I wrote about the Reputation score of Ratan Tata and Cyrus Mistry one week after the ouster of the latter for Scoop Whoop. A week after my previous article I would think, purely based on the sentiment analysis online and general perception Ratan Tata has lost more sheen and Cyrus Mistry has gained some halo.
I’m reproducing some of what I wrote previously…
Tata Trusts gave itself the power to nominate, remove and appoint chairmen before Mistry took over. If the ousted chairman was aware of this reality, he should have never taken his office for granted. In hindsight, it seems like Cyrus was an experiment that the Tata Group tried due to the lack of a well-groomed successor and in less than four years the cracks had shown. The Tata Trusts also appointed Ratan Tata as the boss for life.
There are three other incidents in recent times of similar nature, but each is unique and important to recall to understand the reputation quotient in each scenario. First, in the world of politics way back in 1998 Sonia Gandhi replaced Sitaram Kesri because the dynasty has always been powerful. In the corporate world, the split in the Reliance Group in 2004 between the two brothers garnered a lot of news coverage for weeks together. Then in 2013 N R Narayanamurthy returned to Infosys post retirement as executive chairman in different circumstances.
The unfortunate situation in all the cases is the absence of robust succession planning. This is telling on the leadership in all organisations mentioned above. The biggest casualty is the reputation that gets a hit, especially in the case of the Tatas because of the dirty linen that will be washed in public.
While irreparable damage has been done to Cyrus Mistry’s reputation that was being built after he took charge less than four year’s ago, let us reflect on how this affects Ratan Tata’s reputation.
Before that, it is important to understand the history of the Tata group specifically linked to ownership and the professional relationship between the Mistrys and the Tatas. Also interesting to note that Cyrus Mistry’s sister is married to Ratan Tata’s half-brother, Noel Tata.
Eighty years ago, Shapoorji Mistry (Cyrus’s grandfather) had acquired Tata Sons shares from the heirs of eminent financier F E Dinshaw in 1936, seven years after Cyrus’ father Pallonji was born. Dinshaw had lent nearly Rs 1 crore to Tata Sons to finance its power unit in 1926 but the latter couldn’t repay the amount and, subsequently, the loan got converted into 12.5% stake of Tata Sons. Later, Shapoorji bought some more shares from JRD Tata’s siblings, thus increasing his stake to 18.5%. Legend has it that JRD Tata’s siblings in a fit of anger had sold their shares to the Mistry patriarch. The rest is history.
Reputation is key in all that unfolds. Some of it has eroded, some is at risk and some will stay intact. That which is at risk needs to be fortified.
The section now onwards is new insights.
- Going by the article on how Cyrus Mistry preventing any business from the Tata Group going to Shapoorji Pallonji one can gather threads of good governance that the ousted chairman followed
- The blog by Prof Nirmalaya Kumar on why he was fired is another great piece that has gone viral and picked up for publishing by mainstream media that paints Cyrus in a very good light
- The skeletons tumbling from Air Asia’s cupboard are another reason to believe that Cyrus was not as bad a guy as it was made out to be
- The biggest jewel in the reputation crown for Cyrus was that the independent directors at the Taj Hotels parent company backed him up
- In other news, the manhandling of photojournalists by the security at Tata headquarters has also affected the great reputation of the Tatas
Reputation is largely about behavior and in a small measure about how this behavior is communicated. Mr Tata is perceived to be a well behaved corporate leader and this goodwill is coming in handy during the period of crisis. Now, even Cyrus Mistry is coming across as a good corporate leader and it seems like this was a fall out of an ego tussle.
A year from now when we look back at October 2016, either a tell-all tale in the form of a book or a movie inspired by the saga could put a lot in perspective. In India, people tend to forget easily and quickly. For now, everyone is throwing their few cents. And these were mine.