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Of business and ethics...

Here is Tata & Sons Director J.J. Irani's take on ethics, business management and more...


WHAT WOULD one say of a business corporation that lost hundreds of crores of rupees for being ethical? In an age where fair trade practices are becoming a rarity, this would sound very `un-businesslike' and even impractical.

Not for J.J. Irani, the director of Tata & Sons. The `business of ethics', according to this former Managing Director of Tata Iron and Steel Company (TISCO), is simple - `to be ethical always'. In a freewheeling interaction with students of management of the Dr. G. R. Damodaran College of Science, he spoke on how important business ethics is.

"Ethics is something one has to feel for himself. In the long run, companies that are ethical always come on top. We may have lost money. But do remember that TISCO is one of the most profitable companies in the steel industry now."

Is ethics another set of rules or just an inner voice? "Ethics is not just about rules. It may only define certain boundaries. It is something that comes from your heart. ."

"Our plan is to succeed in the correct way. We play the game of business according to the rules even if our competitors don't." But, is it possible to be ethical in business? "Yes. The ethical movement is making a comeback even in the U.S., which was once considered an unethical society. It's just a phase. All economies and businesses go through these phases," he points out.

Enron example

"We got rid of some executives in our group company because of their unethical practices. We made good the loss," he says. "Enron and other cases (companies) have put in the urge to have open business practices again. Some think that such practices are outdated and impractical. But, business ethics is important," he reminded the budding managers.

The simple thumb rule is: "Don't do anything unethical. Be efficient in your business." Can the Tata model be emulated by others? "People can learn from us. Our job is to run the business honestly. Not preach others on what they should do."

Irani, who scripted the turnaround story of TISCO, also elaborated on the changes that he brought during the tough times. When the country's economy opened up, TISCO was faced with a stark reality. It had to modernise or face what most Indian companies were confronted with at that time - loss of business.

The first option sounded simple, but implementation was difficult. For, TISCO was the only major player in the private sector and had a number of manufacturing units and a large workforce.

Dreams with a vision

"Any vision without action will remain a mere dream," he told the students. Finally, the modernisation was done in five phases. "Not just the plant, even the thinking was old. We had to change all this."

The first four phases made a big hole in the company's kitty as well. "Money was a big constraint. In all, we spent Rs. 8,000 crore for the plan in 10 years." The fifth phase was the most important one - what Irani calls "modernisation of the mind." "It was not very obvious. This did not cost us much, but nonetheless, was crucial. Even if you modernise, it is important to change the mindset and attitude of people. We do not have any problem with the mind. The Indian mind is one of the best in the world. The problem is with our mindset," he points out. TISCO employed fresh graduates and adopted the Malcolm Baldrey system (where all operations are optimised). The result, the 78,000-strong workforce was reduced to 40,000 and productivity improved five-fold.

M. ALLIRAJAN

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