Leader of a Business - Research Paper Example

Submitted Leader of a Business The leader selected in this paper is a business group head in a third world country; India. The group is Tata Sons. The group has successfully bid for international companies and recently acquired an European Steel Company. They are contemplating to acquire share in an international hotel chain, despite having their own group of hotels internationally. The group has diversified subsidiaries producing Iron and steel, cement, communications, information technology and even some consumer goods like tea and other things. The diversified products, the number of industries the group have and the zeal for international presence and the international importance it have is sufficient to choose its head to discuss and analyze his thoughts and actions in this paper. One more thing that justifies the discussion about the person in this paper is that the hotel belonging to this group (Taj Mahal, Mumbai, India) has bore the brunt of terrorist attacks and has been reopened within a month. As a result the author of this paper felt that one can find organizational behavior/management as well as conflict management techniques in the actions of the person mentioned in this paper; Ratan Tata, who succeeded the group as part of the legacy of Tata's family. Personality of Ratan Tata The personality of Ratan Tata is reflected in his activities as he developed management of Tata Sons into a think tank that contemplates group's vertical as well as horizontal expansion. His leadership prompted the directors of the company as well as heads of various industries to innovate the products and to reach common man as well as middle class people in third world countries as well as targeting the rich customers. Regarding personality development of this person, he has transformed a lot from the date he received his bachelor degree in 1962 and transformed his company to a strategic think tank from just a manufacturing think tank. The important trait in Ratan Tata is that he inherited the fact that the holding company can manage with minor share along with the fact that enables a company to expand through acquisitions. With the revenues of his group companies, his group successfully acquired Corus group Plc for 6.2billin GBP, which demonstrates his cash utilizing techniques for expansion of business. Hence, one can state that he has good management techniques as his group is able to manage the companies with minor stake and he is able to convince the group companies to mobilize cash for acquisitions. This demonstrates his planning that is able to convince the majority shareholders and directors, who have real control over the company with major amount of shares. As a result, his personality is a mix of organizational management (managing the group with minor share) and planning the future endeavors. In his leadership the group entered into communications and IT sectors with much success as Tata Tele Services and Tata Consultancy Services are a result of his vision for the foray of the company into new sectors. He guided his group to acquire India's largest foreign communication network 'Videsh Sanchar Nigam Limited', which is responsible for every outgoing and incoming call from and into India. Hence one can understand that Ratan Tata is a person who concentrates on expansion as well as maintaining relationships with the partners. 1 Values in Business and as a Person In addition to the trait of maintaining relationships and expansion of business, the values of Ratan Tata's family are reflected by the fact that the two thirds of the equity of the parent firm are with philanthropic trusts endowed by his ancestors and he too continued the same. After assuming the chairmanship of Tata Sons, he has given new direction to social responsibility by the creation of Tata Council for Community Initiatives. He is also a member of Ford Foundation as well as the member of Bill & Melinda Gates Foundation's Indian initiative. In an interview given to 'Global Giving Matters' in 2005, he emphasized the value that should concentrate on human development as well as developing the quality of life of the people. As part of the activities of corporate social responsibility, the holding company of Tata group to which Ratan Tata is Chairman gives of 8 to 14 percent of its profits to philanthropic and human development activities. Another trait regarding values, which has been observed in that interview is that he expresses his will about people working as institutions but not as individuals. Hence, he stresses on that principle and his charitable trusts as well as the group he is heading can be observed as working as an institution and individuals identify themselves with the organization. 2 In addition to the above aspect, Ratan Tata keeps in view that public mind connects business ethics with financial integrity. According to R.M. Lala (2006), Tata believes that ethical leaders are those who are not swept off by their work, but take time to continue to develop human touch in their activities. He makes difference between value and values as value is business and values are based on ethics according to Douglas K. Smith. The values and ethics of Tata start from their staff and reach large number of people who are benefited by their charitable trusts as well as the nation. Hence, according to Ratan Tata, the words ethics and values should encompass the entire spectrum of human conduct. Ratan Tata and his ancestors believe that practicing the ethical essence of faith is better than attending the rituals. Hence, Mr. Tata thinks good, act good and do good for staff and the nation. Consequently, Tata group thinks about comforts and safety of its employees. Tata Group gave number of buildings and lands for Indian Institute of Science to benefit the people of India through developments of science. The values and ethics Tata take into consideration come from the vision that strengthens the conviction. The importance for values Ratan Tata gives can be understood from the fact that he and his ancestors pay and get in the form of moral values, but not just on basis of legal terms. The above aspect gives a comprehensive picture of values and ethics of Mr. Ratan Tata. Conflict and Negotiation Style The values followed by Mr.Ratan Tata and his ancestors decide the ways they deal with the conflicts and the negotiations that follow. Ratan Tata's close associates say that he faces less number of conflicts as conflict results when the values, perspectives and opinions are contradictory in nature and Tata group would not enter into contradictions by violating the agreements. As Tata lives and acts according to values, he tries to minimize the number of conflicts between his staff as well as between company and share holders, suppliers and other stakeholders. The essence of conflict management of Tata is avoiding it and the management of Tata group tries to remove discomfort and fear from staff and stakeholders. The important aspect that Ratan Tata achieves by his conflict management techniques is to increase productivity and enhancing the morale of the staff. Despite conflict avoiding measures the company follows if there is any instance of conflict, Ratan Tata tries to improve communications between parties of the conflict. One important aspect that Tata group follows to avoid conflict is to involve employees in decision making process. Most of the corporate conflicts are due to absence of understanding about the decisions of management by the employees. Hence, the participation of employees in decision making process avoids conflicts and Tata group in the leadership of Ratan Tata does it. Another conflict management technique that is explicit in Tata is that he and they avoid(s) the traits that he does not like in him to be expressed when there is a conflict. As Tata has very strong conviction about his position, he generally tries to work to get the other's way and yet times offers mutually give and take. However, majority of conflicts are solved or managed due to focus on working together. In addition to the above things, Chairman of Tata group will try to tolerate or accommodate the traits in him, which he does not like. However, there are very less such instances, he may not get that above context of tolerating the traits in others, which he do not like and are similar to the ones in him. As the above all aspects are the ones that are related to policies of the person and company to deal with conflict management, there are other matters that really bothered by parties during the conflict. When Tata management faces a conflict with their staff or stakeholders, they try to convey that they are hearing and understanding them. Ratan Tata tells his managers to avoid the questions like 'why' while the conflict is severe to avoid the wrath of the opponent. However, he maintains clarity in agreement and disagreement with the arguments of the other in the conflict so that the parties of the conflict can understand his view. It is rare to see a conflict up to the above -mentioned extent in the functional style of Tata as the stakeholder's behavior could not conflict with the policies and procedures of the company. 3 Motivation Approaches In addition to the coincidence between stake holder behavior and company policies, Ratan Tata believes that loyalty can drive motivation. When he took over the company in 1991, it is not performing well and his personal mantra of loyalty and earned respect from his employees but not in a commanding tone. To motivate his employees he sends 'thank you' notes when they are doing well and even pay for the terminated workers. The motivational tactics of Ratan Tata made the loosely knit, domestic based company into an international player and a company that is about to release the cheapest car (Nano) in the world. The motivation he induced in his employees through loyalty resulted in a market capitalization of $70 billion and a profit after tax being $2.8 billion in 2008. The gentle and kind manners of Ratan Tata engender loyalty and yet times his managers make tough decisions. Hence, the motivation approach is separate from decision making. His managers say that he encourages to take calculated risks and his style of 'tough mind and gentle hand' is the key motivational approach he follows regarding his employees. However, the motivation approach of Tata is different from other corporate approaches that make only pay scales as main part of motivation, but in case of Ratan Tata's Tata Sons, the motivation approach is payment as well as loyalty and kindness and tough decisions in the gentle mind. The packages they offer even for the employees being terminated results in a loyalty that makes them to return to the company whenever it is possible. Tata Sons pay salary for 9 months to the employees who are terminated due to closure of units and gives 50% of salary for another 9 months from then. Hence, even termination is a motivational approach of the management as they do not want to loose the talent except for the closure of the units. Ratan Tata's management team earns loyalty from the employees through their policies and decision making process. In addition to that the time invested in people also pays in the form of loyalty and Tata believes in that.4 The motivational approach of the Tata is inherent in the fact that, his company is 91 operating divisions and still he is able to manage that. The important motivational approach is that all the companies under Tata Group are autonomous in their own way. Instead of having a face to his company, Tata tries to divide his diverse industrial empire into old and new economy groups. His motivational tactics drove his engineers and managers to plan the units to manufacture the cheapest car in the world. He is clear about the technologies available and guides his managers and employees in a suitable way. In addition to that, he will not force his managers and employees to work in the market, which is not fully understood. In the context of manufacturing he tries to take the product to the most common man in his country and the world and tries to be economic in production cost but generous in paying to the employees. The important aspect in his motivational approach is that his employees feel that they can work with pride in a company that is ever growing and is becoming more international day by day and year by year. Ratan Tata emphasizes the need of merging and divesting as well as the job security of the employees.5 Leadership Style The job security of the employees may be the motivation for them to be loyal and work hard for the company's well being, but the leadership style and qualities are the ones that result in growth of the company. In one such example, one of the companies in the Tata Sons group acquired a steel company called 'Corus' 5 times bigger than Tata Steel by mobilizing enough cash resources from group companies. However, the huge acquisition intention and its timely execution bring to the fore the leadership style of Tata that thinks about big things. The important aspect in the leadership style of Tata is that he want to set milestones in Indian Industry and he has done that by acquiring an international steel company and that too was the 5 times bigger company than Tata Steel. He dreams that his Tata Sons group should be an Indian Multi National Company and that day is not far away according to vision of Ratan Tata. The important activities he has done internationally is along with 'Corus group', Tata tea has took controlling stake in British Company Tetley and Tata steel has acquired Nat Steel of Singapore. In addition to that Tata Chemicals entered into Africa and Tata Motors entered into South Africa and is ready to make a break into third world countries with its cheapest car in the world 'Nano'. In addition to that Tata Sons acquired Videsh Sanchar Nigam Limited (India's public sector firm that controls outgoing and incoming calls from and to the country), which is a crucial step in communications. His leadership style is acquiring firms aggressively by mobilizing the cash reserves of the groups as it has enough cash reserves cumulated from years. However, Tata wanted to enter into airlines market with a huge budget but Indian Government did not respond timely and this lead to cancellation of the proposal. The important aspect in leadership style of Ratan Tata and his predecessors is that they did not confine the leadership of Tata Sons to a family. Moreover, they had minor share in all the companies of the group but the vision and strategic excellence made them to be at the helm of the affairs of the group. 6 While talking about Ratan Tata's leadership style, Satyabir Bhattacharya (2006) talks about the difference leadership style can bring out in entrepreneurship and innovation. He brings out the difference between risk and leadership style and the nature of leaders like Ratan Tata who can make a difference by facing the risk with leadership qualities in addition to the hard work and loyalty. Hence, all entrepreneurs may work hard but leadership style makes the difference in success and growth of a company and financial safety of its employees. According to Satyabir Bhattacharya, the management or the entrepreneur should take part in day to day decision making also to impart his leadership style in the execution of policy decisions. The important thing Ratan Tata follows is that every minute operational matter gets documented and religiously followed by the employees and managers on a regular basis. Another context of leadership style reflection in case of Tata Sons is that the management philosophy or Ratan Tata was principally guided by 'review and control mechanism' as well as 'creation and innovation'. Just being creative and innovative may need other people to execute the creative ideas, but a mix of creation and control combined with review enables an entrepreneur to be a leader with a difference so that he can review his employees and mangers' actions as well as guiding them. Another important leadership aspect in Tata is to select and retaining the right executive team and reposing complete trust and confidence in collective ability and that is the essence of Tata Sons success in every field. Hence, in addition to innovation Ratan Tata gives equal importance to review and control and they find equal importance along with innovation and creativity. 7 Leading through Complexity and Largeness The creativity, innovation, control and review result in managing the group's revenues and even increasing them. According to General Management Review (2006) Ratan Tata established himself as a right leader who can help the group sail through troubled waters and reach the desired lands. The desired lands are vertical growth as well as horizontal growth and being a multi national company. Tata changed the leadership style and management of the company from paradigm of manufacturing by foraying into services too. It does not mean that Ratan Tata ignored manufacturing sector. His interest in manufacturing sector can be observed from the acquisitions of 'Corus Group' and British Tea Company Tetley. His thoughts are innovative in manufacturing also and he is the man who thought of a car of common of India and third world countries. Hence, one can find that the activities of Ratan Tata are directed towards diversifying the Group's activities as well as consolidating them by growing both vertically and horizontally. Till Ratan Tata took the mantle of the group, Tata Sons concentrated on domestic market of India only. However, the presence of Ratan Tata at the helm of Tata Sons resulted in a globalised view of the company by acquiring Overseas communications Wing of India 'Videsh Sanchar Nigam Limited' and acquiring 'Corus' and buying majority share in Tetley. Hence, his leadership style is aggressive with gentle thoughts and large ideas. Before the regime of Ratan Tata, the group used to manufacture trucks from its automobile wing. However, after the entry of Ratan Tata, the company started manufacturing passenger cars and even Sports Utility Vehicles as well as cheapest car in the world. He announced that his group companies will manufacture cheapest water purifier required for the masses of India as well as third world countries. 8 Communication Style The mode communication of Ratan Tata is interpersonal and he talks more with his deeds rather than his words. He interacted with majority of middle class and lower middle class in India and other third world countries by announcing cheapest car project as well as the cheapest water purifier. Though his style is not different from JRD Tata, Ratan has a different aptitude and low profile attitude till his deeds talks about him. Even while selecting him as heir apparent, his Predecessor JRD Tata has to consider Palkhivala and Russy Modi, but the communication style and think big attitude of Ratan Tata played important role and put him at the helm of the Tata Sons. Ratan Tata brought the company out of the conservative style and started acquiring foreign companies as well as increasing dividends to share holders. Hence, by increasing dividends and foraying into foreign markets, he communicated to all stakeholders of the company and assured them of reasonable returns for their investments. Another mode of communication is perseverance and announcing the policy decisions. The above aspects in dealing with employees as well as stakeholders result in a long term success of the company with increasing number of companies as well as assets. Hence, his communication style is gentle as mentioned in the above chapters and also offers much needed confidence to stakeholders and customers as the group is growing and meeting the demands successfully. 9 Works Cited Carter McNamara, Basics of Conflict Management, Free Management Library, 2008, Volume 11, Retrieved on 4th January 2009 from GMR, Complementing for Complexity: Leading through Managing, General Management Review, Volume 2, Retrieved on 14th January 2009 from http://www.etgmr.com/jan_mar05/style.html Nitin P Ahuja, Personality in Focus, Management Paradise.com, Published on 14th January 2008, Retrieved on 5th January 2009 from Rama Chander S, Of Steel and Spunk, Business Line, India, 3rd November 2006, http://www.thehindubusinessline.com/life/2006/11/03/stories/2006110300010100.htm Ratan Tata, Personal, 16th August 2005, Retrieved on 13th January from Satyabir Bhattacharya, Entrepreneurship and Innovation: How Leadership Style Makes the Difference Vikalpa, Volume 31, Edition 1, 2006, Retrieved on 14th January 2009 from http://www.vikalpa.com/pdf/articles/2006/2006_jan_mar_107_115.pdf Synergeos Institute, Ratan N. Tata: Linking shareholder value and social responsibilities, Global Giving Matters, 2005, Retrieved on 4th January 2009 from TATA, Media Reports, Tata.com, Published in 1981, Retrieved on 14th January 2009 from < http://www.tata.com/company/Media/inside.aspxartid=Sng9Do0rWTQ=> The National Learning Institute, Why Loyalty Pays, The National Learning Institute, Retrieved on 13th January 2009 from Read More