Human resources is an area that the Tata Group is focusing more attention on than ever before. The process of attracting, retaining, developing and nurturing talented personnel has become a cornerstone for Tata companies and it is far removed from the paternalistic philosophy that the group adopted towards employees in earlier years.
By developing a structure, system and culture that provides challenging jobs, rewards performance, offers competitive remuneration and delivers continuous opportunities, the group is striving to get the best out of its most valuable possession its people. Powering that quest is an entire range of human resource initiatives aimed at realising the potential of and, consequently, maximising the returns from Tata employees.
Satish Pradhan, executive vice-president (group human resources), heads the core team involved in defining and implementing HR strategies across all Tata companies. The 45-year-old Mr Pradhan, a post-graduate from the University of Delhi, was based in Britain with ICI Plc before taking up his present position. In this interview with Christabelle Noronha, he articulates the nature of the HR exercise underway in the Tata Group.
tata.com: What steps can the Tata Group take to retain and motivate talent?
Satish Pradhan: To attract, retain and develop talent are the three key things that the group and our companies need to address. This can be done by providing employees with challenging jobs, rewarding them with competitive salaries and investing in their development. This is a different approach from the paternalistic one adopted a couple of decades back, which was: I will take charge of your life. The formula now is: I will make available opportunities that enable you to add value to yourself.
We can provide a framework, a structure and an environment, but whether employees add value to themselves depends on how much they invest in themselves. What we can do is provide a range of challenging jobs, reward good performance, offer competitive remuneration and provide continuous opportunities.
tata.com: Is the group creating an environment that attracts and nurtures talent?
SP: There are structural, systemic and cultural components here. The backbone and framework, which are part of the structure, are being provided by the Tata Work Levels (TWLs). The building block of this concept is individual jobs that are big and challenging. When you widen the scope of each job, they become the bricks with which you build your edifice. The edifice then has a certain quality. It is the successive layering of big jobs which does a lot to the way the structure looks as a whole, as well as to the manner in which people move from job to job.
This also has huge implications on what we do with remuneration. Earlier, when we had smaller jobs, we had to calibrate remuneration to those smaller jobs, so you had creeping jobs which went from supervision to senior supervisor to deputy manager, and all were similar in scope. The idea there was to move up slowly, which is not what the TWLs are about. Here you are creating opportunities for people to move from one big job to another big job; that's the structural context.
The systemic context is the Tata Business Excellence Model (TBEM), which is a guideline for the way we introduce business systems into the organisation and clearly co-relate business performance and reward to the individual. The TBEM also has systems to review talent and take informed decisions about talent and, hence, offer opportunities across functions and within companies. You are, therefore, beginning to provide a framework of structure and systems that enable things to start happening.
Then you begin to form a culture, which is based on development and contribution. The best people are assigned the biggest challenge. You have got leaders with leadership attributes who help and lead the development of talent and produce results. You are accountable for the leadership of people as much as you are for the leadership of results. Leadership broadly falls into three categories: leadership of business, which deals with knowledge of the business; leadership of results, which is about driving performance; and leadership of people and teams, where you are constantly getting extraordinary results out of ordinary people.
tata.com: Will all this result in fewer jobs in the group?
SP: There are fewer jobs at the higher or more senior levels, TWL 'A' for instance, than at TWL F, but they have a greater impact. As you get to larger responsibilities and challenges, there are fewer jobs. If there has been an overcrowding in the past at managerial levels then, yes, there will be fewer managerial positions now. The downside is that if we cannot offer more challenging and creative jobs to people, we will not get quality talent to lead this group forward. There is a much greater risk in not getting it right than keeping things the way they are.
tata.com: The Tata Group is perceived as having old managers at a time when management is getting younger. How can the group have a blend of experienced and young managers?
SP: I think you are right. We need wisdom and that is a combination of two things, one of which is having done a few things before. So wisdom does not come without having some experience. In the organisational context, we need a combination of experience, perspective, foresight and an ability to change oneself and the organisation, more so now than in earlier days.
The challenge is going to be in how we create leaders who are relevant to our future, irrespective of whether they are old or young. Some of our older colleagues will not be able to adapt to change, some will and already have. A person like Dr J. J. Irani has reinvented himself at an age when most people would have stopped learning. There are others who have demonstrated it can be done. We have to create opportunities for these people to continue to lead and provide wisdom to the organisation. And we need to build some of our younger people to make them wiser beyond their years. We have to provide opportunities to an entire range of people, irrespective of age or predisposition, who have the willingness and inclination to start reinventing themselves for the future of the group.
tata.com: Companies like General Electric are consolidating for financial strength but at the same time decentralising business units to give independent power and positions to younger people. Is the Tata Group planning any such initiatives?
SP: Power is not a word that is becoming of this group. Responsibility? Yes. Challenge? Yes. We have about 100 legal entities, so we have no shortage of what the Americans call popcorn stands, or small businesses. We have a range of positions through which we can help people grow, so we don't have to create the structure it already exists. It is a question of recognising it as an advantage and using it to develop our people.
Among the constraints we faced in the past was a belief that domain expertise is needed to grow in a particular sector. This is less compelling and relevant today. We have seen people move from one industry to another and grow to become leaders, so there is some learning from that. The structuring of the group and its financial arrangements to create strength is something that can be handled independent of leadership development choices.
Strategically, if you see the way things are going, the Tata Group is moving from 100 companies operating independently as equals to a sense of broad sectors or domains. Where it makes sense for a business to dis-aggregate or re-aggregate will be determined in terms of the strategy for different sectors. That has been made pretty clear through the formation of the Business Review Committees.
I don't see the Tata Group saying GE did this, so we will. We may use business unit aggregation strategies where synergy is valuable to the sustainability and future of that business. We have the expertise to rearrange our financial structuring in ways that best suit the needs of the group and we have enough opportunities to put people into positions of responsibility. Come to think of it, which group in the world has 100 legal entities with independent managing director responsibilities. We have a full stable of opportunities.
tata.com: The Tata Group still tends to lose a lot of bright young talent to multinationals and to start-ups.
SP: That's not because we don't have enough senior positions; its because the lower level in the wall uses very thin bricks, which means that we have been over-layering at the lower level and, hence, it typically takes much longer to rise through the ranks. We saw this, for instance, when we were doing the TWL determination at Tata Chemicals. Earlier it would have taken much longer for, say, a young engineer to rise and so it did not make sense for him or her to hang on. The TWLs will change this.
tata.com: When do you expect to have the TWLs implemented throughout the group?
SP:By the end of this year. In 10 to 12 of the large companies, which account for 80 per cent of the groups turnover, the process has already begun. By next year we should know when we can complete the process for the whole group. My gut feeling is that it will take 18 to 24 months, and thats counting from January 2001.
This is not going to be a slow process. The study has commenced at Tata Engineering. At Tata Steel, Tata Chemicals and Indian Hotels, the process is complete. Rallis, Voltas, Tata International, Tata Power and Tata Teleservices will be done by the end of this year, which means that we would have covered a large chunk by the end of this year itself.
tata.com: What about implementation?
SP: I mean implemented, not just studied.
tata.com: What HR practices should the group adopt to become globally competitive?
SP: One of the things we forget, perhaps because of the national stature of the Tata Group, is that there are many companies within the group which are as global as any multinational. In many of our organisation we have already made the mental shift. Tata Consultancy Services is a classic example. It just happens that they are headquartered in Mumbai; their businesses, revenues and customers are global and their talent is in a global marketplace. From that perspective, within the group there is a lot to learn in terms of sharing best practices.
It is not as though globalisation or multinationals are new to us. There are significant parts of the group that have an export-oriented mindset and that affects how we look, with India as the playing field, at people, at talent and at best practices. We tend to benchmark ourselves with companies that are in India. We need to encourage, stimulate and push to make that mindset more global. A range of HR practices will emerge when that happens.
A fundamental truth of HR practices today is that we cannot afford to follow the command-and-control model. You could only do that in a licensed environment with a surplus of manpower. Today it makes you non-competitive. Other than that, as a group, this is not something we would like to do. Our sustainability in the future will have to account for these facts. There is no freedom without a framework. You can empower only when there is a boundary; then you don't lose control. We do therefore need frameworks in HR practice throughout the group.
tata.com: The Tata Group is characterised by an absence of women in the top management rung. Are we likely to see a change in the coming years?
SP: One of the things you have to understand in the Indian context is how organisations look at it and what comes in the way of career women. The social expectations from women in our environment are different from the social expectations from women in the western world. Even in the most progressive, educated, urbanised families, the pressure on the woman is enormous, not just physically, but psychologically and emotionally too. The demands on them are much more and, as the family grows, they tend to be more onerous.
We also don't have a model of managing breaks in careers, allowing for periods of time in managing different life spaces. For instance, to start a family you need to give it your full attention. You then go back and work. Most Indian establishments dont have this kind of arrangement (except in certain kinds of jobs) and most organisations have struggled to provide a way in which that can be done easily. Also, in corporate India we try to make men out of women and, needless to say, women have colluded with that because being a woman is not understood. The only model is being a better man than the men.
There are lots of areas where evolution has to take place. In organisations like ours there is plenty that needs to be changed about the mindset we have involving men, women, talent and leadership positions. We have had women leading organisations and we have had women leading the country. Often, more by circumstances than choice, women have been catapulted into leadership positions. But the predominant majority of leaders are men and this is completely contrary to the demographics of the country.
The only hope is that new technologies will help us break through some of these glass ceilings and organisational barriers. This is a big challenge because organisations like ours are not tapping half or more of the talent pool. We have to get our act together on this.
tata.com: Mr Ratan Tata has been quoted as having said that he would like to see younger people at the helm. What initiatives are the group taking to make this happen?
SP: As far as getting younger people, the big bang, dramatic approach has never been the Tata way of doing things. We have done things methodically and in a certain way. We are committed to seeing younger people rise to leadership positions. We will have a period of time when the age spectrum shifts. Over the next couple of years you will see this phase continue when people in their 40s and 50s take over positions of responsibility from seniors and executive directors in the higher age bracket. There is also the capability factor to consider. Will a 30-to-40 age bracket person be the managing director of a Tata Steel or Tata Engineering? I don't think so. You get that kind of capability only with certain experience which comes with time.
tata.com: How long will it take before this happens?
SP: We should make it happen in the next three to five years. You have to realise that you need to reach a level of maturity and wisdom before you can be the custodian of a corporate reputation, of corporate citizenship or the destiny of 60,000 people. For stewardship of that magnitude you need foresight that stretches into the next 20 years. It is extremely rare to find that in the 30-40 age group, though its not unknown.
tata.com: Sometime back there was talk about the group setting up an amoebic management structure. What are your views on this? Will it not require a different level of HR management?
SP: The fundamental principal of TWLs is the nature of work and the complexity associated with working in an organised way. There is no way of getting collective accountability and coherence without some sort of hierarchy, so you may have amoebic teams and organisations with some semblance of hierarchy and some semblance of work levels to distinguish different kind of complexities.
tata.com: The Tata group was the first Indian corporate entity to set up a central managerial pool, through the Tata Administrative Services. But TAS seems to have lost its sheen. How do you plan to regain its lost glory?
SP: It is said that golden days are always of the past. My preoccupation now is to create golden days of the future. We would like to see TAS positioned as a premium employment brand in the country. We need to create a high level of awareness about it and restrict admission to it. We need to go to the 10 best campuses and pick the brightest every year. If you don't make the grade, you fall off the table. You invest intensely in rapidly accelerating their development and then get them into the system to demonstrate their ability. Right now TAS is a tired brand; we need to lift it and position it for the future.
tata.com: What about the Tata Management Training Centre?
SP: First of all, we need to get TMTC back to being a centre of quality learning. We have slipped on that and strategy has been a bit muddled. For a decade and a half it was like any other business school: it did a bit for the group but it did more than a bit for the rest of the world. We now have a model and this is: earn your keep. We need to re-establish the quality of learning that takes place. It must get the fundamentals right: well-designed learning events, outstanding quality of facilitation and well-advertised and communicated programmes. Once we have got these basics in place we will begin to move forward in terms of TMTCs position in the group as a centre for excellence in learning. This is why we appointed one of our senior-most HR directors, Mr Vijay Rao, to head it.
tata.com: Tata companies are perceived as being poor paymasters and slow to promote their people. What can be done to change this perception and attract talent?
SP: I think perception follows reality; as the reality shifts so will the perception. We may have been perceived as poor paymasters and in some cases this may be true. But it isnt true in many more cases. I don't think that we are seen as poor paymasters in the IT or hospitality industries. We get the best resources and our employee satisfaction ratios are quite high.
In a sense, the approach of the group is that we wont stuff people with money in an effort to hire them. If you look at corporate India in the past 10 years, a large number of business houses have gone out and bought talent at exorbitant prices and have then had to recalibrate internal parity mechanisms to raise the table. We have not done that and that, perhaps, has fuelled the perception that we dont pay well enough. And, yes, we need to calibrate with the market. A part of what we have done in the group remuneration architecture, which is being implemented along with the Tata Work Level.
Will we be the highest paymasters in the country? I don't think that is a desirable position for a group like ours. Being among the better paymasters is what we would like to do. That is the desired position which the TWL remuneration architecture will take us to and, once we are there, the perception will follow that reality.
tata.com: What is the role of group HR? What plans do you have for it to be a focal point in areas such as succession planning, career planning, job rotation and appraisal processes?
SP: The first three factors fall into one block and work levels are their backbone, so the basic organisational design architecture is the focal point that group HR will be concentrating on for the next 24 to 36 months. There are a whole lot of other things that spill out: succession planning, career planning, job rotations and development of talent. The second thing that comes out once you have work levels in place is performance and the management of performance. Then you have the remuneration architecture. The fourth piece, one that has not been articulated well enough, is learning and development. From the succession point of view, it's the learning aspect that permeates the whole organisation.