Ethical Leadership: Ratan Tata and India's Tata Group




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Excerpts

Leadership with Trust

Since its inception, the Tata Group had sought to function with ethics, integrity, social consciousness, and fairness. According to Ratan, these values were an integral part of the group and the questions one needed to ask while making decisions were: "Does this stand the test of public scrutiny in terms of what I said earlier? As you think the decision through, you have to automatically feel that this is wrong, incorrect, or unfair.

You have to think of the advantages or disadvantages to the segments involved, be it employees or stakeholders." The group's strategy of 'Leadership with Trust' sought to achieve higher value for its stakeholders, better returns for society, and an ethical model of business...

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2G Scam and The Tatas

The Tatas were one of the first private players to foray into the Indian telecom sector. This sector had witnessed unparalleled growth since the dawn of the new millennium, attracting the attention of Indian as well as global telecom companies. The growth of the Indian telecom sector was often attributed to the country's good telecom policies. However, there were murmurs in certain sections that the leading players in the sector had grown by taking advantage of the government’s ignorance of the telecom sector in the earlier years of the roll-out of services...

Ratan Tata's Response

Ratan vehemently denied the allegations that Tata Teleservices had been a beneficiary of the 2G scam. Rather, he claimed that it was a victim. According to him, as Tata Teleservices complied with all application requirements, rivals with better political connections had jumped ahead in the queue and taken most of the spectrum. For getting its share of the spectrum, the company had had to fight an 83-day legal battle with the government. "We haven't had a level playing field. We're still waiting for spectrum. We're still behind the eight ball on several of the things that we should get," claimed Ratan Tata.....

Time for a Leadership Transition

Going forward, the Tata Group was focusing on new technologies and innovation to drive its business in India and internationally. The aim of the group was to build multinational businesses that would achieve growth through excellence and innovation, while balancing the interests of shareholders, employees, and civil society. Ratan believed that one of the biggest challenges for the group was retaining its value systems as it grew bigger and more diverse. He believed that the group had to expand the managerial perspective while retaining the same ethical and moral standards...

The Road Ahead

Under the two-decade reign of Ratan, the Tata Group had been transformed into a global company while still retaining its preeminent position in India. However, the belief that "Integrity" and "Tata" were synonymous had come into question following the 2G scam. At the fag end of his illustrious career, Ratan himself seemed to be frustrated with the level of corruption in his home country which, he argued, had held his group back. In his words: "I think corruption has become worse and if you choose not to participate in this, you leave behind a fair amount of business... You have a non-level playing field and those who do not participate in this (paying bribes) live at a disadvantage."...

Exhibits

Exhibit I: Financial Snapshot of Tata Group
Exhibit II: Tata Group's Revenues by Segment
Exhibit III: Tata Group - Leadership with Trust
Exhibit IV: Tata Group's Purpose and Core Values
Exhibit V: Excerpts from Tata Code of Conduct