development of corporate social responsibility in indian family business
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DEVELOPMENT OF CORPORATE SOCIAL RESPONSIBILITY1 IN INDIAN FAMILY
BUSINESS: A CASE OF TATA IRON & STEEL COMPANY
by
Sarika TomarFaculty, NIILM CMS, New Delhi.Mobi le : 9891084563
Email : [email protected]
Rakesh GuptaAssociate Professor, IILM- GSM, G.NoidaMobile: 9313999520, Email: [email protected]
1 From hereon CSR
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DEVELOPMENT OF CORPORATE SOCIAL RESPONSIBILITY IN INDIAN FAMILY
BUSINESS: A CASE OF TATA IRON & STEEL COMPANY
Abstract
After carefully studying the literature of family businesses it has been noticed that
researches in this field have centered on organizational issues such as structure,
governance, succession, managerial behavior and some policies and practices that
differentiate them from professionally managed firms. There are many other facets
of this area which still remain unexplored and untouched. And one such area that
also characterizes Indian family business is corporate social responsibility. Within
the world of business the main responsibility for corporation has historically been to
make profits and increase shareholder value. In other words corporate financial
responsibility is the main driving force for any business. It is only in last twenty-five
years that a radical change has taken place in the business whereby these
businesses are expected to contribute to the public. A value shift has taken place
within businesses where they not only feel responsibility for wealth creation but also
for social and environmental good. India has a long history of corporate philanthropy
and business involvement in social causes for national development. And if wecarefully study the origin of corporate social responsibility in India, we find its roots in
family businesses that evolved more than a century ago. Corporate social
responsibility in India is based on family values and communitarianism. This
philanthropy grew out of the need to develop India socially, politically, and
economically in order to meet the challenges posed by colonization.
A family-owned business in India can be defined as a business governed and/or
managed on a sustainable potentially cross generational, basis to shape and
perhaps pure the formal or implicit vision of the business held by members of the
same family or a small number of families (Chua, Chrisman, and Sharma, 1999).
Tata Group is a pioneer in promoting CSR in India. The Tata Group is a giant family
of businesses that dominates Indian markets. And Tata Steel is one of twenty-eight
major corporations within the Tata Group. Founded in 1907, it is the largest private
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sector steel company in India, with a capacity of 3.5 million tones per annum crude
steel production. Operations are spread across the country, with steel manufacturing
and mining activities situated in the states of Jharkhand and Orissa at eight
locations. The company employs approximately 48,000 people as at April 2002.
Tata Steels CSR activities started as early as its inception. Initially, these activities
were only philanthropic in nature and the company believed more in giving back to
the society. But over a period of time CSR activities of this company moved from
pure philanthropy to a strategic CSR with a multi stakeholder approach. CSR
activities are now ranging from community development, improving health care,
reducing poverty, occupational health and safety risk control and protecting the
environment that means covering almost all the stakeholders.
The ideals and philosophy of the TATA Group originated from the founding father,
Jamshedji Nusserwanji Tata (1839-1904). In 1895 he explained:
We do not claim to be more unselfish, more generous or more philanthropic than
others, but we think we started on sound and straightforward business principles
considering the interests of the shareholders, our own and health and welfare of our
employeesthe sure foundation of prosperity.
These sound and straightforward principles carried through the generations of
Tatas still has influence on the prevailing businesses and practices. With such a
strong tradition of corporate responsibility, it is no surprise that very recently Ratan
Tata has been honoured with Carnegie Medal of Philanthrophy in Pittsburgh on
Wednesday October 22, 2007. The award is given every two years to individuals
who like Andrew Carnegie have dedicated their private wealth to public good
The purpose of the research paper is to study why, how and to what extentcorporate social responsibility is being implemented in leading family owned
business in India. The paper investigates that how a giant family business like Tata
has been able to carry the tradition of corporate social responsibility so strongly over
the years. The research focuses on the impact of the philosophy of Tata family on
CSR policies and practices of TISCO.
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Introduction
Business today are experiencing profound pressures to reform and improve
stakeholder related practices and their impacts on stakeholders and the natural
environment-in short, to manage responsibly as well as profitably (Waddock, Bodell
& Graves 2002). Although the concept of corporate social responsibility has
changed substantially over the past two decades but still scholars have yet not been
able to define it precisely.
There is tremendous pressure of wide range of stakeholders in pushing companies
to respond in a more responsible way. This pressure not only comes from the
primary stakeholders such as owners, employees, customers and suppliers but also
from the secondary stakeholders such as non governmental organizations, activist,
community and governments who are also seeking greater corporate responsibility.
Lately a third source of pressure is generated from the social trends and institutional
expectations, reflected in the proliferation of best of rankings, the steady emergence
of global principles and standards that define expected levels of corporate
responsibility, and the new initiatives to publicly report the triple bottom lines for
measuring economic, social and environmental performance (Waddock, Bodell &
Graves 2002).
With this kind of enormous pressure we find more and more organizations
transforming themselves into a more responsible organization. But if we understand
the concept of social responsibility from the point of view of business then there are
several issues that are still unresolved and unanswered. Most companies face
problems in addressing the issues of social responsibility. The three issues that
remain unclear are the understanding of social responsible behavior and how any
organization does manages these issues on an ongoing basis. As these activities
are not the primary objective of any business it is evident that they are usually not
taken up with full commitment. The fundamental problem in the field of business and
society has been that there are no clear and precise definition of corporate social
responsibility that provide a framework for systematic collection, organization and
analysis of corporate data on this important concept.
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Hence, in order to fully understand the concept of corporate social responsibility it is
extremely important for us to develop a model that helps us in bringing clarity about
the intentions of organizations and the phases its of development in any
organization. This is further explained by considering a case of Tata Iron and Steel
Company. As this company
There are two objective of this paper, first, is to develop a framework that integrates
the intention and the concern of an organization towards corporate social
responsibility and the degree to which these activities are operational. This
framework will facilitate analysis of corporate social activities as well as the behavior
or intentions behind these activities. This would further help us in understandingthat
how a family managed business like Tata Iron and Steel Company can follow a
tradition of corporate social responsibility so strongly for as many as 100 years.
What are the policies, practices and systems that have helped this organization to
embrace corporate social responsibility so effectively?
This paper will also help us in addressing two key challenges in social responsibility
management. First how to measure corporate social performance and second what
capabilities an organization should have to be socially responsible. The first issueregarding measurement of social performance has been addressed by classifying
the activities on the basis of intent i.e. the objective and the purpose of these
activities ranging from economic to responsible and extent i.e. the degree to which
these activities are operational in a firm. The second issue regarding the capabilities
a firm should have to be socially responsible has been addressed by looking at all
the dimensions and the organizational development of CSR in any organization.
This framework would be able to accommodate all the activities related to corporate
social responsibility on the classification made in the given framework. While the
nature and the extent of the activities may change but still the framework should be
able to ascertain that all the activities can be included here.
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There are several milestones that can be identified towards a theory of corporate
social responsibility but so far there has been no such framework that focuses only
on the responsible domain which is defined as
Our concern here is also to address the extent to which TISCO has evolved
practices and procedures for implementing CSR activities and the involvement and
commitment of these companies towards such issues.
This conceptual framework should prove valuable to managers seeking to establish,
develop and institutionalize CSR principles, policies and practices in and
organization.
This research paper is divided in 3 sections. The first section focuses on the review
of literature regarding definitions and model of corporate social responsibility. The
second section focuses on the construct of responsible domain. And the last section
focuses on the practices, policies and systems of TISCO that have evolved over a
period of time and help the business to be socially responsible.
Definit ion of Corporate Social Responsibili ty
The concept of corporate social responsibility has not yet been defined adequately
and satisfactorily. Several research scholars have made an attempt to define the
social responsibility of business but so far we have not been able to give a definition
that could be accepted uniformly. Definitions of corporate social responsibility fall
into two general schools of thought. Those that argue that business is obligated only
to maximize profits within the boundaries of the law and minimal ethical constraints
(Friedman 1970; Levitt1958), and Bowen (1953) advocated that businessmen have
an obligation to pursue those policies, to make those decisions or to follow those
lines of action which are desirable in terms of the objectives and values of our
society. The concept of social responsibility here emphasizes on the objectives and
value of the society and rests on two fundamental premises. First business exists at
the pleasure of society; its behavior and methods of operation must fall within the
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Classification on the basis of Intent: Intention here basically refers to the concern
of an organization towards socially responsible activities. It also means the objective
and the purpose of an organization behind initiating these activities. A thorough
literature survey reveals that organizations have a responsible behavior because of
any of these three reasons first, they see a long-term benefit in being responsible,
second they want to abide with the prevailing law and thirdly have a genuine
concern for the society. It is not only important but also relevant to understand the
intention of an organization behind being responsible, as it will help us in
understanding the motives behind an organizations move towards becoming
socially responsible.
Hence, it can be concluded that the responsible behavior is generally driven either
by a profit motive; legal motive and or there is a high concern for society.
Concern for Profit: Corporations like all other social institutions are an integral part of
society and must depend on it for their existence, continuity, and growth. As
organizations usually behave in response to market forces, they initiate certain
socially responsible activities that may have a direct impact on their economic
performance. Although these activities are social in nature and aim for community
welfare and societal development somewhere they have a hidden concern forprofits. Here the management cares only about its companys gains, profitability and
organizational success at any price. Their main strategy to have these activities is to
exploit opportunities for corporate gain. These activities have a direct economic
benefit that is clearly visible. Activities that are undertaken to improve the image or
reputation of an organization can be included in this category. As the criteria for
legitimacy for such activities is economic in nature the cost that is incurred in
implementing these activities is treated as an investment. This is the also termed as
the required behaviour of any organization. Such activities are undertaken after a
detailed planning and doing a thorough cost benefit analysis. These activities
generally become an investment that helps the organization in improving long-term
economic performance. Organizations following these activities are called as
Economic Citizens.
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Concern for Law: Organizations prefers to conduct its operations within the legal
framework imposed by social system within which it operates. Those activities that
are driven in response to legal constraints fall under this category. Responsible
behaviour that is driven by legal concern aims either at compliance with the existing
laws or to avoid any litigation. As the criteria for legitimacy here is legal in nature it
implies that bringing corporate behaviour to a level where it is congruent with the
prevailing legal framework. These activities intend not to violate laws and equate
social responsibility with fulfilling minimum legal requirements. This is the expected
behaviour of any organization. And those organizations that do not abide with the
legal framework are termed as illegal organizations. Organizations following these
activities are called as Legal Citizens.
Concern for Society: These activities have very limited relevance of legal and market
forces and they are above such criteria. Although these activities are not compulsory
for any organization to undertake but these are definitely appreciated by the
stakeholders. Organizations or activities belonging to this category are driven by a
high concern for society. As these activities are not legally forced they are in
congruence with the prevailing social norms and values. Organizations having these
activities do recognize the importance of profitable operations but also takes definite
stand on issues of public concern. All ongoing community development programmesthat are voluntary in nature and are ultimately implemented to benefit the society at
large come under in this category. This is the desired behaviour of any organization
Organizations having such activities are progressive; they are the leaders in the
industry and are called as Responsible Citizens.
Classification on the basis of Extent: This is the second dimension that
addresses the recognition of social issues; involvement and commitment of an
organization towards these issues and finally, the intensity of enforcement or in other
words it can be said that these activities would have a degree to which they would
be institutionalized. Extent can also be referred to evaluating the level of
responsibility that an organization demonstrates.
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Learning phase: Here social responsibility is merely considered as corporate
obligation and hence the social response pattern is reactive in nature. There is
minimum responsibility with respect to social activities. In this stage the top
management acknowledges the organizations responsibility in a certain area or on a
certain issues and a policy statement is generated. As social programs are taken as
less ambitious goals for success the commitment towards these activities is very
low. Such programs and activities are forced in place because of crisis or legal
mandate. The management does not do anything until they have to do. Problems
that are taken up are usually specific in nature and they are taken in isolation with no
systematic causes, symptoms or ramifications. There is minimum implementation on
a continuous basis. Emphasis is more on policy formulation than on implementation.
Enforcement of policies in this phase is very low. There are no formal legal, or
ethical standards existing in the company. There is no consistent planning for such
activities. Policy statements are generally not very well defined and poorly
communicated to the employees. Little or no direction, guidance, or support is given
with respect to what the company will do about choosing or implementing such
activities. Employees are usually not involved. Little or no control exists over the
consistency of such programs. Hence corporate social performance here is usually
non-instrumental.
Commitment phase: This stage is one step above learning phase where policies
are clearly defined and organization starts focusing on the implementation of the
programs. Here the organization acquires the knowledge and skills to implement the
policies, the details of the programs are outlined, and monitoring systems are
developed. As careful and detailed planning takes place before the implementation
the commitment is much higher than the learning phase. Social activities are not
only connected to the core business in this phase but we also find consistency with
respect to the continuity of such programmes. The response pattern is proactive in
nature. Employees are awareand they are communicatedthrough written and orally
communicated policy. The onus of implementation of these activities lies usually on
staff people. Emphasis is laid on pertinent data collection and analysis but the ways
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of measuring and reporting are not very well developed. CSR programmes are
formally addressed but outcomes are not clearly defined and measurable.
Institutionalization phase: This stage is defined as the degree of sustained
organizational commitment, and is determined by degree to which the firms
performance/control (PC) system, the system for measuring, reporting, rewarding,
performance is modified to reflect the programs goals. Social response pattern is
proactive and there is maximum responsibility with respect to social activities. Here
the organization acquires the knowledge and skills to implement the policies,
specialists are appointed, the details of the programs are outlined, and monitoring
systems are developed. Responsibility for program is usually transferred from staff
to line. Resources are committed, performance and expectations are communicated
and evaluation instituted. Demonstrates high level of internal commitment. These
programs are in place prior to legal mandate and those that exceed the standards
set by law. Clear problem identification, problem-solving focus exists. In this stage
an organization anticipates future social changes and develops internal structures
and procedures to cope with them
Table1
Conceptualization of Socially Responsible Activities
Ideological Phase Learning Phase Commitment Phase
ECONOMIC
(Concern for profit)
EconomicEmployer
Economic Actor Economic Citizen
LEGAL
(Concern for law)Legal Employer Legal Actor Legal Citizen
RESPONSIBLE
(Concern forsociety)
ResponsibleEmployer
Responsible Actor Responsible Citizen
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Table2
Organizational Development of CSR
Phase I Phase II Phase II I
InstitutionalizationCommitmentLearning
1Social Responsibility isconsidered as corporateobligation.
Social responsibility isconnected to the corebusiness.
Social responsibility is notonly connected to corebusiness but it is alsoproactive in nature.
2Organization acknowledgesresponsibility in certainareas towards legal andtraditional stakeholders.
Organizationacknowledgesresponsibility towards allthe direct stakeholders.
Organizationacknowledgesresponsibility towards allthe stakeholders.
3Emphasis is on generatingpolicy statement.
Policies are well writtenand documented.
Policies are well written,embedded and translatedacross the organizations.
4
As the level of commitmentis very low social activitiesare limited and ad-hoc in
nature.
Social activities are wellplanned and strategic innature.
Social activities areundertaken on an ongoingbasis.
5
Organizations in this phasehave high concern forprofits and low concern forsociety.
Organizations concern for profitsas well as society is high.
High concern for profits aswell as society.
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Table3
Organizational development of CSR
Parameters Learning Phase CommitmentPhase
Institutionalization Phase
Interactionwith focalstakeholder
Legal andtraditionalstakeholder
Direct stakeholders Broad range ofstakeholders from direct toexternal stakeholders
Concern forstakeholders
Low Medium to high Very high
Driving Force Pressure fromtraditionalstakeholders
Changingstakeholderexpectations
Values and vision of theorganization that arecommunity driven
Goals of anorganization
High profits andlow concern forsociety
High profits andconcern for directstakeholders
High profits and highsocietal goals (Allstakeholders)
Policies Policy statementgenerated but notvery well defined.
Very well writtenand documentedpolicies
Policies are embedded andtranslated across theorganization.
Approachtowards CSRactivities
Ad-hoc andreactive
Strategic andreactive
Proactive
Continuity ofCSR programs
Spontaneous Consistent Consistent and with longterm plan
Immediatefuture activities
Limited, sporadicand connectedwith immediatefuture
Connected to thecore business
Connected to the businessand based on therequirement of thestakeholders
Level ofcommitment
Low commitment High commitment Extremely highcommitment forresponsible activities
Allocation ofresources
Minimum support Adequate Adequate and committed
Organizationculture
Neutral Supportive Supports, encourages andreward such activities
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Parameters Learning Phase CommitmentPhase
Institutionalization Phase
Employee
Volunteering(Involvement)
Employee
involvement isnegligible
Employees are
aware andcommunicatedthrough written ororallycommunicatedpoliciesinvolvement ofstaff people isfound in CSRactivities
Employees are not only
aware and communicatedproperly but they areinvolved and also activelyparticipate in CSRactivities.
Recognition to
employees
No recognition
for theseactivities
No special
programs torecognize theefforts ofemployees
Special recognition
programmes for employeesfor their contributiontowards the success of CSRprograms
Awareness
Levels
No trainingprograms
Training programsto make employeesaware of theseactivities.
Internal training programsgeared towards increasingthe involvement ofemployees
Performance
measures and
outcomes
Does not exist Not clear anddefined
Clear and communicatedproperly.
Practices and
programs
Practices andprograms poorlyimplemented
Organizationacquires knowledgeand skills toimplement policiesand implementsprograms andprocesses.
Organization acquiresknowledge and skills,appoint specialists toimplement and monitorsuch programs and policies
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Parameters Learning Phase CommitmentPhase
Institutionalization Phase
Implementation Minimum. As
the approach isadhoc andreactive there ishardly anymechanism thatexists forimplementationand monitoring ofCSR activities.
Specific
mechanism existsfor implementationmonitoring andevaluation
Maximum implementation
and proper mechanism formeaningful performancemonitoring and evaluation.
Feedback and
Evaluation
mechanisms
Do not exists Mechanisms are inthe stage of
development
Mechanisms are developedand institutionalized in the
form department or units.
Reporting and
communication
Not defined anddoes not exist atall
Reporting channelsdefined andcommunication tothe relevantstakeholders
Reporting andcommunication to all thestakeholders
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A Case of Tata Iron & Steel Company
Tata Group is a giant family of businesses that dominates Indian markets. There is a
long history of corporate responsibility within the group.
This case study concerns initiatives undertaken by Tata Steel, as these initiatives
are not mandated by law and the company has taken them voluntarily we classify
them in the responsible domain.
Company Profi le
Tata Steel is one of twenty-eight major corporations within the Tata Group.
Established in 1907, Tata Steel is Asia's first and India's largest private sector steel
company. Tata Steel is among the lowest cost producers of steel in the world and
one of the few select steel companies in the world that is EVA+.
Its captive raw material resources and the state-of-the-art 5 MTPA (million tonne per
annum) plant at Jamshedpur, in Jharkhand State, India give it a competitive edge.
Determined to be a major global steel player, Tata Steel has recently included in its
fold NatSteel, Asia (2 MTPA) and Millennium Steel (now Tata Steel Thailand) (1.7MTPA) creating a manufacturing network in eight markets in South East Asia and
Pacific rim countries. Tata Steel's products are targeted at the quality conscious auto
sector and the burgeoning construction industry. With wire manufacturing facilities in
India, Sri Lanka and Thailand, the Company plans to emerge as a major global
player in the wire business.
Products
Tata Steel's products include hot and cold rolled coils and sheets, galvanised
sheets, tubes, wire rods, construction rebars, rings and bearings. In an attempt to
'decommoditise' steel, the company has introduced brands like Tata Steelium (the
world's first branded Cold Rolled Steel), Tata Shaktee (Galvanised Corrugated
Sheets), Tata Tiscon (re-bars), Tata Bearings, Tata Agrico (hand tools and
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implements), Tata Wiron (galvanised wire products), Tata Pipes (pipes for
construction) and Tata Structure (contemporary construction material).
Community Outreach and Environment Management
While the Company is focused in the pursuit of its operational goals, it is also
committed to being a good corporate citizen. Tata Steel extends support to the
economically underprivileged not by charity but by strengthening and empowering
them with expertise and knowledge. Its community outreach programmes covers the
Tata Steel managed city of Jamshedpur and over 600 villages in and around its
manufacturing and raw materials operations.
Its steel works, mines and collieries and civic services in Jamshedpur are ISO 14001
certified for Environment Management.
The Company's steel works is the first in the world to be conferred the SA 8000
certification for work conditions and improvements in the workplace. It's Ferro Alloys
and Minerals Division is also SA 8000 certified.
According to the UNEP and Standard & Poor's survey, the Corporate Sustainability
Report filed by Tata Steel, according to the Triple Bottom Line Reporting Initiative, is
the strongest by any corporate in the emerging economies and the Top Reporter in
corporate India.
Global Compact, United Nations -
Founder member.
Conferred the prestigious Global Business Coalition Award for Business
Excellence in the Community in recognition of its pioneering work in the fieldof HIV/ AIDS awareness.
Jamshedpur city has been chosen to participate in the UN Global Compact
Cities Pilot Programme.
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Awards and Recogni tions
World Steel Dynamics has ranked Tata Steel as the world's best steel maker (for two
consecutive years) in its annual listing in February 2006.
Tata Steel has been conferred the Prime Minister of India's Trophy for the Best
Integrated Steel Plant five times.
It has been awarded Asia's Most Admired Knowledge Enterprise award in 2003 and
2004.
Project History and Development
The ideals and philosophy of the Tata Group originated from the founding father,
Jamsetji Nusserwanji Tata (1839-1904). In 1895 he explained:
We do not claim to be more unselfish, more generous or more philanthropic
than others, but we think we started on sound and straightforward business
principles considering the interests of the shareholders, our own and the health
and welfare of our employees the sure foundation of prosperity.
Throughout the last century, Tata pioneered the notion of employee benefits in India.
It introduced the eight-hour working day in 1912 an astonishing thirty-six years
before the Indian government. Maternity benefits, schooling facilities and leave with
pay are just some examples of benefits the Tata Group bestowed many years before
it became law to do so.
These sound and straightforward business principles carried through the
generations of Tata Chairmen to influence Ratan N. Tata, Chairman as of 1992.
With such a strong tradition of corporate responsibility, it is no surprise that Tatas
current initiatives target community development and corporate sustainability.
The following section provides an overview of some of the initiatives Tata Steel has
implemented and encouraged in recent years. The first part considers before-profit
practice and corporate governance, that is to say the companys conduct in the
process of manufacturing steel. This includes employee welfare, Codes of Conduct,
environmental regulation, and internal structures for improving the companys
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accountability. The second part reviews after-profit practice, social investment
projects that are not directly related to the business of Tata itself.
Corporate Governance
Tata Steel has articulated its policy position regarding human resources, the
environment, and health and safety. It has a statement of purpose, a vision, and a
mission that shape business-community relations as well as organisational structure.
Tatas organisational structure is called the Tata Business Excellence Model
(TBEM). This has been introduced across the Tata Group as a means of increasing
efficiency and tightening business processes. Activities are broken down into the
following;
Market development
Planning, control and risk management
Investment management
Operations (production and maintenance)
Supply management
Human resources management
Social responsibility and corporate citizenship
Good corporate governance should be an integral part of all of these processes,
not just (as often assumed) social responsibility and corporate citizenship. After all, a
good corporate citizen needs to be accountable to stakeholders while conducting
business as well as when investing in the community at a later date.
Tata Steel has gone some way in ensuring corporate governance at all stages of the
business process. Every year the company aims to exceed its targets on the
Employee and Customer Satisfaction Indexes, and the Corporate Citizenship Index.In order to improve its internal management systems it has also adopted two
systems of evaluation:
Tata Code of Conduct Follows guidelines established by the UN Global
Compact (to which Tata is also a signatory). A company signing to the Tata
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Code of Conduct entitles that company to use the Tata brand name. It
prescribes principles by which all employees are expected to act.
Audit Commit tee
Environmental Sustainability
Tata Steel was the first integrated iron and steel plant in India to have been certified
with the ISO-14001 Environmental Standard, and one of only a few in the world to
have this accreditation in 2000. It operates its own Environmental Management
System (EMS), aimed at increasing efficiency and limiting environmental impact at
all stages of steel production. This system focuses on improved staff education
(including contractors), instituting a system of waste segregation and its eco-friendly
disposal, the safe disposal of industrial waste and where possible, a 100 per cent
recycling of hazardous wastes such as tar sludge, oil soaked jute, and waste acid
from batteries.
Departments
Tata Steel has also established several social departments and societies that work
within the structure of the company. Table 1 lists them and details when they were
established. Programmes implemented under these departments and societies are
described in the next section, Social Investment.
Table 1: Departments and Societies established by Tata Steel
Department / Society Year established
Family Welfare 1951
Community Development and
Social Welfare1958
Tribal and Harijan Welfare Cell 1974
Tata Steel Rural Development
Society (TSRDS)1979
Environmental Management 1986
Tribal Culture Society 1990
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Tata Steel Family Initiatives
Foundation1998
Social Investment
This section reviews after-profit practice, work in and for the community that is not
directly related to the business of business. Again, Tata Steel has internal
procedures that guide policy, meaning that community initiatives are seldom ad hoc.
Below are six of these initiatives or procedures, three of which are organised by
some of the departments listed in Table 1 above.
Tata Council for Community Initiatives (TCCI)
TCCI is a product of the Tata Groups commitment to the community. It serves to
help the Tata companies in their business-community relations, by drawing up Tata
Guidelines for Community Development, designing programmes then implementing
them. Programmes include training courses in which Tata companies conduct
technical (IT, vocational) training to members of the community. This is done with
the help of company volunteers, often management staff. A forthcoming project
involves forming a Tata Corps of Volunteers, under which employee volunteering will
play an increasingly important role in developing business-community relations.
Tata Social Evaluation, Responsibil ity and Accountabili ty (ERA)
ERA is a procedure by which Tatas community projects are evaluated for their
impact on the target communities and their level of accountability. Although ERA is
not independent of Tata, such procedures are influential in improving programme
delivery and ensuring continuing self-evaluation and learning.
Global Business Coalition (GBC)
The Global Business Coalition on HIV/AIDS aims to check the growth of the disease
with the help of over a hundred major international companies. Believing that
business holds the necessary marketing skills, management and infrastructure to be
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able to raise awareness in rural communities, the GBC encourages companies to
campaign with imagination and consistency.
Tata Steel has done just that, and won an award in June 2003 for Best Initiative.
Initially Tata focused on educating employees, but now targets over 600 villages in
the State of Jarkhand. This is done through the dissemination of mass media, aswell as more inventive schemes, such as student workshops which employees are
trained to deliver, or travelling street plays in local languages that reach the rural
illiterate. Tata paid for six condom-vending machines in the city of Jamshedpur in
public places, which are also proving to be a success. At one of these locations, a
busy coach station, there is also a clinic where passers-by can have free check-ups
and learn more about HIV/AIDS.
Volunteer Database
A Directory of Employee Volunteers was established by the Tata Group as an
efficient way of matching jobs in the community with employee skills and interests. A
corporate committee, comprised of a senior executive, union and government
officials, interacts with the communities to ascertain their needs. This is done on a
quarterly basis with senior citizens of each village, and biannually with target
womens groups.
Health Initiatives
Working with government to prioritise projects, Tata Steels involvement in health
initiatives remains largely philanthropic, with the exception of the Global Business
Coalition for HIV/AIDS awareness scheme (see subsection 3 above). Tata Steel has
invested in a local hospital which treats an average of 2,300 people per day. It has
also bought specialist cancer-treating equipment, and part-finances the running of
one blood bank, two rehabilitation centres and five homeopathic clinics. Donations to
the clinics and centres are regular and on a long-term basis, which does indicate a
move from ad hoc sponsorship to a more strategic social investment. This is
organised by the Family Welfare department.
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Culture and Education
Education and Youth Development Programmes have built and maintained
infrastructure for sports across Jarkhand. Over 1,500 young people are currently
training at Tata Steels two sporting academies, six training centres or their
Adventure Foundation. Awards are given to employees who excel in sports. A TribalCultural Centre was built in 1993 and a Jubilee Amusement Park in 2001 to enrich
the cultural heritage of the city of Jamshedpur.
Tata Steel has also invested in education, part-financing eleven schools and
colleges that teach nearly 10,000 students per year.
Looking to the future
Along with the TCCIs forthcoming project to formalise employee volunteering, Tata
Steel also hopes to align more with global standards and initiatives. In 2001 TataSteel produced a Corporate Sustainability Report following guidelines established by
the Global Reporting Initiative. This is another step forward for the company looking
to make its mark on the new corporate responsibility agenda.
Key Issues and Lessons Learned
Tata Steel has provided many examples of how business-community relations are
approached by the private sector in India at the present time. Summaries of Tatainitiatives reveal that the company is working to improve both before and after-
profit practice. As these practices are voluntary undertaken by the organization they
showcase that the organization has a very high concern for the society. These
practices are very well planned by the organization and they are integrated with the
other practices which aim towards maximization of profits. These policies and
practices are embedded and institutionalized in the organization. The organizations
not only have a high concern for profits but they also have a high concern for
society. As these policies are strongly entrenched in the system they are consistent
and connected to the business. Like Tata Code of Conduct means that the company
holds certain principles, based on value judgements, that influence its policies and
procedures. One result of this has been the adoption of various organisational
structures that are responsible for targeting particular issues, such as the Family
Welfare and Environmental Management Department.
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Tata Steels has also started employee volunteering whereby employees are not
aware and communicated properly but are also actively participate in CSR activities.
The employees are given incentives for volunteering. This has implications on the
real motivation behind employees giving up their time for a local cause.
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