TPC 1

Case Study Assignment

Samara Mitchell Julian Horman Kenneth Guzman

TPC 2

Tata Power History Tata Power is the largest & oldest integrated private power utility for India. The company originated in 1919 and was originally formed as the Tata Hydroelectric Power Supply Company. The core product focus consists of electrical power, natural gas, electricity generation and distribution, natural gas exploration, and transportation. The company is highly driven by innovation and leading edge technology. This drive for innovation has led Tata Power to establish various public & private partnerships to aid in their focus of generation, transmission and distribution. Tata Power holds strong leadership qualities which increases the value of both their company, and the communities which they do business in. Vision: To be the most admired integrated Power & Energy Company delivering sustainable value to all stakeholders. Mission: We will become the most admired company delivering sustainable value by:
Providing world class power and energy solutions that exceed customer expectations Innovating and deploying cutting edge eco-friendly technologies Capitalizing on global opportunities and exploring synergy in entire value chain Empowering our employees and creating an environment for them to perform at their highest

potential
Caring for the safety, environment and well-being of employees and their communities Ensuring profitable growth and enhancing value to stakeholders

Values: Integrity, Agility, Respect for People, Collaboration, Empowerment, Trust, Care, Excellence, Tata Power is also a company that believes strongly in corporate social responsibility. Their main areas of focus includes: Environmental, healthcare, education, and sustainable livelihood. In the environment, Tata Power has started environment awareness campaigns, helped to conserve water and other natural resources, to help better the environment. Their healthcare focus is mainly centered on AIDS awareness programs, and Immunization/Health checkup camps.

TPC 3

Tata Power has built a strong culture throughout the company, as it pertains to social responsibility. (Thompson)

Identifying and Analyzing Problems According to the case study, Tata Power Company (TPC) is running its CSR activities through the volunteering initiatives of the employees in various projects undertaken in each thrust area. The employees voluntarily participated in various CSR activities in addition to their regular working hours. (Deshmukh & Adhikar, 2010) Although the volunteer initiative worked for TPCs present CSR model, Tewari was aware that the company was looking to expand and CSR activities would need to be a part of this expansion. He considered the value of adding a separate CSR department vice leaving CSR initiatives up to the altruism of the employees. With this decision would come other concerns. What would be the nature of its composition and its deliverables? Should such staff be hired externally or should the department evolve from the existing structure? Could the CSR activities that had until that point been carried out by project-based organization (PBOs) or non-government organizations (NGOs) provide a possible alternative to the CSR department? If the CSR department became a separate entity, how would TPC monitor the costs and how would TPC assess the costs? How would the balance between interests of investors and the interests of other stakeholders be maintained? (Deshmukh & Adhikar, 2010) How to manage Stakeholder interest While attempting to remain a dominant player in its industry, Tata Power is also challenged with the task of managing multiple stakeholder interests. Tata Power has a high level of diversity in their CSR activities, and as a result, properly managing the interest of all the stakeholders is a daunting task. Stakeholders for the company include: Employees, Stockholders, Foreign Governments, domestic & foreign customers, etc. Tata Power must recognize the differences of interest, and formulate a strategy to mediate them properly. (Thompson) Since the diversity of the CSR activities is high, first Tata Power should seek to prioritize the stakeholders of the company. Listing the people and organizations that are affected most by the operations of the company will help to narrow the focus when seeking to satisfy stakeholders

TPC 4

interest. The stakeholders prioritization can be measured on a scale of power, and interest in the company. For example, if a stakeholder has high power and high interest, the company should seek to closely manage and fulfill their expectations. While a stakeholder, who has low power and low interest, will only receive minimum attention from the company. This strategy of prioritization will help to increase Tatas CSR efficiencies, and decrease resources used on low prioritized stakeholders. (Thompson) Next, Tata Power must move towards fully understanding their key stakeholders, in order to properly manage them. Learning how to communicate, and engaging stakeholders in new project initiatives are vital to the growth of the company, as well as CRS activities. Internal and external surveying can be conducted, to gain valuable information for the company. Internal surveys can cover topics such as: strategic planning, potential managerial conflicts, employee growth, etc. in order to understand the thoughts of the employees and investors of the company. External surveys will allow Tata to key in on key expectations of villagers who live nearby their plants and areas of operations. Having this information will help to decrease any revolt against any potential expansion plans of Tata because they will be able to adequately gauge the responses of the community. By conducting surveys, Tata will be able to better understand and win over both their internal and external stakeholders. (Thompson) Potential Actions and Recommendations Retaining the Employee Volunteer Structure Increasingly, businesses are using the skills and talents of their workforce to meet their CSR objectives. Allowing staff time off from work to volunteer for local charities can increase their commitment and motivation, improve team-working and leadership skills, enhance staff recruitment and retention and build brand loyalty. With a CSR structure built on employee volunteerism, TPC has embedded CSR into its culture. CSR is not the afterthought or an infrastructure, but a tangible activity in which the employees are invested. One of the problems with retaining TPCs current volunteer CSR structure is that out of the 3,430 employees only 259 are actively involved with the volunteer initiative; thats equivalent to seven point five percent of the work force actively engaged in CSR initiatives. Tewari boasts that

TPC 5

in addition to boosting volunteer numbers, TPC now has a mechanism in place to keep track of employee voluntary contributions towards CSR activities and that this tracking helps the company evaluate the contribution of each of the employees in terms of the number of man-hours spent by each employee, as well as the areas of contribution. While its great to know who is volunteering, the shareholders are probably more interested in how the volunteerism is contributing to revenue for the company and how much these efforts are costing them. This is not information readily available to a random volunteer force. Tewari described employee motivation for volunteering: We believe in self-motivated small teams who are not participating for the monetary rewards. Of course they get the due recognition as we acknowledge their work, but then that should not be the motivating factor. The real motivation should come from within for such kind[s] of social cause[s]. (Deshmukh & Adhikar, 2010) While it is noble of people to volunteer for recognition, the fact that less than eight percent of the employees at TPC are involved in the CSR activities should alert Tewari to the fact that he needs to create new motivating factors. Tewari says that the company is expanding and TPC already has 107 key communities they are socially actively involved with. Vivek Vishwasrao, executive in charge of the hydro area, says of the key communities: These villages demonstrate large variety in terms of income levels, standard of living, the state of development, and even the level of aspirations among the villagers. Hence it is very difficult to cater to all the villages through the single uniformed program. (Deshmukh & Adhikar, 2010) In his own words, Vishwasrao states that the current CSR model is not effective in catering to all the villages. While the effort of the volunteers is admirable, it is the successful execution of TPCs CSR activities that ultimately matters. Creating a Separate CSR Department One potential action for TPC is to create an entirely separate CSR department. To create this infrastructure, TPC can capitalize on the culture of CSR already developed at TPC with the employee volunteer efforts, by selecting some home-grown employees to fill positions in the new department. Key executive positions should be a mixture of internal employees already familiar with the culture of TPC and outside leadership with a background in CSR. A sample organization structure would be one Executive Vice President overall in charge of the CSR department, (typically a Sustainability Officer), with three executive leaders below him to oversee the three

TPC 6

divisions that TPC maintains are its main CSR activities; community welfare, environment, and energy. The responsibility of the CSR Department would be to define TPCs CSR goals and spread awareness, have requisite knowledge of sustainability and disseminate that knowledge, to draft CSR policies and respond to CSR issues, ensure TPCs business goals are aligned with the companys CSR activities, measure CSR performance, ensure CSR transparency, and communicate with stakeholders; to name a few. An advantage to creating this infrastructure is that the CSR department would better able to produce an annual CSR report that could provide a complete portfolio of CSR efforts in one place. Under the current structure, this type of report would have to be piecemealed internally and externally and would require tremendous resources. This type of report is beneficial not only to the company as a measure of whether they are meeting their goals, but also to the shareholders as an indication of the value being added to the company through the achievement of social activities. An industry leader in CSR who demonstrates the successful use of a separate CSR department is Starbucks. Starbucks created their CSR department to oversee Starbucks involvement in literacy programs, community volunteering, environmental affairs, shade-grown coffee, and international relief efforts (Austin, 2004). At Starbucks, CSR served two roles across the whole company. First, before any public decisions were made, it communicated with all the relevant departments such as coffee purchasing, supplying and marketing, about steps to bring social responsibility awareness center stage in the decision-making process. The second role was to make sure we do what we say we are going to do. (Liu & Liu, 2009) The successs of Starbucks second role is measured by the companys Global Responsibility Report. This report lists all the goals set by the CSR department and details whether the goal was achieved, on track, or needs improvement. One of Starbucks environmental goals from last year was to implement front-of-store recycling in their company-owned stores by 2015. They list this goal as needing improvement. They reported that only 5% of Starbucks stores have front of store recycling. (Starbucks, 2010) CSR Department Disadvantages The bottom line goal of any corporation is profit. One of the most common arguments against creating a CSR department is the associated cost of creating and staffing a new corporate

TPC 7

infrastructure. With the current TPC CSR structure, there are no additional salaries or risks to shareholders. A CSR department can be perceived as recognizing responsibilities to stakeholders outside of shareholders. This would include customers, communities, employees and suppliers. While there may be long-term benefits of the CSR department fostering core relationships, shareholders are often deterred at the notion that companies will invest in anything that does not create immediately obvious financial gain. With CSR, detecting measurable bottom line benefits is a challenge as social and environmental programs are hard to account for with regard to financial gain. (Kokemuller, 2011) Another disadvantage is the perception that CSR executives are typically junior and dont have much authority to make decisions. This drawback is explained by Peter Klein, vice president for Europe at CarbonView, a provider of software for measuring carbon emissions across firms' supply chains. "It is because of the role's perceived lack of authority what we often see when we sit down with a company to look at their carbon strategy is that the CSR department is not strong enough and as a result the different business units end up arguing." Critics argue that setting up a CSR or sustainability department creates the impression that firms are taking environmental concerns seriously, but in commonly failing to give the department authority over other executives, firms often struggle to drive through genuine changes. Seb Beloe, vice president for research and advocacy at environmental consultancy sustainability, believes this lack of authority is a common problem. "CSR is generally a bolt-on, almost by definition," he argues. "At best it is seen as a risk management or reporting exercise and integration with the rest of the business can be pretty limited." He adds that in some businesses the CSR department's influence is so limited that environmental campaigners and NGOs are rejecting them as a point of contact, and are instead trying to directly access more senior executives. "The more sophisticated [NGOs] are not really interested in talking to the CSR officer as they know they do not make the decisions," he explains. (Murray, 2007) In creating a separate CSR department, TPC runs the risk of the department becoming isolated in their social activities. What was once an embedded practice will now be the responsibility of a few selected individuals which could possibly turn this into a departmental silo. CSR can only be successful if its adopted/owned by everyone in the company as a crossdepartmental matter.

TPC 8

Create a Sustainability Council with an NGO partnership Another potential action for Tata Power is to create a Corporate Social Responsibility Council (CSRC) under the leadership of an Executive Director (ED) who reports directly to the CEO whose sole responsibility is to devise, and implement, ways in which the company can fulfill their social commitment seriously and conscientiously. The council should have a three-way partnership between Tata Power, Government organizations, and NGOs. Additionally the council should utilize the 'triple bottom line' (TBL) approach, as laid out by the Global Reporting Initiative (GRI), which focus on financial, social and environmental performance. Effective corporate citizenship creates goodwill and improves relations with local governments and other important constituencies. (Porter) Therefore, the CSRC should consist of top executive leaders from: Human Resources, Corporate Communications (Public Relations), Operations, and Finance. The council should also comprise qualified/experienced social workers who have a firm understanding of the needs of the community where projects would be implemented. The CSR Mission/Policy should focus upon: 1) Identification of societal felt needs that require intervention. 2) Possibilities for Public-Private-Government Partnerships. 3) Broad program/project design guidelines. 4) Methodologies for talent identification in the community. 5) Leads for corporate R&D in the direction of these felt needs. 6) Financial implications. 7) Campaign, communication and presentation methodologies Information, Education and Communication (IEC). 8) Community feedback analysis. 9) Result mapping. 10) Future projections. 11) Inter-departmental synergy modules HR/CC/CSR to streamline CSR initiatives. (http://www.reacha.org) This CSR Mission/Policy should be drafted after a thorough assessment of the environment in which the company works: 1) Employees, customers and clients. 2) Their families and neighborhood. 3) The socio-cultural environment. 4) The felt need in this environment. 5) Ecological/environmental concerns. 6) Prevailing Political situation. (http://www.reacha.org) Establishing a symbiotic relationship with Government organizations will ensure proper regulation guidelines are being met and will provide a strong foundation towards implementing CSR initiatives. TPC also needs to partner with NGOs/Local grass-roots Voluntary Organizations who are involved in ground level work; experts in the nuts and bolts of Social Dynamics and

TPC 9

possessing the experience in knowing what works at this level. This is essential in order to maintain the sustainability of CSR activities and critical that best suited NGOs are partners. (http://www.reacha.org) The council also needs to take into account the objectives of TPC and ensure that CSR activities will contribute to overall sustainability of the corporation. In order to meet these objectives, the council should utilize the existing corporate culture in place to attract employee volunteers for these initiatives. Corporate Volunteering should be an integral part of CSR. This encourages executives in the various departments at TPC to take that extra step to reach out to the community by encouraging their employees to become engaged with CSR volunteerism. It also provides an opportunity for managers to assess the skills of their employees and could prove to be an important component of succession management. Tata Power emphasizes promoting long-term partnerships between various stakeholders, with the aim of jointly addressing challenges. (http://tatapower.com) In order to do this they must take into account all of their various stakeholders and what they value. Tata Power needs to take into account these competing demands and address each of their individual concerns in order to ensure they are aligning expectations. Creating a CSR council and partnerships with NGOs will be the most effective and advantageous way to achieve these goals. Because this structure incorporates the advantages of a separate CSR department while maintaining strong ties with all departments and executive leadership, CSR initiatives will have the support they need to ensure sustainability.

Sustainability Council with an NGO partnership Disadvantages A separate council will require top level executives to devote additional time and resources that are outside the scope of their current department needs. They need to be passionate about making a difference in the communities they serve and believe in the mission goals of the CSR council. If there is not adequate leadership from the council, then the CSR goals wont be met and projects will fail to be sustainable.

TPC 10

The CSR Councils functions should not be considered actions of a separate department. This would create disconnection within the corporate culture and would negate the advantages of having a council over creating a separate CSR department. Failure to communicate that CSR activities are a part of the functions of each division, will lead to this misconception. Reliance on NGOs to help with the implementation of projects is a double edged sword. If the wrong NGO is utilized and the project fails, Tata Power will be viewed negatively by the public. There is a potential for negative publicity from a failed project but, if proper research is completed before hand, these downsides can easily be alleviated. Future Considerations Tata Powers relationship with society Successful corporations need a healthy society in order to remain viable. Education, health care, and equal opportunity are essential to a productive workforce. Safe products and working conditions not only attract customers but lower the internal costs of accidents. Efficient utilization of land, water, and energy, and other natural resources makes business more productive. Ultimately, a healthy society creates expanding demand for business, as more human needs are met and aspirations grow. (Porter) Generic social issues may be important to society but are neither significantly affected by the companys operations nor influence the companys long-term competitiveness. Value chain social impacts are those that are significantly affected by the companys activities in ordinary course of business. Social dimensions of competitive context are factors in the external environment that significantly affect the underlying drivers of competitiveness in those places where the company operates. Tata Power will need to sort social issues into these three categories for each of its business units and primary locations, and then rank them in terms of potential impact. These rankings will provide a base line for the CSR council to review which projects will have the greatest ROI. Tata Power needs to act as a good corporate citizen, attuned to the evolving social concerns of stakeholders, and mitigating existing or anticipated adverse effects from business activities. Many worthy local organizations rely on corporate contributions, while employees derive

TPC 11

justifiable pride from their companys positive involvement in the community. The importance of being a leader in social outreach projects is a vital role in TPCs sustainability. (Porter) Tata Power must specify clear, measurable goals and track results over time. The Global Reporting Initiative, which is rapidly becoming a standard for CSR reporting, has enumerated a list of 141 CSR issues, supplemented by auxiliary lists for different industries. These lists make for an excellent starting point, but Tata Power needs a more proactive and tailored internal process. They need to approach the subject from two perspectives: Inside looking out and outside looking in. By analyzing CSR initiatives in this way they will be able to have a better understanding of the key societal issues they are best suited to handle and their impact on value chain activities. (Porter) Strategic CSR Strategic CSR unlocks shared value by investing in social aspects of context that strengthen company competitiveness. A symbiotic relationship develops: The success of the company and the success of the community become mutually reinforcing. Typically, the more closely tied a social issue is to the companys business, the greater the opportunity to leverage the firms resources and capabilities, and benefit society. (Porter) Few companies have engaged operating management in processes that identify and prioritize social issues based on their salience to business operations and their importance to the companys competitive context. Even fewer have unified philanthropy with the management of their CSR efforts, much less sought to embed a social dimension into their core value proposition. Companies must shift from a fragmented, defensive posture to and integrated, affirmative approach. The emphasis must be on substance not image. (Porter) Conclusion Strategy is always about making choices, and success in corporate social responsibility is no different. It is about which social issues to focus on. The short-term performance pressures companies face rule out indiscriminate investments in social value creation. They suggest, instead, that creating shared value should be viewed like research and development, as long-term investment in a companys future competitiveness. Companies are called on to address hundreds of social issues, but only a few represent opportunities to make a real difference to society or to

TPC 12

confer a competitive advantage. Organizations that make the right choices and build focused, proactive, and integrated social initiatives in concert with their core strategies will increasingly distance themselves from the pack. (Porter)

References
Deshmukh, D. R., & Adhikar, A. (2010). TATA POWER: CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY. Ivey Publishing. Kokemuller, N. (2011, March 07). What Are the Disadvantages of Corporate Social Responsibility? Retrieved November 25, 2011, from eHow Money: http://www.ehow.com/info_8031857_disadvantages-corporate-social*/responsibility.html Liu, S., & Liu, L. (2009). IMPLEMENTING CORPORATE EXTERNAL SOCIAL RESPONSIBILITY STRATEGIES THROUGH ORGANIZATIONAL DESIGN AND OPERATION. Journal of International Business Ethics, 82-83.

TPC 13

Murray, J. (2007, 11 02). Do We Need CSR Officers. Retrieved 11 25, 2011, from business Green Sustainable thinking: http://www.businessgreen.com/bg/analysis/1802895/do-csr-officers Porter, M. and Krammer, M. (2006). Strategy & Society. The Link Between Compeative Advantage and Corporate Social Responsibility. Harvard Business Review, December, 78-93. Starbucks. (2010). Starbucks Global Responsibility Report.

Thompson, R. (n.d.). Stakeholder analysis. Retrieved from http://www.mindtools.com/pages/ article/nerppm_07.htm

Vogel, D. (2008, October 16). CSR Doesn't Pay. Retrieved November 25, 2011, from Forbes.com: http://www.forbes.com/2008/10/16/csr-doesnt-pay-leadcorprespons08-cx_dv_1016vogel.html