Ratan Regime - Too good to ignore those ethical deviations?

Written by: SR Vasudev
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Despite the prediction of Mayan Calendar, the world did not meet its end by 2012. But in a way, 2012 is putting an end to the glorious innings from two legends - Ratan Naval Tata (RNT) and Sachin Tendulkar. Though both have scripted their own success and leadership stories in their respective fields, this article is focusing on the former. By December end, the Tata Group will have Cyrus Mistry at its helm while RNT will be the Chairman Emeritus of Tata Sons.

In the 21 year tenure of RNT, the group's revenue had gone leaps and bounds and it was successful in identifying new business opportunities. At the same time, the group also got entangled into some controversies. Some of these included the Nira Radia tape issue, cancellation of telecom licences by court, other issues in telecom sector, axing of employees in Tata Communications Ltd, Singur incident, decision to shut shops in Assam and Kashmir etc.

Ratan Tata

How these deviations would measure upto the business world where Business Ethics takes a predominant role in Corporate Governance? Whether those aberrations got outweighed due to the group image or due to the generalised perspective of the way the business is done today needs to be seriously contemplated. This article attempts a self check as to whether RNT can be spared of those ethical deviations.

During our management studies, we had a separate course on Business Ethics. As students, we were guided through different ethical theories and approaches. Ethics involves judgments as to good and bad, right and wrong and what ought to be. The Oxford Dictionary defines ethics as "the science of morals in human conduct, a moral principle or code." The word ethics, therefore, encompasses the entire spectrum of human conduct. Business ethics even covers how a person in business deals with his colleagues, staff and workers, shareholders, customers, the community, the government, environment and the nation and its interest.

Tatas seemed to miss opportunities since they had stayed away from active political management. RNT could absorb this fact and he had openly aired that the group's three attempts to launch an airline failed because he was uncomfortable with the idea of bribing a minister. While other groups were brazenly involved in wooing politicians, Tatas too had started the same in a subtle way.

The Nira Radia tapes could be seen from this perspective. Lobbying is serious business and requires skill and hard work. In countries like US where lobbying is legal, lobbyists are seen as professional intermediaries who help define the priorities by reminding parliamentarians of the needs of specific groups. Here, the fact is that we would like to deny and make a hue and cry over it despite it being the order of the day.

Whether these controversies had been ignited due to pursuance of soft options to meet business needs? Being it lobbying or shutting the shop at Assam or retiring the employees, the decision is purely business based. It is natural that the businesses which are not viable will shut the shop. A private player cannot play the role of Government and turn saviour all the time to its employees. There can be valid reasons where they too act against their conscience.

Even for ordinary people, finding and following a moral course is not always easy. Imagine the same for a business person, given with a set of constraints. The pressure to produce is intense and the temptation to cheat may be more. He has to appease all his stakeholders. No clear moral guidelines have emerged so far even though it seems the law provides useful guideposts for minimum behaviour. So when a business person ordinarily ends up in a difficult situation, the simplest way ahead for him is to move forward with what he thinks correct at that moment.

Now everything is market related. A long-standing culture may help but it is of no guarantee for the future performance. Well, in the end it is the numbers which speak and markets dance to the tune of it. In the issue of Nira Radia tapes and allocation of licences of 2G it could be seen that the group's initiative of grabbing new business opportunities in the telecom sector where the revenue is growing exponentially had backfired. While in Singur, politics played the spoilsport. These could not be mellowed down given the fact that it is the business house of Tatas that has got into these controversies.

Tatas are not the only ones who pursue ethical values in business. But, given the group's value systems and tradition stretching over a hundred years, the expectation of the public and commoner like me are much more than from any of its peers. Tatas had achieved such a stature without actively pursuing political management. The business environment in India is changing and hence the operating environment for business enhancement required a change. Despite the group possessing a distinct corporate culture of honesty and integrity, the immense pressure of doing business in growing India cannot be ignored.

Even though these issues have brought the group image down a little bit, the group still possesses much better image among its peers. There too were instances where the facade had worn thin. RNT succeeded in this balancing act and held the group esteem in tact. He too was a leader who led his people by affection. Such a great leader he was, that he openly admitted his failure to create a flat organisation and pointed out that the fabric of Indian values and ethics was slowly deteriorating in the business community. Thanks to his charismatic leadership, the controversial issues naturally get outweighed.

The group will miss him dearly. As millions of stake holders, me too. Oh, Ratan, Tata, Bye Bye!!!

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