Cyrus Mistry, Chairman of Tata Sons, has been unceremoniously shown the door. He occupied the prestigious and demanding position for less than four years whereas the Tatas are known to have faith in long-term performance.
Prima-facie, Ratan Tata has acted like Narayana Murthy of Infosys. There is of course a difference. Murthy is actually a founder of Infosys whereas Ratan Tata is only a legatee-promoter. He was not born in the family of promoters, he was adopted in. Therefore, Ratan Tata is not entitled to the extenuating psychological excuse of inability to let go of one's creation. Ratan Tata has acted like a typical psychopathic boss who can tolerate only those who do his / her bidding.
During Mistry's chairmanship, the Tata companies did perform well despite tough circumstances. Ratan Tata knows only too well how stormy his own initial term was. Mistry has been sacked when he has just settled down and started taking tough decisions like how to manage Corus. Mistry initiated the process of disinvesting white elephants to facilitate deleveraging. A man struggling midstream needs help to swim ashore.
Ratan Tata had earlier eulogised Mistry's willingness to learn and his humility. If the latter had taken some missteps, he could have been corrected. Ratan Tata through apparent penchant for backseat driving has let down Tata shareholders. It is worth revisiting what we thought when Cyrus Mistry was anointed as Chairman:
http://srivarahan.blogspot.in/search?q=cyrus+mistry
Prima-facie, Ratan Tata has acted like Narayana Murthy of Infosys. There is of course a difference. Murthy is actually a founder of Infosys whereas Ratan Tata is only a legatee-promoter. He was not born in the family of promoters, he was adopted in. Therefore, Ratan Tata is not entitled to the extenuating psychological excuse of inability to let go of one's creation. Ratan Tata has acted like a typical psychopathic boss who can tolerate only those who do his / her bidding.
During Mistry's chairmanship, the Tata companies did perform well despite tough circumstances. Ratan Tata knows only too well how stormy his own initial term was. Mistry has been sacked when he has just settled down and started taking tough decisions like how to manage Corus. Mistry initiated the process of disinvesting white elephants to facilitate deleveraging. A man struggling midstream needs help to swim ashore.
Ratan Tata had earlier eulogised Mistry's willingness to learn and his humility. If the latter had taken some missteps, he could have been corrected. Ratan Tata through apparent penchant for backseat driving has let down Tata shareholders. It is worth revisiting what we thought when Cyrus Mistry was anointed as Chairman:
http://srivarahan.blogspot.in/search?q=cyrus+mistry
The Succession Charade
Ratan Tata has announced that Cyrus Mistry, the son of Pallonji Shapoorji Mistry and the brother of Noel Tata's wife, will succeed him as the chief of the Tata group. As reports go, Cyrus Mistry is a cultured gentleman who espouses humility and respect for governance. Prima facie, the choice is apt. Though only 43, Cyrus Mistry is well experienced in construction business and apparently receptive to advice from well-wishers.
Ratan Tata had earlier observed that his half-brother, Noel Tata, is not experienced enough to succeed him. The question that arises now is: Is Cyrus Mistry more experienced than Noel Tata? The answer may not be reassuring. Ratan Tata also made a mysterious remark, perhaps more philosophical than pragmatic, that Noel Tata's lack of readiness to head the Tata empire was partly his own making. This enigmatic statement gave the game-plan away.
Earlier, a 5-member committee was formed with a great deal of fanfare to do a "global search" for the successor. A world-wide search was made for more than a year only to discover that the target was in Tata's backyard. This brouhaha was, in retrospect, a deceptive ploy. Shapoorji Pallonji's family owns about 18% of Tata Sons. This family seems to have asserted its rights to manage the business empire. This is what happens in many business groups and there is nothing ethically wrong about this development.
However, what is disconcerting is the elaborate drama that was enacted to make us believe that the group was professional and mature enough to delink ownership and management completely. The search committee owes it to the Tata shareholders to inform them the rationale for the ultimate selection. There is no doubt (based on what information is available in the public domain) that Cyrus Mistry is a good choice. It is doubtful however if the committee could not have found a better choice.
Ratan Tata had earlier observed that his half-brother, Noel Tata, is not experienced enough to succeed him. The question that arises now is: Is Cyrus Mistry more experienced than Noel Tata? The answer may not be reassuring. Ratan Tata also made a mysterious remark, perhaps more philosophical than pragmatic, that Noel Tata's lack of readiness to head the Tata empire was partly his own making. This enigmatic statement gave the game-plan away.
Earlier, a 5-member committee was formed with a great deal of fanfare to do a "global search" for the successor. A world-wide search was made for more than a year only to discover that the target was in Tata's backyard. This brouhaha was, in retrospect, a deceptive ploy. Shapoorji Pallonji's family owns about 18% of Tata Sons. This family seems to have asserted its rights to manage the business empire. This is what happens in many business groups and there is nothing ethically wrong about this development.
However, what is disconcerting is the elaborate drama that was enacted to make us believe that the group was professional and mature enough to delink ownership and management completely. The search committee owes it to the Tata shareholders to inform them the rationale for the ultimate selection. There is no doubt (based on what information is available in the public domain) that Cyrus Mistry is a good choice. It is doubtful however if the committee could not have found a better choice.
No comments:
Post a Comment