The Tata Group: HR Challenges: The Case For Learning

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The Tata Group: HR Challenges

We do not claim to be more unselfish, more generous or more philanthropic than other people.
But we think we started on sound and straightforward business principles, considering the
interests of the shareholders our own, and the health and welfare of the employees, the sure
foundation of our success 1 .
- Jamshedji Tata
The critical challenge to a global company’s leadership is to engage itself with its people with
the same level of intensity and seriousness as it does with capital investments or business
strategy 2 .
- Satish Pradhan, executive VP, group HR, Tata Sons
You are permitted to view the material on-line and print a copy for your personal use until 20-Jul-2015.
In 2005, the Tata brand, which was valued at Rs. 24,396 crores 3 ($5.3 billion) in 2005 4 , placing
Please note that you are not permitted to reproduce or redistribute it for any other purpose.
the brand on par with the Top 100 global brands and among the top most Indian brands. The Tata
Group (Annexure I), was one of largest and the most respected business conglomerates in India
Purchased for use by Vijay Gupta on 20-Jul-2014. Order ref F230619.

with 2005 revenues of Rs. 79,911 crores ($17.8 billion), which was equivalent to about 2.8% of
the country’s GDP in 2004 - 2005 (Annexure II). The group employed a total of about 2, 15,000
people and had a shareholder base of over 20,00,000. The Tata group had operations in more than
40 countries across six continents, and its companies exported products and services to 140
nations 5 .
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The group was founded by Jamshedji Tata in the mid 19th century, when India was in the early
Order reference F230619
stages of its struggle for independence from British rule. Hence the early stalwarts of the group
aligned the mission of the company with the objective of nation building, which had been
enshrined into the Tata ethos.
Providing its employees more than just a mere job had been the central theme of the group since
its inception. Workers and their welfare were of utmost priority to founder Jamshedji Tata. The
Tatas were pioneers in the area of employee welfare; they introduced many employee benefits
such as eight-hour working day, free medical aid, and maternity benefits. They introduced the
group’s first provident fund scheme in 1920, while the Indian government regulation on this
came into force only in 1952. This ethos and work culture had been preserved over the centuries
and in the 21st century Tata was one of the most admired corporate brands with operations in
India. It was ranked second in the list of most admired companies, in a survey conducted among
students of leading management schools India 6 . Providing the best work environment, work
culture and excellent Human Resource practices were some of the reasons cited by students for
their preference.
1
“The quotable Jamshedji Tata,” www.tata.com, uploaded on March 3, 2004
2
“Empowering People,” www.tata.com, February 18, 2004
3
“Tata brand value at $5.5 billion,” Indian Express, January 25, 2006. 1 crore = 10 millions = 10,000,000
4
As per the brand tracking survey conducted by Pathfinders in 2005. Pathfinders concentrated on 17 listed
companies. It also included group companies that do not use the Tata brand name at all, like Titan, Indian
Hotels, Trent, and Voltas. Pathfinders' final tally was way ahead of the previous brand valuation of Rs 3,700
crores on five group companies.
5
About us: Leadership with Trust, The Tata Group Profile, www.tata.com
6
www.rediff.com, May 2006.
This Case was written by Rao B, Vasudha A and John D, IBS Research Center. It is intended to be used as the basis for
class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was
compiled from published sources.
©2009, IBS Research Center.
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The Tata Group

In 1868, Jamshedji Nusserwanji Tata (Jamshedji) founded the Tata Group. Jamshedji was a
pioneer and a visionary who was hailed for his contribution to the nation’s enrichment and his
policy of putting people before profits. His sons and relatives (Annexure III), who carried on the
work started by him, were also noted for their philanthropic policies.
The group which started with a single textile mill went on to become one of the leading business
empires in India with 93 diversified companies in seven business sectors of information systems
and communications, engineering, materials, services, energy, consumer products, and chemicals.
When Ratan Tata took over the group in 1991, he consolidated the group in the fields of IT and
telecom, by divesting few companies and merging some of the remaining ones. Ratan also
restructured the group, established a single corporate entity for all the Tata group companies and
initiated the process of giving the company a global presence.
The revival of Tata Steel in the early 1990s was major challenge for the Tata group. Ratan Tata
built a new mill with advanced technologies within a span of 26 months, which gave Tata Steel
an annual capacity of four million tones of steel (almost double the capacity of the mill in 1992).

The company became one of the five lowest cost steel producers in the world and developed new
products such as light weight steels for Asia’s vehicle and electronics industries.
Tatas ventured into the telecom sectors in 1996, through Tata Tele Services Ltd. (TTSL). In
2002, Tata acquired a 46% stake in Videsh Sanchar Nigam Ltd. (VSNL) 7 . TTSL started off by
offering mobile services in the circle of Andhra Pradesh. It acquired Hughes Telecom India Ltd. 8
in 2002, to gain presence in the circles of Mumbai and Maharashtra. TTSL was the only private
telecom service provider in India to have connected over 3000 villages with Village Public
Telephones in 2004.
The management of the Tata group consisted of two decision-making bodies, the Global
Executive Office (GEO) and Global Corporate Center (GCC), which defined and directed the
ventures of the group. The chief objective of the GEO was to make the Tata Group more
synergistic by strengthening the relationship between the Group and its companies. It was
involved in implementing programmes in corporate governance, human resources, the
environment, etc. The GCC guided the future and strategy of the group in close coordination with
the GEO. Ratan Tata, aided by a group of senior Tata executives 9 , headed these two bodies.
Jamshedji Tata (1839 - 1904)
Jamsetji Tata was more than merely an entrepreneur who helped India take her place in the
league of industrialized nations. He was a patriot and a humanist whose ideals and vision shaped
an exceptional business conglomerate 10 .
7
VSNL was a domestic and NYSE-listed company which had a strong position in international long distance
service, Internet service and other value-added service and also possessed national long-distance license.
8
Hughes was one of the first telecom majors to invest in India, in 1992. It was also India’s first listed private
basic telephony services provider in India, having rights to provide services in Goa and Maharashtra.
9
R. Gopalakrishnan, Ishaat Hussain, Kishor Chaukar, Arun Gandhi, Alan Rosling, N. A. Soonawala, J. J. Irani,
and R. K. Krishna Kumar.
10
“The Giant who touched tomorrow,” www.tata.com
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Jamshedji Nusserwanji Tata (Jamshedji) was a Parsi Zoroastrian 11 born in Gujarat, India in 1839.
He belonged to a family of Parsi priests. When he was 14, he joined his father in Mumbai 12 , who
enrolled him at Elphinstone College 13 . On graduation, he joined his father’s banking business,
which failed soon after and the family suffered losses. In 1868, at the age of 29, he started his
own trading company with an initial capital of Rs. 21,000. During a trip to England he was
captivated by the textile business, and the British dominance of the industry. In 1869, he bought
an old oil mill in Mumbai, and renamed it Alexandra Mills. This first cotton mill was the
foundation of the Tata group and for Tata Sons 14 , the premier promoter company of the group.
In 1874, he started Central India Spinning, Weaving and Manufacturing Company, with a seed
capital of Rs 1.5 lakh in Nagpur 15 , chosen for its strategic location in the heart of Maharshtra’s
cotton lands, its proximity to rail links, water and fuel. In 1877, the opening of the Empress Mills
was a significant event which saw the fulfillment of Jamshedji’s dreams of replicating the success
of the Lancashire 16 cotton trade in India. For the remainder of his life, Jamshedji worked towards
achieving his goals of setting up an iron and steel company, generating hydroelectric power, and
creating a world-class educational institution that would tutor Indians in the sciences. Though
none of these came to completion during his life time they were carried forward and achieved due
to the efforts of his son Dorab and cousin Ratan Dadabhoy Tata.

As part of his efforts to help India climb out of poverty, and promote the country’s industrial and
intellectual development, Jamshedji set up an endowment fund called the JN Tata Endowment in
1892, which enabled Indian students with outstanding academic record, to pursue higher studies
abroad. This venture later grew into the Tata Scholarships for studies in India.
Rebelling against the British rule which restricted entry of Indians into one of Bombay’s hotels,
Jamshedji embarked on the venture to build a luxury hotel in Mumbai. The result was the Taj
Mahal Hotel in Mumbai which was completed during his lifetime in 1903, at the cost of Rs. 4.21
crores. It was the first building in Mumbai to use electricity and the first hotel in the country to
have American fans, German elevators, Turkish baths, English butlers and a whole lot of other
innovative delights.
Jamshedji started planning for his iron and steel company, and on how to design a township for
his workers even before a site for the enterprise had been decided. In a letter to Dorab Tata in the
early 1900s, he advised Dorab to ensure that the township had wide tree lined streets, open spaces
for lawns and gardens, and specific areas earmarked for sports and religious activities. In 1907,
when the plant 17 was established and the township was developed, it was named Jamshedpur 18
after its founder. This was the foundation of Tata Steel which was Asia’s largest and the first
Indian private steel manufacturer.
11
A member of the close knit Zoroastrian community in or from the Indian subcontinent. Zoroastrian: one of
the oldest living monotheistic religions, said to have originated in the 13th century BC in Bactria in Eastern Iran.
It was once the state religion of Persia during the Sassanid Era (226 – 651).
12
Capital city of Maharashtra state.
13
One of the oldest colleges in the University of Mumbai system.
14
Tata Sons held the bulk of shareholding of the group companies. It later became the holding company
administering current business activities and financing new ventures. The chairman of Tata Sons had
traditionally been the chairman of the group. Tata Sons was the owner of the Tata name and the Tata
trademark, which were registered in India and several other countries. These were used by various Tata
companies in relation to their products and services. About 66% of the equity capital of Tata Sons was held by
philanthropic trusts set up by members of the Tata family. The biggest of these trusts were the Sir Dorabji Tata
Trust and the Sir Ratan Tata Trust.
15
A city in Maharashtra
16
A county in the Northwest coast of England. In the 19th century, it was a major center for industrial activity
such as mining and textile production.
17
The plant started production in 1912.
18
Also known as Tatanagar, located in Eastern India in the state of Jharkhand.
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If you cannot make it greater, at least preserve it. Do not let things slide. Go on doing my work
and increasing it, but if you cannot, do not lose what we have already done 19 .
- Jamshedji Tata to his son Dorab while on his deathbed
After the death of its founder, his eldest son Sir Dorab Tata took over the Tata group and carried
forward the dreams of Jamshedji Tata 20 . During this period, 85% of the family’s original shares
in Tata Sons were transferred to charitable trusts. The Sir Dorabji Tata Trust 21 the premier
charitable endowment of the Tatas was started by Dorab Tata. The younger son of Jamshedji
Tata, Sir Ratan Tata 22 was also a philanthropist who strived to improve the quality of life of the
public. He created the Sir Ratan Tata Trust 23 which went on to become the second largest of the
Tata trusts. Sir Ratan Dadabhoy Tata died at the early age if 47 in 1918. Lady Ratan Tata adopted
Naval Tata (Naval), when he was studying at an orphanage at the age of 13.
Naval joined the Tata group in 1930 and became a director of Tata Sons in 1941. He was also
closely associated with the Tata charities and served as chairman of his father’s trust. Like his
adoptive father he was also a sports enthusiast and proved it through his stint as President of the

Indian Hockey Federation and vice chairman of the International Hockey Federation. But his
work in the area of labor relations was considered his most outstanding contribution. He served
as a member of the International Labor Organization’s 24 (ILO) governing body and was also
instrumental in setting up the National Institute of Labor Management 25 and served as its
president from 1951 to 1980.

JRD Tata (1904 - 1993)
JRD Tata (JRD) the son of Jamshedji’s cousin and business partner and his French wife, was
born in Paris in 1904 and spent his early years in France, Japan and England. In France, JRD
lived next to a famous French aviator and developed a fascination for flying from his early years.
On completing a one year stint with the French Army, he was called to India by his father. In
1925, JRD started working for the Tata group as an unpaid apprentice. A year later, after his
father’s death, JRD entered the board of Tata Sons.
In 1929, JRD became the first Indian to obtain a commercial pilots’ license and in 1930,
proposed to start an airmail service between Mumbai (capital of Maharashtra), Ahmedabad
(capital of Gujarat) and Karachi (then part of India, but after partition in 1947, became part of
19
“The quotable Jamshedji Tata,” www.tata.com, Uploaded on March 3, 2004
20
During his leadership he set up an integrated steel plant, three hydro electric power companies, edible oil and
soap company, two cement companies and an aviation unit pioneered by JRD Tata. The Indian Institute of
Science, Bangalore was also set up during his period. He had a keen interest in sports and financed the Indian
contingent to the 1924 Olympics.
21
Towards the end of his career, in 1932, he put all his wealth, including the 245-carat Jubilee Diamond, twice
as large as the famed Kohinoor and estimated to cost Rs 110 million then, into the Sir Dorabji Tata Trust, a
trust for the advancement of learning and research, the relief of distress and other charitable purposes.
22
He was an artistic and sensitive personality, who was interested in and sponsored activities in a variety of
areas such as: non-cooperation movement led by Gandhi in South Africa, welfare of students of Oriental
literature and culture, archaeological excavation, study of causes of destitution and poverty, and architecture.
23
Property worth Rs. 8.9 million was bequeathed to the fund.
24
ILO, headquartered in Geneva, Switzerland, was a specialized agency of the United Nations, dealing with
labor issues. The organization sought to strengthen worker rights, improve their working and living conditions,
create employment, and provide information and training opportunities.
25
Later became National Institute of Personnel Management (NIPM). A nationally recognized non-profit
human resources management institute in India. NIPM came into existence in March, 1980 as a result of the
merger of two prominent Institutes, the National Institute of Labor Management (NILM) established in 1950 in
Mumbai, India and the Indian Institute of Personnel Management (IIPM) established in 1948 in Calcutta, India.
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Pakistan). In 1932, Tata Aviation Service, the forerunner to Tata Airlines and Air India, took
off 26 . Air India [Tata Airlines later became Air India] was never just a job for JRD it was labor of
love 27 .
The smooth working of Air India seemed almost opposite to the Indian tradition on the ground…
[JRD] could effectively insulate Air India from the domestic obligation to make jobs and dispense
favours 28 .
When JRD was elected as chairman of Tata Sons in 1938, he was the youngest member of the
board. He ran the group along the same lines in which he ran Tata Airlines. He steered his
company towards growth and diversification during the ‘permit raj 29 ’ era which was hostile
towards ethical entrepreneurs. Throughout the next half-century, JRD took his company into
areas as diverse as chemicals, automobiles, tea and information technology. It was JRD’s policy
to recruit top professionals to run his companies, as opposed to the Indian business practice of
retaining control within the family.
During JRD’s tenure, several Indian companies including Tata Airlines (1953), New India
Assurance Company Limited 30 (1971) were nationalized. In 1970, with the dismantling of the

managing agency system 31 the Tata companies gained independence, but in spite of this they
maintained solidarity through a network of inter-corporate shareholdings, weekly cross-company
director’s meetings and JRD’s leadership.
In the 1970s, the Tata group flourished in the strictly regulated Indian business environment
which limited competition. JRD gave full independence to his Company directors, whom he had
hand picked when he took over the group. During this period Tata Motors 32 (then TELCO) and
Tata Steel (then TISCO) were the two flagship companies of the group.
In the late 1980s, JRD had promised succession of the Tata Sons chair to Russi Mody, a good
friend and chairman of Tata Steel. The decision had been taken since Ratan Tata, then shy and
soft-spoken, was not considered a serious contender for the chair. But subsequent events made
JRD change his decision and invite Ratan to take over the Tata Motors chair in 1988. In 1991,
JRD nominated Ratan to the Tata Sons chair. When Ratan took over he found himself the head of
a group of companies, held together only by the Tata name and culture. The companies were not
legally required to show allegiance to Tata Sons. It was the financial institutions, who were the
major share holders and historically loyal to the Tata family, which was the reason the Tata
management was present in these companies.
26
In 1953, Jawaharlal Nehru, the Prime Minister of India, nationalized Air India, much to the anguish of JRD.
He continued to head Air India till 1977.
27
“Spirit of the skies – A profile,” Pioneers, www.tata.com
28
Anthony Simpson, “Empires of the sky,” www.tata.com
29
An era full of controls and regulations put in place by the government to keep a check on capitalism.
30
Established by Sir Dorab Tata in 1919, New India was the first fully Indian owned insurance company in
India. It was the pioneer in the field of insurance by providing the first domestic airline insurance (1946) and
satellite insurance (1990). By 2006, New India had become the largest non-life insurance company in the Afro-
Asian region.
31
Under the British ‘managing agency’ system, companies across a range of industries were controlled with
limited liability to the agency. When the system was discontinued in the 1970, diverse companies which were
family-controlled formed business groups, the companies within such a group were interlinked via cross-
holdings and interlocking directorates. They also developed a common group identity.
32
Tata Motors Limited was India’s largest private automobile and commercial vehicle manufacturing company.
It was also the world’s sixth biggest commercial vehicle manufacturer. The roots of Tata Motors could be traced
back to 1945 when they started making Trains.
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Ratan Tata
Ratan Tata was the son of one of JRD’s cousins. In 1962, after studying engineering from Cornell
University, Ratan had taken up a career in architecture and was in the US when he was called to
India to join the House of Tata. In 1975, he attended the Advanced Management program at
Harvard Business School. He initially worked with various Tata companies and then was elected
chairman of Tata Industries Limited 33 (TIL). Ratan hoped to turn the small company into the
group strategy think tank.
The ‘Tata Strategic Plan’ of 1983, placed TIL (Annexure IV) as the group’s vehicle for growth in
high technology (advanced electronics, biotechnology, advanced materials and alternative
energy) areas. The plan also phased out sectors such textiles and cooking oils which was not
showing much growth. Ratan Tata also planned to focus the group’s activities in terms of eight
business areas, increasing Tata ownership in the group companies and exploring joint ventures
with the Government.
Ratan’s friendship with the then Prime Minister of India, Rajiv Gandhi, paved the way for the
smooth approval of new projects which had been pending. But Tata’s culture of independence

which had been promoted by JRD stopped the implementation of Ratan’s Strategic Plan. The
chairmen of the various Tata companies, who had control of TIL’s shares, were not in favor of
the plan.
Ratan’s Restructuring Efforts

Since 1991, when Ratan took over Tata Sons, he had set in place a restructuring process across
the Tata Group. He revived an old policy which set the retirement age for executive directors at
65 and non-executive directors at 75. He also started on a restructuring path by selling loss-
making Tata Oil Mills Company Ltd. to Hindustan Lever Ltd. (HLL) 34 . Ratan was also of the
view that the group was present in and venturing into areas which was diffusing its core
competence and resulting in competition within the group companies. One of his first major
tasks was to set right the failing financials of two flagship companies Tata Motors and Tata Steel,
accounting for more than 50% of the group’s sales, in 1993. In 1994, when both companies
started reviving, Ratan, turned his attention to crafting group strategy plans.
…Do we have a common thread that runs through the Tata Group? In the past, that thread was
embodied in a personality, maybe JRD Tata. But I think times are different now. You have to
institutionalize certain things… 35
- Ratan Tata
Ratan had plans to create a stronger collective identity for the brand and set up the Tata Brand
Equity Scheme 36 , in 1995. This was to aid in building a single strong entity that would benefit all
companies. Since many of the Tata companies, had been pushing for such a move, they were all
33
Set up by Tata Sons in 1945, as a managing agency for the various businesses promoted by it. When the
managing agency system was abolished in 1970, TIL was put in charge of promoting the group’s ventures into
new and high-technology areas in the 1980s.
34
India’s largest Fast Moving Consumer Goods (FMCG) Company. It was the leader in Personal & Home Care
as well as Foods & Beverages.
35
“Brand Name to Survive Personalities: Ratan,” The Economic Times, October 14, 1996
36
Companies subscribing to the scheme would derive the benefits of the centrally promoted Tata brand and of
the Tata affiliation. The annual contribution was proportional to each company’s net income (ranging from
0.10% to 0.25% of net income) to meet the expenses of development, promotion and protection of the unified
Tata brand. The companies would also be required to follow a code of conduct which ensured uniformly high
standards of quality and ethical business practices. Companies such as Indian Hotels, Voltas, Rallis which were
not using the Tata name explicitly were also invited to join the scheme.
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in favor of Ratan’s plans. In spite of these impediments, Ratan had promoted through TIL, 20
new ventures which resulted in a combined sales of Rs. 7.5 billion in 1996.
Ratan also had plans to strengthen the stake of Tata Sons in the group companies from an average
of about 1.7% to a minimum of 26%, to ward off the threat of takeovers. Ratan had a
restructuring strategy in mind aimed at changing the group ethos, its internal structure and the
product portfolio. Ratan put in place a much younger and dynamic management team. In 1998, a
common logo was introduced and it was made mandatory to display ‘A Tata Enterprise’ on all
product labels.
Tata Motors had been the most profitable of the Tata companies till 1998, when the weak
economy affected the market for commercial vehicles. The market for commercial vehicles
reduced by 40% in 1999 resulting in Tata Motors suffering a 2% drop in market share. Tata
Motors also undertook cost erosion 37 measures by halving the number of its suppliers, laying off
employees. The cost erosion program started in was the key factor behind the company’s
turnaround in 2003.
Tata Consultancy Services (TCS), an IT consulting firm and software service provider, acquired

CMC 38 in 2001. CMC’s expertise in the areas of execution, customer support, strong R&D focus
was to add to TCS’s strengths. The restructuring also focused on moving away from commodities
to services and branding.
The Tatas closed down all their old textile mills, sold off the group’s units 39 in unrelated business
areas, and merged related/ competing units 40 . Ratan also exited a number of joint ventures41
which were neither profitable nor related to the seven core business sectors which were identified
by him.
Problems
In 2000, after nearly a decade of reforms, the companies had not performed to the expected level.
For example, group companies had to achieve financial benchmarks such as a specified return on
investment and economic value added and also establish market leadership- they have to be
among the first three in their own industries. However, only a few companies were able to
achieve this. Tata shares had also underperformed in the stock market significantly. According to
ASA, a stock market database, the BSE Sensex appreciated 46% between January 1996 and
December 2000, while the Tata group index appreciated only 7% during the same period.
Financial analysts commented that the stock markets did not give the Tata name the premium
they used to enjoy. Also, group profit margins had dropped from about 12% in 1995-96 to 8% as
of 1999 - 2000 and return on invested capital fell from about 18% to 11%. Ishaat Hussain,
Finance Director, Tata Sons admitted, Performance is our biggest worry. A number of reasons
were attributed to this.
There was friction between the GEO, the Business Review Committees 42 (BRCs) and the
management and board of the group companies. Companies focused on turnover instead of
37
Cost cutting was a mere cutting of costs which could in all probability creep back into the system, whereas
cost erosion implied that the cost was removed from the system forever.
38
Also an IR services, software and consulting company in India founded in 1975. Initially the Government of
India held 100% of the equity share capital, in it was converted into a public limited company.
39
Lakmé (to HLL), ACC, Tata Oil, TOMCO, Goodlass Nerolac and Merind.
40
Tata Fertilizers with Tata Chemicals
41
Signed with IBM, Mercedes Benz, Timex, Timken, Lucent and PepsiCo.
42
Each Tata company had a BRC for interaction between Tata Sons and the management of the company. The
BRC met thrice a year to look at strategy and operational performance. Its recommendations were sent to the
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profitability. There were a number of HR issues also. Too many vacancies at the top (both
company and group level), absence of an adequate performance appraisal and talent spotting
system were highlighted. Managers in the group were also perceived to lack general management
expertise.
This was evident from the fact that there was considerable attrition in the junior and middle
management levels, although exact figures were unavailable. While ex-employees admired the
‘breadth of work’, one was exposed to at the Tatas; they were frustrated at the slow pace of work.
Experts felt that with Tata moving into new territories such as airlines, telecommunications and
passenger cars, this was not a healthy trend.
HR Revamp
Subsequently the group launched an HR revamp which evolved solutions to these problems and
implemented them. We want to attract good people, retain the better people and advance the best
people 43 , said R. Gopalakrishnan, Executive Director of Tata Sons and member of the GEO.
The training programs at the Pune-based Tata Management Training Center (TMTC) 44 were

revamped. To identify potential mangers internally, an ‘A team’ was formed based on specified
parameters and a career track was created for them. Also, potentially good managers, below the
age of 50, were identified based on some broad parameters, from larger companies in the group
and were posted in top management positions across the group. For example, Jamshed Daboo,
who was with Titan, was posted as chief operating officer, leisure hotels, Indian Hotels and G.
Madhavan earlier with Tata Industries was posted at Tata Internet Services.
In 2001, Satish Pradhan (Pradhan), Organization Design and Development Manager and Head of
Global Learning at ICI 45 in London, was brought in as Executive VP, to head the HR functions at
the group level. Pradhan was to report to Gopalakrishnan.
The Group HR function was to be divided into three divisions, each headed by a Vice President
reporting to Pradhan. Each division was to be responsible for HR initiatives at six to seven of the
top group companies. The first group was responsible for corporate management development,
performance management, potential assessment, succession planning, group mobility,
compensation structuring and work level deployment. The second group was involved in the
selection process for filling in vacancies at the top three work levels of various companies. The
third group was responsible for the training of Tata employees and also the TMTC.
Ratan Tata along with senior members 46 of Tata Sons carried out a communication exercise,
interacting with 750 of their senior managers all over the country. This was to communicate the
new group vision and provide a forum to clarify all doubts and queries regarding the restructuring
processes. The senior managers in turn made presentations to their colleagues.
company boards. The BRC was meant to bring accountability to the group companies and hasten the change
process.
43
Interview by R Gopalakrishnan, www.tata.com, Uploaded in January 2001
44
Opened in Pune in 1966 by JRD. The TMTC functioned as an in-house training center for Tata Group
employees.
45
A British Chemical Group founded in 1926.
46
GEO, executive directors R Gopalakrishnan and Ishaat Hussain and director Kishore Chaukar and three
other CEOs J.J. Irani, Ramadorai and R. K. Krishnakumar
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Integrated HR System
As part of its mandate for change, the Tata group focused on HR as its key areas (Exhibit II). The
Tata group sought to build an integrated HR system, which focused on the Tata Work Level
(TWL) 47 (Exhibit III). Around this concept were structured the various performance
measurement systems, potential assessment systems, career development systems and a
remuneration policy, all held together by an organized methodology to enable the system to
operate in harmony. As a prelude to framing the group HR policy, a survey 48 was done to assess
the needs of companies and managers in the group. The findings showed that there was a need for
mobility for growth, competitive remuneration; performance measurement system; potential
assessment system; group training inputs and group resourcing.
To introduce an integrated HR system across the Group companies, it was decided to first study
the group’s management jobs. It was decided that that there would be a maximum of six TWLs
(Exhibit III). The TWL was to be decided by the level of challenge in the job and hence was to be
the backbone of the new integrated HR system. The WLs were the intersection of Management
Scope and Company Scope. The Company Scope was determined by factors such as measured by
parameters such as turnover, profits, manpower, nature of competition, extent of co-ordination

and control required.
Exhibit II
Source: www.tata.com
Management scope denoted the level of managerial work one held within the company,
irrespective of the size or the complexity of the company. Management scope 6 (i.e. level F) was
the lowest level of management, with some functional responsibility in a line or staff functions to
deliver results in a fairly defined structure of customers, technology, geography and time frame.
Progressing on the management scope, the roles would encompass leadership, performance and
accountability and at the highest level, the individual concerned, usually the chief executive,
would be responsible for running the enterprise, delivering results and ensuring shareholder
returns.
Under the new HR framework, managers could aspire to move upwards from work level F to
work level A, over a period of time. This model was expected to usher in a flatter hierarchy and
47
Work levels were determined by the Company Scope (CS) and the Management Scope (MS). The intersection
of these two was the Tata Work Level. A was the highest and F the lowest.
48
Conducted by the Tata group among its companies.
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give managers better quality jobs. A model wherein an individual’s capacity to progress up the
organization could be tracked based on the defined work levels and the experience and exposure
of the individual concerned, had been developed.
Exhibit III
Based on a survey done by the GEO on remuneration at group companies, employee

compensation was to be driven partly by market trends and partly by the group’s needs. A new
remuneration architecture, common to all companies, was to be developed and implemented by
group companies progressively. This was to be coordinated by the GEO at the group level.
The Tatas have for long been seen as a good training ground and it is not uncommon to find ex-
Tata managers holding senior positions at other companies. We are now seeking to open up
horizons for employees to grow within the group 49 .
- Gopalakrishnan
A significant departure from the past was the process of managing the career development of its
employees group-wide, instead of looking at specific companies. A key to this was a consultative
process between group companies and the GEO. For instance, if a company needed to recruit a
resource of a certain level of seniority, they were to do so in consultation with the GEO, to check
out the possibility of a good resource within the group.
Group HR Initiatives
The Leadership Development Program, Tata Business Excellence Model, Brockbank model,
Balanced Scorecard, HR Gurukul and the Domestic Management Program were some initiatives
launched as part of the integrated Group HR framework.
49
“Tatas go in for centralized HR strategy,” Economic Times, www.tata.com, January 16, 2001
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Leadership Development Program
The people at the helm of affairs at the Tata group were expected to demonstrate the Tata
Leadership Ethos 50 . The Tata Leadership Practices (TLP) 51 was a set of behaviors and actions
that retained the crux of this Ethos. The Ethos and the TLP aimed to shape the behavior of leaders
and thereby modify their values and philosophies.
The company had also put in place a system to identify potential leaders (Exhibit IV). According
to this, all managers in the group would be continuously evaluated on the basis of a matrix that
mapped their ‘Energy’ (emotional intelligence) with their ‘Experience’ (intuition) gained over the
years. Typical leaders had to be multi-functional with multi-location experience and having very
high levels of energy – physical, emotional and intellectual. Based on the analysis provided by
the matrix, the company kept track of potential leaders in the group.
There were also six characteristics 52 that a Tata leader had to develop through one’s career. To
recognize outstanding leaders, when senior level positions across the group were to be filled, a
talent search was first made within the company in consultation with the GEOs before looking for
talent outside.

Exhibit IV
At Tata Management Training Centre (TMTC), the company had undertaken research in areas
spanning leadership development, innovation and talent management. The company was also
pro-active in creation of academic knowledge. The Tatas partnered with Centre for Creative
Leadership to undertake leadership research in the areas of ‘bridging cultural boundaries’ and
50
Which was qualified as: Trying to hold, under adverse conditions, the line of integrity, Putting the good of the
nation first, Having a social conscience and taking on social responsibility, A fair deal for the workers; treating
the staff with dignity, Fair prices for the customers, The pursuit of excellence in production. A bold vision,
astute strategies, strong convictions, breadth of perspective and intellectual leadership were also some other
valued leadership qualities.
51
They were called 'practices' because they did not describe the underlying philosophy, but dealt with the
outcome of the philosophy, which was observable. This according to the group was a better platform to talk
about leadership behaviors and actions. The Tata Leadership Practices covered multiple aspects of leadership.
The challenge was to be able to demonstrate leadership behaviors in each of these areas, and aspects that the
individual needed to improve upon since they were the strengths possessed by the individual.
52
functional competence, people management ability, delivery capability, conceptual skills, competence with
external agencies, character / courage of conviction
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‘understanding the leadership gap’. The company invited its senior management team to share
their experiences at the workplace with their juniors, in its ‘practitioners as teachers’ initiative.
To develop the leadership potential of its young workforce, Tata firms launched the Young
Leaders Development Programmes.
TBEM
The Tata Group adopted TBEM 53 in 1994. Through implementation of this model the group
aimed at bringing about organizational transformation. The objective of TBEM was to improve
the performance and efficiency of the Tata Group in various business areas and to enable them to
successfully overcome the global competitive challenges. The management felt that the attitudes
and perceptions of people had to be changed first before bringing about a major change in the
functioning of the organization. The Tata Quality Management Service (TQMS) 54 in
collaboration with Tata Management Training Center, the Department for Economic Studies 55
and the Tata Council for Community Initiatives (TCCI) 56 , was assigned the responsibility of
implementing TBEM in the various group companies.
The responsibility of TQMS was to ensure that the Tata Group initiated the TBEM process to

achieve the set standards of excellence within a specified time period. It adopted a 4A approach
wherein it was to provide assurance, assessment, and assistance to the group company. Once the
company was considered to have achieved the required level of business excellence, it was given
the JRD QV Award, which was the fourth A.
Exhibit VI
The Framework
Our Expectation from Companies
TQMS Provides Assure Assess Assist

Processes
Sup
port
Pr o
ces
ses
Engage – Improve Improve Value added

with TQMS Assurance Assessment Consulting
Services
•Board Reviews Create Critical Utilize Partnered

Enable – Mass internally processes and
•Deal with Nay for Cos. and Share practices,
Their Executives to act Sayers TQMS Learning
Missions
• BSC at Board – Self assessment Co. plays an active

Empower – used to drive as good as role in driving
Lead the Way External Business
Strategy
Assessment Excellence in the
Group
Tata Quality Management Services
53
The TBEM aimed at establishing a link between business performance and individual performance. TISCO
was the first company to implement TBEM in 2000. The model was based on the Malcolm Baldrige Award
which was an award given for quality in the US exclusively for US-based companies.
54
A division of Tata Sons, which functioned as a facilitating body that ensured information sharing and learning
among the group companies.
55
Affiliated to the University of Dundee, UK. It was involved in research and teaching, with primary focus on
applied economics and economic policy.
56
TCCI with the help of the Tata Group companies helped communities to become stronger and self-reliant.
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The first step in implementing TBEM was to sign the Brand Equity and Business Promotion
agreement with Tata Sons. As per this agreement companies had to undergo a stringent quality
check procedure in accordance with the ISO standards. Only those companies which complied
with the minimum quality level of quality standards were eligible to apply for TBEM. It was also
necessary for these companies to achieve the minimum standards of excellence which was
determined by scores based on the Malcolm Baldrige model. TBEM measured an organization’s
performance both on the basis of non-financial and financial parameters.
TBEM comprised core values like customer-driven excellence, focus on future, organization
agility, management by fact, managing for innovation, valuing employees and partners, visionary
leadership, among others. These values were broadly classified into two sections Strategy
development and business performance/ results. TBEM was a completely flexible model and the
manner of its implementation, the selection of tools for implementing the business processes and
the manner in which these were used all were left to the discretion of the company concerned.
Thus the model outlined the broad areas of management that must be focused upon to achieve the
excellence targets.
Tata Business Excellence Model is a very process oriented approach to management. It is a total

management system. It integrates all the business processes. It questions the need and the
efficacy of each process. It gives more insight to business. It helps to develop a structured
environment to conduct business 57 .
- Ishat Hussain, Former Executive Director, Tata Sons
In 2002, the TBEM was modified to improve its effectiveness. Some of the existing parameters
of business excellence were redesigned and a few more parameters were included. The changes
involved the inclusion of new guidelines for evaluating strategy planning and business results,
major focus on customer-orientation, relationships with supply chain partners, and redesigning of
work systems and processes. The ‘Information Management’ aspect of TBEM focused on
accessibility, availability and reliability of information, and the quality of hardware and software.
Exhibit VII
HR –
Leveraging Group Resource
Group
Group
Companies
Companies
Group HR
2 to 3 years Sabbatical
HR Mobility
assessor training
9 Group HR to take ownership of

selecting candidates for TBEM
assessment process and
TQMS
TQMS recognition
9 Identify and route few high
performers through TQMS
Tata Quality Management Services
57
Leader Speak, www.indiainfoline.com, July 24, 2000
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Balanced Scorecard (BSC)
The implementation of the BSC 58 (Exhibit VIII) enabled greater focus on different elements of
operational performance. Tata Motors was the first Indian company to be inducted into the BSC
Hall of Fame 59 in 2003. When in 2000 - 01, the company had reached an all time low and
reported a loss of Rs.500 crore, Tata Motors announced a turnaround strategy which aimed to
reorganize its business in terms of customers and products and, develop a strategy to build the
organization. By mid-2000, a three-phase strategic business direction plan was formulated. The
first phase focused on an immediate turnaround through cost reduction initiatives. The next phase
focused on domestic and international growth through new products and improved sales and
service. The final phase spoke about long-term growth, which was to come from increased
business in LCVs, new product segments and new geographies.
The strategy was captured in the framework of the BSC, with the objectives divided into four
perspectives: finance, customers, business processes, and learning and growth. The entire process
was driven by the TBEM. The challenge was in implementing these initiatives across the
company from the executive offices to the shop floor.

Our biggest challenge was changing the organization's culture. People were spread across plants
and offices all over the country, so the emphasis was on teamwork and on highlighting the fact
that competition was outside the company, not within 60 .
- Girotra. K. C., Head, Business Excellence

Steering committees were set up at different levels from the top management down to work
groups, to communicate the BSC to the employees, and hold monthly reviews. The company
broke down its goals into smaller elements which were implemented at different times, to keep
employees focused. A simple traffic light system tracked deployment quality at every level; red
for below target, yellow for targets met, and green indicated that targets had been surpassed.
The Business Excellence Services (BES) team helped integrate TBEM to drive business growth.
It mobilized more than 200 internal and external assessors to mentor people areas which needed
improvement. Over 300 employees were delegated to deploy 10 major quality initiatives, to be
driven by ‘champions’ across the organization. Regular workshops helped review the progress
with inputs from Malcolm Baldrige experts.
The company’s turnover had doubled in the four years since 2002. By 2006 it had a market share
of over 60%. In 2005, it accounted for 1.9 lakh out of the of 3.18 lakh commercial vehicles sold
in India. Tata Motors Commercial Vehicle Business Unit was the fifth-largest commercial
vehicles maker and the second-largest bus chassis manufacturer in the world.
58
The Balanced Scorecard Concept (BSC) was introduced in 1992 by Robert S Kaplan and Dr David P Norton.
This value added management process had been implemented across various corporations, business houses and
government organizations world wide. Based on the premise that ‘measurement motivates,’ the BSC placed
strategy at the centre of the management process, allowing organizations to implement strategies rapidly and
reliably.
59
Hall of Fame, created by the inventors of the BSC to publicly acknowledge the hard work and remarkable
results of implementing the BSC to create the strategy-focused organization. The Balanced Scorecard Hall of
Fame paid tribute to the success that each organization had attained.
60
Sujata Agrawal, “Full speed ahead,” www.tata.com, March 9, 2006.
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Exhibit VIII: The Balanced Scorecard
Brockbank Model
The most important challenge that any company faces is that of aspiration and desire to perform
better. Based on the meetings I’ve had with the Tata group, the aspirations are there and now I’m
hoping that the process will give them the mechanisms and logic that will help them achieve
those aspirations through their people more strongly 61 .
- Dr Brockbank
The Tata Group had brought in Dr Wayne Brockbank 62 to aid in the transformation process
which was to align its HR function to increased financial performance. Dr Brockbank had
adopted a modified model which was founded on four interlinked factors, which represented an
integration of culture management with fast change, strategic direction setting and linking the
organization with its external environment on an ongoing basis 63 .
According to Dr Brockbank, the Tata group would not have a single HR strategy but the exercise
aimed to generate, a central HR strategy for the group … based upon the overlap that exists over
different businesses 64 .
61
“Tatas rope in Brockbank to marry HR with financials,” Financial Express, www.tata.com, January 15, 2003
62
Dr Brockbank was a clinical professor of business at the University of Michigan Business School. He was the
faculty director of the 'Strategic HR planning program' and the 'Advanced HR executive program' at the
University of Michigan's Executive Education Centre. He was also the co-director of the University's 'HR
executive program'. Wall Street Journal and Business Week have consistently rated these three programs as the
best HR executive programs in the US and Europe. Professionally managed companies, such as Unilever,
Citicorp, Hewlett Packard, AT&T and others used this basic framework to ensure that their HR practices were
fully and exactly aligned to create the organizational capabilities required to execute strategy in the most
powerful way possible.
63
op.cit, “Tatas rope in Brockbank to marry HR with financials.”
64
ibid
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The Brockbank model consisted of seven steps to align HR to Business Strategy.
1. Identifying the organizational unit (either an SBU or business division) for which a human resource strategy was
being developed.
2. Identifying and prioritizing the externally driven forces and trends in business environment that influenced the
business unit
3. In the context of the externally driven forces determined in step 2, key sources of competitive advantage have to
be determined. Identifying 3 to 5 measures of success for each source of competitive advantage.
4. Identifying the cultural and technical capabilities that were needed to win in the market place. Mindset and
behaviors needed in the future in order to achieve better performance in the future than in the past. Performing a
Gap analysis.
5. Identifying HR practices with the greatest influence on creating an ideal human organization. Align HR: Deciding
on how the identified HR initiatives needed to be created or changed in order to create an ideal human
organization.
6. Identifying action plans
7. Measuring results

The most difficult part in measuring HR, was knowing what to measure, not doing the measurement itself. In a
complete HR measurement system, HR’s performance also had to be measured to illustrate the relationship between
HR strategies, their results and impacts.
Source: “Tatas rope in Brockbank to marry HR with financials,” Financial Express, www.tata.com,
January 15, 2003

Commenting on the complex portfolio of the Tata Group, which increased the complexity of the
project, Dr Brockbank said he aimed, to develop a systematically customized comprehensive HR
strategy that is at the same time very customized to local businesses and will at the same time
leverage the strengths throughout the group, is something that has seldom been undertaken
anywhere in the world 65 .
HR Gurukul
The Tata HR Gurukul 66 was an HR initiative aimed at helping Tata managers to develop critical
HR skills to leverage the competitive advantages of their businesses through appropriate HR
practices. The Gurukul provided a six-month program package. Each program had eight learning
segments, associated with various HR areas and comprised of problem solving workshops. This
program was linked with other Tata Group HR initiatives like the TBEM (Exhibits V & VI), the
Balanced Scorecard and the Wayne Brockbank (Exhibit VII) model.
The programme specialized in the application of HR principles, organizational design,

performance management, employee relations, community relations, HR strategy and change
management. It also focused on some other key areas like learning, education, careers and
staffing. HR Gurukul aimed at maximizing the business impact of HR. Participants were
expected to learn to analyze compensation survey data, mapping a business process, mapping
competencies, carrying out role analysis, handling change management issues and managing
separation at the work place.
65
ibid
66
Guru meant teacher and kul referred to his domain in India. It was an ancient Indian schooling system where
the students and the teachers resided in the same house.
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Tata’s HR Initiatives: Some Examples
Tata Steel’s Performance Ethic Plan (PEP)
HR policies and changes in the past had more of a socialistic outlook. The policies being tailored
under PEP are very businesslike; it is entirely competency-driven and will have a far-reaching
impact in the long run 67 .
- Niroop Mahanty, VP, HR, Tata Steel
The PEP 68 program was conceived by McKinsey Consultants 69 , based on research of best
practices of many outstanding companies. Tata Steel went about mapping its strengths against
global benchmarks 70 in the respective areas and drew out a plan of operation. The HR team
identified key positions, and defined the roles and competencies required for each position. The
training team was involved in imparting the necessary skills for the positions identified.
The first task of the programme was to appraise employees comprehensively for their
competencies, so that the right person could be chosen for the right job. The new outlook
revolved around three basic fundamentals structure 71 , appraisal 72 and reward 73 .

In collaboration with Eicher Consultancy 74 , the team identified the key parameters for evaluating
employees in the process of transforming them into leaders. Besides core competencies,
employees were assessed for their capacity to think strategically, decision-making ability,
achievement orientation, planning and organizing capabilities, oral and written communication
skills, people development and cost orientation, empathy, conflict-management and influencing
abilities, and their aptitude for learning.
Domestic Management Programme
Through the DMP, which was introduced in 1996, Tata Steel helped families, particularly wives
of employees to manage change caused by their spouses’ increased corporate responsibilities.
This was achieved by improving their skills and abilities as a better person, homemaker, wife and
mother. The Basera Programme 75 an offshoot of the DMP catered to all women in Jamshedpur
and was not restricted to employees' spouses alone. A visit to the Tata Steel Works was also part
of the DMP.
67
K A Ananthram, “Tata Steel peps it up,” www.tata.com
68
A program aimed at creating leadership through people. Was considered to be one of the most comprehensive
and largest HR initiatives at Tata Steel. The previous HR changes were compared to one day matches while the
PEP was called a test match.
69
A privately owned management consulting firm founded in Chicago in 1926.
70
Enhanced focus on current business and its growth, Enhanced profit-and-loss accountability, Providing
employees with exciting opportunities, Building a high-performing team, Redesigning the organization to match
people with positions, Initiating contemporary performance-appraisal and management systems, Installing a
transparent and unambiguous governance code.
71
Clear definition of the job profile and responsibilities; matching the person with the job.
72
Ensuring that all performance was appraised in a fair and transparent manner.
73
Ensuring an adequate scope for promotions with increased responsibilities apart from monetary reward.
74
Eicher Group was a conglomerate of the firms Eicher Goodearth Ltd., Eicher Ltd., Eicher Motors Ltd.,
Eicher International Ltd., and Eicher Consultancy Services Ltd., based in India
75
An offshoot of the DMP catered to all women in Jamshedpur and was not restricted to employees' spouses
alone. The Basera Programme included programmes ranging from inter-personal skills, rights and duties,
health, drugs and AIDS awareness, domestic budget planning, domestic safety and environment, positive
thinking courses and courses on glass paintings, soft toy making, candle making etc to make them self-
employed.
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… visit to the works has become a favorite, as most wives, who earlier had no clue as to how the
inside of the plant looked like get the opportunity to see for themselves the conditions under
which their husbands work 76 .
- Ms Muthuraman 77 , Chief patron of the programme & wife of MD, B. Muthuraman
This strategy of Tata Steel to merge ‘the small families into the big family’ had a positive impact
on the employees and their families. Following the success of the DMP, it was implemented
across more group companies.
These initiatives and an open and transparent communication process helped Tata Steel in its
Voluntary Retirement Scheme (VRS), to painlessly reduce its workforce by a staggering 30,000
people. The ease with which the change programme was implemented was, according to
Muthuraman, a result of the vision projected by the management, which was then shared across
the company in a transparent manner. Some other programmes like the Mindset Programme,
which were training modules designed for officers across the company, also helped in managing
the change process.
The Taj Group’s STARS Initiative

Applicable across the Taj Group, the STARS, an acronym for Special Thanks And Recognition
System programme was a new HR initiative aimed at ‘awarding and recognizing achievement
and exceptional performance instantaneously’. Taj group of Hotels Senior Vice President (HR)
Bernard Martyris said, many employees do that extra bit, go out of the way to dazzle the
customer. The STARS programme links customer delight and employee recognition. It is based on
the premise that happy employees lead to happy customers 78 .
According to this web-enabled programme, while employees were rewarded ‘merit points’ for
acts of excellence or valuable suggestions, their superiors would earn ‘default merit’ points if the
review committee (comprising the general manager, the training manager and all heads of
department) failed to revert within 48 hours on a suggestion made.
In recognition of the STARS initiative, the Taj Group of Hotels won the prestigious Hermes
Award 79 2002 in the HR category, the only award for HR in the hospitality industry. The
programme was so innovative and successful that it was patented. Martyris said that the award
brought global recognition to the Taj Group and was a great motivator to the team.
The HR innovations at the Taj Group resulted in an 80% loyalty among its staff, according to a
Gallup survey conducted in 2002, at a time when turnover in the hospitality industry was high.
According to Martyris, the accessibility of senior staff, quick responses to employees’ grievances
and needs contributed to this.
The success of the STARS programme enthused Indian Hotels to introduce ‘Stars Plus’, a spin-
off for its service providers, and ‘Joy at the Workplace’, which was aimed at team building and
motivating employees. Activities ranged from celebrating birthdays to organizing cricket matches
between the various Taj properties.
76
“Pati, patni aur Tata Steel”, Financial Express, October 5, 2003
77
She had taken charge from Ms Daisy Irani, wife of former Managing Director, Mr. Irani.
78
Christabelle Noronha, “A Star is Born,” Uploaded in May 2001, www.tata.com
79
The Hermes Awards for the world lodging industry are decided by a body of hospitality industry
professionals. It is among the most prestigious awards in the industry, and is instituted under 12 non-traditional
categories.
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Self-directed Teams (SDTS) at the Indica Plant
When the Tata Engineering ventured into the Indica project in 2001, several innovative initiatives
were introduced. In every step of the project, from procuring and modifying the second-hand
assembly plant from Nissan, modifying it, laying down the entire works, designing and testing
engines for Euro emission norms, crash-testing and analysis for approval for sales into the
European markets, and HRD practices, innovative approaches were adopted. In the HR function,
Tata Motors introduced a new work culture to facilitate success of the Indica project. The SDTS
operated without a supervisor and was aimed at making the worker more responsible. Each
worker is responsible for both the quantity and quality of what he produces, both as an individual
and as a team member, said J.N. Joshi (Joshi), Divisional Manager, HR.
According to this initiative, each worker in the assembly line took on the role of a team leader, in
turns. The responsibility of the team leader was to coordinate attendance, absenteeism, leave, job
assignments, and similar responsibilities. Production log sheets were designed to keep track of
work flow. For example, the number of assembly cars that passed through the workstation, and
the reasons for any shortfall, were all mentioned with reasons in the log sheet. Although an
engineer in the work area supervised the overall operations, it was a ‘totally collaborative effort.’

To maintain co-ordination among the various departments, team leaders from each department
discussed among themselves to ensure that the work flow was smooth and that production targets
were met.
Joshi added that this initiative of instilling a sense of ownership among employees also
contributed to the employees empathizing with the company. If we are going to be building a car
which can compete in the marketplace, it is possible only when every employee feels part of that
challenge. This is the new culture we are building, he added. Taking ahead the concept of joint
ownership the management planned to introduce a system that rewarded or punished an entire
Indica team according to a quality index that reflected customer satisfaction.
The VSNL Integration
The acquisition of VSNL, a PSU in 2002 and its integration into the Tata Group presented unique
HR challenges to the Tata group. The challenge was to integrate differing work cultures which
had well-established but different practices and structures, and people with different capabilities,
expectations and concerns. According to N. Srinath, Director (operations), VSNL, the
commitment of the people and the enthusiasm with which they welcomed the Tata acquisition,
was a positive aspect. As part of the integration process, a special programme called
Confluence 80 was conducted at the TMTC for 40 officers of the senior management team.
Concurrently, an organization restructuring exercise was initiated involving the employees

themselves. Employees of different disciplines and levels were asked to talk about the working of
the organization. The feedback was very frank and open and there were suggestions that
revamping was required in employee’s roles, the organizational structure and the level of
accountability. The employees themselves were entrusted the responsibility of presenting the new
structure. The new structure evolved, helped to make roles clear, simplify processes, and improve
accountability and coordination within the company.
New functions that were previously non-existent or sidelined were also created. For example,
sales and marketing functions and customer services functions were strengthened by bringing in
80
At the programme, the mission, value systems and practices of the Tata Group was communicated through
presentations and interactions with senior officers and directors of the Tata group. A visit to the Tata Archives
helped create an awareness and appreciation of the history of the group. Similar programmes were held for
more than 500 employees.
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people from Tata group companies. Also, to enhance the customer relations function, customer
service was segregated into four functions. The first was the point of interaction with the
customer i.e., the call centre or the public office. The second was the back office that handled the
issues, queries or complaints received by the front office. The third function was credit and
collection and the fourth was that of order management.
The new structure was implemented initially at the headquarters and then to the regional and
branch offices. The creation of new roles required development of new skills within the
organization. This was achieved by conducting training programmes in functional areas. To
enhance the management skills of the team, the company also developed a management
development programme. This programme focused on skills like business management, people
and performance management, negotiating skills, and planning and budgeting skills. As part of
this exercise Tata Group executives, who were operating managers, were invited to share their
expertise with the VSNL teams.
TCS’s Maitree 81 & Ultimatix
Maitree was an initiative by TCS, which sought to unite the wider TCS community, employees

and their families, through a variety of activities. An extensive forum of women (and men)
Maitree was started in 2002 by Mala Ramadorai, wife of TCS Chief, S Ramadorai. Maitree
sought to minimize the challenges faced by IT wives and help them adjust to a different culture,
away from family and friends. For example, Maitree would help in finding a school for the
children, easing the language problems that spouses often encountered in a new place or help in
giving women opportunities to socialize with other people.

Another of Maitree’s initiatives was to update the spouses of what was happening in TCS, so that
they were able to understand and appreciate the work their husbands or wives were doing. It also
sought to offer a forum for employees to talk about their hobbies which had taken a backseat
because of work demands. Working on these lines, Maitree had started yoga classes for the
employees and their spouses and a music club. Children were another focus area for Maitree.
This had resulted in setting up of children’s libraries, with computers and educational software.
During the summer vacation activities were offered by Maitree members to keep children
occupied.
TCS had topped Hewitt's best employer list for the year 2004. 272 Indian companies had
participated in the Hewitt's study. The selection of the Best Employers in India was based on in-
depth questionnaires completed by the CEOs, HR departments and employees of participant
organizations, followed by an on-site audit. The best employers were chosen by an independent
judging panel.
To meet the global HR challenge, TCS introduced Ultimatix, an in-house initiative accessible
across the whole organization through the web. Every single employee was connected through
this platform across the globe. Ultimatix was also successful in cutting through layers of
decision-making within TCS.
Ultimatix has become our single employee-service window. It has ensured that employees get
their services without much difficulty. They can log in with their claims, loans or even leave
applications for processing. All approvals are done online. To that extent, we are a paperless
organization 82 .
- S. Padamnabhan, Head & Executive Vice President, Global HRD, TCS
81
Meant friendship in several Indian languages
82
Shobha Ramasamy, “All in a days work,” Uploaded on September 3, 2004, www.tata.com
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Besides its HR policies, the organization had taken its appraisals and employee satisfaction
surveys online. The survey findings, along with implemented suggestions, were also posted
online. Rising employee satisfaction scores endorsed the popularity of these initiatives.
Ratan’s Global Aspirations
We used to live in a world of just raising our top line. I would hope people will say that I've
helped make the Tata companies more competitive and more conscious about costs and the
bottom line. I would hope they remember me for bringing the group together, because we were
often referred to as a loose federation of companies that competed and fought with each other. By
creating a common brand and a codified framework for how we operate, I think we have brought
the group much closer together 83 .
- Ratan
Ratan Tata aspired to take the group global through an aggressive mergers and acquisitions
(Annexure V) route which raised a lot of concern within the group. He went ahead with his
globalization plans and signed a deal with MG Rover 84 of UK to export Indica 85 . Tata’s next

globalization move was to take its commercial vehicles into the emerging markets of the world.
Subsequently Tata Motors acquired the Daewoo Commercial Vehicles Ltd. 86 in 2004.
The flagship company of the group was TCS, the fastest growing company within the group.
Ratan also urged TCS managers to take the company into new markets such as Spain, Brazil,
Argentina and Mexico. As a result of this TCS moved ahead of its competitors 87 in the domestic
market and also achieved international fame.
Ratan Tata also had similar plans for Indian Hotels, which was dependent only on the domestic
markets for its profits. He planned to set up the Taj group of hotels in foreign markets by
acquiring small chain of hotels and individual properties abroad in countries such as South
Africa, the US, China and Russia. Ratan Tata had plans for Tata Steel’s growth through building
mills and acquisitions in foreign countries such as Korea, China, Thailand and Ukraine.
The group acquired the Tetley group 88 in 2000, with the objective of strengthening Tata Tea’s
global presence. By 2005, Ratan had dreams for Tata to manufacture a low-cost, ‘people’s car’
priced Rs. 1, 00,000 and to be ready for launch by 2008. Similarly Ratan also had plans to
manufacture a low-cost watch and set up a chain of low cost hotels, indiOne 89 the first Indian
83
“What's Next For Tata Group?” McKinsey Quarterly, www.forbes.com, October 31, 2005
84
A car manufacturer in the UK formed in 2000 as a result of the demerger of MG and Rover from BMW. A
manufacturing and supply agreement was signed between the two companies in December 2002, for a period of
five years, to export the Tata Indica to European markets.
85
A five door compact hatchback automobile, it was the first car manufactured by the Tatas in 1998. It was
exported to Europe through MG Rover and also sold in South Africa.
86
A South Korean company started in 1938 as National Motors. In 1999 it ran into financial trouble and most of
its assets were taken over by General Motors (GM) to form GM Daewoo. Daewoo’s micro-car model Matiz was
exported to various markets in Asia. It was quite popular in India. Daewoo's commercial vehicle business was
acquired by Tata Motors in 2004 and renamed as Tata Daewoo Commercial Vehicle (TDCV) and Daewoo Bus.
TDCV was the second largest heavy commercial vehicle manufacturer in South Korea.
87
such as Infosys, Wipro and Satyam
88
Tetley was the second largest branded tea company in the world. Tetley was twice the size of Tata tea at the
time of acquisition. Its main markets were the UK, the US, Canada, Australia. Tetley tea bag was the largest
selling tea brand in these countries.
89
Before the launch of indiOne, the IHCL (Indian Hotel Company Limited, part of the Tata Group. The Taj
Mahal was its first luxury hotel in India) offered rooms costing about Rs.3000 a night, which were not
affordable by the Indian middle class travelers. indiOne offered single and double rooms at the cost of Rs. 900 to
Rs 950
21
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‘premium’ hotel for the ‘Bottom of the Pyramid’. The chain of basic low-cost hotels was
launched in 2004 in Bangalore. This was hailed as a landmark innovation, and CK Prahalad 90
who was present during the launch commented, Instead of replicating the best practices, we have
created next practices 91 .
The Road Ahead
…we now really need to look seriously at the needs of the larger part of the Indian income
pyramid, where most consumers can be found. If we don't do that, I think the Chinese will come
and do it for us… We have been a very measured, very cautious group, which has looked at the
market, decided what was safe, and then moved in. We need instead to lead and not just follow.
We have to take more risks and gain predominance in that manner. Targeting the larger part of
the income pyramid is an important part of what Tata will be doing 92 .
- Ratan
With about $2 billion invested in cross-border acquisitions in the last five years, the Tata Group
was pursuing the M&A route to going global. This presented a number of challenges on the HR
front, in terms of system and cultural integration. TCS was considered the most globalized

company in the group with 88% of its revenues coming from global operations. With the
continuation of the globalization trend and increased movement of managers across borders,
differences in pay and work ethics was a major HR challenge. Indian managers posted abroad
would have to be paid on par with their Western counterparts and they would expect the same
levels of compensation on their return to India. Cultural differences in work practices were also
bound to occur. As Seturaman Mahalingam, CFO of TCS commented, if you give an Indian a job
to do, he works night and day to get it done. But in more developed countries, say Singapore,
people don’t want to work on the weekends or at night. Rightly or wrongly, Indians can look
upon that as a lack of commitment 93 .
Since 2004, the Tata group had been working with experts and faculty from top institutes 94 to
introduce a global perspective into the approach and thinking of its employees. Issues regarding
management of a cross-cultural work force spread across different geographical regions and
communication of the evolving global vision were being debated.
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 95 , said Ratan. Experts wondered whether
the Tata group would be able to uphold these values and ethical standards set by their founders in
their efforts to become a global brand.
90
The Paul and Ruth McCracken Distinguished University Professor of Corporate Strategy at the University of
Michigan, was a globally recognized business consultant. AT&T, Cargill, Citicorp, Oracle, TRW and Unilever
were some major companies which consulted him. His research focused on next practices, corporate strategy
and the role of top management in diversified multinational corporations.
91
“Tatas launch sub-Rs. 1000 indiOne,” www.tata.com, June 25, 2004
92
“What's Next For Tata Group?” McKinsey Quarterly, www.mckinseyquarterly.com, October 31, 2005
93
Justin Wood, “Magna Tata,” www.cfoasia.com, December 2005
94
Harvard Business School, INSEAD, CEDEP, Michigan Business School, Nanyang Technological University,
and Singapore Management University among others.
95
op.cit, “What's Next For Tata Group?”
22
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Annexure I
The Tata Group: Time line
Year Event
1868 A private trading firm started by Jamshedji
1874 Set up Central India Spinning, Weaving and Manufacturing Company
1902 Set up the Indian Hotels Company
1903 Opened the Taj Hotel
1907 Established Tata Steel (then known as TISCO)
1910 Set up the first of the three Tata Electric Companies, The Tata Hydro-Electric Power Supply Company, (later
became Tata Power)
1911 Indian Institute of Sciences was set up
1912 Tata Steel started production. Introduced 8 hour work days.
1917 Tata Oil Mills Company established to make soaps, detergents and cooking oils
1932 Established Tata Airlines
1939 Set up Tata Chemicals
1945 Set up Tata Motors
1952 Set up Lakmé
1954 Set up Voltas
1962 Set up Tata Finlay and Tata Exports

1968 Tata Consultancy Services
1970 McGraw Hill Publishing Company
1984 Titan Industries – a joint venture between the Tata Group and the Tamil Nadu Industrial Development
Corporation (TIDCO) – is set up to manufacture watches.
1991 Tata Motors rolled out one million vehicles
1995 Tata Quality Management Services instituted the JRD QV Award, modeled on the Malcolm Baldrige
National Quality Value Award of the United States, laying the foundation of the Tata Business Excellence
Model.
1996 Tata Tele Services Ltd

1998 Launched Tata Indica India’s first indigenously designed and manufactured car
1999 The new Tata Group corporate mark and logo were launched
2000 Tata Tea acquired the Tetley Group, UK. This is the first major acquisition of an international brand by an
Indian business group.
2001 Tata-AIG – a joint venture between the Tata Group and American International Group Inc (AIG) – marked
the Tata re-entry into insurance.
The Tata Group Executive Office (GEO) was set up to design and implement change in the Tata Group and
to provide long-term direction
2002 The Tata Group acquired a controlling stake in VSNL, India's leading international telecommunications
service provider.
Tata Consultancy Services (TCS) became the first Indian software company to cross one billion dollars in
revenues.
Titan launched Edge, the slimmest watch in the world.
Idea Cellular, the cellular service born of a tie-up involving the Tata Group, the Birla Group and AT&T, was
launched.
Tata Indicom, the umbrella brand for telecom services from the Tata Tele Services stable, started operations.
2003 Tata Motors launched CityRover – Indica fashioned for the European market. The first batch of CityRovers
rolled out from the Tata Motors stable in Pune on September 16, 2003.
2004 Tata Motors acquired the heavy vehicles unit of Daewoo Motors, South Korea.
TCS went public in July 2004 in the largest private sector initial public offering (IPO) in the Indian market,
raising nearly $1.2 billion.
2005 Tata Steel acquired Singapore-based steel company NatSteel by subscribing to 100% equity of its subsidiary,
NatSteel Asia.
VSNL acquired Tyco Global Network, making it one of the world's largest providers of submarine cable
bandwidth.
23
Annexure II
The Tata Group - 2006
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24
Tata
Jamshedji
Nusserwanji
(1839 - 1904)
Sir Dorab Tata
Source: www.tata.com, www.tatacentralarchives.com

Ratan Tata
The Pioneers
Annexure III
Sir Ratan Tata

Ratanji
Jehangir
(1904 - 1993)
Dadabhoy Tata
Naval Tata
(1904 – 1989)
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25
Annexure IV
Group holding structure
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26
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Annexure V: Mergers & Acquisitions of the Tata Group

Company Acquisitions Year of acquisition
Indian Hotels The Regent, India September 2002
W, Australia December 2005
TACO Wundsch Weidinger August 2005
Tata Chemicals IMACID, Morroco March 2005
Brunner Mond Group, UK December 2005
Tata Interactive Systems Tertia Edusoft AG, Switzerland January 2006
Tertia Edusoft GmbH, Germany January 2006
Tata Metaliks Usha Ispat, Redi unit, India January 2006
Tata Motors Daewoo Commercial Vehicle, South Korea March 2004
Hispano Carrocera, Spain February 2005
Tata Finance, India April 2005

Tata Steel NatSteel Asia, Singapore February 2005
Millennium Steel, Australia December 2005
Tata Tea Tetley, UK February 2000
Good Earth Corporation, US October 2005

Tata Technologies INCAT International, UK August 2005

TCS CMC, India November 2001
AFS, India January 2004
ASDC, India March 2004
Phoenix Global Solutions, India July 2004
FNS, Australia October 2005
Pearl Group (structured deal), UK October 2005
Comicrom, Chile November 2005
Tata Infotech, India February 2006
Trent Landmark, India August 2005
VSNL Gemplex, US July 2003
Dishnet DSl's ISP division, India March 2004
Teleglobe, US July 2005
Tata Power Broadband, India October 2005
Tyco Global Network, US November 2005
27
406-071-1
References
1. “What's Next For Tata Group?” McKinsey Quarterly, www.mckinseyquarterly.com, October

31, 2005
2. “Tatas Revamp HR Policy,” www.business-standard.com, July 20, 2006
3. Tarun Khanna, Krishna Palepu & Danielle Melito Wu, “House of Tata, 1995: The Next
Generation (A),” Harvard Business School, search.epnet.com, 1998
4. Rwitankar Koondoo & Naveen Das, ICFAI Knowledge Center, search.epnet.com, 2005
5. “Spirit of the skies - A profile,” www.tata.com
6. “Tata Leadership Practices,” www.tmtctata.com
7. “Tata brand value at $5.5 billion,” Indian Express, January 25, 2006
8. “Brand Name to Survive Personalities: Ratan,” The Economic Times, October 14, 1996
9. “Tatas launch sub-Rs. 1000 indiOne,” www.tata.com, June 25, 2004
10. Justin Wood, “Magna Tata,” www.cfoasia.com, December 2005
11. www.imcnet.org
12. www.forbes.com
13. www.businessweek.com
14. www.hinduonnet.com

15. www.tata.com
16. www.tmtctata.com
17. www.wikipedia.com
18. www.ecch.com
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The Tata Group: HR Challenges

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The Tata Group

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Jamshedji Tata (1839 - 1904)

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- Jamshedji Tata to his son Dorab while on his deathbed

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president from 1951 to 1980.

JRD Tata (1904 - 1993)

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Ratan’s Restructuring Efforts

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Leadership Development Program

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TQMS Provides Assure Assess Assist

Engage – Improve Improve Value added

•Board Reviews Create Critical Utilize Partnered

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9 Group HR to take ownership of

Balanced Scorecard (BSC)

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- Girotra. K. C., Head, Business Excellence

Exhibit VIII: The Balanced Scorecard

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January 15, 2003

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Tata’s HR Initiatives: Some Examples

Tata Steel’s Performance Ethic Plan (PEP)

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abilities, and their aptitude for learning.

Domestic Management Programme

The Taj Group’s STARS Initiative

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Self-directed Teams (SDTS) at the Indica Plant

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The VSNL Integration

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Ratan’s Global Aspirations

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market and also achieved international fame.

The Road Ahead

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1996 Tata Tele Services Ltd

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Sir Ratan Tata

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Tata Technologies INCAT International, UK August 2005

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