Dr. Mukund Rajan is the erstwhile Brand Custodian at the Tata group of companies, now responsible for the sustainability practice there. Boasting global brands that include Jaguar, Land Rover, Tetley Tea, and Tata Steel, the Tata group of companies is one of the success stories of emerging economy companies going global. GlobeScan Chairman Doug Miller had the pleasure of interviewing Dr. Rajan about Tata’s remarkable story, which remains relatively unknown outside of India.
Published 18 January 2017
In some ways, Tata Sons is the original socially responsible company. Founded in 1868, the company was among the very first to introduce pensions for employees in 1887. Most remarkably, Tata Sons, the parent investment holding company of the group, is 66% owned by philanthropic trusts that are focused on helping disadvantaged communities and tackling poverty.
Our heritage as a group of companies is unique. All our employees across the Tata companies have a tangible sense of this difference and the higher purpose that drives us. While having the discipline of any modern global company, Tata employees are very aware that our corporate values are differentiated in the free-market economy – we shun extreme short-termism, and focus on delivering value for all stakeholders, not just shareholders.
Our employees gain tremendous satisfaction from cycling the fruits of our efforts back to the communities in which we operate. We recognize that every industry, and certainly enterprises like Tata, needs a supportive community, not just supportive shareholders and while short-term discipline definitely applies, our focus is essentially on the long term.
We run a volunteering program to encourage our employees to volunteer in the communities in which we operate. This program, called Tata Engage, was started three years ago as a volunteering week, but it's really become more like a month now. This year, in our third year, we set an ambitious goal of unleashing a total of one million hours of volunteer time across all our employee groupings around the world. In fact, we achieved 1.2 million hours, which I think speaks volumes of our employees’ commitment to the values and ideals of the group. An initiative like Tata Engage reminds all employees of the heritage of our enterprise, and exposes them to the real needs that people have in the communities in which we operate.
Illustrative of our focus on the long-term, two months back Tata was one of the founding organisations at the launch of a new initiative called Focusing Capital on the Long Term (www.FCLT.org). We were proud to launch this initiative by joining hands with BlackRock, Unilever, McKinsey, and other global leaders in business. This new organization is focused on developing practical tools and approaches that encourage long-term oriented behavior in business and investment decision making.
Certainly there are challenges, but also opportunities when you have a range of global leadership companies as part of a diversified business group. In the mid-1990s, Tata Sons developed an approach which has greatly assisted the congruence across the Tata group of companies. Tata Sons owns the “Tata” brand, and the Brand Equity and Business Promotion Agreement crafted in the mid- 1990s allows the use of the brand and the name by Tata companies subscribing to the Agreement. The Agreement sets out the rights and responsibilities of both sides. Tata companies commit under the Agreement to two critical actions, first to abide by the Tata Code of Conduct which outlines our group’s commitment to the highest standards of ethics and governance, and second, to participate in the Tata Business Excellence Model assessments, patterned on the Malcolm Baldridge Awards in the US, which benchmark their operations with global peers and demonstrate continuous improvement in their business processes.
The Tata Code of Conduct and our Business Excellence Model strongly reference our commitment to good corporate citizenship and sustainable development. So our values and our corporate citizenship are hard-wired into the central underpinnings of businesses that share the Tata name. The Brand Equity and Business Promotion Agreement, and the 148 years of ethical tradition we enjoy, make my job much easier – in fact, I think we're quite blessed.
Across our group companies, we are committed to embedding global sustainable development leadership practices in each of our businesses. There's no option but to do this. This is our long-term strategy. Why? Because in today's information age, customers and investors are voting with their feet. Any enterprise that is not tracking the winds of change, in terms of people’s expectations of corporate behavior, is going to lose in a big way. A business not taking a leadership role around matters of ethics and sustainability risks material losses in three areas. First, the loss of business opportunities that come from denial of access to markets and investors (just look at the decarbonisation movement targeting fossil fuel industries). Second, customers are increasingly de-selecting companies and instead choosing products from other companies that they have an affinity for on the basis of shared values. And third, companies risk ruining their employer brand by not embracing progressive values – especially amongst millennials. On this latter point, as Tata globalizes and attracts new employees in many parts of the world outside of India, it is our commitment and investment to communities in those new markets, and indeed to nation building, that increasingly is mentioned by our new employees as the reason that they choose to work with us. It's who we are, it's who we've been for a very long time, and it is that commitment that they value.
At the Tata group, we organize an annual sustainable development conclave where we showcase best practices from across the organisation. There are no monetary incentives or prizes for this – just an acknowledgement by peers of these best practices. There's just an enormous number of very inspirational stories coming out of our companies showing what is possible. And the peer scrutiny and pressure, if you will, that this generates of “here's what others are doing” – “here's what people over in Tata Steel are doing,” or “here's best practice in Tata Motors” – this is very effective in driving progress. All this gets supported by the leadership from the very top, at Tata Sons and across the Tata group of companies. We've been very fortunate to have Chief Executive Officers and Chairpersons who have provided leadership from the front, who have championed our values and have led by example. This tone at the top is vital in how it helps to cascade our commitment through the organization. People watch these signals very closely.
Well, the answer is quite straightforward. Our commitment to giving back to society and to sustainable development is a critical pillar of the Tata brand. As a group, we want to be understood as a pioneering, successful, global enterprise, with the community at its heart. In endeavoring to better communicate this to an ever-broader number of stakeholders, we have developed three brand messaging corridors. The first is that while we may be Indian in origin, we are today a truly global organisation. In fact, two-thirds of our turnover comes from outside of India. Second, we're trustworthy because of our values and the leadership practices and good governance we have subscribed to for over 148 years. And the third messaging corridor is that we are a good corporate citizen – not just in doing whatever we can to improve the lives of people in the communities in which we operate, but also in creating long-term stakeholder value – real value across the full range of stakeholders.