Ratan Naval Tata Part-7

In Search of the Successor for Tata Group !!!

J N Tata (R to L); Sir Dorabji Tata, Sir Ratan; and R D Tata, father of JRD Tata.

Situation vacant

It will be some months before even the shortlist for Ratan's successor is known. It's anybody's guess who will finally make the cut, but the qualities expected of this paragon are fairly clear to all.

In an interview a few years ago, Ratan had drawn up a somewhat simplistic checklist: someone "younger", ideally in his 40s, who believes in Tata values, demonstrates managerial ability and has the vision to run the Tata Group.

More recently, he also spelled out what the person doesn't need to be: a Tata, Parsi, or even Indian. "The successor should be the right person," was his emphasis at the Tata Chemicals AGM in August.

For the record, in its 142-year history, the Tata Group has had only five chairmen, all of whom were Parsis. The only non-Tata to make it to the top was Nowroji Saklatwala, who was chairman from 1932 to 1938. Of course, he was still family: Saklatwala was Jamsetji Tata's sister's son.

"There will be a vacuum if a non-Tata person is at the top. Any new person without the Tata name starts with a huge disadvantage," says Harish Bijoor, brand specialist and CEO of Harish Bijoor Consults.

Still, considering there aren't too many Tatas around anymore, perhaps it does make sense to keep an open mind about candidates from outside the family. But not outside the company, and certainly not outside the country, seems to be the majority opinion.

Russi Mody

Former Tata Steel CMD Russi Mody doesn't consider the lack of the right surname a handicap -- "I was a chairman although I wasn't a Tata," he says -- but is quite sure that only a company man will do for the job.

"This is an Indian company and an Indian should be appointed chairman. A company man will have loyalty to the group," he declares.

Preety Kumar, managing partner at global executive search firm Amrop, gives the neutral observer's viewpoint. "Internal succession always has smoother transition than an external one. In some of our work, successor appointments have been made two or three years before the succession, which helps change perceptions," she says.

Sanjay Teli, MD of executive search firm ESP Consultants, adds that group acceptance of and support to the heir apparent is critical. "Ratan Tata's personality and the changes he brought about helped attract the best talent to the group. Retaining some of those people may become an issue in the future," he warns.

Those and other important issues must be top of mind for the selection committee as it searches for the ideal candidate. The five-member panel -- comprising Tata Sons vice chairman NA Soonawala, group advisor Shirin Bharucha, British businessman Lord Bhattacharya, Tata Sons director Cyrus Mistry and Indian Hotels vice chairman R K Krishnakumar -- is expected to announce its choice by March 2011, which leaves room for a reasonably long handover period.

The actual selection process isn't public, but it is known that Tata and other senior executives have given their inputs on what to look for. "It's a scientific process," says a person familiar with the broad workings of the panel.

"The candidates will be evaluated on leadership qualities, management skills, operational performance and other criteria. There will be a matrix and the top scorer will get the top job."

As it happens, those are precisely the qualities that catapulted B Muthuraman to the top job at Tata Steel in 2001. When J J Irani's retirement was imminent, three people were considered likely successors -- Muthuraman and T Mukherjee, both executive directors, and Firdose A Vandrewala, who was responsible for sales and marketing, as well as new business initiatives at the company.

Sir Dorabji Tata.

"Tata asked all three to prepare a presentation on the future of Tata Steel. Muthuraman's vision and roadmap was crisp, clear and the most appropriate," says a 30-year veteran of the company.

Background and prior domain expertise aren't make-or-break criteria for Ratan Tata, perhaps because he's living proof that track records can be deceptive or misinterpreted.

Anil Sardana was CEO of North Delhi Power when he was picked to lead Tata Teleservices (TTSL), a different industry altogether. He's already proved that the group's confidence in him was justified: from a user base of 15 million in August 2007 when he took over, TTSL now has 75 million.