Extreme Culture
by Miki Saxon
How profitable can a company be that takes social responsibility to its extreme?
What kind of corporate social responsibility is possible if Wall Street isn’t breathing down your neck?
For answers you need look no further than India’s Tata and America’s SAS.
I’ve already written twice about SAS, its amazing culture and the lengths they go to to take care of their people.
And then there is Tata, where Ratan Tata, Chairman of Tata Group, built a culture of innovation after India dropped its trade barriers.
… for his companies to survive and thrive in a global economy he had to make innovation a priority—and build it into the DNA of the Tata group so that every employee at every company might think and act like an innovator.
Notice it says every employee, not just the stars, designers or engineers.
Obviously good culture and good business, but not really extreme.
Extreme social responsibility follows a different path. In 2000 Tata Tea Ltd. purchased Britain’s Tetley Tea Company and shortly after sold the vast plantations in an economically underdeveloped community where it had been the largest employer for a century.
But the transaction was anything but routine. Instead of working out a lucrative deal with eager investment bankers, bribing local politicians to mollify them, laying off workers, and selling to the highest bidder, as some other Indian companies shedding a moribund business might have done, Tata Tea sold 17 of the 25 plantations to its own former employees. Layoffs were generally limited to one per household, and Tata gave a group of voluntary retirees enough cash to buy equity in the new company that was formed. (That company, Kanan Devan Hills Plantation Company [KDHP], still operates as an employee-owned enterprise.)
Although Tata Tea would henceforth maintain only limited business interests in the area (including some equity in KDHP), the company continued its active social role there. It still subsidizes a range of social services and KDHP employee benefits, including free housing for plantation workers, a private school, an education center for disabled children and young adults, and the newly renovated Tata General Hospital in Munnar. Tata still remains a major customer of KDHP, which helps guarantee a stable supply of tea at competitive prices.
Tata’s extreme culture is simple.
Since its founding in 1868, Tata has operated on the premise that a company thrives on social capital (the value created from investing in good community and human relationships) in the same way that it relies on hard assets for sustainable growth.
And at $70 billion it certainly is thriving.
Extreme culture is long-term and looks well beyond the next quarter and short-term profits.
Extreme culture is successful, but not in the US—Wall Street would never allow it.
Flickr image credit: Tata Group
