issues be discussed on the main corporate site?

What do you think?

(Incidentally, I like the reference to Private Eye – definitely a first here!)

Modus Rex,

Thanks for the input and the references. I shall investigate. I am somewhat surprised that a company that has received many CSR and Integrity awards could have been so callous. Nevertheless I have enough business experience to know that anything is possible.

Best wishes,

Ed

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