2009 will see Tata Steel, TCS and Tata Motors lose their top men to retirement. Is the Tata Group prepared for this, or even the larger leadership crisis?
Russi Mody was well past 70 and was unceremoniously ousted. Darbari Seth fought a subterranean battle that he lost when he turned 70. Even his son had to quit as MD, Tata Chemicals. And Ajit Kerkar could not even enjoy the fruits of being non-executive Chairman as he was turfed out of the Taj group when he turned 65. The exit of regional chieftains enabled Ratan Tata to transform the group from a loosely held federation to a tightly controlled corporate house where he and his trusted, hand-picked team held all the aces. In fact, Tata leveraged his unchallenged supremacy to ensure that the holding company Tata Sons substantially increased its stake in all group companies. This has been one of the key reasons for group companies like Tata Tea, TCS, Tata Steel & Tata Motors to execute expensive global acquisitions.
In 2002, when he turned 65, Ratan Tata stuck to the ‘group’ policy and retired as executive Chairman of the group. But then, no one in the group or anywhere else had any doubt whatsoever as to who called the shots in the group, no matter who the ‘executive head’. If you think Ratan Tata has actually relinquished control after 2002 when he retired as executive chairman, you will believe that it is Manmohan Singh, and not Sonia Gandhi who calls the shots in UPA. This arrangement worked well for while and then the clock started ticking again. It was Ratan Tata who had introduced a policy that defined 70 years as the final cut off age even for ‘non-executive’ positions; the same policy that was invoked to oust big wigs like Russi Mody and Darbari Seth. Most leaders tend to think that they are indispensable and Ratan Tata is no different. The dilemma was how to transform his ‘indispensability’ into official group policy. Out went the Sonia model and in came the Zia ul Haq cum Mussharraff model of governance. They changed the constitution to extend their rule and Ratan Tata changed the official group policy to extend his tenure. Back in 2005, Tata Sons announced that non-executive chairmen can now function up to age 75. Ratan Tata was 68 then and earned a fresh mandate to lead the group till 2012 at least.
Russi Mody was well past 70 and was unceremoniously ousted. Darbari Seth fought a subterranean battle that he lost when he turned 70. Even his son had to quit as MD, Tata Chemicals. And Ajit Kerkar could not even enjoy the fruits of being non-executive Chairman as he was turfed out of the Taj group when he turned 65. The exit of regional chieftains enabled Ratan Tata to transform the group from a loosely held federation to a tightly controlled corporate house where he and his trusted, hand-picked team held all the aces. In fact, Tata leveraged his unchallenged supremacy to ensure that the holding company Tata Sons substantially increased its stake in all group companies. This has been one of the key reasons for group companies like Tata Tea, TCS, Tata Steel & Tata Motors to execute expensive global acquisitions.
In 2002, when he turned 65, Ratan Tata stuck to the ‘group’ policy and retired as executive Chairman of the group. But then, no one in the group or anywhere else had any doubt whatsoever as to who called the shots in the group, no matter who the ‘executive head’. If you think Ratan Tata has actually relinquished control after 2002 when he retired as executive chairman, you will believe that it is Manmohan Singh, and not Sonia Gandhi who calls the shots in UPA. This arrangement worked well for while and then the clock started ticking again. It was Ratan Tata who had introduced a policy that defined 70 years as the final cut off age even for ‘non-executive’ positions; the same policy that was invoked to oust big wigs like Russi Mody and Darbari Seth. Most leaders tend to think that they are indispensable and Ratan Tata is no different. The dilemma was how to transform his ‘indispensability’ into official group policy. Out went the Sonia model and in came the Zia ul Haq cum Mussharraff model of governance. They changed the constitution to extend their rule and Ratan Tata changed the official group policy to extend his tenure. Back in 2005, Tata Sons announced that non-executive chairmen can now function up to age 75. Ratan Tata was 68 then and earned a fresh mandate to lead the group till 2012 at least.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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