Approaches To Leadership In Tata Group Management Essay

Introduction:

Leadership is an integrated part of our life. According to corporate chief and former US presidential candidate Ross Perot, “the principles of leadership are timeless because, in a rapidly changing world, human nature remains a constant”. We all experience leadership in our life from early childhood in our families, through friendships, social & sports activities, school & higher education, in politics, in government and of course in our work. We all recognize leadership in other people and often in ourselves. In government, global corporations and small businesses alike, the leadership role is becoming more demanding, more open to scrutiny and more difficult [Gill, R. 2006].

The development of leadership theory also parallels the development of organizational theory. The bureaucratic form of business organization is characterized by ‘laissez-faire leadership’ – whereby so-called leaders tend to avoid taking a stand, ignore problems, not follow up, and refrain from intervening – or transactional leadership, in which leaders practise management by exception, focusing only on deviations from what is required, and contingent reward, rewarding people (either materially or psychologically) for achieving what is required. The emergence of the post-bureaucratic form of organization in the late nineteenth century reflects the development of the concept of transformational leadership [Gill, R. 2006].

Theory & Approaches to Leadership:

Many Leadership theories and approaches have been evolved around Style, Trait, Behaviour, Situation and Charisma. Many researchers made efforts linking these theories across these leadership approaches. However, each leadership model has its merit, assumptions and limitations. Most recent researches are conducted on Situational & Transformational leadership styles. Various leadership Gurus presented new models as variations to the already existing models. Max Weber, MacGregor, Bass, Bennis & Nanus are some of the most important researchers in the area of transformational leadership. The difference between transactional and transformational leadership is vital in getting the whole concept of transformational leadership theory. In general, a relationship between two people is based on the level of exchange they have. The more exchange they have the stronger the relationship. Manager’s expects more productivity from employee in order to give good rewards. In this way, if something is done to anyone based on the return then that relation is called ‘Transactional’ type. In business, leaders announce rewards in turn to the productivity. These relations are all about requirements, conditions and rewards (wordpress.com).

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In our life at various stages some things are happen without any expectation from other side e.g. mother’s love for her babies. This is one for of transformational approach. Transformational Leaders work toward a common goal with followers: put followers in front and develop them, take followers to next level, inspire followers to transcend their own self-interests in achieving superior results (wordpress.com). Here we discuss the various forms of leadership and Table 1, given below shows how Bass’s full range model of leadership works [DBS Notes].

Table 1

By studying the evolution of leadership approach of the TATA Group, an in-depth analysis of importance of leadership model is given now onwards.

Leadership Approach in TATA Group:

TATA Group founded in 1868, is an Indian multinational conglomerate headquartered in Mumbai. The Group has more than half million employees spread across over six continents (more than 100 countries) and is the largest private corporate group in India. The estimated market capitalization of the group is worth $80bn. It is the biggest employer in UK as well, employing more than 50,000 people. It has main interests in communications, IT, engineering, materials, services, energy, consumer products and chemicals. Its present chairman, Ratan Tata is the most influential business leaders in India. He is also one of the world’s most influential people as per Forbs magazine. The Group is known for ethics and value based business approach.

Evolution of Leadership in TATA Group:

Under the leadership of the Ratan Tata, the Group has incorporated more leadership changes which were essential in current environment to drive towards to be more competitive. In terms of leadership style, the Group has adopted a team-led culture and collective effort approach. Trust became a major factor and theme of the group. Ratan has put a complete organisational restructuring, since he became chairman of the group in 1991, by taking a more matrix-style approach building teams. These changes have transformed a lot in the group business, senior managers have to be on their toes and flexibility and adaptability became essential qualities to have. The leadership changed from a centralised, command centre to a much more distributed form with employees and all managers enjoying greater responsibility and knowledge, which in turn motivated them to work harder and as a group.

From well established leadership models such as the McGregor Theory X and Y; in which the theory X manager believes workers dislike work, are not creative and avoid all responsibility whilst the theory Y manager believes that workers get as much enjoyment from work as they can derive with leisure, accept responsibility and be creative. Theory Y approach has been adopted by the Ratan Tata. He wanted all his managers to be modelled as closely to Theory Y and he himself could be called a Theory Y facilitator. He encourages managers to be more innovative and share all their ideas, consulting actively with them and giving them more responsibility and importantly encouraging team-working.

Five Factor Leadership Model:

Emotional Stability: Ratan has very low anxiety within him and has great sense of security with his future leadership.

Extraversion: Even being a bachelor Ratan is very sociable. He has produced very positive affect on future leadership of the Group.

Openness: He believes in originality and versatility. By making £1200/- car he has shown his great interest with and innovation seeking personality.

Agreeableness: Within his management team and outside world, Ratan is well trusted and very friendly.

Conscientiousness: He is very dutifulness. He spent most of his life working for Group without having any self-interest. He leads a very well organised life.

Style (Behaviour) Theory in TATA Group:

As per style theory, there are three kind of leadership models are available in literatures. These are as given below.

Autocratic

Democratic

Laissez-faire

Ratan Tata is a leader who engages in more democratic style of leadership approach and occasionally shows the other two leadership styles as well. He is more democratic because he always encourages his group leadership to be creating good communication and participation. The budding leadership are well informed about group future strategy and they are very well engaged in decision making process. Most of the group long-term and short-term strategies are formulated by the lower rank of the leadership and are treated as stake holders. Ratan has occasionally shown some short of autocratic style of leadership. Sometimes when needed especially when quick and informed decisions have to be taken, but he is never too commanding in his nature, being a man of few words and being more of a man of action. This is evident from the manner he aggressively pushes for bold international deals, such as during the global acquisitions of business powerhouses such as Corus, JLR, and Tetley. One of his senior leadership team members, Muthuraman refers him “Ratan was the chief architect of the Corus deal. I was worried about the magnitude and the amount of money. But he instilled confidence.”

In daily routine matters and in developing the leadership, Ratan also uses the Laissez-Faire model such as the delegation of important duties and decision-making, he also do not interfere with any manager’s functioning, he might make a broad strategic assessment but he does not interfere in operational issues and details, which shows that he has his trust and faith in his managers and believes in their ability. Another quote from Gopalakrishnan, an executive director of the company, expresses how much value Ratan places on his trust, this can be highly motivating for managers and workers alike, “I remember what Ratan told us at a meeting. He said that he will continue to trust all his managers, but once they lose that trust, he will go after them. I think that is a very fair deal.”

Max Weber’s Leadership Model in TATA Group:

Looking at Max Weber’s Transactional and Transformational Leadership models, where leadership is classed in three forms, Bureaucratic, Charismatic and Traditional, where a Bureaucratic leader is one who is always bound by the set rule and never go beyond them; a Traditional leader is one who does and follows everything from a history and always loyal to obey these ‘traditions and a Charismatic leader is one who uses his own wit or abilities to inspire and is one who can be described as radically opposed to administrative rules and set principles. From these models, Ratan Tata falls into the Charismatic form because he is one who leads by example, coming up with highly innovative ideas such as £1200 (Rs. One Lakh) car the ‘Nano’, budget hotels or low-end watches, he brought radical change to the Tata Group as a whole, changing it from its ‘Traditional’ mindset to new more flexible and adaptive cultural mindset in global world.

Bennis & Nanus Transformational Leadership Model in TATA Group:

We can see from Bennis and Nanus’s Transformational Leadership model that the transformational leaders groom their followers into self-empowered leaders and their main focus is to articulate vision and values clearly so these self-empowered leaders know where to go. Their traits include logical thinking, persistence, empowerment and self-control. Benniss and Nanus has evolved the model which emphasis on the four I’s of Transformational leadership, which are

Idealised Influence (being a role model)

Inspirational Motivation (creating a team spirit, motivating and provide a challenge)

Intellectual Stimulation (innovation and creativity)

Individual Consideration (mentoring and providing support for followers)

Ratan Tata has been proved a true transformational leader. We can see all I’s built-in in Ratan Tata. He is the leader with great vision hence he knows right approach to groom future leadership. He has created the team spirit in whole group at every level. He has empowered all his managers and executives and has complete faith in them. He is extremely innovative and is credited for much of the Group’s new products; he places a great deal of importance to his R&D department. He deeply cares about the welfare of all his employees and managers. During the Mumbai’s terrorist attack in Taj Hotel (belongs to TATA Group), he took front line in leading at the time of crises. In his leadership statement he articulated “One hundred years from now, I expect TATA Group to be much bigger, of course, than it is now. Best in the manner in which we operate, best in the products we deliver and best in our value system and ethics.” [tata.com]

As a leader of a global business group, Ratan, knows the fierce competition experienced by group business empire. He put a lot of effort in making his business competitive at global level. Through transformational leadership process, the group has made their processes and technology up to date. Ratan Tata said to his managers in his leadership speech “A company or business which remains static is a business that will die; a company that constantly changes and accepts that there are better ways to do things than the way they are done today, is a company that will survive in the global market that we face.” From this statement we can infer that he knows the importance of developing a good leadership within group to take Group to new heights. Ratan, involves strategy in leadership. He is a deep thinker and a brilliant strategist as is described by one of his Executive Directors, Alan Rosling, “He is a deep thinker and extremely strategic. He is always 2-3 steps ahead”. Ratan Tata is a man of strong integrity, ethics and valued principles. He cultivated the same across the Group companies. One of his companies CEO said “Tata has shown that there is no other way he will do business other than do it ethically.” He believes in strong value based leadership approach in doing business. Ratan Tata has led the TATA Group to transforming from local business group to become a global leader.

Leadership Development in TATA Group:

TATA Group has long standing leadership program in-place. Their leadership program is based in British Administrative Service model. Group’s leadership development programme aims at grooming the managers of today into the leaders of tomorrow. The leadership development programme conceived by JRD Tata, the late chairman of Group in 1950’s. The idea behind the leadership programme known as Tata Administrative Services (TAS) was to select and groom young managers, provide them opportunity for professional growth, and make them leaders of tomorrow. This is TATA’s in-house programme and has goal is to provide training to high performers, act as a cradle of change and develop the leadership qualities. Most of the Group companies are traditionally led by these in-house groomed leaders.

Cons in Leadership Development in TATA Group:

Although Ratan Tata has been very successful in leading the group to a new height, but as in case of every leadership he lacks in few of the areas, these areas includes his successor and integration of his own companies in smaller numbers. Due to large number of companies within group, there is chance of internal conflict between its own companies leadership. There have been cases when the Ratan Tata’s leadership has been ineffective in dealing with some critical situation. Ratan Tata will be retiring next year and the group is still struggling to get his replacement. He made himself bigger than the group as a whole. Most of the group leadership hover around him and whole leadership has become Ratan centric. Due to recent scam in 2G spectrum allocation in India, the group reputation has been affected severely. Its few of the top leadership were involved in different scams which could prove detrimental to group business in future. Furthermore TATA Group leadership lacks international flavour. This could be a major hindrance for the group in becoming a major global player.

Conclusions:

Ratan Tata has transformed TATA as global brand under his leadership. He has created a rank of leadership to whom he can easily pass the leadership baton. Grooming 98 CEO/MD (TATA Group has 98 companies in its group) is a challenging job in which Group has been very successful so far. He has provided inspiration to leaders within his own company. Ratan Tata has successfully led and motivated its CEO/MD of the group companies to be ambitious. Ratan Tata has adopted a management by consensus style. Leading a large group of companies in current business scenario of changing regulations, increasing competition and global economy could be a tough challenge for many business leaders. Leading the business through these tough times and growing multi-folding revenues could be a dream for many business leaders. Achieving this requires clear vision, innate conviction, ability to inspire and guide along the way. Ratan Tata established himself to be the right leader who has helped the company sail through the turbulent waters and reach the desired lands.

Appendix: Reference List

DBS Managing People Lecture Notes

Roger Gill, “Theory and Practice of Leadership”, Sage Publication, 2006

Robins, S.P & Judge T.A (2010) 10th Edition, Essentials of Organizational Behaviour, Pearson, ISBN 0-13-815763-4

http://leadershipchamps.wordpress.com/2008/08/04/transactional-leadership-vs-transformational-leadership/

http://business.outlookindia.com/inner.aspx?articleid=682&editionid=22&catgid=70&subcatgid=464

http://www.tata.com/company/Articles/inside.aspx?artid=YJbf7uiUY0M=

Visionary Leadership: Creating a Compelling Sense of Direction for Your Organization (Jossey Bass Business and Management Series): Burt Nanus

Tata Group – Annual Reports (1991 -2011)