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Cyrus Mistry’s exit from the Tata Group – a failed experiment in Sucession planning

By | Ramesh Ranjan | Founder & Editor – www.humanengineers.com

In a surgical strike the Tata Board removed Cyrus Mistry on 24th October 2016.

The untimely removal of Cyrus Mistry as the Chairman of the Tata Group is probably a great example of a “failed experiment” in bringing an outsider to lead a very large organisation. It was an experiment that didn’t work and backfired.

They had taken a lot of time and effort in zeroing on Mistry four years back before anointing him as the Chairman of the Group. Probably he couldn’t handle such a large and diversified group with numerous entitites and handle all the complexities associated with it. Moreover he also had to be sensitive to the 150 year old legacy culture of TATA. He was parachuted from above into the organisation.

Such a sudden move came as a surprise to many. The reason for the decision is unknown and keeping in tune with the TATA values of transparency, the Board may consider explaining the reason for the change. A decision of this nature is also unprecedented because the group has a stated ‘humane’ policy of removing employees only on ethical grounds or under grave circumstances.

There are many rumours floating and is not fair to both Cyrus Mistry or the TATA’s.

A low-profile man to the extent of being reclusive, Mistry, 48, was a surprise choice to succeed Tata, who retired on 29 December, 2012 as chairman of the one of the country’s oldest business empires. The only second non-Tata to take charge of the group after Nowroji Saklatvala in 1932, Mistry by virtue of his age came in with a lot of promise, specially of continuity when he became chairman of Tata Sons—the promoter of the major operating Tata companies at the age of 44.

However, in nearly four years since he took over the reins of the salt-to-software conglomerate, Mistry had to face many challenges in both domestic and global markets as many of the group companies faced headwinds.

While speculation is rife as to what led to Mistry’s departure, many are pointing to the obvious pressures resulting from the company’s lacklustre performance — Tata Sons’ sales declined to $103 billion in 2015-2016 from $108 billion the previous year.

His handling of the Docomo litigation, the sale of Corus in UK, the sale of Legacy Hotels of the Tata’s abroad, the lack of enthusiasm to invest further in the Jaguar and the Welspun Renewables’ acquisition are some of the reasons being talked about. The Corus, the Hotels in US and UK and the Land Rover Jaguar were a matter of pride for the TATA’s especially Ratan Tata and the lack of enthusiasm shown by Cyrus in these prestigious acquisitions and the lack of will to make these acquisitions succeed, have hurt the TATA legacy. May be it has been seen a reversal of policies and a threat to the TATA old guards.

He has not been able to build a strong team to manage this diverse and complex organisation at the Top, what with many senior leadership positions still unfilled.

It leads to the question “should you buy talent or grow talent”.

One of the most frequent and important questions in talent management is “Build or Buy,” ie. should you build talent (develop an internal candidate) or buy (go outside the organization for the candidate). Even as Organisations are grappling with this dilemma and are currently trying to strike an even balance between “Building” talent from within and “Buying” talent in the form of new hires, the current economic climate and labor market appear to be shifting this balance. The quality of leaders makes a difference to the organisation.

Growing Talent Takes Commitment

Cultivating talent from within requires a different approach to talent management. It requires Organizations making greater investments in such areas as training, career development, succession planning, and identifying high-potential employees The critical component in being able to effectively promote from within is to have an active Talent Pipeline that can supply the right leaders in the right roles at the right time. This isn’t easy and can be time consuming & expensive & requires a lot of effort on the part of the organisation. Organizations that have all the pieces in place to grow their own talent invest heavily in doing so; they are committed to it at the highest levels.

Organizations can grow its own or go out and buy talent.Either way, put a plan and processes in place to support goals and strategy; don’t just hope leaders will grow and evolve.

It’s a pity that an organisation that has over 100+ organisations, been around for 150 years and employing more than 660,000 cannot find a leader who can take over from Ratan Tata. It must be biggest failure of the Succession Planning exercise in modern day Human Resources Management history.

They have eminent leaders in TCS, Titan, Tata Steel, Tata Motors, ACC, Tata Tea, Tata Chemicals, Tata Power etc and are we saying that none of these leaders are worthy to occupy the Top Slot in the Tata Group. All of these leaders have been in the organisation for a long period of time (Tata Motors exception), been highly successful having nurtured and grown their organisations into market leadership in most areas , know the Tata culture well, know the market and their expectations and more importantly enjoy the Trust and Confidence of Ratan Tata.

I am reminded of my ex Boss who used to say that one of the most important competency for a successful leader is “Comfort around Top Management” and “Managing Boss”. If you aren’t able to carry yourself around with the Top Management or be able to gain the Trust & Confidence of your BOSS you wont be able to manage him and will lead to failure & exit.

May be it’s a case of Mistry not being able to win the confidence & trust of Ratan Tata and the Board and hence his sudden exit.

Its about time that the Tata group looked within and pick one of their leaders from their Jewels of Tata companies rather than looking for a savior from outside. Hope they realize that a known devil is better than an unknown angel.

Its too big,diverse and a complex organisation for an outsider to come in and handle. An outsider would also find it very difficult to manage the group dynamics and handling veteran Industry Leaders who are stalwarts in their own area.

Whatever the future unfolds in the next few days, uneasy lies on the Crown for the TATA’s.


RanjanLRamesh Ranjan is the Founder & Chief Editor of Human Engineers  an organization being formed to help Organization’s to “make the most of its People” and co-creating value thro’  People”. He is also the Founder & Head of URNEXTBREAK, a Staffing solutions organization aimed at helping employees plan their NEXTBREAK. He is a certified CEO / Leadership Coach, Mentor for Startups, Blogger & a Speaker.

In a career spanning nearly 3 decades, he has been Head of HR and held leadership positions in India & globally in organisations like Schneider Electric India, American Power Conversion (APC), Chevron Texaco/Caltex India, Praxair India, Co Systems India, Indian Herbs & ITI. He was the Honorary Secretary of the National HRD Network, Bangalore Chapter – 2000-2002, Cluster Lead – NHRD Bangalore Chapter (Whitefield & ORR) in 2014 and currently the Vice President – NHRD Bangalore Chapter. He was the member of the India HR Council of the AMCHAM, New Delhi, Panelist on the Roundtable of HR Directors of Petroleum Companies, ISP Mumbai and Member of the India HR Council of Conference Board.

He strongly believes that HR is not for faint hearted professionals. He believes that “when the going gets tough, the tough gets going” and can be reached at rameshranjan@humanengineers.com

 

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