Development of Corporate Social Responsibility in Indian Family Business

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DEVELOPMENT OF CORPORATE SOCIAL RESPONSIBILITY1 IN INDIAN FAMILY

BUSINESS: A CASE OF TATA IRON & STEEL COMPANY

by

Sarika TomarFaculty, NIILM CMS, New Delhi.Mobi le : 9891084563

Email : [email protected]

Rakesh GuptaAssociate Professor, IILM- GSM, G.NoidaMobile: 9313999520, Email: [email protected]

1 From hereon CSR


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DEVELOPMENT OF CORPORATE SOCIAL RESPONSIBILITY IN INDIAN FAMILY

BUSINESS: A CASE OF TATA IRON & STEEL COMPANY

Abstract

After carefully studying the literature of family businesses it has been noticed that

researches in this field have centered on organizational issues such as structure,

governance, succession, managerial behavior and some policies and practices that

differentiate them from professionally managed firms. There are many other facets

of this area which still remain unexplored and untouched. And one such area that

also characterizes Indian family business is corporate social responsibility. Within

the world of business the main responsibility for corporation has historically been to

make profits and increase shareholder value. In other words corporate financial

responsibility is the main driving force for any business. It is only in last twenty-five

years that a radical change has taken place in the business whereby these

businesses are expected to contribute to the public. A value shift has taken place

within businesses where they not only feel responsibility for wealth creation but also

for social and environmental good. India has a long history of corporate philanthropy

and business involvement in social causes for national development. And if wecarefully study the origin of corporate social responsibility in India, we find its roots in

family businesses that evolved more than a century ago. Corporate social

responsibility in India is based on family values and communitarianism. This

philanthropy grew out of the need to develop India socially, politically, and

economically in order to meet the challenges posed by colonization.

A family-owned business in India can be defined as a business governed and/or

managed on a sustainable potentially cross generational, basis to shape and

perhaps pure the formal or implicit vision of the business held by members of the

same family or a small number of families (Chua, Chrisman, and Sharma, 1999).

Tata Group is a pioneer in promoting CSR in India. The Tata Group is a giant family

of businesses that dominates Indian markets. And Tata Steel is one of twenty-eight

major corporations within the Tata Group. Founded in 1907, it is the largest private

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sector steel company in India, with a capacity of 3.5 million tones per annum crude

steel production. Operations are spread across the country, with steel manufacturing

and mining activities situated in the states of Jharkhand and Orissa at eight

locations. The company employs approximately 48,000 people as at April 2002.

Tata Steels CSR activities started as early as its inception. Initially, these activities

were only philanthropic in nature and the company believed more in giving back to

the society. But over a period of time CSR activities of this company moved from

pure philanthropy to a strategic CSR with a multi stakeholder approach. CSR

activities are now ranging from community development, improving health care,

reducing poverty, occupational health and safety risk control and protecting the

environment that means covering almost all the stakeholders.

The ideals and philosophy of the TATA Group originated from the founding father,

Jamshedji Nusserwanji Tata (1839-1904). In 1895 he explained:

We do not claim to be more unselfish, more generous or more philanthropic than

others, but we think we started on sound and straightforward business principles

considering the interests of the shareholders, our own and health and welfare of our

employeesthe sure foundation of prosperity.

These sound and straightforward principles carried through the generations of

Tatas still has influence on the prevailing businesses and practices. With such a

strong tradition of corporate responsibility, it is no surprise that very recently Ratan

Tata has been honoured with Carnegie Medal of Philanthrophy in Pittsburgh on

Wednesday October 22, 2007. The award is given every two years to individuals

who like Andrew Carnegie have dedicated their private wealth to public good

The purpose of the research paper is to study why, how and to what extentcorporate social responsibility is being implemented in leading family owned

business in India. The paper investigates that how a giant family business like Tata

has been able to carry the tradition of corporate social responsibility so strongly over

the years. The research focuses on the impact of the philosophy of Tata family on

CSR policies and practices of TISCO.

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Introduction

Business today are experiencing profound pressures to reform and improve

stakeholder related practices and their impacts on stakeholders and the natural

environment-in short, to manage responsibly as well as profitably (Waddock, Bodell

& Graves 2002). Although the concept of corporate social responsibility has

changed substantially over the past two decades but still scholars have yet not been

able to define it precisely.

There is tremendous pressure of wide range of stakeholders in pushing companies

to respond in a more responsible way. This pressure not only comes from the

primary stakeholders such as owners, employees, customers and suppliers but also

from the secondary stakeholders such as non governmental organizations, activist,

community and governments who are also seeking greater corporate responsibility.

Lately a third source of pressure is generated from the social trends and institutional

expectations, reflected in the proliferation of best of rankings, the steady emergence

of global principles and standards that define expected levels of corporate

responsibility, and the new initiatives to publicly report the triple bottom lines for

measuring economic, social and environmental performance (Waddock, Bodell &

Graves 2002).

With this kind of enormous pressure we find more and more organizations

transforming themselves into a more responsible organization. But if we understand

the concept of social responsibility from the point of view of business then there are

several issues that are still unresolved and unanswered. Most companies face

problems in addressing the issues of social responsibility. The three issues that

remain unclear are the understanding of social responsible behavior and how any

organization does manages these issues on an ongoing basis. As these activities

are not the primary objective of any business it is evident that they are usually not

taken up with full commitment. The fundamental problem in the field of business and

society has been that there are no clear and precise definition of corporate social

responsibility that provide a framework for systematic collection, organization and

analysis of corporate data on this important concept.

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Hence, in order to fully understand the concept of corporate social responsibility it is

extremely important for us to develop a model that helps us in bringing clarity about

the intentions of organizations and the phases its of development in any

organization. This is further explained by considering a case of Tata Iron and Steel

Company. As this company

There are two objective of this paper, first, is to develop a framework that integrates

the intention and the concern of an organization towards corporate social

responsibility and the degree to which these activities are operational. This

framework will facilitate analysis of corporate social activities as well as the behavior

or intentions behind these activities. This would further help us in understandingthat

how a family managed business like Tata Iron and Steel Company can follow a

tradition of corporate social responsibility so strongly for as many as 100 years.

What are the policies, practices and systems that have helped this organization to

embrace corporate social responsibility so effectively?

This paper will also help us in addressing two key challenges in social responsibility

management. First how to measure corporate social performance and second what

capabilities an organization should have to be socially responsible. The first issueregarding measurement of social performance has been addressed by classifying

the activities on the basis of intent i.e. the objective and the purpose of these

activities ranging from economic to responsible and extent i.e. the degree to which

these activities are operational in a firm. The second issue regarding the capabilities

a firm should have to be socially responsible has been addressed by looking at all

the dimensions and the organizational development of CSR in any organization.

This framework would be able to accommodate all the activities related to corporate

social responsibility on the classification made in the given framework. While the

nature and the extent of the activities may change but still the framework should be

able to ascertain that all the activities can be included here.

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There are several milestones that can be identified towards a theory of corporate

social responsibility but so far there has been no such framework that focuses only

on the responsible domain which is defined as

Our concern here is also to address the extent to which TISCO has evolved

practices and procedures for implementing CSR activities and the involvement and

commitment of these companies towards such issues.

This conceptual framework should prove valuable to managers seeking to establish,

develop and institutionalize CSR principles, policies and practices in and

organization.

This research paper is divided in 3 sections. The first section focuses on the review

of literature regarding definitions and model of corporate social responsibility. The

second section focuses on the construct of responsible domain. And the last section

focuses on the practices, policies and systems of TISCO that have evolved over a

period of time and help the business to be socially responsible.

Definit ion of Corporate Social Responsibili ty

The concept of corporate social responsibility has not yet been defined adequately

and satisfactorily. Several research scholars have made an attempt to define the

social responsibility of business but so far we have not been able to give a definition

that could be accepted uniformly. Definitions of corporate social responsibility fall

into two general schools of thought. Those that argue that business is obligated only

to maximize profits within the boundaries of the law and minimal ethical constraints

(Friedman 1970; Levitt1958), and Bowen (1953) advocated that businessmen have

an obligation to pursue those policies, to make those decisions or to follow those

lines of action which are desirable in terms of the objectives and values of our

society. The concept of social responsibility here emphasizes on the objectives and

value of the society and rests on two fundamental premises. First business exists at

the pleasure of society; its behavior and methods of operation must fall within the

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Classification on the basis of Intent: Intention here basically refers to the concern

of an organization towards socially responsible activities. It also means the objective

and the purpose of an organization behind initiating these activities. A thorough

literature survey reveals that organizations have a responsible behavior because of

any of these three reasons first, they see a long-term benefit in being responsible,

second they want to abide with the prevailing law and thirdly have a genuine

concern for the society. It is not only important but also relevant to understand the

intention of an organization behind being responsible, as it will help us in

understanding the motives behind an organizations move towards becoming

socially responsible.

Hence, it can be concluded that the responsible behavior is generally driven either

by a profit motive; legal motive and or there is a high concern for society.

Concern for Profit: Corporations like all other social institutions are an integral part of

society and must depend on it for their existence, continuity, and growth. As

organizations usually behave in response to market forces, they initiate certain

socially responsible activities that may have a direct impact on their economic

performance. Although these activities are social in nature and aim for community

welfare and societal development somewhere they have a hidden concern forprofits. Here the management cares only about its companys gains, profitability and

organizational success at any price. Their main strategy to have these activities is to

exploit opportunities for corporate gain. These activities have a direct economic

benefit that is clearly visible. Activities that are undertaken to improve the image or

reputation of an organization can be included in this category. As the criteria for

legitimacy for such activities is economic in nature the cost that is incurred in

implementing these activities is treated as an investment. This is the also termed as

the required behaviour of any organization. Such activities are undertaken after a

detailed planning and doing a thorough cost benefit analysis. These activities

generally become an investment that helps the organization in improving long-term

economic performance. Organizations following these activities are called as

Economic Citizens.

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Concern for Law: Organizations prefers to conduct its operations within the legal

framework imposed by social system within which it operates. Those activities that

are driven in response to legal constraints fall under this category. Responsible

behaviour that is driven by legal concern aims either at compliance with the existing

laws or to avoid any litigation. As the criteria for legitimacy here is legal in nature it

implies that bringing corporate behaviour to a level where it is congruent with the

prevailing legal framework. These activities intend not to violate laws and equate

social responsibility with fulfilling minimum legal requirements. This is the expected

behaviour of any organization. And those organizations that do not abide with the

legal framework are termed as illegal organizations. Organizations following these

activities are called as Legal Citizens.

Concern for Society: These activities have very limited relevance of legal and market

forces and they are above such criteria. Although these activities are not compulsory

for any organization to undertake but these are definitely appreciated by the

stakeholders. Organizations or activities belonging to this category are driven by a

high concern for society. As these activities are not legally forced they are in

congruence with the prevailing social norms and values. Organizations having these

activities do recognize the importance of profitable operations but also takes definite

stand on issues of public concern. All ongoing community development programmesthat are voluntary in nature and are ultimately implemented to benefit the society at

large come under in this category. This is the desired behaviour of any organization

Organizations having such activities are progressive; they are the leaders in the

industry and are called as Responsible Citizens.

Classification on the basis of Extent: This is the second dimension that

addresses the recognition of social issues; involvement and commitment of an

organization towards these issues and finally, the intensity of enforcement or in other

words it can be said that these activities would have a degree to which they would

be institutionalized. Extent can also be referred to evaluating the level of

responsibility that an organization demonstrates.

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Learning phase: Here social responsibility is merely considered as corporate

obligation and hence the social response pattern is reactive in nature. There is

minimum responsibility with respect to social activities. In this stage the top

management acknowledges the organizations responsibility in a certain area or on a

certain issues and a policy statement is generated. As social programs are taken as

less ambitious goals for success the commitment towards these activities is very

low. Such programs and activities are forced in place because of crisis or legal

mandate. The management does not do anything until they have to do. Problems

that are taken up are usually specific in nature and they are taken in isolation with no

systematic causes, symptoms or ramifications. There is minimum implementation on

a continuous basis. Emphasis is more on policy formulation than on implementation.

Enforcement of policies in this phase is very low. There are no formal legal, or

ethical standards existing in the company. There is no consistent planning for such

activities. Policy statements are generally not very well defined and poorly

communicated to the employees. Little or no direction, guidance, or support is given

with respect to what the company will do about choosing or implementing such

activities. Employees are usually not involved. Little or no control exists over the

consistency of such programs. Hence corporate social performance here is usually

non-instrumental.

Commitment phase: This stage is one step above learning phase where policies

are clearly defined and organization starts focusing on the implementation of the

programs. Here the organization acquires the knowledge and skills to implement the

policies, the details of the programs are outlined, and monitoring systems are

developed. As careful and detailed planning takes place before the implementation

the commitment is much higher than the learning phase. Social activities are not

only connected to the core business in this phase but we also find consistency with

respect to the continuity of such programmes. The response pattern is proactive in

nature. Employees are awareand they are communicatedthrough written and orally

communicated policy. The onus of implementation of these activities lies usually on

staff people. Emphasis is laid on pertinent data collection and analysis but the ways

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of measuring and reporting are not very well developed. CSR programmes are

formally addressed but outcomes are not clearly defined and measurable.

Institutionalization phase: This stage is defined as the degree of sustained

organizational commitment, and is determined by degree to which the firms

performance/control (PC) system, the system for measuring, reporting, rewarding,

performance is modified to reflect the programs goals. Social response pattern is

proactive and there is maximum responsibility with respect to social activities. Here

the organization acquires the knowledge and skills to implement the policies,

specialists are appointed, the details of the programs are outlined, and monitoring

systems are developed. Responsibility for program is usually transferred from staff

to line. Resources are committed, performance and expectations are communicated

and evaluation instituted. Demonstrates high level of internal commitment. These

programs are in place prior to legal mandate and those that exceed the standards

set by law. Clear problem identification, problem-solving focus exists. In this stage

an organization anticipates future social changes and develops internal structures

and procedures to cope with them

Table1

Conceptualization of Socially Responsible Activities

Ideological Phase Learning Phase Commitment Phase

ECONOMIC

(Concern for profit)

EconomicEmployer

Economic Actor Economic Citizen

LEGAL

(Concern for law)Legal Employer Legal Actor Legal Citizen

RESPONSIBLE

(Concern forsociety)

ResponsibleEmployer

Responsible Actor Responsible Citizen

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Table2

Organizational Development of CSR

Phase I Phase II Phase II I

InstitutionalizationCommitmentLearning

1Social Responsibility isconsidered as corporateobligation.

Social responsibility isconnected to the corebusiness.

Social responsibility is notonly connected to corebusiness but it is alsoproactive in nature.

2Organization acknowledgesresponsibility in certainareas towards legal andtraditional stakeholders.

Organizationacknowledgesresponsibility towards allthe direct stakeholders.

Organizationacknowledgesresponsibility towards allthe stakeholders.

3Emphasis is on generatingpolicy statement.

Policies are well writtenand documented.

Policies are well written,embedded and translatedacross the organizations.

4

As the level of commitmentis very low social activitiesare limited and ad-hoc in

nature.

Social activities are wellplanned and strategic innature.

Social activities areundertaken on an ongoingbasis.

5

Organizations in this phasehave high concern forprofits and low concern forsociety.

Organizations concern for profitsas well as society is high.

High concern for profits aswell as society.

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Table3

Organizational development of CSR

Parameters Learning Phase CommitmentPhase

Institutionalization Phase

Interactionwith focalstakeholder

Legal andtraditionalstakeholder

Direct stakeholders Broad range ofstakeholders from direct toexternal stakeholders

Concern forstakeholders

Low Medium to high Very high

Driving Force Pressure fromtraditionalstakeholders

Changingstakeholderexpectations

Values and vision of theorganization that arecommunity driven

Goals of anorganization

High profits andlow concern forsociety

High profits andconcern for directstakeholders

High profits and highsocietal goals (Allstakeholders)

Policies Policy statementgenerated but notvery well defined.

Very well writtenand documentedpolicies

Policies are embedded andtranslated across theorganization.

Approachtowards CSRactivities

Ad-hoc andreactive

Strategic andreactive

Proactive

Continuity ofCSR programs

Spontaneous Consistent Consistent and with longterm plan

Immediatefuture activities

Limited, sporadicand connectedwith immediatefuture

Connected to thecore business

Connected to the businessand based on therequirement of thestakeholders

Level ofcommitment

Low commitment High commitment Extremely highcommitment forresponsible activities

Allocation ofresources

Minimum support Adequate Adequate and committed

Organizationculture

Neutral Supportive Supports, encourages andreward such activities

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Employee

Volunteering(Involvement)

Employee

involvement isnegligible

Employees are

aware andcommunicatedthrough written ororallycommunicatedpoliciesinvolvement ofstaff people isfound in CSRactivities

Employees are not only

aware and communicatedproperly but they areinvolved and also activelyparticipate in CSRactivities.

Recognition to

employees

No recognition

for theseactivities

No special

programs torecognize theefforts ofemployees

Special recognition

programmes for employeesfor their contributiontowards the success of CSRprograms

Awareness

Levels

No trainingprograms

Training programsto make employeesaware of theseactivities.

Internal training programsgeared towards increasingthe involvement ofemployees

Performance

measures and

outcomes

Does not exist Not clear anddefined

Clear and communicatedproperly.

Practices and

programs

Practices andprograms poorlyimplemented

Organizationacquires knowledgeand skills toimplement policiesand implementsprograms andprocesses.

Organization acquiresknowledge and skills,appoint specialists toimplement and monitorsuch programs and policies

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Implementation Minimum. As

the approach isadhoc andreactive there ishardly anymechanism thatexists forimplementationand monitoring ofCSR activities.

Specific

mechanism existsfor implementationmonitoring andevaluation

Maximum implementation

and proper mechanism formeaningful performancemonitoring and evaluation.

Feedback and

Evaluation

mechanisms

Do not exists Mechanisms are inthe stage of

development

Mechanisms are developedand institutionalized in the

form department or units.

Reporting and

communication

Not defined anddoes not exist atall

Reporting channelsdefined andcommunication tothe relevantstakeholders

Reporting andcommunication to all thestakeholders

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A Case of Tata Iron & Steel Company

Tata Group is a giant family of businesses that dominates Indian markets. There is a

long history of corporate responsibility within the group.

This case study concerns initiatives undertaken by Tata Steel, as these initiatives

are not mandated by law and the company has taken them voluntarily we classify

them in the responsible domain.

Company Profi le

Tata Steel is one of twenty-eight major corporations within the Tata Group.

Established in 1907, Tata Steel is Asia's first and India's largest private sector steel

company. Tata Steel is among the lowest cost producers of steel in the world and

one of the few select steel companies in the world that is EVA+.

Its captive raw material resources and the state-of-the-art 5 MTPA (million tonne per

annum) plant at Jamshedpur, in Jharkhand State, India give it a competitive edge.

Determined to be a major global steel player, Tata Steel has recently included in its

fold NatSteel, Asia (2 MTPA) and Millennium Steel (now Tata Steel Thailand) (1.7MTPA) creating a manufacturing network in eight markets in South East Asia and

Pacific rim countries. Tata Steel's products are targeted at the quality conscious auto

sector and the burgeoning construction industry. With wire manufacturing facilities in

India, Sri Lanka and Thailand, the Company plans to emerge as a major global

player in the wire business.

Products

Tata Steel's products include hot and cold rolled coils and sheets, galvanised

sheets, tubes, wire rods, construction rebars, rings and bearings. In an attempt to

'decommoditise' steel, the company has introduced brands like Tata Steelium (the

world's first branded Cold Rolled Steel), Tata Shaktee (Galvanised Corrugated

Sheets), Tata Tiscon (re-bars), Tata Bearings, Tata Agrico (hand tools and

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implements), Tata Wiron (galvanised wire products), Tata Pipes (pipes for

construction) and Tata Structure (contemporary construction material).

Community Outreach and Environment Management

While the Company is focused in the pursuit of its operational goals, it is also

committed to being a good corporate citizen. Tata Steel extends support to the

economically underprivileged not by charity but by strengthening and empowering

them with expertise and knowledge. Its community outreach programmes covers the

Tata Steel managed city of Jamshedpur and over 600 villages in and around its

manufacturing and raw materials operations.

Its steel works, mines and collieries and civic services in Jamshedpur are ISO 14001

certified for Environment Management.

The Company's steel works is the first in the world to be conferred the SA 8000

certification for work conditions and improvements in the workplace. It's Ferro Alloys

and Minerals Division is also SA 8000 certified.

According to the UNEP and Standard & Poor's survey, the Corporate Sustainability

Report filed by Tata Steel, according to the Triple Bottom Line Reporting Initiative, is

the strongest by any corporate in the emerging economies and the Top Reporter in

corporate India.

Global Compact, United Nations -

Founder member.

Conferred the prestigious Global Business Coalition Award for Business

Excellence in the Community in recognition of its pioneering work in the fieldof HIV/ AIDS awareness.

Jamshedpur city has been chosen to participate in the UN Global Compact

Cities Pilot Programme.

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Awards and Recogni tions

World Steel Dynamics has ranked Tata Steel as the world's best steel maker (for two

consecutive years) in its annual listing in February 2006.

Tata Steel has been conferred the Prime Minister of India's Trophy for the Best

Integrated Steel Plant five times.

It has been awarded Asia's Most Admired Knowledge Enterprise award in 2003 and

2004.

Project History and Development

The ideals and philosophy of the Tata Group originated from the founding father,

Jamsetji Nusserwanji Tata (1839-1904). In 1895 he explained:

We do not claim to be more unselfish, more generous or more philanthropic

than others, but we think we started on sound and straightforward business

principles considering the interests of the shareholders, our own and the health

and welfare of our employees the sure foundation of prosperity.

Throughout the last century, Tata pioneered the notion of employee benefits in India.

It introduced the eight-hour working day in 1912 an astonishing thirty-six years

before the Indian government. Maternity benefits, schooling facilities and leave with

pay are just some examples of benefits the Tata Group bestowed many years before

it became law to do so.

These sound and straightforward business principles carried through the

generations of Tata Chairmen to influence Ratan N. Tata, Chairman as of 1992.

With such a strong tradition of corporate responsibility, it is no surprise that Tatas

current initiatives target community development and corporate sustainability.

The following section provides an overview of some of the initiatives Tata Steel has

implemented and encouraged in recent years. The first part considers before-profit

practice and corporate governance, that is to say the companys conduct in the

process of manufacturing steel. This includes employee welfare, Codes of Conduct,

environmental regulation, and internal structures for improving the companys

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accountability. The second part reviews after-profit practice, social investment

projects that are not directly related to the business of Tata itself.

Corporate Governance

Tata Steel has articulated its policy position regarding human resources, the

environment, and health and safety. It has a statement of purpose, a vision, and a

mission that shape business-community relations as well as organisational structure.

Tatas organisational structure is called the Tata Business Excellence Model

(TBEM). This has been introduced across the Tata Group as a means of increasing

efficiency and tightening business processes. Activities are broken down into the

following;

Market development

Planning, control and risk management

Investment management

Operations (production and maintenance)

Supply management

Human resources management

Social responsibility and corporate citizenship

Good corporate governance should be an integral part of all of these processes,

not just (as often assumed) social responsibility and corporate citizenship. After all, a

good corporate citizen needs to be accountable to stakeholders while conducting

business as well as when investing in the community at a later date.

Tata Steel has gone some way in ensuring corporate governance at all stages of the

business process. Every year the company aims to exceed its targets on the

Employee and Customer Satisfaction Indexes, and the Corporate Citizenship Index.In order to improve its internal management systems it has also adopted two

systems of evaluation:

Tata Code of Conduct Follows guidelines established by the UN Global

Compact (to which Tata is also a signatory). A company signing to the Tata

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Code of Conduct entitles that company to use the Tata brand name. It

prescribes principles by which all employees are expected to act.

Audit Commit tee

Environmental Sustainability

Tata Steel was the first integrated iron and steel plant in India to have been certified

with the ISO-14001 Environmental Standard, and one of only a few in the world to

have this accreditation in 2000. It operates its own Environmental Management

System (EMS), aimed at increasing efficiency and limiting environmental impact at

all stages of steel production. This system focuses on improved staff education

(including contractors), instituting a system of waste segregation and its eco-friendly

disposal, the safe disposal of industrial waste and where possible, a 100 per cent

recycling of hazardous wastes such as tar sludge, oil soaked jute, and waste acid

from batteries.

Departments

Tata Steel has also established several social departments and societies that work

within the structure of the company. Table 1 lists them and details when they were

established. Programmes implemented under these departments and societies are

described in the next section, Social Investment.

Table 1: Departments and Societies established by Tata Steel

Department / Society Year established

Family Welfare 1951

Community Development and

Social Welfare1958

Tribal and Harijan Welfare Cell 1974

Tata Steel Rural Development

Society (TSRDS)1979

Environmental Management 1986

Tribal Culture Society 1990

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Tata Steel Family Initiatives

Foundation1998

Social Investment

This section reviews after-profit practice, work in and for the community that is not

directly related to the business of business. Again, Tata Steel has internal

procedures that guide policy, meaning that community initiatives are seldom ad hoc.

Below are six of these initiatives or procedures, three of which are organised by

some of the departments listed in Table 1 above.

Tata Council for Community Initiatives (TCCI)

TCCI is a product of the Tata Groups commitment to the community. It serves to

help the Tata companies in their business-community relations, by drawing up Tata

Guidelines for Community Development, designing programmes then implementing

them. Programmes include training courses in which Tata companies conduct

technical (IT, vocational) training to members of the community. This is done with

the help of company volunteers, often management staff. A forthcoming project

involves forming a Tata Corps of Volunteers, under which employee volunteering will

play an increasingly important role in developing business-community relations.

Tata Social Evaluation, Responsibil ity and Accountabili ty (ERA)

ERA is a procedure by which Tatas community projects are evaluated for their

impact on the target communities and their level of accountability. Although ERA is

not independent of Tata, such procedures are influential in improving programme

delivery and ensuring continuing self-evaluation and learning.

Global Business Coalition (GBC)

The Global Business Coalition on HIV/AIDS aims to check the growth of the disease

with the help of over a hundred major international companies. Believing that

business holds the necessary marketing skills, management and infrastructure to be

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able to raise awareness in rural communities, the GBC encourages companies to

campaign with imagination and consistency.

Tata Steel has done just that, and won an award in June 2003 for Best Initiative.

Initially Tata focused on educating employees, but now targets over 600 villages in

the State of Jarkhand. This is done through the dissemination of mass media, aswell as more inventive schemes, such as student workshops which employees are

trained to deliver, or travelling street plays in local languages that reach the rural

illiterate. Tata paid for six condom-vending machines in the city of Jamshedpur in

public places, which are also proving to be a success. At one of these locations, a

busy coach station, there is also a clinic where passers-by can have free check-ups

and learn more about HIV/AIDS.

Volunteer Database

A Directory of Employee Volunteers was established by the Tata Group as an

efficient way of matching jobs in the community with employee skills and interests. A

corporate committee, comprised of a senior executive, union and government

officials, interacts with the communities to ascertain their needs. This is done on a

quarterly basis with senior citizens of each village, and biannually with target

womens groups.

Health Initiatives

Working with government to prioritise projects, Tata Steels involvement in health

initiatives remains largely philanthropic, with the exception of the Global Business

Coalition for HIV/AIDS awareness scheme (see subsection 3 above). Tata Steel has

invested in a local hospital which treats an average of 2,300 people per day. It has

also bought specialist cancer-treating equipment, and part-finances the running of

one blood bank, two rehabilitation centres and five homeopathic clinics. Donations to

the clinics and centres are regular and on a long-term basis, which does indicate a

move from ad hoc sponsorship to a more strategic social investment. This is

organised by the Family Welfare department.

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Culture and Education

Education and Youth Development Programmes have built and maintained

infrastructure for sports across Jarkhand. Over 1,500 young people are currently

training at Tata Steels two sporting academies, six training centres or their

Adventure Foundation. Awards are given to employees who excel in sports. A TribalCultural Centre was built in 1993 and a Jubilee Amusement Park in 2001 to enrich

the cultural heritage of the city of Jamshedpur.

Tata Steel has also invested in education, part-financing eleven schools and

colleges that teach nearly 10,000 students per year.

Looking to the future

Along with the TCCIs forthcoming project to formalise employee volunteering, Tata

Steel also hopes to align more with global standards and initiatives. In 2001 TataSteel produced a Corporate Sustainability Report following guidelines established by

the Global Reporting Initiative. This is another step forward for the company looking

to make its mark on the new corporate responsibility agenda.

Key Issues and Lessons Learned

Tata Steel has provided many examples of how business-community relations are

approached by the private sector in India at the present time. Summaries of Tatainitiatives reveal that the company is working to improve both before and after-

profit practice. As these practices are voluntary undertaken by the organization they

showcase that the organization has a very high concern for the society. These

practices are very well planned by the organization and they are integrated with the

other practices which aim towards maximization of profits. These policies and

practices are embedded and institutionalized in the organization. The organizations

not only have a high concern for profits but they also have a high concern for

society. As these policies are strongly entrenched in the system they are consistent

and connected to the business. Like Tata Code of Conduct means that the company

holds certain principles, based on value judgements, that influence its policies and

procedures. One result of this has been the adoption of various organisational

structures that are responsible for targeting particular issues, such as the Family

Welfare and Environmental Management Department.

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Tata Steels has also started employee volunteering whereby employees are not

aware and communicated properly but are also actively participate in CSR activities.

The employees are given incentives for volunteering. This has implications on the

real motivation behind employees giving up their time for a local cause.

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Documents

Development of Corporate Social Responsibility in Indian Family Business