Contents:

Introduction to succession planning

Definition
Enforcing the succession plan:
Coverage
The role of HR
Impotence of succession planning
SUCCESSION PLANNING PROCESS
ADVANTAGES OF SUCCESSION PLANNING
Mistakes to be Avoided in Succession Planning
Case Study of TATA Group
Early Years of Mr. Ratan Tata
Building the TATA Corporate Brand
TATA Group Today & Tomorrow
The Challenges Before the Successor
The Race for Succession
About Cyrus Pallonji Mistry

Acknowledgement:
INTRODUCTION TO SUCCESSION PLANNING :
Succession planning is a process for identifying and developing internal people with the
potential to fill key business leadership positions in the company. Succession
planning increases the availability of experienced and capable employees that are prepared to
assume these roles as they become available.
Succession planning is not an issue that many organizations address in any
systematic way. Because many non-profits are small (with fewer than 10
employees) and because they may be facing other organizational challenges,
thinking about who the next executive director might be or what would happen if
the director of finance suddenly left is not high on their priority list.
There are many reasons why organizations need to be thinking about succession
planning. The most important reason, of course, is that we rely on staff to carry out
our missions, provide services and meet our organization's goals. We need to think
about what would happen to those services or our ability to fulfill our mission if a
key staff member left.
Another reason to focus on succession planning is the changing realities of
workplaces. The impending retirement of the baby boomers is expected to have a
major impact on workforce capacity. Teresa Howe in "Succession Planning and
Management" identified other emerging realities about the workforce in Canada:
Vacancies in senior or key positions are occurring in numerous organizations
simultaneously and demographics indicate there are statistically fewer people
available to fill them
Baby boomer retirements are on the rise just at the time when the economy is
growing and increasing the demand for senior management expertise
There is no emerging group of potential employees on the horizon as in past
generations (i.e. baby boomers, women entering the workforce, large waves of
immigration)
Many organizations eliminated middle manager positions during restructuring in the
1980s and 90s and no longer have this group as a source to fill senior level
vacancies
Younger managers interested in moving up do not have the skills and experience
required because they have not been adequately mentored. This is because middle
managers, who would normally perform this type of coaching role, were eliminated .
Succession Planning Thinking About Tomorrow Today In organizational
development, succession planning is the process of identifying and preparing
suitable employees through mentoring, training and job rotation, to replace key
players such as the chief executive officer (CEO) within an organization as their
terms expire. From the risk management aspect, provisions are made in case no
suitable internal candidates are available to replace the loss of any key person. It is

usual for an organization to insure the key person so that funds are available if she
or he dies and these funds can be used by the business to cope with the problems
before a suitable replacement is found or developed. Succession Planning involves
having senior executives periodically review their top executives and those in the
next-lower level to determine several backups for each senior position. This is
important because it often takes years of grooming to develop effective senior
managers. There is a critical shortage in companies of middle and top leaders for
the next five years. Organizations will need to create pools of candidates with high
leadership potential. Succession planning involves a careful balancing of the
concerns and needs of a firms founding and senior managers, on the one hand, and
its more junior investment professionals and managers, on the other hand. The
founding and senior managers want to be properly rewarded for their efforts in
building and growing the firm, and this may include rights to continue to participate
in fund economics after these managers have begun to wind down their active
involvement. These desires must be balanced against the need to provide increased
economic benefits and firm governance rights to junior managers and investment
professionals in order to develop the next generation of managers for the firm.

Definition of succession planning

Identification and development of potential successors for key positions in an

organization, through a systematic evaluation process and training. Unlike
replacement planning (which grades an individual solely on the basis of his or
her past performance) succession planning is largely predictive in judging an
individual for a position he or she might never have been in.

Succession planning can be broadly defined as identifying future potential

leaders to fill key positions. Wendy Hirsh1 defines succession planning as a
process by which one or more successors are identified for key posts (or
groups of similar key posts), and career moves and/or development activities
are planned for these successors. Successors may be fairly ready to do the
job (short-term successors) or seen as having longer-term potential (longterm successors). According to Hirsh, succession planning sits inside a very
much wider set of resourcing and development processes called 'succession
management', encompassing management resourcing strategy, aggregate
analysis of demand/supply (human resource planning and auditing), skills
analysis, the job filling process, and management development (including
graduate and high-flyer programs).

Enforcing the succession plan:

A careful and considered plan of action ensures the least possible disruption to the persons
responsibilities and therefore the organizations effectiveness. Examples include such a person who
is: Suddenly and unexpectedly unable or unwilling to continue their role within the organization;

 Accepting an approach from another organization or external opportunity which will terminate or
lessen their value to the current organization;
Indicating the conclusion of a contract or time-limited project;
Moving to another position and different set of responsibilities within the organization.

Coverage
Organizations differ in size, scope and type, so it is difficult to point to any single model of
succession planning. However, it is most common for succession planning to cover only the most
senior jobs in the organization, plus short-term and longer-term successors for these posts. The latter
groups are in effect on a fast-track, and are developed through job moves within various parts of the
business. This focus on the most senior posts - perhaps the top two or three levels of management means that even in large organizations, only a few hundred people at any given time will be subject
to the succession planning process. It also makes the process more manageable, because it is much
easier to concentrate on a few hundred individuals rather than (say) several thousand. That said,
however, many large organizations attempt to operate devolved models in divisions, sites or countries
where the same or similar processes are applied to a wider population.

The Role of HR
Succession planning needs to be owned by line managers, and should be
actively led by the chief executive who has a key role in ensuring that it is given
the importance it deserves by other senior managers; ensuring that there is a
healthy pipeline of potential leaders is about nothing less than the future of the
organization. But it is not realistic for CEOs and those around them to have sole
responsibility for this; they have neither the time nor the expertise. The HR
function therefore has a critical role in supporting and facilitating the process,
not least in compiling all the necessary information on potential candidates. Any
career move at senior level is a process of multiple dialogues, in which a senior
representative from HR will collect views from senior line managers in an
iterative fashion, testing, challenging and amending them as the dialogue goes
on, making sure that all possibilities are covered, and maybe putting proposals
for decision to a succession development committee. HR departments are of
course also heavily involved in giving career advice and information to
individuals, and assessing and advising on their development needs. The HR
function is also centrally concerned in the design and management of
assessment processes and information support, including the development and
maintenance of computerized databases.

IMPORTANCE OF SUCCESSION PLANNING

Succession planning is an essential part of doing business, no matter how certain

your future appears. It's easy to put off planning when everything seems to be
going so well, right? Wrong. Now is the time to begin succession planning. Here are
some reasons why it can't and shouldn't wait:1. You Can't Plan for Disaster:- No matter how good you and your staff are at
revenue projections or economic predictions, no one can truly plan for disaster.
Whether it's an unforeseen illness, a natural disaster, or a CEO's decision to
suddenly retire, the reasons for having a succession plan in place before it is
needed are endless. So while you can't plan for disaster, you can put into place a
series of contingencies that will help your company stay afloat if, in fact,
catastrophe occurs.
2. Succession Planning Benefits the Business Now:- Just as business practices
have evolved over the years, succession planning has also grown and changed. It's
no longer a plan that can only be accessed when leadership is going to change; a
succession plan can be used before its "real" intent is necessary. It can be used to
build strong leadership, help a business survive the daily changes in the
marketplace, and force executives to review and examine the company's current
goals.
3. Succession Planning Gives Your Colleagues a Voice:- If you're running a
family business, the process of succession planning will give family members an
opportunity to express their needs and concerns. Giving them that voice will also
help create a sense of responsibility throughout the organization, which is critical for

successful succession planning. Resist the temptation to solely carry the entire
weight of creating and then sustaining a plan.
4. A Succession Plan can Help Sustain Income and Support Expenses:Talking about money should be a priority. People generally don't want to work for
free and things don't pay for themselves. A succession plan can provide answers as
to what you and your staff will need for future income, as well as what kinds of
expenses you may incur once you step out of the main leadership role. Ask yourself
questions about your annual income and other benefits including health and dental
insurance for you and your dependents, life insurance premiums paid for by the
company, your car, professional memberships, and other business-related
expenses.
5. Succession Planning Gives You a Big Picture:- Some companies mistakenly
focus solely on replacing high-level executives. A good succession plan can go
further, however, and force you to examine all levels of employees. The people who
do the day-to-day work are the ones keeping the business going. Neglecting to add
them to the succession planning mix could have dire consequences. As you develop
your plan, incorporate all layers of management and their direct reports.
6. Succession Planning Strengthens Departmental Relationships:- When
regular communication occurs between departments you are more likely to
experience synergy, which breeds a culture of strength. Make sure that you link
your succession planning activities with human resources. After all, HR is about
people. By including HR in succession planning, you can incorporate elements like
the employee-evaluation process, which can help when deciding whether to fill
vacancies with internal candidates.
7. Succession Planning Keeps the Mood Buoyant:- Change - a major
component of a succession plan is exciting and can bring a company unforeseen
rewards. Still, change can be a source of tremendous stress, especially when
people's livelihoods are at stake. As you put your succession plan together, consider
its positive effects on the business. Planning for the future is exciting and, if done
correctly, can inspire your workers to stay involved and maintain company loyalty.
It's true that a plan is often put into place to avert catastrophe, but it's also a
company's way of embracing the future a business strategy that is essential for
survival.

SUCCESSION PLANNING PROCESS

Succession planning recognizes that some jobs are the lifeblood of the organization
and too critical to be left vacant or filled by any but the best qualified persons.
Effectively done, succession planning is critical to mission success and creates an
effective process for recognizing, developing, and retaining top leadership talent.
Success factors
There are several factors typically found in successful succession planning
initiatives. For example: Senior leaders are personally involved.

 Senior leaders hold themselves accountable for growing leaders.

Employees are committed to their own self-development.
Success is based on a business case for long-term needs.
Succession is linked to strategic planning and investment in the future.
Workforce data and analysis inform the process.

Leadership competencies are identified and used for selection and

development.

A pool of talent is identified and developed early for long-term needs.

Development is based on challenging and varied job-based experiences.

Senior leaders form a partnership with human resources.

Succession planning addresses challenges such as diversity, recruitment, and
retention.

Effective succession planning

The following information includes:A graphic representation of a six-step process for effective succession
planning

A table with descriptions of each step in this process.

Steps
Step 1: Link Strategic and Workforce Planning Decisions
This step involves:1. Identifying the long-term vision and direction.
2. Analyzing future requirements for products and services.
3. Using data already collected.
4. Connecting succession planning to the values of the organization.
5. Connecting succession planning to the needs and interests of senior leaders.
Step 2: Analyze Gaps
This step involves:1. Identifying core competencies and technical competency requirements.
2. Determining current supply and anticipated demand.
3. Determining talents needed for the long term.
4. Identifying real continuity issues.
5. Developing a business plan based on long-term talent needs, not on position
replacement.
Step 3: Identify Talent Pools
This step involves:1. Using pools of candidates V/s development of positions.
2. Identifying talent with critical competencies from multiple levelsearly in careers
and often.
3. Assessing competency and skill levels of current workforce, using assessment
instrument(s).
4. Using 360 feedback for development purposes.
5. Analyzing external sources of talent.
12
Succession planning addresses challenges such as diversity, recruitment, and
retention.
Effective succession planning
The following information includes: A graphic representation of a six-step process for effective succession planning
A table with descriptions of each step in this process.
11

Step 4: Develop Succession Strategies

This step involves:1. Identifying recruitment strategies: Recruitment and relocation bonuses.
Special programs.
2. Identifying retention strategies: Retention bonuses.
Quality of work life programs.
3. Identifying development/learning strategies: Planned job assignments.
Formal development.
Coaching and mentoring.
Assessment and feedback.
Action learning projects.
Communities of practice.
Shadowing.
Step 5: Implement Succession Strategies
This step involves:1. Implementing recruitment strategies (e.g., recruitment and relocation bonuses).
2. Implementing retention strategies (e.g., retention bonuses, quality of work life
programs).
3. Implementing development/learning strategies (e.g., planned job assignments,
formal development, Communities of Practice).
4. Communication planning.
5. Determining and applying measures of success.
6. Linking succession planning to HR processes.
Performance management.
Compensation.
Recognition.
13

 Recruitment and retention.

Workforce planning.
7. Implementing strategies for maintaining senior level commitment.
Step 6: Monitor and Evaluate
This step involves:1. Tracking selections from talent pools.
2. Listening to leader feedback on success of internal talent and internal hires.
3. Analyzing satisfaction surveys from customers, employees, and stakeholders.
4. Assessing response to changing requirements and needs.

ADVANTAGES OF SUCCESSION PLANNING

Succession planning is an essential part of doing business, no matter how certain

your future appears. It's not easy to put off planning when everything seems to be
going so well. Here are some reasons why it can't - and shouldn't - wait: You can't plan for disaster.
Succession planning benefits the business now.
Succession planning gives your colleagues a voice.
A succession plan can help sustain income and support expenses.
Succession planning gives you a big picture.
Succession planning strengthens departmental relationships.
Succession planning keeps the mood buoyant.
Besides the obvious benefit of not leaving your company in the lurch of proper
Succession Planning will help your company in other ways, too. Heres a rundown of
the benefits. Remember, not all benefits will apply, depending on your specific
situation. Succession Planning can:1. Reduce Taxes, in some Situations with Family-Owned Businesses:- For
example, if a company gets new ownership after an owner's death, lack of planning
can result in steep estate taxes. Other tax issues, such as transferring ownership to
a child, might apply.
2. Ensure Continuity:- Customers, clients, vendors, and employees all want and
need to know that a business will continue to function as they know it, even when
theres a leadership change. Choosing and grooming a successor who fits your mold
will help this happen.
3. Provide Training Plan for Possible Successors:- If you identify who you
might choose as a successor early, youll know that that person needs more training
and one-on-one time with your current leader to gain as much knowledge for the
position while its still possible.
4. Help you plan for the future direction of the company.

MISTAKES TO BE AVOIDED IN SUCCESSION PLANNING

Many mistakes are commonly made in establishing succession planning programs.
They are worth enumerating. It is also worthwhile to describe some ways to avoid
these common mistakes:1. Assuming that Success at One Level Will Guarantee Success at Higher
Levels:- An individuals success at one level is no guarantee of success at higher
levels of responsibility. The reason is simple: the competencies required for success
at each level are different. Hence, it is important to separate thinking about how

well someone does his or her current job and how well he or she might do a job at a
higher responsibility level.
2. Assuming that Bosses Are Always the Best Judges of Who Is
Promotable:- A second mistake is to assume that, for purposes of succession
planning, bosses are always the best judges of who is promotable. That is not
always true. Bosses are self-interested players in the succession game. They have a
stake in what happens to people. Indeed, some bosses do not want to see their best
people promoted for fear of an inability to replace them. Some bosses grade people
by their own standards - with the result that some individuals who are quite unlike
the boss are not considered for promotion. While the support of a boss is useful in
developing individuals, more objective assessments, such as multi-rater assessment
are excellent in aiding the managers assessment.
3. Assuming that Promotions Are Rewards:- Some employees have an
entitlement mentality in which they feel that long service with an organization
should always be rewarded with promotions. But business decisions must be based
on who will do the best job, not who is owed a promotion because of greatest
seniority. Workers must continually be reminded that doing jobs at each level
requires different competencies, and the best way for them to compete is to
prepare for future challenges rather than expect promotions for past performance at
a different level of responsibility.
4. Trying to Do Too Much Too Fast:- The strong results-orientation of many
organizations today emphasizes quick results. Senior leaders expect to see all the
components of a comprehensive succession system in place immediately. That is
not always realistic. It is advisable to think of implementing systematic succession
in a phased way - either from the top down or else starting in specific divisions or
locations with greatest need.
5. Giving No Thought to What to Call It:- A fifth mistake is to devote no time to
considering what to call the succession program. As any marketer knows, product
names do matter. It is not necessary to call a spade a spade. Many organizations
choose alternative namessuch as leadership development program, human
capital management program, or even talent program.
6. Assuming that Everyone Wants a Promotion:- A sixth mistake is to assume
that everyone wants a promotion. That is not always true today. In many downsized
organizations, workers have seen what pressures their bosses have to deal with.
Some say leave me out of that. Hence, it is unwise to assume that everyone
wants a promotionor even to assume that money will convince everyone. It will
not. Check first. Find out what people want to do. For that reason, many
organizations launch both a top-down succession planning program and a bottomup career planning program to galvanize development.
7. Lack of understanding how it works and how it benefits the organization.
8. Lack of a formal written plan for the person or position(s).
9. Lack of availability of human and financial resources; lack of budgetary
commitment.
10. Superficial approach; lack of real understanding of the procedures, processes
and requirements of each area the individual is exposed to during the process.

11. The requirements of the Managers/Executives are not fulfilled in providing

dedicated instructions, guidance regarding skills, knowledge and abilities needed for
the candidates to be successful.
12. Failure to identify key employees who may have concerns with your succession
plan.
13. Failure to plan for disability.
14. A rigid, inflexible plan NOT tailored to the needs and abilities of the personnel
involved.
15. Too long a wait for real movement/promotion, disillusionment, may result in
some people leaving due to apparent inertia in the system.
16. Selection of unqualified or unmotivated people for inclusion in the Succession
Plan. Quality of the individuals selected is paramount to the success of the process.
17. Complex program, requiring considerable paper work, follow-up, reporting.

Case Study of TATA Group

The Tata case is interesting. From what is publicly known, succession planning
was not a strong point until the late 1980s. In the late 1970s, the unsuccessful
succession planning attempt by Voltas is etched in the public mind.
The Tatas have gone down this road before. In 1981, group company Voltas hired
a search firm to find a CEO. There was a worldwide search, said P.N. Singh,
who was in charge of HR at Voltas when the exercise took place. A global
agency was employed. There were ads in global media and people were asked to
apply for the job of CEO. Chairman Tobaccowala initiated a high visibility, open
search which resulted in the recruitment of Ramesh Sarin of ITC as the CEO and
finally, Sarin from tobacco-to-hotels major ITC was chosen as MD. The
experiment worked for only a few years. Subsequent events proved that
Tobaccowala had no intention of giving up his executive power and authority.
Inevitable clashes followed and Sarin fell out and moved on. It was a question of
culture and control, says Singh, who is now chairman of Grid Consultants, which
conducts Blake & Mouton grid seminars. ITC had a different culture and
Tobaccowala had a different idea of control. He was unwilling to let go.
Tobaccowala was an entrepreneur and Sarin was a manager. So the two should
actually have worked well together.

But something positive by way of process must have happened during the last 20
years under Ratan Tata. It is known that Ratan Tata set up a group HR function as
part of his re-organization plan in the 1990s. The intent was to introduce good
practices within the companies with respect to talent management and succession
planning. While there is not much outside information about how much progress
the companies have made, something right must be going on. The succession
transitions are impressive from an outsider's perspective. Further, the board
directors seem to be involved and to drive the leadership changes in the companies.
In Tata Steel, Jamshed Irani became CEO in 1991 amidst
tumultuous circumstances of the Russi Mody departure. In earlier
interviews, Irani had
mentioned that by the late 1990s, he presented to Ratan Tata a
comprehensive review of possible successors; together, they
zeroed in on a few possibilities. From this list, B. Muthuraman
emerged as the CEO in 2001. Muthuraman, it is learnt, did a
similar exercise and discussed it quite early on with Ratan Tata
and the board while choosing his successor in 2009. He too
accomplished a successful transition.
In Tata Consultancy, S. Ramadorai took over from the legendary
F.C. Kohli in 1996. He was filling big shoes. He grew the business
dramatically over the next decade and a half, including the IPO of
the company. By mid 2000s, he is reported to have made a short
list of potential successors for discussion with Ratan Tata and the
board. From this list emerged N. Chandrasekharan. Ramadorai
walked out of his TCS office on the date of his retirement so that
his successor would have a free hand.
In Tata Chemicals, change was sought in 2001. Outsider Prasad
Menon was recruited to succeed Manu Seth. Perhaps because of
what he had learnt at ICI, his earlier company, Prasad Menon
started to think about succession early on. Apart from pacing
potential, solid internal leaders, the leadership brought in a young
TAS officer into the company and tested him through hugely
challenging assignments. All the identified candidates were
watched, coached, talked about and nominated to Advanced
Management Programmes. Finally a choice was made by selecting
R. Mukundan, with a short bridging role by veteran Homi
Khusrokhan.

The successful transitions completed in the listed Tata companies

during the last two decades are impressive: Titan (where Xerxes
Desai gave way to Bhaskar Bhat), Voltas, Rallis, and Indian Hotels.
The conclusion is that whatever the process, the Tata group
seems to have got succession about right - not perfect, but it
seems to be effective and deliver positive results.
In 2011, Tata was in the midst of the mother of all successions,
finding a successor to Ratan Tata. Instead of focusing on the
possible candidates, it is purposeful to reflect on the streamlined
and effective process of succession they had announced.
Firstly, a search committee was appointed with its composition
and membership placed in the public domain. The choice of
candidate was kept wide open: man or woman, Indian or
foreigner, internal or external. Secondly, the search committee
provided brief public updates of the status; it wasnt surprising
that the details or candidates were not revealed. Thirdly, the
search committee set itself approximate time targets so that their
work inadvertently did not become desultory. Lastly, they
internally adopted relevant criteria and a methodology, taking the
assistance of a specialist firm. There seemingly wasnt much else
to do by way of a process. Based on the recent track record of
successful transitions and the transparent process for the
chairman succession, the Tata group did have a good chance of
getting the succession right. People had no choice but to wait for
the search committee to complete its job rather than to keep
speculating on names and individuals.
EARLY YEARS OF MR. RATAN TATA & THE EXIT OF THE
SATRAPS
Ratan Tata was a surprise choice to head the group after JRD (as
J.R.D. Tata was popularly known).
He studied at Cornell University, specialized in architecture, and
had an offer from International Business Machines Corp., but
returned to India because his grandmother was unwell, and joined
Tata Steel Ltd (then known as Tata Iron and Steel Co., or Tisco) as

an apprentice on the shop floor of its Jamshedpur plant. The year

was 1962.
In 1971, he was appointed director-in-charge of the ailing National
Radio and Electronics Co. While Tata managed to turn around the
firms fortunes, it was to be a temporary success.
In 1977, he was asked to turn around another troubled company,
the Mumbai-based Empress Mills. Tata managed to do so, but was
refused an investment he thought was required. The Mumbai
textile workers strike led by Datta Samant also hurt the company,
which eventually closed down in 1986.
Maybe because of these failures, few people understood why he
was chosen as the person who would replace JRD in 1991. At the
time, Tata was still perceived as an outsider in Bombay House, the
groups headquarters.
Several group companies were also led by individuals who had
been given considerable autonomy by JRD and were, sometimes,
more closely associated with their companies than the groups
chairman himself.
Among these executives were Russi Mody at Tata Steel; Darbari
Seth at Tata Tea and Tata Chemicals; Ajit Kerkar, who transformed
the Taj group (Indian Hotels) into a major hospitality chain; and
Nani Palkhivala, a director on the boards of several Tata
companies and chairman of
he erstwhile Associated Cement Companies (ACC Ltd), in which the Tata group was
one of the original promoters.
It had been widely expected that one of these individuals would succeed JRD, and
Tatas appointment resulted in some bitternessand not all of it remained unvoiced.
Mody sparred openly with Tata. Kerkar and the new chairman had different views on
the management of the chain.
J.R.D. Tata had around him a team of senior managers, all of them people of
substantial understanding in their respective spheres, Tata said in an interview
posted on the Tata group website on 6 December for some time before being
inexplicably taken down. While they may have acceded to his wish that I take over
the chairmanshipand this happened suddenlyI must confess that I did not feel
any sense of joyousness on their part, because some of them had aspirations to
have the job themselves.
In 1993, Mody was sacked after a messy scrap involving the appointment of senior
executives. In 1997, Palkhivala quit, citing ill health. And Seth retired in 1995 and
Kerkar in 1997, after Tata brought in a new policy that set the retirement age for
directors at 70 and senior executives at 65.
In my personal view, when JRD saw this scramble among the company chiefs to
succeed him and the unpleasant innuendos that surfaced, he may have appointed
someone who understood the Tata ethos, which was always very important to him;

and, perhaps, he thought Ratan Tata was someone who could uphold this ethos,
Piramal said.
She added that the concept of succession planning was nascent in JRDs time. Its
only in the last five years that large business groups have realized the need for this,
she said. Indeed, perhaps because of the rocky start that he had, Tata appointed a
five-member selection committee, comprising N.A. Soonawala, Shirin Bharucha, R.K.
Krishna Kumar, Cyrus Mistry and Lord Kumar Bhattacharya, to identify his successor.
In hindsight, Tatas ascension in 1991 was the best thing that could have happened
to the Tata group, according to a business historian and writer.

Tata, like every Indian company, was suddenly in a new environment. It could not keep operating
under the old market rules, the old certainties, said Morgen Witzel, a UK-based management writer
and author of Tata: The Evolution of a Corporate Brand.
Ratan Tatas strategy was to change Tata to help it keep pace with a changing India, he said.
And, after spending nearly five years quelling the challenge of the satraps, thats just what Tata did.

BUILDING THE TATA CORPORATE BRAND A GROUP IDENTITY

Once the dust over the succession issue settled, the conglomerates new chief Mr. Ratan Tata came
into his own. His primary focus was the improvement of the operational efficiencies of several of the
groups manufacturing companies and reiterating the very conglomerate nature of the entity.
The main beneficiaries of the focus on operations were Tisco and Telco (Tata Engineering and
Locomotive Co.). The former soon emerged as one of the lowest-cost steel makers in the world. The
two companies were also renamedTisco as Tata Steel and Telco as Tata Motors.
Simultaneously, Tata convinced group companies to pay royalty to Tata Sons for the direct or indirect
use of the Tata brand name. He also moved towards increasing the promoters shareholding in key
group firms. Until then, the promoting firms held minority stakes in most group companies, making
them vulnerable to takeovers.
The group also exited businesses such as cement, textiles and cosmetics even as it increased its focus
on others such as software, and entered telecommunications, finance and retail.
These divestments and investments helped the Tata group shake off the slightly fusty image it had
built up in the 1980s and make it fit for purpose in the modern world, according to Witzel.
Indeed, today, the Tata groups most profitable company is information
technology firm Tata Consultancy Services Ltd (TCS), which boasts around $10
billion (around Rs.54,700 crore) in revenue and serves customers around the
world.
I think the creation of the corporate brand was quite important. The Tata corporate brand is one of
the worlds most valuable global brands because it harnesses the power of the whole group and
creates a strong image in the minds of the stakeholders, Witzel added.
Tata himself sees the re-establishment of the group identity as one of his achievements. In the
interview that was posted on the groups website, he said one of his most satisfying moments as
chairman was the welding of the organization together in a more cohesive way than it had been in
the past that it was able to identify itself more as a group.

And, even as some of these efforts to establish himself, improve the operational effectiveness of
some companies, and reiterate a group identity were bearing fruit, Tata went out and made a bigticket global acquisitionthe Tetley group in 2000.

THE TATA GROUP TODAY AND TOMORROW

Mr. Jamsetji N. Tata was the founder of the group. In 1904, he handed over the
baton to Sir Dorab Tata, who was at the helm of affairs till 1932, followed by Sir
Nowroji Saklatvala who was there till 1938. The group was then steered by Mr. J. R.
D. Tata till 1991, when the charge passed on to Mr. Ratan Tata. It was on March 23,
1991, that Mr. Ratan Tata was told by his uncle that he intended to handover the
baton of the group to him. Coinciding with the economic reforms unleashed by Dr.
Manmohan Singh, the group has had a remarkable journey since then! Mr. Ratan
Tata took over the reins of the group at a time when it was an empire made up of
several independent fiefdoms, run by stalwarts like Mr. Darbari Seth, Mr. Russi
Mody, Mr. Ajit Kerkar and Mr. Nani Palkhivala. Mr. Ratan Tata was barely 54 when he
assumed control of the Tata Group in 1991. His successor was searched for, keeping
in line with a whole lot of other Tata company managing directors who were then in
their 40s. The group had brought people in their 40s and 50s to run some key
companies. Observers said that the next leaders will be from among them. They
included Tata Power MD Anil Sardana, TCS MD Natarajan Chandrasekaran, Tata
Chemicals MD R Mukundan, Tata Teleservices MD N Srinath, Tata Global Beverages
head Peter Unsworth, Tata Motors MD Carl-Peters Forster, India Hotels chief
Raymond Bickson and Tata International MD Noel Tata.
The activities of the group were and are overseen by two bodies. The Executive
Office reviews business activities of all group companies. Besides Ratan Tata, it had
R Gopalakrishnan, Ishaat Hussain, Kishor Chaukar and Arunkumar Gandhi. Then
there is the Group Corporate Centre, which reviewed policy issues related to growth
and took decisions on entering new areas. It also promoted the Tata brand and
provided advisory services to group companies in human resources, finance and
legal affairs. It comprised Ratan Tata, JJ Irani, R K Krishna Kumar, R Gopalakrishnan,
Ishaat Hussain, Kishor Chaukar and Arunkumar Gandhi. The members of both these
groups were then in their 60s and 70s. Tata Steel's acquisition of Corus, Tata Motors
buying Jaguar Land Rover and TCS going public were some of the significant
milestones after Mr. Ratan Tata took over from JRD as Chairman of the group. The
Tata Group comprises over 100 operating companies in seven business sectors:
communications and information technology, engineering, materials, services,
energy, consumer products and chemicals. The group has operations in more than
80 countries across six continents, and its companies export products and services
to 85 countries. The total revenue of Tata companies, taken together, was $83.3
billion (around 379,675 Cr INR) in 2010-11, with 58 per cent of this coming from
business outside India. Tata companies employ over 425,000 people worldwide. The
Tata name has been respected in India for 140 years for its adherence to strong
values and business ethics. Every Tata company or enterprise operates

independently. Each of these companies has its own board of directors and
shareholders, to whom it is answerable. There are 31 publicly listed Tata enterprises
and they have a combined market capitalization of about $77.44 billion (as on
November 17, 2011), and a shareholder base of 4.3 million. The major Tata
companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power,
Tata Chemicals, Tata Global Beverages, Indian Hotels, Tata Communications, Tata
Teleservices and Titan. Mr. Tata has taken the group to great heights and we hope
the new Chairman will take it to greater heights, said an official closely associated
with the selection committee. The five-member committee held 18 meetings over
the last on-and-a-half years and interviewed a large number of candidates, both
Indian and expatriates.
Mr. Tata had a tougher clean-up exercise where there were many powerful
individuals who were running their own fiefdoms. He managed to do this while
carving out a new global agenda for the Group. The new Chairman will have a
relatively easier job on his hands, an industry veteran said. Much like the few
erstwhile Kings who chose a successor based on merit alone, the group had
invariably followed the principle of meritocracy when choosing a successor in the
past. What the new Chairman would have had to take over from Mr. Ratan Tata was
a much more well-knit and cohesive group, united by a shared philosophy, vision
and identity.

THE CHALLENGES THAT WERE BEFORE THE MAN-TO-BE

There is always a lot of hoopla surrounding the succession planning of leaders.
Whenever a visible leadership change occurs, the image of the incoming leader
appears to be much less than the exiting leader. The fallacy lies in our tendency to
make an unfair comparison between the embellished profile of the outgoing leader
and the unclear profile of the incoming leader. That is why Lal Bahadur Shastri
initially looked inadequate as a replacement for Jawaharlal Nehru, Homi Sethna
looked inadequate compared to Homi Bhabha and Vikram Sarabhai, and Ratan Tata
was thought to be less than J.R.D. Tata. But all of these turned out to be successful
transitions. There were many challenges ahead for the young Chairman-to-be.

STEEL
Weak demand and decline in global steel prices were the key challenges faced by Tata Steel's
European operations. This was even as the prices of raw materials such as coking coal and iron ore
ruled high as compared to 2010. Tata Steel had reduced its capacity utilization marginally in line with
weakening demand and may have had to resort to production cuts if demand did not improve in
Europe. Even in India, the company was up against weaker demand from sectors such as construction
and automotive, but expected volumes to grow by eight per cent for the year 2011.
AUTOMOTIVE

The big disappointment was the Nano which was clocking modest numbers. The
car business needs to rev up though commercial vehicles had been doing well.
The Tatas were and are the market leader in trucks and buses but a lot
depended then on the state of the economy over the next few months.

TELECOM
In the telecom sector, the Tatas had their hands full with major challenges for both Tata Teleservices
and Tata Communications. Tata Tele was now the fifth largest telecom player in a crowded market
with as many as 14 in the arena. But the overall telecom sector was witnessing disturbing trends over
the past year. All the operators' revenues, including Tata Teleservices, were stagnating, profitability
was declining, and investments were slowing and costs were rising.
Tata Teleservices undertook a major restructuring exercise in bid to cut costs and rationalize
operations. The Successor had to ensure that this paid off in the long term.
Apart from the tough market conditions, there were a whole host of regulatory issues especially those
related to spectrum. Tata Teleservices still did not have GSM spectrum in key markets like Delhi. The
company's 3G roll out was also under a cloud with the Government raising questions over roaming
agreements.
On the Tata Communications front, the worry was to bring the company back into profitability. The
company, which once had a monopoly over the international long distance segment, had to reposition
its strategy with more focus on foreign markets. While this paid off to some extent, the then ongoing
dispute with the Government over funding and land sale put the company's expansion plans on hold.
Another immediate challenge for the new Chairman was to be able to steer the company away from
all that happened with Ms. Niira Radia and the 2G scam. Although there were no business
implications, the Tatas had taken a major hit on its image, which the new Chairman would have had
to build.
IT SERVICES
The offshore IT/BPO players were grappling with macro uncertainties in key overseas markets such
as the US and Europe, and, at the same time, coping with currency volatility back home.
For TCS, the largest Indian IT Services Company, the challenge was also to
sustain its pole position in a market that had already started seeing a reshuffle
in the pecking order of Tier-1 vendors, said Mr. Sanjeev Hota, Associate VicePresident - Institutional Equities at Sharekhan.

Also given its over two lakh employee base, TCS had to chase, perhaps even more aggressively, the
non-linear growth strategy (beyond adding employees). Deals such as the recent $2.2-billion
contract from Friends Life (a British financial services firm) will be critical in this regardIf TCS
wants to scale up further, it will be important that the revenue growth outstrips the employee
growth, noted Mr. Harit Shah, Senior Research Analyst at Nirmal Bang Institutional Equities.
Though the company had been growing at a scorching pace in the last few quarters, the euro zone
crisis and the rupee volatility were the key challenges. Mr. Tata's acumen when it came to the
business of technology was well known. Would the new Chairman's lack of expertise in the
technology space be a deterrent going forward? was a key question to be considered. I do not

think soat the top level people settle into their roles pretty quickly. Sometimes a complete outsider
can bring a completely new perspective to the business of technology, TCS sources had said.

THE RACE FOR SUCCESSION

The committee set up to find a successor to Tata group Chairman Ratan Tata had
shortlisted around 11 candidates. Out of them, four-five were group employees.
The frontrunner in the Tata race appeared to be Noel Tata, Ratan Tatas half-brother
who was then promoted to overseeing the groups international operations. Some
65% of the conglomerates US$70.8 billion revenue (AprilMarch 2008-2009) came from outside India, so this was a significant responsibility.
Additionally, Noel Tata was the son-in-law of Pallonji Mistry, who owned 18.4% in
Tata Sons, which made him the single largest individual shareholder (most of the
equity being held by charitable trusts).
But others were in the race, too. The Economic Times speculated that the internal
candidates include Tata Sons executive directors Ishaat Hussain and R.
Gopalakrishnan; and B. Muthuraman, Ravi Kant and S. Ramadorai, vice chairmen of
Tata Steel, Tata Motors and Tata Consultancy Services (TCS), respectively. The
younger group included the CEOs of TCS (N. Chandrasekaran) and Titan (Bhaskar
Bhat). But they were long shots at best, observers had reported.
There was also a speculation that, given the groups increasing global focus, the
choice need not be an Indian. The Times of India said that the candidates could
include Indra Nooyi of PepsiCo, former Vodafone head Arun Sarin and Renault
Nissan chief Carlos Ghosn. The selection process would consider suitable persons
from within the Tata companies, other professionals in India as well as persons
overseas with global experience, said a Tata Sons press release.
Ratan Tata had also clarified that the new chief need not have to be either a Parsi or
a Tata. (The Parsis are a wealthy business community in India, and the Tata chief
has traditionally been a Parsi.) The Parsis are a shrinking community. Birth rates are
very low and women who marry outside the community are excommunicated. There
are now less than 60,000 Parsis left in India, and it is inevitable that the Tata baton
will pass on to a non-Parsi sooner or later.
It was evident that it would have to pass on to a non-Tata, too. The Tatas are a small
clan. Apart from Ratan, there was his 80-year-old French stepmother, Simone, who
was obviously not in the running for his job. His brother, Jimmy, who was close to 70
and had retired from Tata Power. Aloo Tata (who was by birth a Mistry) wouldnt
have got precedence over her husband, Noel. And their three children Liya, Maya
and Neville were still studying. So, Noel was the only Tata who was eligible.
The composition of the selection panel had some critics speculating that the choice
of Noel was pre-decided. It consisted of Tata Sons directors R.K. Krishna Kumar and
Cyrus Mistry (who was Noel Tatas brother-in-law), Tata veteran N.S. Soonawala,
group legal advisor Shirin Barucha and independent member Lord
Kumar Bhattacharya of the Warwick Manufacturing Group of the U.K. There was
only one external member, said Pradeep Mukerjee, founder-director of Confluence
Coaching and Consulting. Mukerjee, who had worked for several years in the HR
area with Citigroup in the U.S., says that in the West, such selection panels have
many more external members. What good is a panel stuffed with internal
members? I wonder what the true purpose is. Thus, the panel did have to face

some criticism but it was worthwhile to keep a panel that was in keeping with the core
values of the Tata Group for such a strategic decision-making which would bear fruit in the long run.

CYRUS PALLONJI MISTRY

Cyrus Mistry, then 43, is the son of construction tycoon Pallonji Shapoorji Mistry.
Valued at $8.8 billion, Pallonji held an 18.5 per cent stake in Tata Sons, making him
the single largest shareholder.
Mr. Mistry is the younger son of Pallonji and is married to Rohika Chagla, the
daughter of lawyer Iqbal Chagla. He has an elder brother - Shapoor Mistry and one
of his sisters is married to Noel Tata, Ratan Tata's half-brother.
He had been a director of Tata Sons since September 1, 2006. He served as a
Director of Tata Elxsi Limited, from September 24, 1990 to October 26, 2009 and
was a Director of Tata Power Co. Ltd until September 18, 2006.
Mr. Mistry served as Chairman of the Board of Shapoorji Pallonji Group and Afcons
Infrastructure Limited before he became the Chairman of the Tata Group.
Mr. Mistry also served as Director of various companies including - Forvol
International Services Ltd, Shapoorji Pallonji & Co. Ltd, Cyrus Investments Ltd,
Shapoorji Pallonji Power Co. Ltd, Buildbazaar Technologies (India) Pvt Ltd, Sterling
Investment Corporation Pvt. Ltd, Samalpatti Power Co. Pvt. Ltd, Shapoorji Pallonji &
Co. (Rajkot) Pvt. Ltd, Shapoorji Pallonji Finance Ltd, Shapoorji Pallonji Infrastructure
Capital Co. Ltd, Oman Shapoorji Construction Co. Ltd and Muscat Pallonji Shapoorji
& Co. Pvt. Ltd.
Mr. Mistry had been a Non-executive Director of Forbes Gokak Limited since June 23,
2003.
Mr. Mistry is Fellow of the Institute of Civil Engineers. He holds a BE in Civil
Engineering from Imperial College, London and a Master of Science in Management
from London Business School. He holds a Bachelor of Commerce from Mumbai
University.
An avid golfer, Mr. Mistry is also a founder member of the Construction Federation of
India. He is a trustee of the Breach Candy Hospital Trust, Mumbai. He is also on the
board of Imperial College India Foundation.
Cyrus Pallonji Mistry succeeded Ratan Tata at the helm of Tata Sons. He was
appointed as Deputy Chairman and worked with Mr. Tata for one year as per the
plan chalked out for him as a successor, before taking over in December 2012.
43-year-old Mistry was a director of Tata Sons and Tata Elxsi (India). Ratan Tata
retired in 2012 when he turned 75. He joined the Tata group in 1962 and was the
Chairman since 1991. Mr. Cyrus Mistry took over from a man who over the last two
decades transformed the Tata Group into a global enterprise.
Endorsing the appointment then, Mr. Tata had said, "The appointment of Mr. Cyrus P.
Mistry as Deputy Chairman of Tata Sons is a good and far-sighted choice."
(Courtesy: Press release from Tata Sons)

"I will be committed to working with him over the next year to give him the
exposure, the involvement and the operating experience to equip him to undertake
the full responsibility of the Group on my retirement," Mr. Tata had added.
Mr. Mistry had said that he was deeply honoured by his appointment. "I am aware
that an enormous responsibility, with a great legacy, has been entrusted to me," he
had reported in a statement.
He announced that he will legally dissociate himself from the management of his
family businesses to avoid any issue of conflict of interest. Shapoorji Pallonji Mistry,
the father of the new deputy chairman, was owner of 18 per cent stake in Tata Sons.
The Shapoorji Pallonji Group is into construction, textile, water treatment and other
businesses. Cyrus Mistry was the managing director of the two billion dollar SP
Group.
Apart from the Tata Group, he also serves as a director on the board of several other
companies, including Shapoorji Pallonji & Co, Forbes Gokak, Afcons Infrastructure
and United Motors (India).
Mr. Mistry was also a part of a search panel appointed last year to find Mr. Tata's
successor. He withdrew himself when his name was suggested. He then entered the
process as a candidate.
The 5-member panel also comprised of N A Soonawala, vice-chairman, Tata Sons; R
K Krishna Kumar, non-executive director, Tata Sons; Lord Bhattacharya, a
businessman based in the UK who runs Warwick Manufacturing; and Shirin
Bharucha, a lawyer for the group. The committee is said to have met 18 times
before announcing the succession plan.