Contents:

Introduction to succession planning

Definition
Enforcing the succession plan:
History of Tata group
Founder of Tata group
Impotence of succession planning
SUCCESSION PLANNING PROCESS
ADVANTAGES OF SUCCESSION PLANNING
Mistakes to be Avoided in Succession Planning
Case Study of TATA Group
Early Years of Mr Ratan Tata
Building the TATA Corporate Brand
TATA Group Today & Tomorrow
The Challenges Before the Successor
The Race for Succession
About Cyrus Pallonji Mistry

Acknowledgement:
INTRODUCTION TO SUCCESSION PLANNING:
Succession planning is a process for identifying and developing internal people with the potential
to fill key business leadership positions in the company. Succession planning increases the
availability of experienced and capable employees that are prepared to assume these roles as they
become available.

Succession planning is not an issue that many organizations address in any systematic way.
Because many non-profits are small (with fewer than 10 employees) and because they may be
facing other organizational challenges, thinking about who the next executive director might be
or what would happen if the director of finance suddenly left is not high on their priority list.
There are many reasons why organizations need to be thinking about succession planning. The
most important reason, of course, is that we rely on staff to carry out our missions, provide
services and meet our organization's goals. We need to think about what would happen to those
services or our ability to fulfill our mission if a key staff member left.
Another reason to focus on succession planning is the changing realities of workplaces. The
impending retirement of the baby boomers is expected to have a major impact on workforce
capacity. Teresa Howe in "Succession Planning and Management" identified other emerging
realities about the workforce in Canada:
Vacancies in senior or key positions are occurring in numerous organizations simultaneously and
demographics indicate there are statistically fewer people available to fill them
Baby boomer retirements are on the rise just at the time when the economy is growing and
increasing the demand for senior management expertise
There is no emerging group of potential employees on the horizon as in past generations (i.e.
baby boomers, women entering the workforce, large waves of immigration)
Many organizations eliminated middle manager positions during restructuring in the 1980s and
90s and no longer have this group as a source to fill senior level vacancies
Younger managers interested in moving up do not have the skills and experience required
because they have not been adequately mentored. This is because middle managers, who would
normally perform this type of coaching role, were eliminated.
Succession Planning Thinking About Tomorrow Today In organizational development,
succession planning is the process of identifying and preparing suitable employees through
mentoring, training and job rotation, to replace key players such as the chief executive officer
(CEO) within an organization as their terms expire. From the risk management aspect,
provisions are made in case no suitable internal candidates are available to replace the loss of any
key person. It is usual for an organization to insure the key person so that funds are available if
she or he dies and these funds can be used by the business to cope with the problems before a
suitable replacement is found or developed. Succession Planning involves having senior
executives periodically review their top executives and those in the next-lower level to determine
several backups for each senior position. This is important because it often takes years of
grooming to develop effective senior managers. There is a critical shortage in companies of
middle and top leaders for the next five years. Organizations will need to create pools of
candidates with high leadership potential. Succession planning involves a careful balancing of
the concerns and needs of a firms founding and senior managers, on the one hand, and its more
junior investment professionals and managers, on the other hand. The founding and senior
managers want to be properly rewarded for their efforts in building and growing the firm, and
this may include rights to continue to participate in fund economics after these managers have

begun to wind down their active involvement. These desires must be balanced against the need to
provide increased economic benefits and firm governance rights to junior managers and
investment professionals in order to develop the next generation of managers for the firm.
Definition of succession planning

Identification and development of potential successors for key positions in an

organization, through a systematic evaluation process and training. Unlike replacement
planning (which grades an individual solely on the basis of his or her past performance)
succession planning is largely predictive in judging an individual for a position he or she
might never have been in.

Succession planning can be broadly defined as identifying future potential leaders to fill
key positions. Wendy Hirsh1 defines succession planning as a process by which one or
more successors are identified for key posts (or groups of similar key posts), and career
moves and/or development activities are planned for these successors. Successors may be
fairly ready to do the job (short-term successors) or seen as having longer-term potential
(long-term successors)According to Hirsh, succession planning sits inside a very much
wider set of resourcing and development processes called 'succession management',
encompassing management resourcing strategy, aggregate analysis of demand/supply
(human resource planning and auditing), skills analysis, the job filling process, and
management development (including graduate and high-flyer programs).

Enforcing the succession plan:

A careful and considered plan of action ensures the least possible disruption to the persons
responsibilities and therefore the organizations effectiveness. Examples include such a person
who is:Suddenly and unexpectedly unable or unwilling to continue their role within the organization;
Accepting an approach from another organization or external opportunity which will terminate
or lessen their value to the current organization;
Indicating the conclusion of a contract or time-limited project;
Moving to another position and different set of responsibilities within the organization.

HISTOY OF TATA GROUP

The Tata group is one of the india oldest business conglomerates and with the passage of the time
it has been able to gamer the image of been one of the largest business group.Tatas business
horizon spread over seven business sectore.

FOUNDATION (1868-1931)
The seeds of what would mature and become todays tata goup where laid long year before india
become independent.

1868: Jamsetji Nusserwanji Tata starts a private trading firm, laying the foundation of the tata
group.
1902: The indian hotels company is an incorporated to set up the taj mahal palace and tower,
indias first luxury hotel, which open in 1903.
1907: The tata iron and steel company is established to set up indias first iron and steel plant in
Jamshedpur. The plant started production in 1912. Sets up its first office overseas, Tata limited
in London.
1910: The first of the three tata electric companies, the tata hydro-electric power supply company
is set up. The second, Andhra valley power supply company was established in 1917 and the tata
power in 1919. The first two companies where merged with tata power in 2000 to form a single
entity.
1911: Tata steel introduce eight-hour working days, will before such a system was implemented
by law in much of the west.
1917: the Tatas enter the consumer goods industry, with the Tata oil mils company beings
established to make soaps, detergents and cooking oils. The company was sold to Hindustan
lever (now unilever) in 1984.
1945: Tata engineering and loco motive company established in 27 may 2011
Consolidation (1932-1989)
The Tata group ventured into a new areas and built on the foundation , in spite of the restraints
imposed by a controlled economy.
1932: Tata airlines , a divison if Tata sons, is established, opening of the aviation sector in india
Air india was nationalised in 1953.

1939: Tata chemicals, now the largest producer of soda ash in the country, established
1945: Tata engineering and loco motive company (renamed tata motors in 2003) established to
manufacture loco motive and engineering products. Tata industries is created for the promotion
and development of hi-tech industries.
1954: voltas established in 20 may 2011.
1952: Jawaharlal Nehru indias first prime minister, requests the group of maufature cosmetic in
india, leading to setting up lakme. The company was sold to Hindustan liver (now unilever) in
1997.
1954: Indias major marketing, engineering and manufacturing organisation, voltas, established.
1962: Tata finlay (now Tata tea ), one of the largest tea producer, is established. Tata exports is
established. Today the company, renamed Tata international, is one of the leading export houses
in india.
1984: The first 500 MW thermal power unit started 27 may, 2011.
1968: Tata consultancy services (TCS), indias first software service company, establishe as a
division of the Tata sons.
1971: Tata precision industries the first Tata company in Singapore, is founded to design and
manufacture precision engineering products,
1984: the first 500 MW thermal power unit at the Trombay station of Tata electric comapies is
commissioned.
Expansion (1990 onwards)
The liberalistaion of the Indians economy unleashed a period of remarkable growth for the tata
group , in india and worldwide.
1995: Tata quality management services institute JRD QV Award , modelled on the Malcolm
Baldridge National Quality Value Award of the United States , laying the foundation of the Tata
business excellence model.
1996: Tata teleservices (TTSL) is established to sparehead the groups foray into the telecom
sector.
1998: Tata indicaIndias first indigenously designed and manufactured car is launched by
Tata Motors, spareheading the groups entry into the passenger car segment.
1999: The new Tata group corporate mark and logo are launched.
2000: Tata Tea(now tata global beverages) acquires the Tetley Group, UK. This is the first major
acquisition of an international brand by an indian business group.

2001: Tata AIG a joint venture between the tata group and American international group inc
(AIG)-marks the tata re-entry into insurance. (The groups insurance company, new india
assurance, sett up in 1919, was nationalised in 1956).
2002:Tata sons acquires controlling stake in VSNL (renamed Tata Communication in
2008),indias leading international telecommunications service provider.Tata Consultancy
services (TCS) becomes the first indian software company to cross 1 billion dollars in revenue.
Titan launches edge the slimmest watch in the world.
2004:Tata motors is listed on the worlds largest bourse, the New York stock exchange the second
group company to do so after VSNL. Tata motors acquires the heavy vehicles unit of Daewoo
Motors, South Korea. TCS goes public in july 2004 in the largest private sector initial public
offering(IPO) in the indian market , rising nearly $1.2 billion.
2005: Tata steel acquires Singapore-based steel company NatSteel by subscribing to 100 percent
in equity of its subsidiary, NatSteel Asia . VSNL (now TATA COMMUNICATIONS) acquired
Tyco Global Network making it one of the world largest providers of submarine cable
bandwidth. Tata Sons completes60 years of Tata operations in the US. The taj acquires a hotel
run by Starwood, Sydney(renamed Blue) and takes over management of the Pierre,NY.
2006: Tata Sky Television Service launched across the country . Foundation stone for the Tata
medical centre unveiled in Kolkata.
2007: Tata Steel acquires the Ango-dutch company corus, making it the worlds fifth largest
steel producer. TCS inaugurates TCS China-a joint venture with the Chinese government and
other partners. Computational research laboratories , a division of Tata Sons develops Eka , one
of the fastest supercomputers in the world and the fastest in Asia. The Taj acquires campton place
hotel in San Francisco. Tata Steel celebrates its century in august 26, 2007.
2008: Tata Motors unveils Tata Nano, the peoples car , at the 9th auto expo in delhi on January
2008. Tata Motors acquires the Jaguar and Land Rovers brands from the Ford Motors Company.
Tata Chemical acquires general chemical industrial products Inc.
2009: Tata Motors announces commercial launch of the tata nano ; Tata Nano draws over 2.03
lakhs booking; first 100000 owners of the tata nanochosen; delivers first tata nano in the country
in Mumbai.
Tata Motors ushers new era in indian auto industry with its new, world-standard truck- range.
Tata Teleservices announces Pan india GSM service with NTT DOCOMO.
TRF acquires Dutch Lanka trailer manufactures (DLT), Sri Lanka , a world class trailer
manufacturing company. Jaguar LandRover introduce its premium range of vehicles in india
Tata Motors acquires remaining 79 percent shares in Hispano Carrocera, one of the largest
manufactures of bus and coach and cabins in Europe.
Tata Teleservices launched Photon TV, an application that allows Tata Photon Plus subscribers to
watch live television channel on their laptops while on the move, and on their personal

computers at home and in the office.Tata Chemicals launched Tata Swach the worlds most
cost effective water purifier.
2010: TRF acquires UK-based Hewitt Robins international. New plant for Tata Nano at sanand
anaugrated. Advinus Therapeutics announces thediscovery of a novel molecule GKM-001- for
the treatment of type II diabetes.
Tata Docomo launches its 3G services in Maharashtra and Gujurat. Brunner Mond acquires 100percent stake in leading vacuum salt producer British Salt,UK.
2011: Tata Coffee and Starbucks sign MoU for strategic alliance in india. TCSs iON brings
power world class technology to indias small and medium business. Tata Motors introduce the
new Tata Indica eV2, the most fuel efficient car in india with 25kmpl mileage.
Mjunction services celebrates 10 years of innovation and excellence. Tata Chemicals rebrands its
global subsidiaries in the UK , the US and Kenya under the Tata Chemicals Corporate brand.

The Tata group is one of India's oldest business conglomerates and with the passage of time it has been
able to garner the image of been one of the largest and respected business group. Tata's business
horizon spread over seven business secto

IMPORTANCE OF SUCCESSION PLANNING

Succession planning is an essential part of doing business, no matter how certain your future
appears. It's easy to put off planning when everything seems to be going so well, right? Wrong.
Now is the time to begin succession planning? Here are some reasons why it can't and
shouldn't wait:1. You Can't Plan for Disaster: No matter how good you and your staff are at revenue
projections or economic predictions, no one can truly plan for disaster. Whether it's an
unforeseen illness, a natural disaster, or a CEO's decision to suddenly retire, the reasons for
having a succession plan in place before it is needed are endless. So while you can't plan for
disaster, you can put into place a series of contingencies that will help your company stay afloat
if, in fact, catastrophe occurs.
2. Succession Planning Benefits the Business Now: Just as business practices have evolved
over the years, succession planning has also grown and changed. It's no longer a plan that can
only be accessed when leadership is going to change; a succession plan can be used before its
"real" intent is necessary. It can be used to build strong leadership, help a business survive the
daily changes in the marketplace, and force executives to review and examine the company's
current goals.

3. Succession Planning Gives Your Colleagues a Voice: If you're running a family business, the
process of succession planning will give family members an opportunity to express their needs
and concerns. Giving them that voice will also help create a sense of responsibility throughout
the organization, which is critical for successful succession planning. Resist the temptation to
solely carry the entire weight of creating and then sustaining a plan.
4. A Succession Plan can Help Sustain Income and Support Expenses: Talking about money
should be a priority. People generally don't want to work for free and things don't pay for
themselves. A succession plan can provide answers as to what you and your staff will need
for future income, as well as what kinds of expenses you may incur once you step out of the
main leadership role. Ask yourself questions about your annual income and other benefits
including health and dental insurance for you and your dependents, life insurance premiums paid
for by the company, your car, professional memberships, and other business-related expenses.
5. Succession Planning Gives You a Big Picture: Some companies mistakenly focus solely on
replacing high-level executives. A good succession plan can go further, however, and force you
to examine all levels of employees. The people who do the day-to-day work are the ones keeping
the business going. Neglecting to add them to the succession planning mix could have dire
consequences. As you develop your plan, incorporate all layers of management and their direct
reports.
6. Succession Planning Strengthens Departmental Relationships: When regular
communication occurs between departments you are more likely to experience synergy, which
breeds a culture of strength. Make sure that you link your succession planning activities with
human resources. After all, HR is about people. By including HR in succession planning, you
can incorporate elements like the employee-evaluation process, which can help when deciding
whether to fill vacancies with internal candidates.
7. Succession Planning Keeps the Mood Buoyant: Change - a major component of a
succession plan is exciting and can bring a company unforeseen rewards. Still, change can be
a source of tremendous stress, especially when people's livelihoods are at stake. As you put your
succession plan together, consider its positive effects on the business. Planning for the future is
exciting and, if done correctly, can inspire your workers to stay involved and maintain company
loyalty. It's true that a plan is often put into place to avert catastrophe, but it's also a company's
way of embracing the future a business strategy that is essential for survival.

SUCCESSION PLANNING PROCESS

Succession planning recognizes that some jobs are the lifeblood of the organization and too
critical to be left vacant or filled by any but the best qualified persons. Effectively done,
succession planning is critical to mission success and creates an effective process for
recognizing, developing, and retaining top leadership talent.
Success factors

There are several factors typically found in successful succession planning initiatives. For
example: Senior leaders are personally involved.
Senior leaders hold themselves accountable for growing leaders.
Employees are committed to their own self-development.
Success is based on a business case for long-term needs.
Succession is linked to strategic planning and investment in the future.
Workforce data and analysis inform the process.

Leadership competencies are identified and used for selection and development.

A pool of talent is identified and developed early for long-term needs.

Development is based on challenging and varied job-based experiences.

Senior leaders form a partnership with human resources.

Succession planning addresses challenges such as diversity, recruitment, and retention.

Effective succession planning

The following information includes:A graphic representation of a six-step process for effective succession planning

A table with descriptions of each step in this process.

Steps
Step 1: Link Strategic and Workforce Planning Decisions
This step involves:1. Identifying the long-term vision and direction.
2. Analyzing future requirements for products and services.
3. Using data already collected.
4. Connecting succession planning to the values of the organization.
5. Connecting succession planning to the needs and interests of senior leaders.
Step 2: Analyse Gaps
This step involves:1. Identifying core competencies and technical competency requirements.
2. Determining current supply and anticipated demand.
3. Determining talents needed for the long term.
4. Identifying real continuity issues.
5. Developing a business plan based on long-term talent needs, not on position replacement.
Step 3: Identify Talent Pools
This step involves:1. Using pools of candidates V/s development of positions.
2. Identifying talent with critical competencies from multiple levelsearly in careers and often.
3. Assessing competency and skill levels of current workforce, using assessment instrument(s).
4. Using 360 feedback for development purposes.
5. Analyzing external sources of talent.
12
Succession planning addresses challenges such as diversity, recruitment, and retention.
Effective succession planning
The following information includes: A graphic representation of a six-step process for effective succession planning
A table with descriptions of each step in this process.
11

Step 4: Develop Succession Strategies

This step involves:1. Identifying recruitment strategies: Recruitment and relocation bonuses.
Special programs.
2. Identifying retention strategies: Retention bonuses.
Quality of work life programs.
3. Identifying development/learning strategies: Planned job assignments.
Formal development.
Coaching and mentoring.
Assessment and feedback.
Action learning projects.
Communities of practice.
Shadowing.
Step 5: Implement Succession Strategies
This step involves:1. Implementing recruitment strategies (e.g., recruitment and relocation bonuses).
2. Implementing retention strategies (e.g., retention bonuses, quality of work life programs).
3. Implementing development/learning strategies (e.g., planned job assignments, formal
development, Communities of Practice).
4. Communication planning.
5. Determining and applying measures of success.
6. Linking succession planning to HR processes.
Performance management.
Compensation.
Recognition.
13

 Recruitment and retention.

Workforce planning.
7. Implementing strategies for maintaining senior level commitment.
Step 6: Monitor and Evaluate
This step involves:1. Tracking selections from talent pools.
2. Listening to leader feedback on success of internal talent and internal hires.
3. Analyzing satisfaction surveys from customers, employees, and stakeholders.
4. Assessing response to changing requirements and needs.

ADVANTAGES OF SUCCESSION PLANNING

Succession planning is an essential part of doing business, no matter how certain your future
appears. It's not easy to put off planning when everything seems to be going so well. Here are
some reasons why it can't - and shouldn't - wait: You can't plan for disaster.
Succession planning benefits the business now.
Succession planning gives your colleagues a voice.
A succession plan can help sustain income and support expenses.
Succession planning gives you a big picture.

 Succession planning strengthens departmental relationships.

Succession planning keeps the mood buoyant.
Besides the obvious benefit of not leaving your company in the lurch of proper Succession
Planning will help your company in other ways, too. Heres a rundown of the benefits.
Remember, not all benefits will apply, depending on your specific situation. Succession Planning
can:1. Reduce Taxes, in some Situations with Family-Owned Businesses: For example, if a
company gets new ownership after an owner's death, lack of planning can result in steep estate
taxes. Other tax issues, such as transferring ownership to a child, might apply.
2. Ensure Continuity:- Customers, clients, vendors, and employees all want and need to know
that a business will continue to function as they know it, even when theres a leadership change.
Choosing and grooming a successor who fits your mold will help this happen.
3. Provide Training Plan for Possible Successors: If you identify who you might choose as a
successor early, youll know that that person needs more training and one-on-one time with your
current leader to gain as much knowledge for the position while its still possible.
4. Help you plan for the future direction of the company.

MISTAKES TO BE AVOIDED IN SUCCESSION PLANNING

Many mistakes are commonly made in establishing succession planning programs. They are
worth enumerating. It is also worthwhile to describe some ways to avoid these common
mistakes:1. Assuming that Success at One Level Will Guarantee Success at Higher Levels: An
individuals success at one level is no guarantee of success at higher levels of responsibility. The
reason is simple: the competencies required for success at each level are different. Hence, it is
important to separate thinking about how well someone does his or her current job and how well
he or she might do a job at a higher responsibility level.
2. Assuming that Bosses Are Always the Best Judges of Who Is Promotable: A second
mistake is to assume that, for purposes of succession planning, bosses are always the best judges
of who is promotable. That is not always true. Bosses are self-interested players in the succession
game. They have a stake in what happens to people. Indeed, some bosses do not want to see their
best people promoted for fear of an inability to replace them. Some bosses grade people by their
own standards - with the result that some individuals who are quite unlike the boss are not
considered for promotion. While the support of a boss is useful in developing individuals, more
objective assessments, such as multi-rate assessment are excellent in aiding the managers
assessment.
3. Assuming that Promotions Are Rewards: Some employees have an entitlement mentality in
which they feel that long service with an organization should always be rewarded with
promotions. But business decisions must be based on who will do the best job, not who is
owed a promotion because of greatest seniority. Workers must continually be reminded that

doing jobs at each level requires different competencies, and the best way for them to compete is
to prepare for future challenges rather than expect promotions for past performance at a different
level of responsibility.
4. Trying to Do Too Much Too Fast: The strong results-orientation of many organizations today
emphasizes quick results. Senior leaders expect to see all the components of a comprehensive
succession system in place immediately. That is not always realistic. It is advisable to think of
implementing systematic succession in a phased way - either from the top down or else starting
in specific divisions or locations with greatest need.
5. Giving No Thought to What to Call It: A fifth mistake is to devote no time to considering
what to call the succession program. As any marketer knows, product names do matter. It is not
necessary to call a spade a spade. Many organizations choose alternative namessuch as
leadership development program, human capital management program (or even talent
program.)
6. Assuming that Everyone Wants a Promotion: A sixth mistake is to assume that everyone
wants a promotion. That is not always true today. In many downsized organizations, workers
have seen what pressures their bosses have to deal with. Some say leave me out of that. Hence,
it is unwise to assume that everyone wants a promotionor even to assume that money will
convince everyone. It will not. Check first. Find out what people want to do. For that reason,
many organizations launch both a top-down succession planning program and a bottom-up career
planning program to galvanize development.
7. Lack of understanding how it works and how it benefits the organization.
8. Lack of a formal written plan for the person or position(s).
9. Lack of availability of human and financial resources; lack of budgetary commitment.
10. Superficial approach; lack of real understanding of the procedures, processes and
requirements of each area the individual is exposed to during the process.
11. The requirements of the Managers/Executives are not fulfilled in providing dedicated
instructions, guidance regarding skills, knowledge and abilities needed for the candidates to be
successful.
12. Failure to identify key employees who may have concerns with your succession plan.
13. Failure to plan for disability.
14. A rigid, inflexible plan NOT tailored to the needs and abilities of the personnel involved.
15. Too long a wait for real movement/promotion, disillusionment, may result in some people
leaving due to apparent inertia in the system.
16. Selection of unqualified or unmotivated people for inclusion in the Succession Plan. Quality
of the individuals selected is paramount to the success of the process.
17. Complex program, requiring considerable paper work, follow-up, reporting.

Case Study of TATA Group

The Tata case is interesting. From what is publicly known, succession planning was not a strong
point until the late 1980s. In the late 1970s, the unsuccessful succession planning attempt by
Voltas is etched in the public mind.
The Tatas have gone down this road before. In 1981, group company Voltas hired a search firm
to find a CEO. There was a worldwide search, said P.N. Singh, who was in charge of HR at
Voltas when the exercise took place. A global agency was employed. There were ads in global
media and people were asked to apply for the job of CEO. Chairman Tobaccowala initiated a
high visibility, open search which resulted in the recruitment of Ramesh Sarin of ITC as the CEO
and finally, Sarin from tobacco-to-hotels major ITC was chosen as MD. The experiment worked
for only a few years. Subsequent events proved that Tobaccowala had no intention of giving up
his executive power and authority. Inevitable clashes followed and Sarin fell out and moved on.
It was a question of culture and control, says Singh, who is now chairman of Grid Consultants,
which conducts Blake & Mouton grid seminars. ITC had a different culture and Tobaccowala
had a different idea of control. He was unwilling to let go. Tobaccowala was an entrepreneur and
Sarin was a manager. So the two should actually have worked well together.
But something positive by way of process must have happened during the last 20 years under
Ratan Tata. It is known that Ratan Tata set up a group HR function as part of his re-organization
plan in the 1990s. The intent was to introduce good practices within the companies with respect
to talent management and succession planning. While there is not much outside information
about how much progress the companies have made, something right must be going on. The
succession transitions are impressive from an outsider's perspective. Further, the board directors
seem to be involved and to drive the leadership changes in the companies.
In Tata Steel, Jamshed Irani became CEO in 1991 amidst tumultuous circumstances of the Russi
Mody departure. In earlier interviews, Irani had
mentioned that by the late 1990s, he presented to Ratan Tata a comprehensive review of possible
successors; together, they zeroed in on a few possibilities. From this list, B. Muthuraman
emerged as the CEO in 2001. Muthuraman, it is learnt, did a similar exercise and discussed it
quite early on with Ratan Tata and the board while choosing his successor in 2009. He too
accomplished a successful transition.
In Tata Consultancy, S. Ramadorai took over from the legendary F.C. Kohli in 1996. He was
filling big shoes. He grew the business dramatically over the next decade and a half, including
the IPO of the company. By mid 2000s, he is reported to have made a short list of potential
successors for discussion with Ratan Tata and the board. From this list emerged N.
Chandrasekharan. Ramadorai walked out of his TCS office on the date of his retirement so that
his successor would have a free hand.
In Tata Chemicals, change was sought in 2001. Outsider Prasad Menon was recruited to succeed
Manu Seth. Perhaps because of what he had learnt at ICI, his earlier company, Prasad Menon
started to think about succession early on. Apart from pacing potential, solid internal leaders, the
leadership brought in a young TAS officer into the company and tested him through hugely

challenging assignments. All the identified candidates were watched, coached, talked about and
nominated to Advanced Management Programmes. Finally a choice was made by selecting R.
Mukundan, with a short bridging role by veteran Homi Khusrokhan.
The successful transitions completed in the listed Tata companies during the last two decades are
impressive: Titan (where Xerxes Desai gave way to Bhaskar Bhat), Voltas, Rallis, and Indian
Hotels. The conclusion is that whatever the process, the Tata group seems to have got succession
about right - not perfect, but it seems to be effective and deliver positive results.
In 2011, Tata was in the midst of the mother of all successions, finding a successor to Ratan Tata.
Instead of focusing on the possible candidates, it is purposeful to reflect on the streamlined and
effective process of succession they had announced.
Firstly, a search committee was appointed with its composition and membership placed in the
public domain. The choice of candidate was kept wide open: man or woman, Indian or foreigner,
internal or external. Secondly, the search committee provided brief public updates of the status; it
wasnt surprising that the details or candidates were not revealed. Thirdly, the search committee
set itself approximate time targets so that their work inadvertently did not become desultory.
Lastly, they internally adopted relevant criteria and a methodology, taking the assistance of a
specialist firm. There seemingly wasnt much else to do by way of a process. Based on the recent
track record of successful transitions and the transparent process for the chairman succession, the
Tata group did have a good chance of getting the succession right. People had no choice but to
wait for the search committee to complete its job rather than to keep speculating on names and
individuals.
EARLY YEARS OF MR. RATAN TATA & THE EXIT OF THE SATRAPS
Ratan Tata was a surprise choice to head the group after JRD (as J.R.D. Tata was popularly
known).
He studied at Cornell University, specialized in architecture, and had an offer from International
Business Machines Corp., but returned to India because his grandmother was unwell, and joined
Tata Steel Ltd (then known as Tata Iron and Steel Co., or Tisco) as an apprentice on the shop
floor of its Jamshedpur plant. The year was 1962.
In 1971, he was appointed director-in-charge of the ailing National Radio and Electronics Co.
While Tata managed to turn around the firms fortunes, it was to be a temporary success.
In 1977, he was asked to turn around another troubled company, the Mumbai-based Empress
Mills. Tata managed to do so, but was refused an investment he thought was required. The
Mumbai textile workers strike led by Datta Samant also hurt the company, which eventually
closed down in 1986.
Maybe because of these failures, few people understood why he was chosen as the person who
would replace JRD in 1991. At the time, Tata was still perceived as an outsider in Bombay
House, the groups headquarters.
Several group companies were also led by individuals who had been given considerable
autonomy by JRD and were, sometimes, more closely associated with their companies than the
groups chairman himself.
Among these executives were Russi Mody at Tata Steel; Darbari Seth at Tata Tea and Tata
Chemicals; Ajit Kerkar, who transformed the Taj group (Indian Hotels) into a major hospitality

chain; and Nani Palkhivala, a director on the boards of several Tata companies and chairman of
Associated Cement Companies (ACC Ltd), in which the Tata group was one of the
original promoters.

It had been widely expected that one of these individuals would succeed JRD, and Tatas
appointment resulted in some bitternessand not all of it remained unvoiced. Mody sparred
openly with Tata Kerkar and the new chairman had different views on the management of the
chain.
J.R.D. Tata had around him a team of senior managers, all of them people of substantial
understanding in their respective spheres, Tata said in an interview posted on the Tata group
website on 6 December for some time before being inexplicably taken down. While they may
have acceded to his wish that I take over the chairmanshipand this happened suddenlyI must
confess that I did not feel any sense of joyousness on their part, because some of them had
aspirations to have the job themselves.
In 1993, Mody was sacked after a messy scrap involving the appointment of senior executives.
In 1997, Palkhivala quit, citing ill health. And Seth retired in 1995 and Kerkar in 1997, after Tata
brought in a new policy that set the retirement age for directors at 70 and senior executives at 65.
In my personal view, when JRD saw this scramble among the company chiefs to succeed him
and the unpleasant innuendos that surfaced, he may have appointed someone who understood the
Tata ethos, which was always very important to him; and, perhaps, he thought Ratan Tata was
someone who could uphold this ethos, Piramal said.
She added that the concept of succession planning was nascent in JRDs time. Its only in the last
five years that large business groups have realized the need for this, she said. Indeed, perhaps
because of the rocky start that he had, Tata appointed a five-member selection committee,
comprising N.A. Soonawala, Shirin Bharucha, R.K. Krishna Kumar, Cyrus Mistry and Lord
Kumar Bhattacharya, to identify his successor.
In hindsight, Tatas ascension in 1991 was the best thing that could have happened to the Tata
group, according to a business historian and writer.
Tata, like every Indian company, was suddenly in a new environment. It could not keep
operating under the old market rules, the old certainties, said Morgen Witzel, a UK-based
management writer and author of Tata: The Evolution of a Corporate Brand.
Ratan Tatas strategy was to change Tata to help it keep pace with a changing India, he said.
And, after spending nearly five years quelling the challenge of the satraps, thats just what Tata
did.

BUILDING THE TATA CORPORATE BRAND A GROUP IDENTITY

Once the dust over the succession issue settled, the conglomerates new chief Mr. Ratan Tata
came into his own. His primary focus was the improvement of the operational efficiencies of
several of the groups manufacturing companies and reiterating the very conglomerate nature of
the entity.

The main beneficiaries of the focus on operations were Tisco and Telco (Tata Engineering and
Locomotive Co.). The former soon emerged as one of the lowest-cost steel makers in the world.
The two companies were also renamedTisco as Tata Steel and Telco as Tata Motors.
Simultaneously, Tata convinced group companies to pay royalty to Tata Sons for the direct or
indirect use of the Tata brand name. He also moved towards increasing the promoters
shareholding in key group firms. Until then, the promoting firms held minority stakes in most
group companies, making them vulnerable to takeovers.
The group also exited businesses such as cement, textiles and cosmetics even as it increased its
focus on others such as software, and entered telecommunications, finance and retail.
These divestments and investments helped the Tata group shake off the slightly fusty image it
had built up in the 1980s and make it fit for purpose in the modern world, according to Witzel.
Indeed, today, the Tata groups most profitable company is information technology firm Tata
Consultancy Services Ltd (TCS), which boasts around $10 billion (around Rs.54700 crore) in
revenue and serves customers around the world.
I think the creation of the corporate brand was quite important. The Tata corporate brand is
one of the worlds most valuable global brands because it harnesses the power of the whole
group and creates a strong image in the minds of the stakeholders, Witzel added.
Tata himself sees the re-establishment of the group identity as one of his achievements. In the
interview that was posted on the groups website, he said one of his most satisfying moments as
chairman was the welding of the organization together in a more cohesive way than it had
been in the past that it was able to identify itself more as a group.
And, even as some of these efforts to establish himself, improve the operational effectiveness of
some companies, and reiterate a group identity were bearing fruit, Tata went out and made a bigticket global acquisitionthe Tetley group in 2000.

THE TATA GROUP TODAY AND TOMORROW

Mr. Jamsetji N. Tata was the founder of the group. In 1904, he handed over the baton to Sir
Dorab Tata, who was at the helm of affairs till 1932, followed by Sir Nowroji Saklatvala who
was there till 1938. The group was then steered by Mr. J. R. D. Tata till 1991, when the charge
passed on to Mr. Ratan Tata. It was on March 23, 1991, that Mr. Ratan Tata was told by his uncle
that he intended to handover the baton of the group to him. Coinciding with the economic
reforms unleashed by Dr Manmohan Singh, the group has had a remarkable journey since then!
Mr. Ratan Tata took over the reins of the group at a time when it was an empire made up of
several independent fiefdoms, run by stalwarts like Mr. Darbari Seth, Mr Russi Mody, Mr Ajit
Kerkar and Mr Nani Palkhivala. Mr. Ratan Tata was barely 54 when he assumed control of the
Tata Group in 1991. His successor was searched for, keeping in line with a whole lot of other
Tata company managing directors who were then in their 40s. The group had brought people in
their 40s and 50s to run some key companies. Observers said that the next leaders will be from
among them. They included Tata Power MD Anil Sardana, TCS MD Natarajan Chandrasekaran,
Tata Chemicals MD R Mukundan, Tata Teleservices MD N Srinath, Tata Global Beverages head

Peter Unsworth, Tata Motors MD Carl-Peters Forster, India Hotels chief Raymond Bickson and
Tata International MD Noel Tata.
The activities of the group were and are overseen by two bodies. The Executive Office reviews
business activities of all group companies. Besides Ratan Tata, it had R Gopalakrishnan, shaat
IHussain, Kishor Chaukar and Arunkumar Gandhi. Then there is the Group Corporate Centre,
which reviewed policy issues related to growth and took decisions on entering new areas. It also
promoted the Tata brand and provided advisory services to group companies in human resources,
finance and legal affairs. It comprised Ratan Tata, JJ Irani, R K Krishna Kumar, R
Gopalakrishnan, Ishaat Hussain, Kishor Chaukar and Arunkumar Gandhi. The members of both
these groups were then in their 60s and 70s. Tata Steel's acquisition of Corus, Tata Motors buying
Jaguar Land Rover and TCS going public were some of the significant milestones after Mr.
Ratan Tata took over from JRD as Chairman of the group. The Tata Group comprises over 100
operating companies in seven business sectors: communications and information technology,
engineering, materials, services, energy, consumer products and chemicals. The group has
operations in more than 80 countries across six continents, and its companies export products
and services to 85 countries. The total revenue of Tata companies, taken together, was $83.3
billion (around 379,675 Cr INR) in 2010-11, with 58 per cent of this coming from business
outside India. Tata companies employ over 425,000 people worldwide. The Tata name has been
respected in India for 140 years for its adherence to strong values and business ethics. Every Tata
company or enterprise operates independently. Each of these companies has its own board of
directors and shareholders, to whom it is answerable. There are 31 publicly listed Tata enterprises
and they have a combined market capitalization of about $77.44 billion (as on November 17,
2011), and a shareholder base of 4.3 million. The major Tata companies are Tata Steel, Tata
Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages,
Indian Hotels, Tata Communications, Tata Teleservices and Titan. Mr. Tata has taken the group
to great heights and we hope the new Chairman will take it to greater heights, said an official
closely associated with the selection committee. The five-member committee held 18 meetings
over the last on-and-a-half years and interviewed a large number of candidates, both Indian and
expatriates.
Mr. Tata had a tougher clean-up exercise where there were many powerful individuals who
were running their own fiefdoms. He managed to do this while carving out a new global agenda
for the Group. The new Chairman will have a relatively easier job on his hands.i an industry
veteran said. Much like the few erstwhile Kings who chose a successor based on merit alone, the
group had invariably followed the principle of meritocracy when choosing a successor in the
past. What the new Chairman would have had to take over from Mr. Ratan Tata was a much
more well-knit and cohesive group, united by a shared philosophy, vision and identity.

THE CHALLENGES THAT WERE BEFORE THE MAN-TO-BE

There is always a lot of hoopla surrounding the succession planning of leaders. Whenever a
visible leadership change occurs, the image of the incoming leader appears to be much less than
the exiting leader. The fallacy lies in our tendency to make an unfair comparison between the

embellished profile of the outgoing leader and the unclear profile of the incoming leader. That is
why Lal Bahadur Shastri initially looked inadequate as a replacement for Jawaharlal Nehru,
Homi Sethna looked inadequate compared to Homi Bhabha and Vikram Sarabhai, and Ratan Tata
was thought to be less than J.R.D. Tata. But all of these turned out to be successful transitions.
There were many challenges ahead for the young Chairman-to-be.
STEEL
Weak demand and decline in global steel prices were the key challenges faced by Tata Steel's
European operations. This was even as the prices of raw materials such as coking coal and iron
ore ruled high as compared to 2010. Tata Steel had reduced its capacity utilization marginally in
line with weakening demand and may have had to resort to production cuts if demand did not
improve in Europe. Even in India, the company was up against weaker demand from sectors
such as construction and automotive, but expected volumes to grow by eight per cent for the year
2011.
AUTOMOTIVE
The big disappointment was the Nano which was clocking modest numbers. The car business
needs to rev up though commercial vehicles had been doing well. The Tatas were and are the
market leader in trucks and buses but a lot depended then on the state of the economy over the
next few months.

TELECOM
In the telecom sector, the Tatas had their hands full with major challenges for both Tata
Teleservices and Tata Communications. Tata Tele was now the fifth largest telecom player in a
crowded market with as many as 14 in the arena. But the overall telecom sector was witnessing
disturbing trends over the past year. All the operators' revenues, including Tata Teleservices, were
stagnating, profitability was declining, and investments were slowing and costs were rising.
Tata Teleservices undertook a major restructuring exercise in bid to cut costs and rationalize
operations. The Successor had to ensure that this paid off in the long term.
Apart from the tough market conditions, there were a whole host of regulatory issues especially
those related to spectrum. Tata Teleservices still did not have GSM spectrum in key markets like
Delhi. The company's 3G roll out was also under a cloud with the Government raising questions
over roaming agreements.
On the Tata Communications front, the worry was to bring the company back into profitability.
The company, which once had a monopoly over the international long distance segment, had to
reposition its strategy with more focus on foreign markets. While this paid off to some extent, the
then ongoing dispute with the Government over funding and land sale put the company's
expansion plans on hold.
Another immediate challenge for the new Chairman was to be able to steer the company away
from all that happened with Ms. Niira Radia and the 2G scam. Although there were no business
implications, the Tatas had taken a major hit on its image, which the new Chairman would have
had to build.

IT SERVICES
The offshore IT/BPO players were grappling with macro uncertainties in key overseas markets
such as the US and Europe, and, at the same time, coping with currency volatility back home.
For TCS, the largest Indian IT Services Company, the challenge was also to sustain its pole
position in a market that had already started seeing a reshuffle in the pecking order of Tier-1
vendors, said Mr. Sanjeev Hota, Associate Vice-President - Institutional Equities at Sharekhan.

Also given its over two lakh employee base, TCS had to chase, perhaps even more aggressively,
the non-linear growth strategy (beyond adding employees). Deals such as the recent $2.2billion contract from Friends Life (a British financial services firm) will be critical in this
regardIf TCS wants to scale up further, it will be important that the revenue growth outstrips
the employee growth, noted Mr. Harit Shah, Senior Research Analyst at Nirmal Bang
Institutional Equities.
Though the company had been growing at a scorching pace in the last few quarters, the euro
zone crisis and the rupee volatility were the key challenges. Mr. Tata's acumen when it came to
the business of technology was well known. Would the new Chairman's lack of expertise in the
technology space be a deterrent going forward? was a key question to be considered. I do not
think soat the top level people settle into their roles pretty quickly. Sometimes a complete
outsider can bring a completely new perspective to the business of technology, TCS sources had
said.
THE RACE FOR SUCCESSION
The committee set up to find a successor to Tata group Chairman Ratan Tata had shortlisted
around 11 candidates. Out of them, four-five were group employees.
The frontrunner in the Tata race appeared to be Noel Tata, Ratan Tatas half-brother who was
then promoted to overseeing the groups international operations. Some 65% of the
conglomerates US$70.8 billion revenue (AprilMarch 2008-2009) came from outside India, so this was a significant responsibility. Additionally,
Noel Tata was the son-in-law of Pallonji Mistry, who owned 18.4% in Tata Sons, which made
him the single largest individual shareholder (most of the equity being held by charitable trusts).
But others were in the race, too. The Economic Times speculated that the internal candidates
include Tata Sons executive directors Ishaat Hussain and R. Gopalakrishnan; and B.
Muthuraman, Ravi Kant and S. Ramadorai, vice chairmen of Tata Steel, Tata Motors and Tata
Consultancy Services (TCS), respectively. The younger group included the CEOs of TCS (N.
Chandrasekaran) and Titan (Bhaskar Bhat). But they were long shots at best, observers had
reported.
There was also a speculation that, given the groups increasing global focus, the choice need not
be an Indian. The Times of India said that the candidates could include Indra Nooyi of PepsiCo,
former Vodafone head Arun Sarin and Renault Nissan chief Carlos Ghosn. The selection
process would consider suitable persons from within the Tata companies, other professionals in
India as well as persons overseas with global experience, said a Tata Sons press release.

Ratan Tata had also clarified that the new chief need not have to be either a Parsi or a Tata. (The
Parsis are a wealthy business community in India, and the Tata chief has traditionally been a
Parsi.) The Parsis are a shrinking community. Birth rates are very low and women who marry
outside the community are excommunicated. There are now less than 60,000 Parsis left in India,
and it is inevitable that the Tata baton will pass on to a non-Parsi sooner or later.
It was evident that it would have to pass on to a non-Tata, too. The Tatas are a small clan. Apart
from Ratan, there was his 80-year-old French stepmother, Simone, who was obviously not in the
running for his job. His brother, Jimmy, who was close to 70 and had retired from Tata Power.
Aloo Tata (who was by birth a Mistry) wouldnt have got precedence over her husband, Noel.
And their three children Liya, Maya and Neville were still studying. So, Noel was the only
Tata who was eligible.
The composition of the selection panel had some critics speculating that the choice of Noel was
pre-decided. It consisted of Tata Sons directors R.K. Krishna Kumar and Cyrus Mistry (who was
Noel Tatas brother-in-law), Tata veteran N.S. Soonawala, group legal advisor Shirin Barucha
and independent member Lord
Kumar Bhattacharya of the Warwick Manufacturing Group of the U.K. There was only one
external member, said Pradeep Mukerjee, founder-director of Confluence Coaching and
Consulting. Mukerjee, who had worked for several years in the HR area with Citigroup in the
U.S., says that in the West, such selection panels have many more external members. What
good is a panel stuffed with internal members? I wonder what the true purpose is. Thus, the
panel did have to face some criticism but it was worthwhile to keep a panel that was in keeping
with the core values of the Tata Group for such a strategic decision-making which would bear
fruit in the long run.

CYRUS PALLONJI MISTRY

Cyrus Mistry, then 43, is the son of construction tycoon Pallonji Shapoorji Mistry. Valued at $8.8
billion, Pallonji held an 18.5 per cent stake in Tata Sons, making him the single largest
shareholder.
Mr. Mistry is the younger son of Pallonji and is married to Rohika Chagla, the daughter of
lawyer Iqbal Chagla. He has an elder brother - Shapoor Mistry and one of his sisters is married to
Noel Tata, Ratan Tata's half-brother.
He had been a director of Tata Sons since September 1, 2006. He served as a Director of Tata
Elxsi Limited, from September 24, 1990 to October 26, 2009 and was a Director of Tata Power
Co. Ltd until September 18, 2006.
Mr. Mistry served as Chairman of the Board of Shapoorji Pallonji Group and Afcons
Infrastructure Limited before he became the Chairman of the Tata Group.
Mr. Mistry also served as Director of various companies including - Forvol International
Services Ltd, Shapoorji Pallonji & Co. Ltd, Cyrus Investments Ltd, Shapoorji Pallonji Power Co.
Ltd, Buildbazaar Technologies (India) Pvt Ltd, Sterling Investment Corporation Pvt. Ltd,
Samalpatti Power Co. Pvt. Ltd, Shapoorji Pallonji & Co. (Rajkot) Pvt. Ltd, Shapoorji Pallonji

Finance Ltd, Shapoorji Pallonji Infrastructure Capital Co. Ltd, Oman Shapoorji Construction Co.
Ltd and Muscat Pallonji Shapoorji & Co. Pvt. Ltd.
Mr. Mistry had been a Non-executive Director of Forbes Gokak Limited since June 23, 2003.
Mr. Mistry is Fellow of the Institute of Civil Engineers. He holds a BE in Civil Engineering from
Imperial College, London and a Master of Science in Management from London Business
School. He holds a Bachelor of Commerce from Mumbai University.
An avid golfer, Mr. Mistry is also a founder member of the Construction Federation of India. He
is a trustee of the Breach Candy Hospital Trust, Mumbai. He is also on the board of Imperial
College India Foundation.
Cyrus Pallonji Mistry succeeded Ratan Tata at the helm of Tata Sons. He was appointed as
Deputy Chairman and worked with Mr. Tata for one year as per the plan chalked out for him as a
successor, before taking over in December 2012.
43-year-old Mistry was a director of Tata Sons and Tata Elxsi (India). Ratan Tata retired in 2012
when he turned 75. He joined the Tata group in 1962 and was the Chairman since 1991. Mr.
Cyrus Mistry took over from a man who over the last two decades transformed the Tata Group
into a global enterprise.
Endorsing the appointment then, Mr. Tata had said, "The appointment of Mr. Cyrus P. Mistry as
Deputy Chairman of Tata Sons is a good and far-sighted choice." (Courtesy: Press release from
Tata Sons)
"I will be committed to working with him over the next year to give him the exposure, the
involvement and the operating experience to equip him to undertake the full responsibility of the
Group on my retirement," Mr. Tata had adde
Mr. Mistry had said that he was deeply honoured by his appointment. "I am aware that an
enormous responsibility, with a great legacy, has been entrusted to me," he had reported in a
statement.
He announced that he will legally dissociate himself from the management of his family
businesses to avoid any issue of conflict of interest. Shapoorji Pallonji Mistry, the father of the
new deputy chairman, was owner of 18 per cent stake in Tata Sons. The Shapoorji Pallonji Group
is into construction, textile, water treatment and other businesses. Cyrus Mistry was the
managing director of the two billion dollar SP Group.
Apart from the Tata Group, he also serves as a director on the board of several other companies,
including Shapoorji Pallonji & Co, Forbes Gokak, Afcons Infrastructure and United Motors
(India).
Mr. Mistry was also a part of a search panel appointed last year to find Mr. Tata's successor. He
withdrew himself when his name was suggested. He then entered the process as a candidate.
The 5-member panel also comprised of N A Soonawala, vice-chairman, Tata Sons; R K Krishna
Kumar, non-executive director, Tata Sons; Lord Bhattacharya, a businessman based in the UK
who runs Warwick Manufacturing; and Shirin Bharucha, a lawyer for the group. The committee
is said to have met 18 times before announcing the succession plan.