shubham project.docx

8/17/2019 shubham project.docx

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Contents:

Introduction to succession planning

Definition

Enforcing the succession plan: History of Tata group

Founder of Tata group

Impotence of succession planning

SUCCESSION !"NNIN# $OCESS

"D%"NT"#ES OF SUCCESSION !"NNIN#

&ista'es to (e ")oided in Succession lanning

Case Study of T"T" #roup

Early *ears of &r $atan Tata

+uilding the T"T" Corporate +rand

T"T" #roup , Today - Tomorro. The Challenges +efore the Successor

The $ace for Succession

"(out Cyrus allon/i &istry

"c'no.ledgement:

INT$ODUCTION TO SUCCESSION !"NNIN#:

Succession planning is a process for identifying and developing internal people with the potential

to fill key business leadership positions in the company. Succession planning increases the

availability of experienced and capable employees that are prepared to assume these roles as they

become available.


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begun to wind down their active involvement. #hese desires must be balanced against the need to provide increased economic benefits and firm governance rights to 'unior managers andinvestment professionals in order to develop the next generation of managers for the firm.

:efinition of succession planning

• 4dentification and development of potential successors for key positions in an

organization" through a systematic evaluation process and training. ;nlike replacement

planning (which grades an individual solely on the basis of his or her past performance!

succession planning is largely predictive in 'udging an individual for a position he or she

might never have been in.

• Succession planning can be broadly defined as identifying future potential leaders to fill

key positions. %endy irsh1 defines succession planning as +oving to another position and different set of responsibilities within the organization.


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4S#7 78 #& @A7;*#he #ata group is one of the india oldest business conglomerates and with the passage of the timeit has been able to gamer the image of been one of the largest business group.#atas businesshorizon spread over seven business sectore.

87;C:/C (10D0-1/E1!

#he seeds of what would mature and become todays tata goup where laid long year before india become independent.

10D0 Famset'i Cusserwan'i #ata starts a private trading firm" laying the foundation of the tata

group.

1/G #he indian hotels company is an incorporated to set up the ta' mahal palace and tower"indias first luxury hotel" which open in 1/E.

1/H #he tata iron and steel company is established to set up indias first iron and steel plant inFamshedpur. #he plant started production in 1/1G. Sets up its first office overseas" #ata limitedin Iondon.

1/1 #he first of the three tata electric companies" the tata hydro-electric power supply companyis set up. #he second" &ndhra valley power supply company was established in 1/1H and the tata

power in 1/1/. #he first two companies where merged with tata power in G to form a singleentity.

1/11 #ata steel introduce eight-hour working days" will before such a system was implemented by law in much of the west.

1/1H the #atas enter the consumer goods industry" with the #ata oil mils company beingsestablished to make soaps" detergents and cooking oils. #he company was sold to industanlever (now unilever! in 1/0J.

1/JK #ata engineering and loco motive company established in GH may G11

,onsolidation (1/EG-1/0/!

#he #ata group ventured into a new areas and built on the foundation " in spite of the restraintsimposed by a controlled economy.

1/EG #ata airlines " a divison if #ata sons" is established" opening of the aviation sector in india

&ir india was nationalised in 1/KE.


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1/E/ #ata chemicals" now the largest producer of soda ash in the country" established

1/JK #ata engineering and loco motive company (renamed tata motors in GE! established tomanufacture loco motive and engineering products. #ata industries is created for the promotionand development of hi-tech industries.

1/KJ voltas established in G may G11.

1/KG Fawaharlal Cehru indias first prime minister" re2uests the group of maufature cosmetic inindia" leading to setting up lakme. #he company was sold to industan liver (now unilever! in1//H.

1/KJ 4ndias ma'or marketing" engineering and manufacturing organisation" voltas" established.

1/DG #ata finlay (now #ata tea !" one of the largest tea producer" is established. #ata exports isestablished. #oday the company" renamed #ata international" is one of the leading export housesin india.

1/0J #he first K +% thermal power unit started GH may" G11.

1/D0 #ata consultancy services (#,S!" indias first software service company" establishe as adivision of the #ata sons.

1/H1 #ata precision industries the first #ata company in Singapore" is founded to design andmanufacture precision engineering products"

1/0J the first K +% thermal power unit at the #rombay station of #ata electric comapies iscommissioned.

6xpansion (1// onwards!

#he liberalistaion of the 4ndians economy unleashed a period of remarkable growth for the tatagroup " in india and worldwide.

1//K #ata 2uality management services institute FA: L &ward " modelled on the +alcolmBaldridge Cational Luality alue &ward of the ;nited States " laying the foundation of the #ata business excellence model.

1//D #ata teleservices (##SI! is established to sparehead the groups foray into the telecomsector.

1//0 #ata indica54ndias first indigenously designed and manufactured car M is launched by#ata +otors" spareheading the groups entry into the passenger car segment.

1/// #he new #ata group corporate mark and logo are launched.

G #ata #ea(now tata global beverages! ac2uires the #etley @roup" ;N. #his is the first ma'or ac2uisition of an international brand by an indian business group.


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G1 #ata &4@ M a 'oint venture between the tata group and &merican international group inc(&4@!-marks the tata re-entry into insurance. (#he groups insurance company" new indiaassurance" sett up in 1/1/" was nationalised in 1/KD!.

GG#ata sons ac2uires controlling stake in SCI (renamed #ata ,ommunication in

G0!"indias leading international telecommunications service provider.#ata ,onsultancyservices (#,S! becomes the first indian software company to cross 1 billion dollars in revenue.#itan launches edge the slimmest watch in the world.

GJ#ata motors is listed on the worlds largest bourse" the Cew ork stock exchange the secondgroup company to do so after SCI. #ata motors ac2uires the heavy vehicles unit of :aewoo+otors" South Norea. #,S goes public in 'uly GJ in the largest private sector initial publicoffering(4*7! in the indian market " rising nearly O1.G billion.

GK #ata steel ac2uires Singapore-based steel company CatSteel by subscribing to 1 percentin e2uity of its subsidiary" CatSteel &sia . SCI (now #& ,7++;C4,/CS! ac2uired#yco @lobal Cetwork making it one of the world largest providers of submarine cable

bandwidth. #ata Sons completesD years of #ata operations in the ;S. #he ta' ac2uires a hotelrun by Starwood" Sydney(renamed Blue! and takes over management of the *ierre"C.

GD #ata Sky #elevision Service launched across the country . 8oundation stone for the #atamedical centre unveiled in Nolkata.

GH #ata Steel ac2uires the &ngo-dutch company corus" making it the worlds fifth Mlargeststeel producer. #,S inaugurates #,S ,hina-a 'oint venture with the ,hinese government andother partners. ,omputational research laboratories " a division of #ata Sons develops 6ka " oneof the fastest supercomputers in the world and the fastest in &sia. #he #a' ac2uires campton placehotel in San 8rancisco. #ata Steel celebrates its century in august GD" GH.

G0 #ata +otors unveils #ata Cano" the peoples car " at the /th auto expo in delhi on FanuaryG0. #ata +otors ac2uires the Faguar and Iand Aovers brands from the 8ord +otors ,ompany.#ata ,hemical ac2uires general chemical industrial products 4nc.

G/ #ata +otors announces commercial launch of the tata nano ? #ata Cano draws over G.Elakhs booking? first 1 owners of the tata nanochosen? delivers first tata nano in the countryin +umbai.

#ata +otors ushers new era in indian auto industry with its new" world-standard truck- range.#ata #eleservices announces *an M india @S+ service with C## :7,7+7.

#A8 ac2uires :utch Ianka trailer manufactures (:I#!" Sri Ianka " a world M class trailermanufacturing company. Faguar IandAover introduce its premium range of vehicles in india

#ata +otors ac2uires remaining H/ percent shares in ispano ,arrocera" one of the largestmanufactures of bus and coach and cabins in 6urope.

#ata #eleservices launched *hoton #" an application that allows #ata *hoton *lus subscribers towatch live television channel on their laptops while on the move" and on their personal


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computers at home and in the office.#ata ,hemicals launched #ata Swach M the worlds mostcost M effective water purifier.

G1 #A8 ac2uires ;N-based ewitt Aobins international. Cew plant for #ata Cano at sanandanaugrated. &dvinus #herapeutics announces thediscovery of a novel molecule M @N+-1- for

the treatment of type 44 diabetes.

#ata :ocomo launches its E@ services in +aharashtra and @u'urat. Brunner +ond ac2uires 1- percent stake in leading vacuum salt producer British Salt";N.

G11 #ata ,offee and Starbucks sign +o; for strategic alliance in india. #,Ss i7C brings power world class technology to indias small and medium business. #ata +otors introduce thenew #ata 4ndica eG" the most fuel efficient car in india with GKkmpl mileage.

+'unction services celebrates 1 years of innovation and excellence. #ata ,hemicals rebrands itsglobal subsidiaries in the ;N " the ;S and Nenya under the #ata ,hemicals ,orporate brand.

The Tata group is one of India's oldest business conglomerates and with the passage of time it has been

able to garner the image of been one of the largest and respected business group. Tata's business

horizon spread over seven business secto

I&O$T"NCE OF SUCCESSION !"NNIN#Succession planning is an essential part of doing business" no matter how certain your futureappears. 4t$s easy to put off planning when everything seems to be going so well" rightP %rong. Cow is the time to begin succession planningP ere are some reasons why it can$t 5 andshouldn$t 5 wait-10 *ou Can2t lan for Disaster: Co matter how good you and your staff are at revenue pro'ections or economic predictions" no one can truly plan for disaster. %hether it$s anunforeseen illness" a natural disaster" or a ,67$s decision to suddenly retire" the reasons forhaving a succession plan in place before it is needed are endless. So while you can$t plan fordisaster" you can put into place a series of contingencies that will help your company stay afloatif" in fact" catastrophe occurs.

30 Succession lanning +enefits the +usiness No.: Fust as business practices have evolvedover the years" succession planning has also grown and changed. 4t$s no longer a plan that canonly be accessed when leadership is going to change? a succession plan can be used before its)real) intent is necessary. 4t can be used to build strong leadership" help a business survive thedaily changes in the marketplace" and force executives to review and examine the company$scurrent goals.


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40 Succession lanning #i)es *our Colleagues a %oice: 4f you$re running a family business" the process of succession planning will give family members an opportunity to express their needsand concerns. @iving them that voice will also help create a sense of responsibility throughoutthe organization" which is critical for successful succession planning. Aesist the temptation tosolely carry the entire weight of creating and then sustaining a plan.

50 " Succession lan can Help Sustain Income and Support E6penses: #alking about moneyshould be a priority. *eople generally don$t want to work for free and things don$t pay forthemselves. & succession plan can provide answers as to what you 5 and your staff 5 will needfor future income" as well as what kinds of expenses you may incur once you step out of themain leadership role. &sk yourself 2uestions about your annual income and other benefitsincluding health and dental insurance for you and your dependents" life insurance premiums paidfor by the company" your car" professional memberships" and other business-related expenses.

70 Succession lanning #i)es *ou a +ig icture: Some companies mistakenly focus solely onreplacing high-level executives. & good succession plan can go further" however" and force youto examine all levels of employees. #he people who do the day-to-day work are the ones keeping

the business going. Ceglecting to add them to the succession planning mix could have direconse2uences. &s you develop your plan" incorporate all layers of management and their directreports.

80 Succession lanning Strengthens Departmental $elationships: %hen regularcommunication occurs between departments you are more likely to experience synergy" which breeds a culture of strength. +ake sure that you link your succession planning activities withhuman resources. &fter all" A is about people. By including A in succession planning" youcan incorporate elements like the employee-evaluation process" which can help when decidingwhether to fill vacancies with internal candidates.

90 Succession lanning eeps the &ood +uoyant: ,hange - a ma'or component of a

succession plan 5 is exciting and can bring a company unforeseen rewards. Still" change can bea source of tremendous stress" especially when people$s livelihoods are at stake. &s you put yoursuccession plan together" consider its positive effects on the business. *lanning for the future isexciting and" if done correctly" can inspire your workers to stay involved and maintain companyloyalty. 4t$s true that a plan is often put into place to avert catastrophe" but it$s also a company$sway of embracing the future 5 a business strategy that is essential for survival.

SUCCESSION !"NNIN# $OCESS

Succession planning recognizes that some 'obs are the lifeblood of the organization and toocritical to be left vacant or filled by any but the best 2ualified persons. 6ffectively done"succession planning is critical to mission success and creates an effective process forrecognizing" developing" and retaining top leadership talent.Success factors


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Steps

Step 1: !in' Strategic and ;or'force lanning Decisions

#his step involves-10 4dentifying the long-term vision and direction.

30 &nalyzing future re2uirements for products and services.

40 ;sing data already collected.

50 ,onnecting succession planning to the values of the organization.

70 ,onnecting succession planning to the needs and interests of senior leaders.

Step 3: "nalyse #aps

#his step involves-10 4dentifying core competencies and technical competency re2uirements.

30 :etermining current supply and anticipated demand.

40 :etermining talents needed for the long term.

50 4dentifying 3real continuity issues.‖

70 :eveloping a business plan based on long-term talent needs" not on position replacement.

Step 4: Identify Talent ools

#his step involves-10 ;sing pools of candidates =s development of positions.

30 4dentifying talent with critical competencies from multiple levels5early in careers and often.

40 &ssessing competency and skill levels of current workforce" using assessment instrument(s!.

50 ;sing EDQ feedback for development purposes.

70 &nalyzing external sources of talent.1G

> Succession planning addresses challenges such as diversity" recruitment" and retention.

Effecti)e succession planning

#he following information includes-> & graphic representation of a six-step process for effective succession planning

> & table with descriptions of each step in this process.11


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Step 5: De)elop Succession Strategies

#his step involves-10 4dentifying recruitment strategies-

> Aecruitment and relocation bonuses.

> Special programs.

30 4dentifying retention strategies-

> Aetention bonuses.

> Luality of work life programs.

40 4dentifying development=learning strategies-

> *lanned 'ob assignments.

> 8ormal development.

> ,oaching and mentoring.

> &ssessment and feedback.

> &ction learning pro'ects.

> ,ommunities of practice.

> Shadowing.

Step 7: Implement Succession Strategies

#his step involves-

10 4mplementing recruitment strategies (e.g." recruitment and relocation bonuses!.

30 4mplementing retention strategies (e.g." retention bonuses" 2uality of work life programs!.

40 4mplementing development=learning strategies (e.g." planned 'ob assignments" formaldevelopment" ,ommunities of *ractice!.

50 ,ommunication planning.

70 :etermining and applying measures of success.

80 Iinking succession planning to A processes.

> *erformance management.> ,ompensation.

> Aecognition.1E


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> Aecruitment and retention.

> %orkforce planning.

90 4mplementing strategies for maintaining senior level commitment.

Step 8: &onitor and E)aluate

#his step involves-10 #racking selections from talent pools.

30 Iistening to leader feedback on success of internal talent and internal hires.

40 &nalyzing satisfaction surveys from customers" employees" and stakeholders.

50 &ssessing response to changing re2uirements and needs.


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"D%"NT"#ES OF SUCCESSION !"NNIN#

Succession planning is an essential part of doing business" no matter how certain your futureappears. 4t$s not easy to put off planning when everything seems to be going so well. ere aresome reasons why it can$t - and shouldn$t - wait-> ou can$t plan for disaster.

> Succession planning benefits the business now.

> Succession planning gives your colleagues a voice.

> & succession plan can help sustain income and support expenses.

> Succession planning gives you a big picture.


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> Succession planning strengthens departmental relationships.

> Succession planning keeps the mood buoyant.

Besides the obvious benefit of not leaving your company in the lurch of proper Succession*lanning will help your company in other ways" too. ere9s a rundown of the benefits.

Aemember" not all benefits will apply" depending on your specific situation. Succession *lanningcan-10 $educe Ta6es< in some Situations .ith Family=O.ned +usinesses: 8or example" if acompany gets new ownership after an owner$s death" lack of planning can result in steep estatetaxes. 7ther tax issues" such as transferring ownership to a child" might apply.

30 Ensure Continuity:= ,ustomers" clients" vendors" and employees all want and need to knowthat a business will continue to function as they know it" even when there9s a leadership change.,hoosing and grooming a successor who fits your mold will help this happen.

40 ro)ide Training lan for ossi(le Successors: 4f you identify who you might choose as asuccessor early" you9ll know that that person needs more training and one-on-one time with yourcurrent leader to gain as much knowledge for the position while it9s still possible.

50 elp you plan for the future direction of the company.

&IST"ES TO +E "%OIDED IN SUCCESSION !"NNIN#

+any mistakes are commonly made in establishing succession planning programs. #hey areworth enumerating. 4t is also worthwhile to describe some ways to avoid these commonmistakes-

10 "ssuming that Success at One !e)el ;ill #uarantee Success at Higher !e)els: &nindividual9s success at one level is no guarantee of success at higher levels of responsibility. #hereason is simple the competencies re2uired for success at each level are different. ence" it isimportant to separate thinking about how well someone does his or her current 'ob and how wellhe or she might do a 'ob at a higher responsibility level.

30 "ssuming that +osses "re "l.ays the +est >udges of ;ho Is romota(le: & secondmistake is to assume that" for purposes of succession planning" bosses are always the best 'udgesof who is promotable. #hat is not always true. Bosses are self-interested players in the successiongame. #hey have a stake in what happens to people. 4ndeed" some bosses do not want to see their best people promoted for fear of an inability to replace them. Some bosses grade people by their

own standards - with the result that some individuals who are 2uite unlike the boss are notconsidered for promotion. %hile the support of a boss is useful in developing individuals" moreob'ective assessments" such as multi-rate assessment are excellent in aiding the manager9sassessment.

40 "ssuming that romotions "re $e.ards: Some employees have an entitlement mentality inwhich they feel that long service with an organization should always be rewarded with promotions. But business decisions must be based on who will do the best 'ob" not who is3owed a promotion because of greatest seniority. %orkers must continually be reminded that‖


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doing 'obs at each level re2uires different competencies" and the best way for them to compete isto prepare for future challenges rather than expect promotions for past performance at a differentlevel of responsibility.

50 Trying to Do Too &uch Too Fast: #he strong results-orientation of many organizations todayemphasizes 2uick results. Senior leaders expect to see all the components of a comprehensive

succession system in place immediately. #hat is not always realistic. 4t is advisable to think ofimplementing systematic succession in a phased way - either from the top down or else startingin specific divisions or locations with greatest need.70 #i)ing No Thought to ;hat to Call It: & fifth mistake is to devote no time to consideringwhat to call the succession program. &s any marketer knows" product names do matter. 4t is notnecessary to call a spade a spade. +any organizations choose alternative namesMsuch as3leadership development program" 3human capital management program (or even 3talent program.!

80 "ssuming that E)eryone ;ants a romotion: & sixth mistake is to assume that everyonewants a promotion. #hat is not always true today. 4n many downsized organizations" workers

have seen what pressures their bosses have to deal with. Some say 3leave me out of that. ence"it is unwise to assume that everyone wants a promotionMor even to assume that money willconvince everyone. 4t will not. ,heck first. 8ind out what people want to do. 8or that reason"many organizations launch both a top-down succession planning program and a bottom-up career planning program to galvanize development.

90 Iack of understanding how it works and how it benefits the organization.

?0 Iack of a formal written plan for the person or position(s!.

@0 Iack of availability of human and financial resources? lack of budgetary commitment.

1A0 Superficial approach? lack of real understanding of the procedures" processes and

re2uirements of each area the individual is exposed to during the process.

110 #he re2uirements of the +anagers=6xecutives are not fulfilled in providing dedicatedinstructions" guidance regarding skills" knowledge and abilities needed for the candidates to besuccessful.

130 8ailure to identify key employees who may have concerns with your succession plan.

140 8ailure to plan for disability.

150 & rigid" inflexible plan C7# tailored to the needs and abilities of the personnel involved.

170 #oo long a wait for real movement=promotion" disillusionment" may result in some people

leaving due to apparent inertia in the system.

180 Selection of un2ualified or unmotivated people for inclusion in the Succession *lan. Lualityof the individuals selected is paramount to the success of the process.

190 ,omplex program" re2uiring considerable paper work" follow-up" reporting.


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Case Study of T"T" #roup

#he #ata case is interesting. 8rom what is publicly known" succession planning was not a strong point until the late 1/0s. 4n the late 1/Hs" the unsuccessful succession planning attempt byoltas is etched in the public mind.#he #ata9s have gone down this road before. 4n 1/01" group company oltas hired a search firmto find a ,67. 3#here was a worldwide search" said *.C. Singh" who was in charge of A atoltas when the exercise took place. 3& global agency was employed. #here were ads in globalmedia and people were asked to apply for the 'ob of ,67. ,hairman #obaccowala initiated ahigh visibility" open search which resulted in the recruitment of Aamesh Sarin of 4#, as the ,67and finally" Sarin from tobacco-to-hotels ma'or 4#, was chosen as +:. #he experiment workedfor only a few years. Subse2uent events proved that #obaccowala had no intention of giving up

his executive power and authority. 4nevitable clashes followed and Sarin fell out and moved on.34t was a 2uestion of culture and control" says Singh" who is now chairman of @rid ,onsultants"which conducts Blake R +outon grid seminars. 34#, had a different culture and #obaccowalahad a different idea of control. e was unwilling to let go. #obaccowala was an entrepreneur andSarin was a manager. So the two should actually have worked well together.But something positive by way of process must have happened during the last G years underAatan #ata. 4t is known that Aatan #ata set up a group A function as part of his re-organization plan in the 1//s. #he intent was to introduce good practices within the companies with respectto talent management and succession planning. %hile there is not much outside informationabout how much progress the companies have made" something right must be going on. #hesuccession transitions are impressive from an outsider$s perspective. 8urther" the board directors

seem to be involved and to drive the leadership changes in the companies.4n #ata Steel" Famshed 4rani became ,67 in 1//1 amidst tumultuous circumstances of the Aussi

+ody departure. 4n earlier interviews" 4rani had

mentioned that by the late 1//s" he presented to Aatan #ata a comprehensive review of possible

successors? together" they zeroed in on a few possibilities. 8rom this list" B. +uthuraman

emerged as the ,67 in G1. +uthuraman" it is learnt" did a similar exercise and discussed it

2uite early on with Aatan #ata and the board while choosing his successor in G/. e too

accomplished a successful transition.

4n #ata ,onsultancy" S. Aamadorai took over from the legendary 8.,. Nohli in 1//D. e wasfilling big shoes. e grew the business dramatically over the next decade and a half" including

the 4*7 of the company. By mid Gs" he is reported to have made a short list of potentialsuccessors for discussion with Aatan #ata and the board. 8rom this list emerged C.,handrasekharan. Aamadorai walked out of his #,S office on the date of his retirement so thathis successor would have a free hand.4n #ata ,hemicals" change was sought in G1. 7utsider *rasad +enon was recruited to succeed+anu Seth. *erhaps because of what he had learnt at 4,4" his earlier company" *rasad +enonstarted to think about succession early on. &part from pacing potential" solid internal leaders" theleadership brought in a young #&S officer into the company and tested him through hugely


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challenging assignments. &ll the identified candidates were watched" coached" talked about andnominated to &dvanced +anagement *rogrammes. 8inally a choice was made by selecting A.+ukundan" with a short bridging role by veteran omi Nhusrokhan.#he successful transitions completed in the listed #ata companies during the last two decades areimpressive #itan (where erxes :esai gave way to Bhaskar Bhat!" oltas" Aallis" and 4ndian

otels. #he conclusion is that whatever the process" the #ata group seems to have got successionabout right - not perfect" but it seems to be effective and deliver positive results.4n G11" #ata was in the midst of the mother of all successions" finding a successor to Aatan #ata.4nstead of focusing on the possible candidates" it is purposeful to reflect on the streamlined andeffective process of succession they had announced.8irstly" a search committee was appointed with its composition and membership placed in the public domain. #he choice of candidate was kept wide open man or woman" 4ndian or foreigner"internal or external. Secondly" the search committee provided brief public updates of the status? itwasn9t surprising that the details or candidates were not revealed. #hirdly" the search committeeset itself approximate time targets so that their work inadvertently did not become desultory.Iastly" they internally adopted relevant criteria and a methodology" taking the assistance of a

specialist firm. #here seemingly wasn9t much else to do by way of a process. Based on the recenttrack record of successful transitions and the transparent process for the chairman succession" the#ata group did have a good chance of getting the succession right. *eople had no choice but towait for the search committee to complete its 'ob rather than to keep speculating on names andindividuals.

E"$!* *E"$S OF &$0 $"T"N T"T" - THE EBIT OF THE S"T$"S

Aatan #ata was a surprise choice to head the group after FA: (as F.A.:. #ata was popularlyknown!.e studied at ,ornell ;niversity" specialized in architecture" and had an offer from 4nternationalBusiness +achines ,orp." but returned to 4ndia because his grandmother was unwell" and 'oined#ata Steel Itd (then known as #ata 4ron and Steel ,o." or #isco! as an apprentice on the shopfloor of its Famshedpur plant. #he year was 1/DG.4n 1/H1" he was appointed director-in-charge of the ailing Cational Aadio and 6lectronics ,o.%hile #ata managed to turn around the firm9s fortunes" it was to be a temporary success.4n 1/HH" he was asked to turn around another troubled company" the +umbai-based 6mpress+ills. #ata managed to do so" but was refused an investment he thought was re2uired. #he+umbai textile workers strike led by :atta Samant also hurt the company" which eventuallyclosed down in 1/0D.+aybe because of these failures" few people understood why he was chosen as the person whowould replace FA: in 1//1. &t the time" #ata was still perceived as an outsider in Bombayouse" the group9s head2uarters.Several group companies were also led by individuals who had been given considerableautonomy by FA: and were" sometimes" more closely associated with their companies than thegroup9s chairman himself.&mong these executives were Aussi +ody at #ata Steel? :arbari Seth at #ata #ea and #ata

,hemicals? &'it Nerkar" who transformed the #a' group (4ndian otels! into a ma'or hospitality


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chain? and Cani *alkhivala" a director on the boards of several #ata companies and chairman ofAssociated Cement Companies (ACC Ltd), in which the Tata group was one of the

original promoters.

4t had been widely expected that one of these individuals would succeed FA:" and #ata9sappointment resulted in some bitterness5and not all of it remained unvoiced. +ody sparred

openly with #ata Nerkar and the new chairman had different views on the management of thechain.3F.A.:. #ata had around him a team of senior managers" all of them people of substantialunderstanding in their respective spheres" #ata said in an interview posted on the #ata groupwebsite on D :ecember for some time before being inexplicably taken down. 3%hile they mayhave acceded to his wish that 4 take over the chairmanship5and this happened suddenly54 mustconfess that 4 did not feel any sense of 'oyousness on their part" because some of them hadaspirations to have the 'ob themselves.4n 1//E" +ody was sacked after a messy scrap involving the appointment of senior executives.4n 1//H" *alkhivala 2uit" citing ill health. &nd Seth retired in 1//K and Nerkar in 1//H" after #ata brought in a new policy that set the retirement age for directors at H and senior executives at DK.

34n my personal view" when FA: saw this scramble among the company chiefs to succeed himand the unpleasant innuendos that surfaced" he may have appointed someone who understood the#ata ethos" which was always very important to him? and" perhaps" he thought Aatan #ata wassomeone who could uphold this ethos" *iramal said.She added that the concept of succession planning was nascent in FA:9s time. 4t9s only in the lastfive years that large business groups have realized the need for this" she said. 4ndeed" perhaps because of the rocky start that he had" #ata appointed a five-member selection committee"comprising C.&. Soonawala" Shirin Bharucha" A.N. Nrishna Numar" ,yrus +istry and IordNumar Bhattacharya" to identify his successor.4n hindsight" #ata9s ascension in 1//1 was the best thing that could have happened to the #ata

group" according to a business historian and writer.

3#ata" like every 4ndian company" was suddenly in a new environment. 4t could not keepoperating under the old market rules" the old certainties" said +orgen %itzel" a ;N-basedmanagement writer and author of #ata #he 6volution of a ,orporate Brand.3Aatan #ata9s strategy was to change #ata to help it keep pace with a changing 4ndia" he said.‖&nd" after spending nearly five years 2uelling the challenge of the satraps" that9s 'ust what #atadid.

+UI!DIN# THE T"T" CO$O$"TE +$"ND , " #$OU IDENTIT*

7nce the dust over the succession issue settled" the conglomerate9s new chief +r. Aatan #atacame into his own. is primary focus was the improvement of the operational efficiencies ofseveral of the group9s manufacturing companies and reiterating the very conglomerate nature ofthe entity.


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#he main beneficiaries of the focus on operations were #isco and #elco (#ata 6ngineering andIocomotive ,o.!. #he former soon emerged as one of the lowest-cost steel makers in the world.#he two companies were also renamed5#isco as #ata Steel and #elco as #ata +otors.Simultaneously" #ata convinced group companies to pay royalty to #ata Sons for the direct orindirect use of the #ata brand name. e also moved towards increasing the promoters

9shareholding in key group firms. ;ntil then" the promoting firms held minority stakes in mostgroup companies" making them vulnerable to takeovers.#he group also exited businesses such as cement" textiles and cosmetics even as it increased itsfocus on others such as software" and entered telecommunications" finance and retail.#hese divestments and investments helped the #ata group 3shake off the slightly fusty image ithad built up in the 1/0s and make it fit for purpose in the modern world " according to %itzel.‖4ndeed" today" the #ata group9s most profitable company is information technology firm #ata

,onsultancy Services Itd (#,S!" which boasts around O1 billion (around As.KJH crore! in

revenue and serves customers around the world.

34 think the creation of the corporate brand was 2uite important. #he #ata corporate brand isone of the world9s most valuable global brands because it harnesses the power of the wholegroup and creates a strong image in the minds of the stakeholders" %itzel added.#ata himself sees the re-establishment of the group identity as one of his achievements. 4n theinterview that was posted on the group9s website" he said one of his most satisfying moments aschairman was the welding of 3the organization together in a more cohesive way than it had been in the past that it was able to identify itself more as a group .‖&nd" even as some of these efforts to establish himself" improve the operational effectiveness ofsome companies" and reiterate a group identity were bearing fruit" #ata went out and made a big-ticket global ac2uisition5the #etley group in G.

THE T"T" #$OU , TOD"* "ND TO&O$$O;

+r. Famset'i C. #ata was the founder of the group. 4n 1/J" he handed over the baton to Sir

:orab #ata" who was at the helm of affairs till 1/EG" followed by Sir Cowro'i Saklatvala who

was there till 1/E0. #he group was then steered by +r. F. A. :. #ata till 1//1" when the charge

passed on to +r. Aatan #ata. 4t was on +arch GE" 1//1" that +r. Aatan #ata was told by his uncle

that he intended to handover the baton of the group to him. ,oinciding with the economic

reforms unleashed by :r +anmohan Singh" the group has had a remarkable 'ourney since thenT

+r. Aatan #ata took over the reins of the group at a time when it was an empire made up of

several independent fiefdoms" run by stalwarts like +r. :arbari Seth" +r Aussi +ody" +r &'itNerkar and +r Cani *alkhivala. +r. Aatan #ata was barely KJ when he assumed control of the

#ata @roup in 1//1. is successor was searched for" keeping in line with a whole lot of other

#ata company managing directors who were then in their Js. #he group had brought people in

their Js and Ks to run some key companies. 7bservers said that the next leaders will be from

among them. #hey included #ata *ower +: &nil Sardana" #,S +: Catara'an ,handrasekaran"

#ata ,hemicals +: A +ukundan" #ata #eleservices +: C Srinath" #ata @lobal Beverages head


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*eter ;nsworth" #ata +otors +: ,arl-*eters 8orster" 4ndia otels chief Aaymond Bickson and

#ata 4nternational +: Coel #ata.

#he activities of the group were and are overseen by two bodies. #he 6xecutive 7ffice reviews business activities of all group companies. Besides Aatan #ata" it had A @opalakrishnan" shaat4ussain" Nishor ,haukar and &runkumar @andhi. #hen there is the @roup ,orporate ,entre"which reviewed policy issues related to growth and took decisions on entering new areas. 4t also promoted the #ata brand and provided advisory services to group companies in human resources"finance and legal affairs. 4t comprised Aatan #ata" FF 4rani" A N Nrishna Numar" A@opalakrishnan" 4shaat ussain" Nishor ,haukar and &runkumar @andhi. #he members of boththese groups were then in their Ds and Hs. #ata Steel$s ac2uisition of ,orus" #ata +otors buyingFaguar Iand Aover and #,S going public were some of the significant milestones after +r.Aatan #ata took over from FA: as ,hairman of the group. #he #ata @roup comprises over 1operating companies in seven business sectors communications and information technology"engineering" materials" services" energy" consumer products and chemicals. #he group hasoperations in more than 0 countries across six continents" and its companies export productsand services to 0K countries. #he total revenue of #ata companies" taken together" was O0E.E billion (around EH/"DHK ,r 4CA! in G1-11" with K0 per cent of this coming from businessoutside 4ndia. #ata companies employ over JGK" people worldwide. #he #ata name has beenrespected in 4ndia for 1J years for its adherence to strong values and business ethics. 6very #atacompany or enterprise operates independently. 6ach of these companies has its own board ofdirectors and shareholders" to whom it is answerable. #here are E1 publicly listed #ata enterprisesand they have a combined market capitalization of about OHH.JJ billion (as on Covember 1H"G11!" and a shareholder base of J.E million. #he ma'or #ata companies are #ata Steel" #ata+otors" #ata ,onsultancy Services (#,S!" #ata *ower" #ata ,hemicals" #ata @lobal Beverages"4ndian otels" #ata ,ommunications" #ata #eleservices and #itan. 3+r. #ata has taken the groupto great heights and we hope the new ,hairman will take it to greater heights" said an official‖closely associated with the selection committee. #he five-member committee held 10 meetings

over the last on-and-a-half years and interviewed a large number of candidates" both 4ndian andexpatriates.3+r. #ata had a tougher clean-up exercise where there were many powerful individuals who

were running their own fiefdoms. e managed to do this while carving out a new global agenda

for the @roup. #he new ,hairman will have a relatively easier 'ob on his hands.i an industry

veteran said. +uch like the few erstwhile Nings who chose a successor based on merit alone" the

group had invariably followed the principle of meritocracy when choosing a successor in the

past. %hat the new ,hairman would have had to take over from +r. Aatan #ata was a much

more well-knit and cohesive group" united by a shared philosophy" vision and identity.

THE CH"!!EN#ES TH"T ;E$E +EFO$E THE &"N=TO=+E

#here is always a lot of hoopla surrounding the succession planning of leaders. %henever avisible leadership change occurs" the image of the incoming leader appears to be much less thanthe exiting leader. #he fallacy lies in our tendency to make an unfair comparison between the


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embellished profile of the outgoing leader and the unclear profile of the incoming leader. #hat iswhy Ial Bahadur Shastri initially looked inade2uate as a replacement for Fawaharlal Cehru"omi Sethna looked inade2uate compared to omi Bhabha and ikram Sarabhai" and Aatan #atawas thought to be less than F.A.:. #ata. But all of these turned out to be successful transitions.#here were many challenges ahead for the young ,hairman-to-be.

STEE!

%eak demand and decline in global steel prices were the key challenges faced by #ata Steel$s6uropean operations. #his was even as the prices of raw materials such as coking coal and ironore ruled high as compared to G1. #ata Steel had reduced its capacity utilization marginally inline with weakening demand and may have had to resort to production cuts if demand did notimprove in 6urope. 6ven in 4ndia" the company was up against weaker demand from sectorssuch as construction and automotive" but expected volumes to grow by eight per cent for the year G11.

"UTO&OTI%E

#he big disappointment was the Cano which was clocking modest numbers. #he car business

needs to rev up though commercial vehicles had been doing well. #he #atas were and are the

market leader in trucks and buses but a lot depended then on the state of the economy over the

next few months.

TE!ECO&

4n the telecom sector" the #atas had their hands full with ma'or challenges for both #ata

#eleservices and #ata ,ommunications. #ata #ele was now the fifth largest telecom player in acrowded market with as many as 1J in the arena. But the overall telecom sector was witnessingdisturbing trends over the past year. &ll the operators$ revenues" including #ata #eleservices" werestagnating" profitability was declining" and investments were slowing and costs were rising.#ata #eleservices undertook a ma'or restructuring exercise in bid to cut costs and rationalizeoperations. #he Successor had to ensure that this paid off in the long term.&part from the tough market conditions" there were a whole host of regulatory issues especiallythose related to spectrum. #ata #eleservices still did not have @S+ spectrum in key markets like:elhi. #he company$s E@ roll out was also under a cloud with the @overnment raising 2uestionsover roaming agreements.7n the #ata ,ommunications front" the worry was to bring the company back into profitability.

#he company" which once had a monopoly over the international long distance segment" had toreposition its strategy with more focus on foreign markets. %hile this paid off to some extent" thethen ongoing dispute with the @overnment over funding and land sale put the company$sexpansion plans on hold.&nother immediate challenge for the new ,hairman was to be able to steer the company awayfrom all that happened with +s. Ciira Aadia and the G@ scam. &lthough there were no businessimplications" the #atas had taken a ma'or hit on its image" which the new ,hairman would havehad to build.


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IT SE$%ICES

#he offshore 4#=B*7 players were grappling with macro uncertainties in key overseas marketssuch as the ;S and 6urope" and" at the same time" coping with currency volatility back home.

8or #,S" the largest 4ndian 4# Services ,ompany" the challenge was also to sustain its pole position in a market that had already started seeing a reshuffle in the pecking order of #ier-1

vendors" said +r. San'eev ota" &ssociate ice-*resident - 4nstitutional 62uities at Sharekhan.

&lso given its over two lakh employee base" #,S had to chase" perhaps even more aggressively"the non-linear growth strategy (beyond adding employees!. 3:eals such as the recent OG.G- billion contract from 8riends Iife (a British financial services firm! will be critical in thisregardU4f #,S wants to scale up further" it will be important that the revenue growth outstripsthe employee growth" noted +r. arit Shah" Senior Aesearch &nalyst at Cirmal Bang‖4nstitutional 62uities.

#hough the company had been growing at a scorching pace in the last few 2uarters" the eurozone crisis and the rupee volatility were the key challenges. +r. #ata$s acumen when it came tothe business of technology was well known. %ould the new ,hairman$s lack of expertise in thetechnology space be a deterrent going forwardP M was a key 2uestion to be considered. 34 do notthink soUat the top level people settle into their roles pretty 2uickly. Sometimes a completeoutsider can bring a completely new perspective to the business of technology" #,S sources had‖said.

THE $"CE FO$ SUCCESSION

#he committee set up to find a successor to #ata group ,hairman Aatan #ata had shortlistedaround 11 candidates. 7ut of them" four-five were group employees.#he frontrunner in the #ata race appeared to be Coel #ata" Aatan #ata9s half-brother who wasthen promoted to overseeing the group9s international operations. Some DKV of theconglomerate9s ;SOH.0 billion revenue (&pril-+arch G0-G/! came from outside 4ndia" so this was a significant responsibility. &dditionally" Coel #ata was the son-in-law of *allon'i +istry" who owned 10.JV in #ata Sons" which madehim the single largest individual shareholder (most of the e2uity being held by charitable trusts!.But others were in the race" too. #he 6conomic #imes speculated that the internal candidatesinclude #ata Sons executive directors 4shaat ussain and A. @opalakrishnan? and B.+uthuraman" Aavi Nant and S. Aamadorai" vice chairmen of #ata Steel" #ata +otors and #ata

,onsultancy Services (#,S!" respectively. #he younger group included the ,67s of #,S (C.,handrasekaran! and #itan (Bhaskar Bhat!. But they were long shots at best" observers hadreported.#here was also a speculation that" given the group9s increasing global focus" the choice need not be an 4ndian. #he #imes of 4ndia said that the candidates could include 4ndra Cooyi of *epsi,o"former odafone head &run Sarin and Aenault Cissan chief ,arlos @hosn. 3#he selection process would consider suitable persons from within the #ata companies" other professionals in4ndia as well as persons overseas with global experience" said a #ata Sons press release.‖


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Aatan #ata had also clarified that the new chief need not have to be either a *arsi or a #ata. (#he*arsis are a wealthy business community in 4ndia" and the #ata chief has traditionally been a*arsi.! #he *arsis are a shrinking community. Birth rates are very low and women who marryoutside the community are excommunicated. #here are now less than D" *arsis left in 4ndia"and it is inevitable that the #ata baton will pass on to a non-*arsi sooner or later.

4t was evident that it would have to pass on to a non-#ata" too. #he #atas are a small clan. &partfrom Aatan" there was his 0-year-old 8rench stepmother" Simone" who was obviously not in therunning for his 'ob. is brother" Fimmy" who was close to H and had retired from #ata *ower.&loo #ata (who was by birth a +istry! wouldn9t have got precedence over her husband" Coel.&nd their three children 5 Iiya" +aya and Ceville 5 were still studying. So" Coel was the only#ata who was eligible.#he composition of the selection panel had some critics speculating that the choice of Coel was pre-decided. 4t consisted of #ata Sons directors A.N. Nrishna Numar and ,yrus +istry (who was Coel #ata9s brother-in-law!" #ata veteran C.S. Soonawala" group legal advisor Shirin Baruchaand independent member IordNumar Bhattacharya of the %arwick +anufacturing @roup of the ;.N. 3#here was only one

external member" said *radeep +uker'ee" founder-director of ,onfluence ,oaching and‖

,onsulting. +uker'ee" who had worked for several years in the A area with ,itigroup in the;.S." says that in the %est" such selection panels have many more external members. 3%hatgood is a panel stuffed with internal membersP 4 wonder what the true purpose is. #hus" the‖ panel did have to face some criticism but it was worthwhile to keep a panel that was in keepingwith the core values of the #ata @roup for such a strategic decision-making which would bearfruit in the long run.

C*$US "!!ON>I &IST$*

,yrus +istry" then JE" is the son of construction tycoon *allon'i Shapoor'i +istry. alued at O0.0 billion" *allon'i held an 10.K per cent stake in #ata Sons" making him the single largestshareholder.+r. +istry is the younger son of *allon'i and is married to Aohika ,hagla" the daughter oflawyer 42bal ,hagla. e has an elder brother - Shapoor +istry and one of his sisters is married to Coel #ata" Aatan #ata$s half-brother.e had been a director of #ata Sons since September 1" GD. e served as a :irector of #ata6lxsi Iimited" from September GJ" 1// to 7ctober GD" G/ and was a :irector of #ata *ower,o. Itd until September 10" GD.+r. +istry served as ,hairman of the Board of Shapoor'i *allon'i @roup and &fcons4nfrastructure Iimited before he became the ,hairman of the #ata @roup.+r. +istry also served as :irector of various companies including - 8orvol 4nternationalServices Itd" Shapoor'i *allon'i R ,o. Itd" ,yrus 4nvestments Itd" Shapoor'i *allon'i *ower ,o.Itd" Buildbazaar #echnologies (4ndia! *vt Itd" Sterling 4nvestment ,orporation *vt. Itd"Samalpatti *ower ,o. *vt. Itd" Shapoor'i *allon'i R ,o. (Aa'kot! *vt. Itd" Shapoor'i *allon'i


24/24

8inance Itd" Shapoor'i *allon'i 4nfrastructure ,apital ,o. Itd" 7man Shapoor'i ,onstruction ,o.Itd and +uscat *allon'i Shapoor'i R ,o. *vt. Itd.+r. +istry had been a Con-executive :irector of 8orbes @okak Iimited since Fune GE" GE.+r. +istry is 8ellow of the 4nstitute of ,ivil 6ngineers. e holds a B6 in ,ivil 6ngineering from

4mperial ,ollege" Iondon and a +aster of Science in +anagement from Iondon Business

School. e holds a Bachelor of ,ommerce from +umbai ;niversity.

&n avid golfer" +r. +istry is also a founder member of the ,onstruction 8ederation of 4ndia. eis a trustee of the Breach ,andy ospital #rust" +umbai. e is also on the board of 4mperial,ollege 4ndia 8oundation.,yrus *allon'i +istry succeeded Aatan #ata at the helm of #ata Sons. e was appointed as:eputy ,hairman and worked with +r. #ata for one year as per the plan chalked out for him as asuccessor" before taking over in :ecember G1G.JE-year-old +istry was a director of #ata Sons and #ata 6lxsi (4ndia!. Aatan #ata retired in G1Gwhen he turned HK. e 'oined the #ata group in 1/DG and was the ,hairman since 1//1. +r.,yrus +istry took over from a man who over the last two decades transformed the #ata @roupinto a global enterprise.6ndorsing the appointment then" +r. #ata had said" )#he appointment of +r. ,yrus *. +istry as:eputy ,hairman of #ata Sons is a good and far-sighted choice.) (,ourtesy *ress release from#ata Sons!)4 will be committed to working with him over the next year to give him the exposure" theinvolvement and the operating experience to e2uip him to undertake the full responsibility of the@roup on my retirement") +r. #ata had adde+r. +istry had said that he was deeply honoured by his appointment. )4 am aware that anenormous responsibility" with a great legacy" has been entrusted to me") he had reported in astatement.e announced that he will legally dissociate himself from the management of his family businesses to avoid any issue of conflict of interest. Shapoor'i *allon'i +istry" the father of thenew deputy chairman" was owner of 10 per cent stake in #ata Sons. #he Shapoor'i *allon'i @roupis into construction" textile" water treatment and other businesses. ,yrus +istry was themanaging director of the two billion dollar S* @roup.&part from the #ata @roup" he also serves as a director on the board of several other companies"

including Shapoor'i *allon'i R ,o" 8orbes @okak" &fcons 4nfrastructure and ;nited +otors

(4ndia!.

+r. +istry was also a part of a search panel appointed last year to find +r. #ata$s successor. ewithdrew himself when his name was suggested. e then entered the process as a candidate.#he K-member panel also comprised of C & Soonawala" vice-chairman" #ata Sons? A N Nrishna

Numar" non-executive director" #ata Sons? Iord Bhattacharya" a businessman based in the ;N

who runs %arwick +anufacturing? and Shirin Bharucha" a lawyer for the group. #he committeeis said to have met 10 times before announcing the succession plan.

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