brief introduction and management principle followed by ITC

1. BY
Arijit Ghosh

2.  ITC Limited or ITC is an Indian conglomerate headquartered in
Kolkata, West Bengal. Its diversified business includes five segments:
Fast Moving Consumer Goods (FMCG), Hotels, Paperboards &
Packaging, Agri Business & Information Technology.
 Established in 1910 as the Imperial Tobacco Company of India
Limited, the company was rechristened as the Indian Tobacco
Company Limited in 1970 and further to I.T.C. Limited in 1974. Finally,
the periods in the name were removed in September 2001 for the
company to be renamed as ITC Ltd. The company completed 100
years in 2010 and as of 2012-13, had an annual turnover of US$ 8.31
billion and a market capitalization of US$ 45 billion. It employs over
25,000 people[ at more than 60 locations across India and is part of
Forbes 2000 list.
 ITC claims to be the only company in the world of comparable
dimensions to be Carbon Positive, Water Positive and Solid Waste
Recycling Positive.

3. -TOUCHING YOUR LIFE EVERYDAY…
 Tobacco products
ITC is the market leader in cigarettes in India. With its wide range of invaluable
brands, ITC has a leadership position in every segment of the market.
 Other businesses
 Foods
 Lifestyle Apparel
 Personal Care
 Stationery
 Safety Matches and Agarbattis
 Hotels
 Paperboard
 Packaging and Printing
 Information Technology

4. ITC aims at developing a customer-focused, high performance
organization which creates value for all its stakeholders:
Trusteeship
Customer Focus
Respect For People
Excellence
Innovation (double loop learning)
Nation Orientation
Therefore we can say that ITC follows
Model II type of organization of
Chris Agyris.

5. SPECIALIZATION OF LABOR
Specializing encourages continuous improvement in skills and the
development of improvements in methods.
ITC’s employment practices are premised on attracting and retaining
talent based on merit. Its capability building programs ensure both
vertical as well as lateral enhancement of skills of all its
employees through customized training and development inputs.

6. The right to give orders and the power to exact
obedience.
ITC’s strategy of organization is based on the principle of distributed
leadership which has ensured that each of our businesses is
managed by a team of competent, passionate and inspiring leaders.
Their Company’s talent and capability building practices have been
commended in the Nielsen 2013 Campus track survey. According to
the survey, their organization has emerged amongst the top five
employers of choice in premier management campuses and amongst
the top three in premier technology.

7. No slacking, bending of rules.
ITC believes that any meaningful policy on Corporate Governance
must provide empowerment to the executive management of the
Company, and simultaneously create a mechanism of checks
and balances which ensures that the decision making powers
vested in the executive management is not only not misused,
but is used with care and responsibility to meet stakeholder
aspirations and societal expectations.
ITC believes that control is a necessary concomitant of its second
core principle of governance that the freedom of management
should be exercised within a framework of appropriate checks
and balances. Control should prevent misuse of power, facilitate
timely management response to change, and ensure that
business risks are pre-emptively and effectively managed.

8. Each employee has one and only one boss.
ITC also follows this principle. This can be noticed in the scalar chain.
The practice of governance is at three levels.
 Strategic supervision- by Board of Directors
 Strategic management- by the Corporate Management Committee
 Executive management- by Strategic Business Unit
Each of these level follows unity of command in all its sectors of
business.

9. The principle calls for “one manager one plan” for all operations having the
same objective. The entire organization should be moving towards a
common objective in a common direction. Teams with the same objective
should be working under the direction of one manager, using one plan.
This will ensure that the action is properly coordinated.
Over the years, ITC has evolved from a single product company to a
multi business corporation. Its business are spread over a wide
spectrum, ranging from cigarettes and tobacco to hotels, packaging,
paper and paperboards and international commodities trading. Each
of these business is vastly different from the others in its type and in
basic nature of its activity, all of which influence the choice of the
form of governance. The challenge of governance for ITC therefore
lies in fashioning a model that addresses the uniqueness of each of
its businesses and yet strengthens the unity of purpose of the
company as a whole.

10. In any organization, the interests of employees should not
take precedence over the interests of the organization as a
whole. This can be achieved when managers set an
example through their good conduct and behavior. They
must be honest and fair in dealing with internal groups.
They must be prepared to sacrifice their personal interests
whenever such interests are in conflict with organizational
interests.
In the ITC code of conduct, it is written that Directors, senior
management and employees must avoid situations in which
personal interests could conflict with the interests of the
company. This is an area in which it is impossible to provide
comprehensive guidance but the guiding principle is that
conflicts, if any, must be disclosed to higher management for
guidance and action as appropriate.

11. Employees receive fair
payment for their services.
Different sector of ITC follows different salary structure.
1 FMCG SECTOR -76% OF the EMPLOYEES ARE SATISFIED WITH
THEIR SALARY PACKAGE WITH SALARY RANGING FROM
ADMINISTRATIVE MANAGER 3.68 LAKHS TO SALES MANAGER
6.68 LAKHS
2 IT SECTOR – TYPICALLY PAYS 3% ABOVE MARKET PRICE
WHEREAS IT RIVALS COGNIZANT PAYS LESS THAN ITC.
3 HOSPITALITY SECTOR - ITC PAYS THEIR EMPLOYEES 5% ABOVE
MARKET PRICE WHEREAS RIVALS TAJ GROUP PAYS 3% ABOVE
MARKET PRICE.
4 AGRICULTURAL SECTOR – GIVES ASSURED INCOME AND GOOD
INSTITUTIONAL SUPPORT TO THE FARMERS.
So we can see that in highly competitive sectors pays its employees
marginally above market price to develop an advantage over its
competition.

12. Consolidation of management functions, decisions
are made from Top.
Decision making process of ITC follows a centralized structure.
It is divided into Board of Directors with its head Executive chairman taking
all strategic decision. The Board is then further divided into executive and
non executive directors. Executive directors take decision regarding the
functioning of the business whereas non executive director provides
judgment relating to other matters. Board consist of following committees.
1 AUDIT
2 COMPENSATION
3 NOMINATIONS
4 INVESTORS
5 SUSTAINABILITY
Apart from these committee there is a Divisional Management Committee
with its Divisional CEO to carry orders of the board and manage and
instruct employees.

13. Scalar Chain is 'the chain of superiors ranging from the
ultimate authority to the lowest rank.'
An employee should feel free
to contact his supervisor about
anything through the scalar
chain. Every order, message,
request, instruction or explanation
has to pass through the Scalar
Chain. This path shows a company's
line of authority and the links through
which communications are transmitted
from the top to the bottom of a
company and back and it is
strongly maintained by ITC limited.

14. All materials and personnel have a prescribed
place, and they must remain there.
In order to formalize its existing sustainable procurement process,
ITC now has a Board approved Policy on Responsible. Sourcing
which addresses the issues of labor practices, human rights,
bribery, corruption, occupational health, safety and the
environment. The policy is meant for Third Party Manufacturers
(TPM), service providers including transporters, suppliers of
agricultural & non agricultural materials and capital goods,
franchisees, dealers and distributors collectively. The supply
chains of most of ITC’s businesses are vertically integrated.

15. Equality of treatment
(but not necessarily
identical treatment)
ITC respects and complies with international standards on human
rights and international labor standards, treating them as
universal.
ITC promotes team work, free from any bias and intentionally draws
the strength and value arising from the diversity of its employees.
Relations with employees are based on respect for their dignity.
ITC observes the prohibition of discrimination based on race, social
status, ethnic origin, religion, handicap, disability, gender, sexual
orientation, union or political affiliation, age or marital status.

16. Limited turnover of personnel.
Lifetime employment for good workers.
ITC provides a stable job, and honestly inform employees about
employment prospects.
ITC supports staff in raising the skills and supports their career
within the company.
Pay system rules are designed to reflect the individual
contribution of every employee. Honesty is a prerequisite for
achieving stability and success of ITC.
Half of ITC's 7,000-odd managers have been with the tobacco,
hotels and consumer products enterprise for more than a
quarter of century. Attrition at senior management levels - from
chief executive officer to business heads - has been zero for at
least 15 years now.

17. Thinking out a plan and do what it takes to make it
happen.
ITC believes that business exists to sub serve larger societal
goals. Therefore the company not only embarks to create a good
health in terms of its profit and loss statements, its contribution
can be measured for the value it creates for society at large.

18. Harmony, cohesion among personnel.
ITC is a super company which is famed to emphasize and nurture
team spirit. They believe that union is strength and which aptly
reflects in the company projections where during the major shift
form one production line to another, the company remained
solidly unified at all levels.

19. The management principles followed in ITC hence are
 Model II type of organization of Chris Agyris
And
 Henri Fayol’s fourteen principles of management.
The success of ITC can be materialized by a few number
crunching which establishes that the cigarettes to hospitality giant
has indeed made inroads to an intensely competitive market often
marked by pressured margins.
In just two years, ITC's personal care business has notched up
market share of about 5 per cent (volume) in soaps, and around
3.4 per cent in shampoos.
Brands Vivel and Superia are each estimated to be more than Rs
200 crore (Rs 2 billion) per annum in consumer spend.
This does not happen if the management is slacking.