Tata Group Deepak

8/17/2019 Tata Group Deepak

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Contents:

Introduction to succession planning

Defnition

Enforcing the succession plan:

Coverage

The role of HR

Impotence o succession planning

SUCCESSION PLANNING POCESS

AD!AN"AGES O# SUCCESSION PLANNING

$ista%es to &e A'oided in Succession Planning

Case Stud( o "A"A Group

Earl( )ears o $r* atan "ata +uilding t,e "A"A Corporate +rand

"A"A Group - "oda( . "omorro/

",e C,allenges +eore t,e Successor

",e ace or Succession

A&out C(rus Pallon0i $istr(


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Ac%no/ledgement:IN"ODUC"ION "O SUCCESSION PLANNING :

Succession planning is a process for identifying and developing internal people with thepotential to fill key business leadership positions in the company. Succession

planning increases the availability of experienced and capable employees that are prepared toassume these roles as they become available.

Succession planning is not an issue that many organizations address in anysystematic way. Because many non-profts are small (with ewer than 10employees) and because they may be acing other organizational challengesthin!ing about who the ne"t e"ecuti#e director might be or what would happen ithe director o fnance suddenly let is not high on their priority list.

$here are many reasons why organizations need to be thin!ing about successionplanning. $he most important reason o course is that we rely on sta% to carry outour missions pro#ide ser#ices and meet our organization&s goals. 'e need to thin!

about what would happen to those ser#ices or our ability to ulfll our mission i a!ey sta% member let.

nother reason to ocus on succession planning is the changing realities owor!places. $he impending retirement o the baby boomers is e"pected to ha#e amaor impact on wor!orce capacity. $eresa *owe in +Succession ,lanning andanagement+ identifed other emerging realities about the wor!orce in anada/

acancies in senior or !ey positions are occurring in numerous organizationssimultaneously and demographics indicate there are statistically ewer peoplea#ailable to fll them

Baby boomer retirements are on the rise ust at the time when the economy isgrowing and increasing the demand or senior management e"pertise

$here is no emerging group o potential employees on the horizon as in pastgenerations (i.e. baby boomers women entering the wor!orce large wa#es oimmigration)

any organizations eliminated middle manager positions during restructuring in the120s and 0s and no longer ha#e this group as a source to fll senior le#el#acancies

3ounger managers interested in mo#ing up do not ha#e the s!ills and e"perience

re4uired because they ha#e not been ade4uately mentored. $his is because middlemanagers who would normally perorm this type o coaching role were eliminated *

Succession ,lanning 5$hin!ing bout $omorrow $oday6 7n organizationalde#elopment succession planning is the process o identiying and preparingsuitable employees through mentoring training and ob rotation to replace !eyplayers 8 such as the chie e"ecuti#e o9cer (:;) 8 within an organization as theirterms e"pire.


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usual or an organization to insure the !ey person so that unds are a#ailable i sheor he dies and these unds can be used by the business to cope with the problemsbeore a suitable replacement is ound or de#eloped. Succession ,lanning in#ol#esha#ing senior e"ecuti#es periodically re#iew their top e"ecuti#es and those in thene"t-lower le#el to determine se#eral bac!ups or each senior position. $his isimportant because it oten ta!es years o grooming to de#elop e%ecti#e senior

managers. $here is a critical shortage in companies o middle and top leaders orthe ne"t f#e years. ;rganizations will need to create pools o candidates with highleadership potential. Succession planning in#ol#es a careul balancing o theconcerns and needs o a frm=s ounding and senior managers on the one hand andits more unior in#estment proessionals and managers on the other hand. $heounding and senior managers want to be properly rewarded or their e%orts inbuilding and growing the frm and this may include rights to continue to participatein und economics ater these managers ha#e begun to wind down their acti#ein#ol#ement. $hese desires must be balanced against the need to pro#ide increasedeconomic benefts and frm go#ernance rights to unior managers and in#estmentproessionals in order to de#elop the ne"t generation o managers or the frm.

>efnition o succession planning

• 7dentifcation and de#elopment o potential successors or !ey positions in an

organization through a systematic e#aluation process and training. ?nli!ereplacement planning (which grades an indi#idual solely on the basis o his orher past perormance) succession planning is largely predicti#e in udging anindi#idual or a position he or she might ne#er ha#e been in.

• Succession planning can be broadly defned as identiying uture potential

leaders to fll !ey positions. 'endy *irsh1 defnes succession planning as @aprocess by which one or more successors are identifed or !ey posts (orgroups o similar !ey posts) and career mo#es andAor de#elopment acti#itiesare planned or these successors. Successors may be airly ready to do the ob (short-term successors) or seen as ha#ing longer-term potential (long-term successors).= ccording to *irsh succession planning sits inside a #erymuch wider set o resourcing and de#elopment processes called &successionmanagement& encompassing management resourcing strategy aggregateanalysis o demandAsupply (human resource planning and auditing) s!illsanalysis the ob flling process and management de#elopment (includinggraduate and high-yer programs).

Enforcing the succession plan:A careful and considered plan of action ensures the least possible disruption to the person‘sresponsibilities and therefore the organization‘s effectiveness. Examples include such a person whois:-

Suddenly and unexpectedly unable or unwilling to continue their role within the organization


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The Role of HRSuccession planning needs to be owned by line managers and should be

acti#ely led by the chie e"ecuti#e who has a !ey role in ensuring that it is gi#enthe importance it deser#es by other senior managersC ensuring that there is a

healthy pipeline o potential leaders is about nothing less than the uture o the

organization. But it is not realistic or :;s and those around them to ha#e soleresponsibility or thisC they ha#e neither the time nor the e"pertise. $he *Dunction thereore has a critical role in supporting and acilitating the process

not least in compiling all the necessary inormation on potential candidates. nycareer mo#e at senior le#el is a process o multiple dialogues in which a senior

representati#e rom *D will collect #iews rom senior line managers in aniterati#e ashion testing challenging and amending them as the dialogue goes

on ma!ing sure that all possibilities are co#ered and maybe putting proposalsor decision to a succession de#elopment committee. *D departments are o

course also hea#ily in#ol#ed in gi#ing career ad#ice and inormation toindi#iduals and assessing and ad#ising on their de#elopment needs. $he *Dunction is also centrally concerned in the design and management o

assessment processes and inormation support including the de#elopment andmaintenance o computerized databases.

IMPORTANCE OF SCCESSION P!ANNIN"Succession planning is an essential part o doing business no matter how certainyour uture appears. 7t&s easy to put o% planning when e#erything seems to begoing so well rightE 'rong. Fow is the time to begin succession planning. *ere are

some reasons why it can&t 8 and shouldn&t 8 wait/-1* )ou Can2t Plan or Disaster:3 Fo matter how good you and your sta% are atre#enue proections or economic predictions no one can truly plan or disaster.'hether it&s an unoreseen illness a natural disaster or a :;&s decision tosuddenly retire the reasons or ha#ing a succession plan in place beore it isneeded are endless. So while you can&t plan or disaster you can put into place aseries o contingencies that will help your company stay aoat i in actcatastrophe occurs.

4* Succession Planning +enefts t,e +usiness No/:3 Gust as business practicesha#e e#ol#ed o#er the years succession planning has also grown and changed. 7t&sno longer a plan that can only be accessed when leadership is going to changeC a

succession plan can be used beore its +real+ intent is necessary. 7t can be used tobuild strong leadership help a business sur#i#e the daily changes in themar!etplace and orce e"ecuti#es to re#iew and e"amine the company&s currentgoals.

5* Succession Planning Gi'es )our Colleagues a !oice:3 7 you&re running aamily business the process o succession planning will gi#e amily members anopportunity to e"press their needs and concerns. Hi#ing them that #oice will alsohelp create a sense o responsibility throughout the organization which is critical or


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successul succession planning. Desist the temptation to solely carry the entireweight o creating and then sustaining a plan.

6* A Succession Plan can 7elp Sustain Income and Support E8penses:3 $al!ing about money should be a priority. ,eople generally don&t want to wor! orree and things don&t pay or themsel#es. succession plan can pro#ide answers as

to what you 8 and your sta% 8 will need or uture income as well as what !inds oe"penses you may incur once you step out o the main leadership role. s! yoursel4uestions about your annual income and other benefts including health and dentalinsurance or you and your dependents lie insurance premiums paid or by thecompany your car proessional memberships and other business-relatede"penses.

9* Succession Planning Gi'es )ou a +ig Picture:3 Some companies mista!enlyocus solely on replacing high-le#el e"ecuti#es. good succession plan can gourther howe#er and orce you to e"amine all le#els o employees. $he people whodo the day-to-day wor! are the ones !eeping the business going. Feglecting to addthem to the succession planning mi" could ha#e dire conse4uences. s you de#elop

your plan incorporate all layers o management and their direct reports.* Succession Planning Strengt,ens Departmental elations,ips:3 'henregular communication occurs between departments you are more li!ely toe"perience synergy which breeds a culture o strength. a!e sure that you lin!your succession planning acti#ities with human resources. ter all *D is aboutpeople. By including *D in succession planning you can incorporate elements li!ethe employee-e#aluation process which can help when deciding whether to fll#acancies with internal candidates.

;* Succession Planning


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Senior leaders hold themsel#es accountable or growing leaders.

:mployees are committed to their own sel-de#elopment.

Success is based on a business case or long-term needs.

Succession is lin!ed to strategic planning and in#estment in the uture.

'or!orce data and analysis inorm the process.

• Ieadership competencies are identifed and used or selection andde#elopment.

• pool o talent is identifed and de#eloped early or long-term needs.

• >e#elopment is based on challenging and #aried ob-based e"periences.

• Senior leaders orm a partnership with human resources.

Succession planning addresses challenges such as di#ersity recruitment and

retention.

• E=ecti'e succession planning

• $he ollowing inormation includes/-

• graphic representation o a si"-step process or e%ecti#e successionplanning

• table with descriptions o each step in this process.


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StepsStep 1: Lin% Strategic and >or%orce Planning Decisions $his step in#ol#es/-1* 7dentiying the long-term #ision and direction.

4* nalyzing uture re4uirements or products and ser#ices.

5* ?sing data already collected.

6* onnecting succession planning to the #alues o the organization.

9* onnecting succession planning to the needs and interests o senior leaders.

Step 4: Anal(?e Gaps $his step in#ol#es/-1* 7dentiying core competencies and technical competency re4uirements.

4* >etermining current supply and anticipated demand.

5* >etermining talents needed or the long term.

6* 7dentiying 5real6 continuity issues.

9* >e#eloping a business plan based on long-term talent needs not on positionreplacement.

Step 5: Identi( "alent Pools $his step in#ol#es/-1* ?sing pools o candidates As de#elopment o positions.

4* 7dentiying talent with critical competencies rom multiple le#els8early in careersand oten.

5* ssessing competency and s!ill le#els o current wor!orce using assessmentinstrument(s).

6* ?sing JK0L eedbac! or de#elopment purposes.

9* nalyzing e"ternal sources o talent.1M

Succession planning addresses challenges such as di#ersity recruitment andretention.

E=ecti'e succession planning $he ollowing inormation includes/-

graphic representation o a si"-step process or eecti#e succession planning

table with descriptions o each step in this process.11


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Step 6: De'elop Succession Strategies $his step in#ol#es/-1* 7dentiying recruitment strategies/-

Decruitment and relocation bonuses.

Special programs.4* 7dentiying retention strategies/-

Detention bonuses.

Nuality o wor! lie programs.

5* 7dentiying de#elopmentAlearning strategies/-

,lanned ob assignments.

etermining and applying measures o success.

* Iin!ing succession planning to *D processes.

,erormance management.

ompensation.

Decognition.1J


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Decruitment and retention.

'or!orce planning.

;* 7mplementing strategies or maintaining senior le#el commitment.

Step : $onitor and E'aluate $his step in#ol#es/-1* $rac!ing selections rom talent pools.

4* Iistening to leader eedbac! on success o internal talent and internal hires.

5* nalyzing satisaction sur#eys rom customers employees and sta!eholders.

6* ssessing response to changing re4uirements and needs.

A#$ANTA"ES OF SCCESSION P!ANNIN"


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Succession planning is an essential part o doing business no matter how certainyour uture appears. 7t&s not easy to put o% planning when e#erything seems to begoing so well. *ere are some reasons why it can&t - and shouldn&t - wait/-

3ou can&t plan or disaster. Succession planning benefts the business now.

Succession planning gi#es your colleagues a #oice.

succession plan can help sustain income and support e"penses.

Succession planning gi#es you a big picture.

Succession planning strengthens departmental relationships.

Succession planning !eeps the mood buoyant.

Besides the ob#ious beneft o not lea#ing your company in the lurch o proper

Succession ,lanning will help your company in other ways too. *ere=s a rundown othe benefts. Demember not all benefts will apply depending on your specifcsituation. Succession ,lanning can/-1* educe "a8es@ in some Situations /it, #amil(3O/ned +usinesses:3


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well someone does his or her current ob and how well he or she might do a ob at ahigher responsibility le#el.

4* Assuming t,at +osses Are Al/a(s t,e +est udges o >,o IsPromota&le:3 second mista!e is to assume that or purposes o successionplanning bosses are always the best udges o who is promotable. $hat is not

always true. Bosses are sel-interested players in the succession game. $hey ha#e asta!e in what happens to people. 7ndeed some bosses do not want to see their bestpeople promoted or ear o an inability to replace them. Some bosses grade peopleby their own standards - with the result that some indi#iduals who are 4uite unli!ethe boss are not considered or promotion. 'hile the support o a boss is useul inde#eloping indi#iduals more obecti#e assessments such as multi-rater assessmentare e"cellent in aiding the manager=s assessment.

5* Assuming t,at Promotions Are e/ards:3 Some employees ha#e anentitlement mentality in which they eel that long ser#ice with an organizationshould always be rewarded with promotions. But business decisions must be basedon who will do the best ob not who is 5owed6 a promotion because o greatest

seniority. 'or!ers must continually be reminded that doing obs at each le#elre4uires di%erent competencies and the best way or them to compete is toprepare or uture challenges rather than e"pect promotions or past perormance ata di%erent le#el o responsibility.

6* "r(ing to Do "oo $uc, "oo #ast:3 $he strong results-orientation o manyorganizations today emphasizes 4uic! results. Senior leaders e"pect to see all thecomponents o a comprehensi#e succession system in place immediately. $hat isnot always realistic. 7t is ad#isable to thin! o implementing systematic successionin a phased way - either rom the top down or else starting in specifc di#isions orlocations with greatest need.9* Gi'ing No ",oug,t to >,at to Call It:3 fth mista!e is to de#ote no time toconsidering what to call the succession program. s any mar!eter !nows product

names do matter. 7t is not necessary to call a spade a spade. any organizationschoose alternati#e namesOsuch as 5leadership de#elopment program6 5humancapital management program6 or e#en 5talent program.6

* Assuming t,at E'er(one >ants a Promotion:3 si"th mista!e is to assumethat e#eryone wants a promotion. $hat is not always true today. 7n many downsizedorganizations wor!ers ha#e seen what pressures their bosses ha#e to deal with.Some say 5lea#e me out o that.6 *ence it is unwise to assume that e#eryonewants a promotionOor e#en to assume that money will con#ince e#eryone. 7t willnot. hec! frst.


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11* $he re4uirements o the anagersA:"ecuti#es are not ulflled in pro#idingdedicated instructions guidance regarding s!ills !nowledge and abilities needed orthe candidates to be successul.

14*


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ut something positive by way of process must have happened during the last =/years under 6atan 'ata. !t is (nown that 6atan 'ata set up a group &6 function as

part of his re-organization plan in the ,/s. 'he intent was to introduce good practices within the companies with respect to talent management and succession planning. >hile there is not much outside information about how much progressthe companies have made% something right must be going on. 'he successiontransitions are impressive from an outsider?s perspective. +urther% the boarddirectors seem to be involved and to drive the leadership changes in the companies.7n $ata Steel Gamshed 7rani became :; in 11 amidst

tumultuous circumstances o the Dussi ody departure. 7n earlier

inter#iews 7rani hadmentioned that by the late 10s he presented to Datan $ata a

comprehensi#e re#iew o possible successorsC together they

zeroed in on a ew possibilities.


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$he successul transitions completed in the listed $ata companiesduring the last two decades are impressi#e/ $itan (where Qer"es>esai ga#e way to Bhas!ar Bhat) oltas Dallis and 7ndian *otels. $he conclusion is that whate#er the process the $ata group

seems to ha#e got succession about right - not perect but itseems to be e%ecti#e and deli#er positi#e results.7n M011 $ata was in the midst o the mother o all successionsfnding a successor to Datan $ata. 7nstead o ocusing on thepossible candidates it is purposeul to reect on the streamlinedand e%ecti#e process o succession they had announced.


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an apprentice on the shop oor o its Gamshedpur plant. $he yearwas 1KM.7n 1R1 he was appointed director-in-charge o the ailing FationalDadio and :lectronics o. 'hile $ata managed to turn around the

frm=s ortunes it was to be a temporary success.7n 1RR he was as!ed to turn around another troubled companythe umbai-based :mpress ills. $ata managed to do so but wasreused an in#estment he thought was re4uired. $he umbaite"tile wor!ers= stri!e led by >atta Samant also hurt the companywhich e#entually closed down in 12K.aybe because o these ailures ew people understood why hewas chosen as the person who would replace GD> in 11. t thetime $ata was still percei#ed as an outsider in Bombay *ouse thegroup=s head4uarters.

Se#eral group companies were also led by indi#iduals who hadbeen gi#en considerable autonomy by GD> and were sometimesmore closely associated with their companies than the group=schairman himsel.mong these e"ecuti#es were Dussi ody at $ata SteelC >arbari

Seth at $ata $ea and $ata hemicalsC it Per!ar who transormed

the $a group (7ndian *otels) into a maor hospitality chainC andFani ,al!hi#ala a director on the boards o se#eral $ata

companies and chairman o

he erstwhile ssociated ement ompanies ( Itd) in which the $ata group wasone o the original promoters.7t had been widely e"pected that one o these indi#iduals would succeed GD> and $ata=s appointment resulted in some bitterness8and not all o it remained un#oiced.ody sparred openly with $ata. Per!ar and the new chairman had di%erent #iews onthe management o the chain.5G.D.>. $ata had around him a team o senior managers all o them people osubstantial understanding in their respecti#e spheres6 $ata said in an inter#iewposted on the $ata group website on K >ecember or some time beore beingine"plicably ta!en down. 5'hile they may ha#e acceded to his wish that 7 ta!e o#erthe chairmanship8and this happened suddenly87 must coness that 7 did not eel

any sense o oyousness on their part because some o them had aspirations toha#e the ob themsel#es.67n 1J ody was sac!ed ater a messy scrap in#ol#ing the appointment o seniore"ecuti#es. 7n 1R ,al!hi#ala 4uit citing ill health. nd Seth retired in 1 andPer!ar in 1R ater $ata brought in a new policy that set the retirement age ordirectors at R0 and senior e"ecuti#es at K.57n my personal #iew when GD> saw this scramble among the company chies tosucceed him and the unpleasant innuendos that suraced he may ha#e appointedsomeone who understood the $ata ethos which was always #ery important to himC


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and perhaps he thought Datan $ata was someone who could uphold this ethos6,iramal said.She added that the concept o succession planning was nascent in GD>=s time. 7t=sonly in the last f#e years that large business groups ha#e realized the need or thisshe said. 7ndeed perhaps because o the roc!y start that he had $ata appointed af#e-member selection committee comprising F.. Soonawala Shirin Bharucha D.P.

Prishna Pumar yrus istry and Iord Pumar Bhattacharya to identiy his successor.7n hindsight $ata=s ascension in 11 was the best thing that could ha#e happenedto the $ata group according to a business historian and writer.

3'ata% li(e every !ndian company% was suddenly in a new environment. !t could not (eep operatingunder the old mar(et rules% the old certainties%@ said #orgen >itzel% a B-based management writer and author of 'ata: 'he Evolution of a 2orporate rand.36atan 'ata‘s strategy was to change 'ata to help it (eep pace with a changing !ndia%@ he said.And% after spending nearly five years 8uelling the challenge of the satraps% that‘s "ust what 'ata did.

&I!#IN" THE TATA CORPORATE &RAN# ) A "ROP I#ENTIT*

$nce the dust over the succession issue settled% the conglomerate‘s new chief #r. 6atan 'ata cameinto his own. &is primary focus was the improvement of the operational efficiencies of several of thegroup‘s manufacturing companies and reiterating the very conglomerate nature of the entity.'he main beneficiaries of the focus on operations were 'isco and 'elco )'ata Engineering andCocomotive 2o.*. 'he former soon emerged as one of the lowest-cost steel ma(ers in the world. 'hetwo companies were also renamedD'isco as 'ata Steel and 'elco as 'ata #otors.Simultaneously% 'ata convinced group companies to pay royalty to 'ata Sons for the direct or indirectuse of the 'ata brand name. &e also moved towards increasing the promoters‘ shareholding in (eygroup firms. ntil then% the promoting firms held minority sta(es in most group companies% ma(ingthem vulnerable to ta(eovers.'he group also exited businesses such as cement% textiles and cosmetics even as it increased its focuson others such as software% and entered telecommunications% finance and retail.'hese divestments and investments helped the 'ata group 3sha(e off the slightly fusty image it had built up in the ,/s and ma(e it fit for purpose in the modern world@% according to >itzel.7ndeed today the $ata group=s most proftable company is inormation

technology frm $ata onsultancy Ser#ices Itd ($S) which boasts around T10billion (around Ds.UR00 crore) in re#enue and ser#es customers around the

world.

3! thin( the creation of the corporate brand was 8uite important. 'he 'ata corporate brand is one ofthe world‘s most valuable global brands because it harnesses the power of the whole group andcreates a strong image in the minds of the sta(eholders%@ >itzel added.'ata himself sees the re-establishment of the group identity as one of his achievements. !n theinterview that was posted on the group‘s 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 inthe past that it was able to identify itself more as a group@.


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And% 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-tic(et global ac8uisitionDthe 'etley group in =///.

THE TATA "ROP ) TO#A* AN# TOMORRO+

r. Gamseti F. $ata was the ounder o the group. 7n 10U he handed o#er thebaton to Sir >orab $ata who was at the helm o a%airs till 1JM ollowed by SirFowroi Sa!lat#ala who was there till 1J2. $he group was then steered by r. G. D.>. $ata till 11 when the charge passed on to r. Datan $ata. 7t was on arch MJ11 that r. Datan $ata was told by his uncle that he intended to hando#er thebaton o the group to him. oinciding with the economic reorms unleashed by >r.anmohan Singh the group has had a remar!able ourney since thenV r. Datan

$ata too! o#er the reins o the group at a time when it was an empire made up ose#eral independent fedoms run by stalwarts li!e r. >arbari Seth r. Dussiody r. it Per!ar and r. Fani ,al!hi#ala. r. Datan $ata was barely U when heassumed control o the $ata Hroup in 11. *is successor was searched or !eepingin line with a whole lot o other $ata company managing directors who were then intheir U0s. $he group had brought people in their U0s and 0s to run some !eycompanies. ;bser#ers said that the ne"t leaders will be rom among them. $heyincluded $ata ,ower > nil Sardana $S > Fataraan handrase!aran $atahemicals > D u!undan $ata $eleser#ices > F Srinath $ata Hlobal Be#erageshead ,eter ?nsworth $ata otors > arl-,eters Foel $ata.

$he acti#ities o the group were and are o#erseen by two bodies. $he :"ecuti#e;9ce re#iews business acti#ities o all group companies. Besides Datan $ata it hadD Hopala!rishnan 7shaat *ussain Pishor hau!ar and run!umar Handhi. $henthere is the Hroup orporate entre which re#iewed policy issues related to growthand too! decisions on entering new areas. 7t also promoted the $ata brand andpro#ided ad#isory ser#ices to group companies in human resources fnance andlegal a%airs. 7t comprised Datan $ata GG 7rani D P Prishna Pumar D Hopala!rishnan7shaat *ussain Pishor hau!ar and run!umar Handhi. $he members o both thesegroups were then in their K0s and R0s. $ata Steel&s ac4uisition o orus $ata otorsbuying Gaguar Iand Do#er and $S going public were some o the signifcantmilestones ater r. Datan $ata too! o#er rom GD> as hairman o the group. $he $ata Hroup comprises o#er 100 operating companies in se#en business sectors/communications and inormation technology engineering materials ser#icesenergy consumer products and chemicals. $he group has operations in more than20 countries across si" continents and its companies e"port products and ser#icesto 2 countries. $he total re#enue o $ata companies ta!en together was T2J.Jbillion (around JRKR r 7FD) in M010-11 with 2 per cent o this coming rombusiness outside 7ndia. $ata companies employ o#er UM000 people worldwide. $he $ata name has been respected in 7ndia or 1U0 years or its adherence to strong#alues and business ethics. :#ery $ata company or enterprise operates


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independently. :ach o these companies has its own board o directors andshareholders to whom it is answerable. $here are J1 publicly listed $ata enterprisesand they ha#e a combined mar!et capitalization o about TRR.UU billion (as onFo#ember 1R M011) and a shareholder base o U.J million. $he maor $atacompanies are $ata Steel $ata otors $ata onsultancy Ser#ices ($S) $ata ,ower $ata hemicals $ata Hlobal Be#erages 7ndian *otels $ata ommunications $ata

$eleser#ices and $itan. 5r. $ata has ta!en the group to great heights and we hopethe new hairman will ta!e it to greater heights6 said an o9cial closely associatedwith the selection committee. $he f#e-member committee held 12 meetings o#erthe last on-and-a-hal years and inter#iewed a large number o candidates both7ndian and e"patriates.5r. $ata had a tougher clean-up e"ercise where there were many powerulindi#iduals who were running their own fedoms. *e managed to do this whilecar#ing out a new global agenda or the Hroup. $he new hairman will ha#e arelati#ely easier ob on his hands6 an industry #eteran said. uch li!e the ewerstwhile Pings who chose a successor based on merit alone the group hadin#ariably ollowed the principle o meritocracy when choosing a successor in the

past. 'hat the new hairman would ha#e had to ta!e o#er rom r. Datan $ata wasa much more well-!nit and cohesi#e group united by a shared philosophy #isionand identity.

THE CHA!!EN"ES THAT +ERE &EFORE THE MAN,TO,&E

$here is always a lot o hoopla surrounding the succession planning o leaders.'hene#er a #isible leadership change occurs the image o the incoming leader

appears to be much less than the e"iting leader. $he allacy lies in our tendency toma!e an unair comparison between the embellished profle o the outgoing leaderand the unclear profle o the incoming leader. $hat is why Ial Bahadur Shastriinitially loo!ed inade4uate as a replacement or Gawaharlal Fehru *omi Sethnaloo!ed inade4uate compared to *omi Bhabha and i!ram Sarabhai and Datan $atawas thought to be less than G.D.>. $ata. But all o these turned out to be successultransitions. $here were many challenges ahead or the young hairman-to-be.

STEE!

>ea( demand and decline in global steel prices were the (ey challenges faced by 'ata Steel?sEuropean operations. 'his was even as the prices of raw materials such as co(ing coal and iron ore

ruled high as compared to =/,/. 'ata Steel had reduced its capacity utilization marginally in line withwea(ening demand and may have had to resort to production cuts if demand did not improve inEurope. Even in !ndia% the company was up against wea(er demand from sectors such as constructionand automotive% but expected volumes to grow by eight per cent for the year =/,,.

ATOMOTI$E


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$he big disappointment was the Fano which was cloc!ing modest numbers. $he

car business needs to re# up though commercial #ehicles had been doing well. $he $atas were and are the mar!et leader in truc!s and buses but a lot

depended then on the state o the economy o#er the ne"t ew months.

TE!ECOM

!n the telecom sector% the 'atas had their hands full with ma"or challenges for both 'ata 'eleservicesand 'ata 2ommunications. 'ata 'ele was now the fifth largest telecom player in a crowded mar(etwith as many as , in the arena. ut the overall telecom sector was witnessing disturbing trends overthe past year. All the operators? revenues% including 'ata 'eleservices% were stagnating% profitabilitywas declining% and investments were slowing and costs were rising.'ata 'eleservices undertoo( 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.Apart from the tough mar(et conditions% there were a whole host of regulatory issues especially those

related to spectrum. 'ata 'eleservices still did not have 9S# spectrum in (ey mar(ets li(e 7elhi. 'hecompany?s F9 roll out was also under a cloud with the 9overnment raising 8uestions over roamingagreements.$n the 'ata 2ommunications front% the worry was to bring the company bac( into profitability. 'hecompany% which once had a monopoly over the international long distance segment% had to repositionits strategy with more focus on foreign mar(ets. >hile this paid off to some extent% the then ongoingdispute with the 9overnment over funding and land sale put the company?s expansion plans on hold.Another immediate challenge for the new 2hairman was to be able to steer the company away fromall that happened with #s. 5iira 6adia and the =9 scam. Although there were no businessimplications% the 'atas had ta(en a ma"or hit on its image% which the new 2hairman would have hadto build.

IT SER$ICES

'he offshore !'G4$ players were grappling with macro uncertainties in (ey overseas mar(ets suchas the S and Europe% and% at the same time% coping with currency volatility bac( home.ould the new 2hairman?s lac( of expertise in thetechnology space be a deterrent going forwardJ K was a (ey 8uestion to be considered. 3! do not


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thin( soIat the top level people settle into their roles pretty 8uic(ly. Sometimes a complete outsidercan bring a completely new perspective to the business of technology%@ '2S sources had said.

THE RACE FOR SCCESSION

$he committee set up to fnd a successor to $ata group hairman Datan $ata hadshortlisted around 11 candidates. ;ut o them our-f#e were group employees. $he rontrunner in the $ata race appeared to be Foel $ata Datan $ata=s hal-brotherwho was then promoted to o#erseeing the group=s international operations. SomeKX o the conglomerate=s ?STR0.2 billion re#enue (pril-arch M002-M00) came rom outside 7ndia so this was a signifcant responsibility.dditionally Foel $ata was the son-in-law o ,alloni istry who owned 12.UX in $ata Sons which made him the single largest indi#idual shareholder (most o thee4uity being held by charitable trusts).But others were in the race too. $he :conomic $imes speculated that the internalcandidates include $ata Sons e"ecuti#e directors 7shaat *ussain and D.

Hopala!rishnanC and B. uthuraman Da#i Pant and S. Damadorai #ice chairmen o $ata Steel $ata otors and $ata onsultancy Ser#ices ($S) respecti#ely. $heyounger group included the :;s o $S (F. handrase!aran) and $itan (Bhas!arBhat). But they were long shots at best obser#ers had reported. $here was also a speculation that gi#en the group=s increasing global ocus thechoice need not be an 7ndian. $he $imes o 7ndia said that the candidates couldinclude 7ndra Fooyi o ,epsio ormer odaone head run Sarin and DenaultFissan chie arlos Hhosn. 5$he selection process would consider suitable personsrom within the $ata companies other proessionals in 7ndia as well as personso#erseas with global e"perience6 said a $ata Sons press release.Datan $ata had also clarifed that the new chie need not ha#e to be either a ,arsi ora $ata. ($he ,arsis are a wealthy business community in 7ndia and the $ata chie

has traditionally been a ,arsi.) $he ,arsis are a shrin!ing community. Birth rates are#ery low and women who marry outside the community are e"communicated. $hereare now less than K0000 ,arsis let in 7ndia and it is ine#itable that the $ata batonwill pass on to a non-,arsi sooner or later.7t was e#ident that it would ha#e to pass on to a non-$ata too. $he $atas are a smallclan. part rom Datan there was his 20-year-old


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some criticism but it was worthwhile to !eep a panel that was in !eeping with the corevalues of the 'ata 9roup for such a strategic decision-ma(ing which would bear fruit in the long run.

C*RS PA!!ON-I MISTR*

yrus istry then UJ is the son o construction tycoon ,alloni Shapoori istry.alued at T2.2 billion ,alloni held an 12. per cent sta!e in $ata Sons ma!ing himthe single largest shareholder.r. istry is the younger son o ,alloni and is married to Dohi!a hagla thedaughter o lawyer 74bal hagla. *e has an elder brother - Shapoor istry and oneo his sisters is married to Foel $ata Datan $ata&s hal-brother.*e had been a director o $ata Sons since September 1 M00K. *e ser#ed as a>irector o $ata :l"si Iimited rom September MU 10 to ;ctober MK M00 andwas a >irector o $ata ,ower o. Itd until September 12 M00K.r. istry ser#ed as hairman o the Board o Shapoori ,alloni Hroup and cons7nrastructure Iimited beore he became the hairman o the $ata Hroup.r. istry also ser#ed as >irector o #arious companies including - eputy hairman o $ata Sons is a good and ar-sighted choice.+(ourtesy/ ,ress release rom $ata Sons)


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+7 will be committed to wor!ing with him o#er the ne"t year to gi#e him thee"posure the in#ol#ement and the operating e"perience to e4uip him to underta!ethe ull responsibility o the Hroup on my retirement+ r. $ata had added.r. istry had said that he was deeply honoured by his appointment. +7 am awarethat an enormous responsibility with a great legacy has been entrusted to me+ hehad reported in a statement.

*e announced that he will legally dissociate himsel rom the management o hisamily businesses to a#oid any issue o conict o interest. Shapoori ,alloni istrythe ather o the new deputy chairman was owner o 12 per cent sta!e in $ata Sons. $he Shapoori ,alloni Hroup is into construction te"tile water treatment and otherbusinesses. yrus istry was the managing director o the two billion dollar S,Hroup.part rom the $ata Hroup he also ser#es as a director on the board o se#eral othercompanies including Shapoori ,alloni Y o

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