Corporate Social Responsibility & Business Strategy - a case study on the Tata group under Mr. Ratan Tata Prof. Dibyendu Choudhury
Outline And Objectives• The Tata group has aggressively pursuing several corporate social responsibility (CSR) initiatives in India. The case describes the vision and mission of Tata group which places importance on CSR.• It then examines how the groups vision is translated into action through the various community development initiatives.• This case focuses on issues like, how the Tata group had gone about integrating various CSR initiatives across the group companies, the measures it is adopting for institutionalizing the concept and the various benchmarks adopted.• Finally, the case examines how Tata Group is integrating CSR with its business processes in the organizations journey towards business excellence.
Statement of Scientific Question Addressed.Corporate Social responsibility andBusiness Strategy are not antagonistic toeach other and a synergy between thesetwo objectives are good for a companysbusiness as well as in creating a healthysociety
The Tata Group• The Tata Group operates more than 80 companies ranging from software and automobiles to steel, consumer goods and telecommunications. With 200,000 employees across India, it is the nations largest private employer.• The Tata Group is also unique in that nearly two thirds of the equity of the parent firm, Tata Sons Ltd., is held by philanthropic trusts endowed by Sir Dorabji Tata and Sir Ratan Tata, sons of Jamsetji Tata, who founded the family business in the 1860s.• These multipurpose trusts, chaired by Ratan N. Tata, include two of the earliest and largest private grant making organizations in India.• Through these trusts, Tata Sons gives away on average between 8 to 14 percent of its net profit every year.
CSR and The Tata Group• In a free enterprise, the community is not just another stakeholder in business but is in fact the very purpose of its existence."• "Corporate Social Responsibility should be in the DNA of every organization. Our processes should be aligned so as to benefit the society. If society prospers, so shall the organizatio..."• The guiding mission of the Tata group was stated by JRD Tata in the following words: "No success or achievement in material terms is worthwhile unless it serves the needs or interests of the country and its people.“• The groups mission statement states, "At the Tata group, our purpose is to improve the quality of life of the communities we serve. We do this through leadership in sectors of national economic significance, to which the group brings a unique set of capabilities...
CSR and The Tata Group• Tata initiated various labor welfare laws, like the establishment of Welfare Department was introduced in 1917 and enforced by law in 1948 or Maternity Benefit was introduced in 1928 and enforced by law in 1946.• Be it relief measures, rural development, health care, education and art and culture, they have been very forthcoming..• Different Tata companies have been actively involved in various social works.• Like Tata Consultancy Services runs an adult literacy programme, Titan has employed 169 disabled people in blue collar workforce at Hosur, Telco is fighting against Leprosy at Jamshedpur, Tata Chemicals runs a rural development programme at Okhamandal and Babrala, Tata Teas education programme and Tata Relief Committee (TRC) which works to provide relief at disaster affected areas.• The groups policy is to provide livelihood instead of giving money.
CSR and Business Strategy• Since inception, the Tata group has placed equal importance on maximizing financial returns as on fulfilling its social and environmental responsibilities - popularly known as the triple bottom line.• After decades of corporate philanthropy, the efforts of the group in recent years have been directed towards synchronization of the Triple Bottom Line (TBL).• Through its TBL initiative, the Tata group aimed at harmonizing environmental factors by reducing the negative impact of its commercial activities and initiating drives encouraging environment- friendly practices.• In order to build social capital in the community, the group has got its senior management involved in social programs, and has encouraged employees to share their skills with others and work with community-based organizations...
Ratan Tata : Carrying The Mission Forward• In corporate social responsibility he has given new direction and focus to the Tata Groups disparate activities with the creation of the Tata Council for Community Initiatives (TCCI) in 1996• A July 2004 cover story in Business Week [India] quotes an investment banking source as noting that the company’s r challenge is to "ensure that the Tata groups sense of social obligation doesnt collide with shareholder value creation .• According to Ratan Tata’s view these two objectives are not incompatible. What the company has done in their discharge of social responsibility should be of value to their shareholders.• Their efforts result in a more prosperous country, and lead to a greater quality of life that benefits all.
Ratan Tata : Carrying The Mission Forward• In the early days, philanthropy was about creating development institutions such as hospitals, and initiatives of a nature which at the time were more about nation building than ours are today.• Today, the company’s philanthropic initiatives have greater focus, for example, on creation of awareness of things like discrimination against the girl child; on microfinance, to get people away from moneylenders; on water harvesting and conservation; in moving more to small community initiatives.• From their own grant giving, they have found that the greatest challenge is to find appropriate, professionally managed grantees or NGOs.
Ratan Tata : Carrying The Mission Forward• Some of their water conservation grantees have transformed the areas in which they are working, and whatever they have seen there is just amazing.• A number of their grantees have worked with villages -- villages starved of water that have had no livelihoods -- and with water harvesting and conservation, theyve created year-round water supply and changed the entire fabric of these villages.• Thanks to a partnership between the research lab of software giant Tata Consultancy Services (TCS) and a range of local NGOs, clean and safe drinking water is available for the first time for thousands of households in rural Maharashtra.
Ratan Tata : Carrying The Mission Forward• Developed specifically for rural areas, the filter is the result of years of research and field trials by scientists at the Tata Research Development and Design Centre (TRDDC), the Pune-based R&D division of TCS.• "Theyve been trying to bridge the divide between the IT world and the rest of India, and this has come out of that effort," explains Ratan N. Tata.• While the connection between information technology and low-tech water filters may not be obvious, the project exemplifies Tata philanthropys emphasis on rural communities and water conservation and is squarely in keeping with TRDDCs mission to use research to transform lives .
TBEM - Striving for Business Excellence• To ensure that Tata group companies achieved high levels of business excellence, Tata Quality Management Services (TQMS - a division of Tata Sons) had been entrusted with the task of institutionalizing the Tata Business Excellence Model (TBEM).• The role of TQMS includes setting up of standards of business excellence using the TBEM framework and assisting group companies in achieving those established standards.• The TBEM provides each company with an outline to help it improve business performance and attain higher levels of efficiency.
Recognition Of CSR• The different group companies have received several awards for their fulfillment of social responsibility.• For instance, TISCO was awarded The Energy Research Institute (TERI) award for Corporate Social Responsibility (CSR) for the fiscal year 2002-03 in recognition of its corporate citizenship and sustainability initiatives.• As the only Indian company trying to put into practice the Global Compact principles on human rights, labor and environment, TISCO was also conferred the Global Business Coalition Award in 2003 for its efforts in spreading awareness about HIV/AIDS...
Conclusion• Ratan Tata says his company is not driven to grow “over everybody’s dead bodies.”• Some 66 percent of the profits of its investment arm, Tata Sons, go to charity, and executives make clear they have no intention of relinquishing control to Wall Street.• At Tata, “corporate social responsibility,” to use the Western buzzword, has real money behind it.