Business Ethics & Governance

TATA Group Code of Conduct & Ethical Policy

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 Table of Content

S.no Topic Page no

1 TATA group introduction 4-6

2 Code of conduct 7

3 Code of ethics 8

4 Code of conduct & ethics of TATA group 9-11

Critical examination of TATA group code of

5 12-14
conduct and ethics with hbr article

6 References 15

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 TATA GROUP

 Founded by Jamshedji Tata in 1868, the Tata group

is a global enterprise, headquartered in India,
comprising 30 companies across ten verticals.
 The group operates in more than 100 countries
across six continents, with a mission 'To improve
the quality of life of the communities we serve
globally, through long-term stakeholder value
creation based on Leadership with Trust’.
 Tata Sons is the principal investment holding
company and promoter of Tata companies.
 In 2020-21, the revenue of Tata companies, taken
together, was $103 billion (INR 7.7 trillion). These
companies collectively employ over 800,000
people.
 Each Tata company or enterprise operates
independently under the guidance and supervision
of its own board of directors. There are 29 publicly
listed Tata enterprises with a combined market
capitalisation of $314 billion (INR 23.4 trillion) as
on December 31, 2021.
 Tata companies include Tata Consultancy Services,
Tata Motors, Tata Steel, Tata Chemicals, Tata
Consumer Products, Titan, Tata Capital, Tata
Power, Indian Hotels, Tata Communications, Tata
Digital, and Tata Electronics
 Sixty-six percent of the equity share capital of Tata
Sons is held by philanthropic trusts, which support
education, health, livelihood generation and art and
culture.

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 The company emphasises on improving the standard of living of all the
consumers and building customer trust along the way. It was one of the first
companies in its time to have introduced employee initiatives to generate
employment for people under British rule.
 The group believes in the Parsi legend ‘humata hukhta hvarshta’ which means
good thoughts, good words and good deeds. It adds value to society through the
establishment of various trusts and institutes over the years.  Being one of the
largest contributors to India’s GDP, the company added about 4 percent to the
country’s GDP in 2018.

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 TATA group historical timeline

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 Code of Conduct

 A code of conduct is a set of rules around behaviour for the employees to follow
within an organisation. The code acts as a standard that staff need to meet so
that they can know what is expected of them to produce a generally more
efficient business.
 A code of conduct serves not only as a set of internal guidelines for the
employees to follow, but also as an external statement of corporate values and
commitments.
 A code of conduct can:
I. Define the company culture
II. Set standards and expectations for employees to follow when it comes to
their behaviour
III. Let customers and partners know your values, and from there they can
work out if they want to work with you – creating a level of transparency
for a healthy business relationship.
 A well-written code of conduct clarifies an organisation's values and principles,
linking them with standards of professional conduct when it comes to the
behaviour of the employees. As a result, codes of conduct set the benchmarks
for companies to live up to.
 Additionally, a code can support employees in general decision making by
giving them a structure to follow when it comes to company behaviour,
allowing them to be prepared to handle ethical dilemmas in the workplace.
 Having a code of conduct can give employees a structure to follow from the
moment they join the company, reducing the chances of problems coming up,
but also making the process of dealing with issues a lot easier should the worst
occur. There should be no ambiguity when it comes to a code of conduct,
because as soon as lines are blurred, rules can be broken.
 As well as setting rules to follow, the code of conduct can let employees know
what they need to do if they ever need to report a violation of company policy
and lets them know the consequences of using false information.
 Employees have a greater understanding of the business rules by having a code
of conduct to follow, making life a bit easier for all parties involved. It
improves the working situation for staff and promotes your business values too,
attracting customers in the process.

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 Code of Ethics

 A code of ethics is a guide of principles designed to help professionals conduct

business honestly and with integrity. A code of ethics document may outline the
mission and values of the business or organization, how professionals are
supposed to approach problems, the ethical principles based on the
organization's core values, and the standards to which the professional is held.
 Business ethics refers to how ethical principles guide a business's operations.
Common issues that fall under the umbrella of business ethics include
employer-employee relations, discrimination, environmental issues,
bribery, insider trading, and social responsibility.
 While many laws exist to set basic ethical standards within the business
community, it is largely dependent upon a business's leadership to develop a
code of ethics.
 For all businesses, laws regulate issues such as hiring and safety standards.
Compliance-based codes of ethics not only set guidelines for conduct but also
determine penalties for violations.
 A code of ethics is a guiding set of principles intended to instruct professionals
to act in a manner that is honest and that is beneficial to all stakeholders
involved. A code of ethics is drafted by a business and tailored to the specific
industry at hand, requiring all employees of that business to adhere to the code.
 The moral choices of businesses have evolved, from the industrial age to the
modern era. In the world we live in today, working conditions, how a business
impacts the environment, and how it deals with inequality are all areas that
society deems important that perhaps two centuries ago it did not as much. A
code of ethics helps ensure that businesses will always act with integrity.

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 Code of conduct and ethics of Tata group

The TATA group code of conduct was formulated by Mr. Ratan Tata which
deals with the core values and principles which are essential for guiding all the
companies of TATA group related to business.
These are also known as TATA values.
Although several amendments have been made in the policy from time to time
but its core principle have remained unchanged.

The code of conduct of TATA group follows five basic values also knows as the
building blocks of code of conduct, they are stated below:
1) Integrity (talks about honesty & transparency in business i.e., ethics)
2) Unity (talks about the mutual growth of each stakeholder)
3) Responsibility (talks about sustainability)
4) Pioneering (talks about courage, innovation and customer focus)
5) Excellence (talks about quality and excellence)

The code talks about all the stakeholders that includes employees, business
partners, society, customers, governments, all the group companies etc.
It always talks about ‘we’, ‘us’, ‘our’ which signifies the expectations about the
awareness of code of conduct.

If we talk about the principles of the policy then it talks about the working of the
group towards the equal benefits or interest of its owners, employees, customers,
society and the country as a whole.

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Some of the points related to the principles are:
1) Morality & ethical standard in business (like zero corruption)
2) Social upliftment, also avoiding activities which have negative impact on the
community i.e., sustainability.
3) Taking care of the safety, health and overall development of its employees.
4) Overall, it talks about all ethical, sustainable points related to its
stakeholders.
5) They also talk about respecting the law of the country, and should not
practice anything which breaks the law.

The policy has been explained separately for employees, customers,

communities & environment, value chain partners, financial stake holders,
governments and the group of companies.

Employees:
 TATA talks about giving equal opportunity to each of its employee.
 Promoting diversity, transparency and also overall development of
employee since his/her induction into the group.
 It also talks about the dignity and mutual respect of employees, i.e.
providing a healthy and safe environment for employee to work and
excel.
 A lot of focus has been given to human rights of the employee, like no
child labour etc.
 Bribery, conflict of interest, corruption is strict no no in the group, if any
employee found guilty has to face consequences.
Customers:
 TATA talks about the fair competition in market.
 Focuses on the quality of products and services given to the customers.
 Transparency in the business.
Communities and Environment:
 It talks about the social upliftment of the community where it operates.
 It focuses on prevention of wasteful usage of natural resource.
 A lot of importance is given to sustainability.

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Value chain partners:
 Talks about transparency and equality in the business.
 It also expects the same from partners.
Financial stakeholders:
 Accuracy should be there in the records of the company
Governments:
 It emphasises on engaging with the government and regulators in a
constructive manner in order to promote good governance
Group of companies:
 Talks about the mutual cooperation among the different companies of the
group.
 Resolution of any dispute in a mature and amicable manner.

The policy also talks about the role of whistle blower. And encourages its
employees to raise issue if they found the violation of the policy anywhere by
anyone.

TATA believes that the reputation and the success of the group has been
attained due to its strong commitment and adherence to the five core values of
its code of conduct which are-
1) Integrity
2) Unity
3) Responsibility
4) Pioneering
5) Excellence

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Critical examination of TATA group code of conduct and
ethics with hbr article

The given hbr article talks about the process of designing the ethical
organization, which as per my understand is the building block for the success
of any organisation.
As we know that unethical practices damage the reputation of the company, it
also lowers the moral of its employees and thus hampers its success.

The article talks abut four pillars which are required for creating an ethcal
culture in organisation, which are-
1) Explicit values
2) Thoughts during judgement
3) Incentives
4) Cultural norms
It also talks about the requirement for creating an ethical culture, that one
should think about ethics as design problem along with belief problem.
We will examine the TATA policy in terms of above-mentioned parameters.

Explicit values:

It talks about the strategies and practices that should be shared throughout the
organisation. It should be simple and understandable for the employees. It
should be a guiding principle for top management when creating new strategy in
organization. There has to be uniformity throughout the organization.

If we talk about TATA group, the policy is same for all the group of companies
of TATA. It is very simple, crisp and to the point. It also talks about the
consequences of not following the code of ethics defined by the company.
For example, TATA group strictly against bribery and corruption, and have
strict penalties for employee who found guilty. It is easily understandable to
employee; a sit ruins the reputation of the group in market and also demoralizes
the key stakeholders.

Thoughts during judgement:

It talks about keeping ethics of the company in mind while making any decision
At the workplace. It enhances the decision-making ability of the employee.

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Increases the positivity at workplace.
At TATA, they talk about rational utilization of natural resources, and are
committed towards environment conservation.
They believe in marketing their products on the basis of merit rather than on
unfair means. For the employees it provided equal opportunities irrespective of
caste, gender, colour, religion, marital status etc.
It is against indulging in any activity which promotes anti – competitive
behaviour such as- abuse of market dominance, collusion, participation in
cartels or inappropriate exchange of information with competitors

INCENTIVES:

It emphasises on the fact that along with the income that they earn, employees
also look for doing meaningful work, making a positive impact on society or
workplace, and most importantly being respected and recognized for their work.

At TATA a lot of focus is given towards sustainability. Employees are

motivated towards minimum wastage of natural resources like water etc
A lot of encouragement is provided by the top management to its employees
To volunteer for projects that benefits the communities where there operate.
It gives a sense of pride and ownership to employees towards the society and
environment at same time respect for the company

CULTURAL NORMS:

This pillar talks about the importance of ethical behaviour at all the segment of
the organisation whether its at the top, middle or lower level.
Management should focus more on ethical beacons rather then ethical
blackholes of the organisation. It talks about the role of leaders in promoting
ethics in the organisation. They should highlight the good things that employees
are doing rather than just targeting the negative things, in order to promote
positivity at the workplace.

At TATA a lot of encouragement is given to employees towards ethics. They

are rewarded, appreciated by the management for their exemplary work towards
ethics. At the same time also punished for breaking a serios code of conduct
law. This shows how the management is serious about promoting ethics in the
work culture.
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Also, to work on this they have a very simple, transparent, fair policy to
promote diversity and equality among its employees.
Finally, it’s a collective work of top, middle and lower management to maintain
an ethical environment in the organisation. For the leaders it is their duty to
promote the positive culture by rewarding and highlighting the examplary work
done by the employees to set examples among the employees, at same the time
the employees should follow the guideline provided by the company related to
work ethics, as we know how badly it impacts to the reputation of the
organisation if done in unethical manner, and to stop this they have certain
guideline to penalise the employee on the basis of severity of the crime.

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