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An analysis of Tata Steel’s preparedness for agility and high performance

organization

ABSTRACT

This paper analyses Tata Steel’s preparedness for Agility and High Performance. Tata Steel Ltd is one of the biggest
steel manufacturers in the world with a presence in 26 countries, has an annual production of 34 million tons and sales
of INR 82,125 crore in FY 2020. (www.tatasteels.com).

The study reveals that spirit of an Agile model of a high-performing organization like Tata Steel globally, is by
strengthening and optimizing, strategy, structure, processes, people, and technology. A right team of people, with
diverse capabilities, results in excellent performance and client satisfaction. Employees will be inspired by clear and
shared values, freedom to make certain decisions, and to sharpen their skills. Such high performing teams accomplish
around 30 percent more in terms of productivity, consumer gratification, operational performance, and continued
innovation. (McKinsey & Company, May 2021).

Keywords: Agility, Sustainable competitive advantage, Workforce and Talent Management, Corporate
Governance and Risk Management, ESG and CSR, Helix

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INTRODUCTION
Tata Steel Ltd is one of the biggest steel manufacturers in the world with a presence in 26 countries, has an annual
production of 34 million tons and sales of INR 82,125 crore in FY 2020. (www.tatasteels.com). It is India’s foremost
international steel company with yearly crude steel production of 18.2 MTPA. It conducts mine operations both in
India and abroad to sustain cost
effectiveness and manufacturing efficiency by their continuous source of raw material.
Tata Steel Europe manages its operations in Europe. In 2004, the company acquired NatSteel, Singapore and
Millennium Steel, Thailand; expanding its South-East Asian operations (Tata Steel, Company Profile, 2021). It
initiated numerous strategies through all its set-ups in different continents to accomplish sustainable competitive
advantage even during the present pandemic (www.ukessay.com).
Tata Steel has made large investments of Rs. 15,000 crore in Greenfield projects both in India and abroad making it
difficult for other players to match or enter into the market. It enjoys economies of scale, as its owns limestone and
coal mines through JVs with Australia, Oman and Mozambique. It needs to step up its agility for sustainable
competitive advantage in the future.

AGILITY FOR SUSTAINABLE COMPETITIVE ADVANTAGE

Managerial agility is a company's ability to accelerate speedy, people-oriented reform in tune with altering conditions
(Dove 2002; Teece et.al., 2016 & Goldman et.al., 1995).
Conboy (2009) asserts that agility in data analysis accelerates systems which respond to change, leading to client
satisfaction through scale and excellence. A firm’s agility is critical for an organization’s advancement and innovation
(Sambamurthy et al., 2003; Tallon & Pinsonneault, 2011). During the present modern technology era, businesses
progressively depend on data systems, information methods, and communication know-hows that augment their
capability (Sambamurthy et al., 2003; Yusuf et al., 1999).
Agile firms encourage management at all designations to generate a creative culture (Crocito, M., & Youseef, M.
2003). Market leaders need to innovatively increase competence, knowledge and team spirit among its employees
(Krasnicka et.al., 2016).
Tata Steel announced Agile Working Model on November 1, 2020 as an innovative step to strengthen its
organizational culture, in tune with its values and beliefs to deliver more tangible results (www.tatasteels.com).
Under this Model, the Company strengthened its Employees Value Proposition, permitting employees to work from
home during the pandemic. It acknowledges that the future work force and social trends by 2025 will be remote
working, by leveraging technology platforms. (www.tatasteel.com) The agility of Tata Steel is reflected in its vision
of ‘value creation and corporate citizenship’ for all its stakeholders. This caters to the customer requirements across
various divisions globally.
WORKFORCE AND TALENT MANAGEMENT
Tata Steels as pioneer in People Management, takes utmost care to the requirements of a diverse workforce from its
top executives to its young management trainees inducted from Premier Engineering colleges through campus
placement, unionized employees, and contract workers. Additionally, they build on the competencies of young talent
across geographies to support new businesses by 2025. Diversity and Inclusion stresses on meritocracy, gender
diversity, a supportive set-up for differently-abled personnel and involvement of women in senior leadership.
Tata Steels management, being employee-centric, integrates leaders and employees harmoniously as per strategy.
Employees are motivated to upskill through rewards and incentives. The company promotes social connectedness by
attracting and retaining human talent. This process will strengthen changes needed for agility, high performance and
sustainable enterprise.

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CORPORATE GOVERNANCE AND RISK MANAGEMENT

High-performing organizations need to adapt to organizational governance and risk management. Corporate
governance addresses the responsibilities of the owners (Aoki, 2001). Effective corporate governance ensures
stakeholders’ rights and welfare, and being accountable for safeguarding of wealth invested in the firm. Giovannini,
2010, validated that it is very significant for organizations to practice corporate governance principles to achieve
transparency.
Tata Steel incorporates the paramount standards of governance, in a just and transparent manner to produce long-
term value for all stakeholders. Tata’s Code of Conduct adopts the best global practices for a definite ethical
governance structure.
RISK MANAGEMENT
India's regulatory framework emphasizes the role of the board in enterprise risk management or ERM. The Board of
Tata Steel constituted a Risk Management Committee to drive the ERM process as a significant consideration for high
performing organizations related to risk and governance.
Table 1: TATA STEEL KEY RISK AREAS AND SRATEGIES TO MITIGATE RISK

Sl. No. Key Risk Areas Strategies to Mitigate Risk

1. Macroeconomic Risk a. Product Diversification
Global Imports/competitors impacting steel price, b. Creation of Different markets
financial prospects and profits
2. Economic Risks a. To Maximize operational cash flow
Variation in exchange and volatility in business b. Refinancing of Debt
Considerable amount of Debt c. Appropriate foreign exchange
Deterioration of Assets hedging policies
d. Liquidity Management
3. Regulatory Risks a. Focus on compliance
Noncompliance of environment norms Legal/Consultancy services
Non-renewal of mining leases b. Time for regulatory changes
Elimination of trade procedures
4. Operational Risks a. Enhancing training from experts
Increase in cost of supplies and energy b. Availability of raw materials from
Failure of critical information systems another countries
Violation of safety standards leading to c. Committed to Zero- Safety drives
injury of personnel, and resources
5. Market Risks a. Focus on Product differentiation
Industry volatility affects financial position. and cost reduction
Rivalry from competitors and suppliers affects the b. Enhancement of Sales and Service
viability of the business, c. Establishment of Contracts
Threat from new Entrants arrangements

6. Environmental Risk a. Sustained environmental projects.

Environmental regulations relating to pollution and b. Tie up for collaborative research
Greenhouse Gas emissions projects on environmental concerns.
Restrictions affecting firms survival and growth
7. Human Resources Risks a. Building relations with key person
Industrial dispute or labour unrest b. Succession planning for Senior
Attract new talents Management
c. Strategies for employee motivation
and retention
d. Talent acquisition

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8. Strategic/Business Risks a. Robust teams of engineers and

Unable to realize the organic and inorganic growth technocrats for future projects
plans b. Capacity building, economies of
Business risk relating to strategic alliances and joint scale and product differentiation
venture c. Encouraging consultants and
relevant stakeholders in Europe
Source: www.tatasteel.com

In the table above, Tata Steels identified and addressed its risks in a prioritized manner and rational
managerial approach with due attention to risk mitigation measures, financial losses, returns and
resource repercussions. Risk management is designed for sustenance, business continuity and
directing the company towards attaining goals. Importance is also given to environmental issues
and stakeholder expectations as the organization develops its own threshold for risk.
ENVIRONMENTAL SOCIAL GOVERNANCE (ESG) AND CSR INITIATES
Corporate Citizenship of Tata Steels highlights that, in addition to monetary and financial responsibilities of creating
maximum wealth to their stakeholders, the company has social, cultural, and environmental responsibilities towards
the communities in which they exist. As a High performing organization, Tata Steels have adopted a robust CSR
approach to their business practices and have exceeded their targets. (www.csrunivese.com).
At Tata Steel, the CSR projects highlight on education, healthcare and sustainable employment like women
empowerment through Self Help Groups and other prospects across societies. They empower local communities
through agriculture improvement and market, skill enhancement, entrepreneurship and protection of environment, and
culture. The focus on CSR has extended to ESG (environmental, social and governance). This model considers the
social and environmental concerns of the firm’s initiatives in addition to the wellbeing of all the stakeholders (Gallardo
et al., 2015)
ALTERNATIVE CONSIDERATION FOR ORGANIZATION STRUCTURE
As an alternative consideration of organizational structure for future, Tata Steel should adopt the Helix organizational
structure for Continuous Innovation by 2025 (Steiber, A., & Alange, S. 2013)
Figure 1: Sustainability Helix for Tata Steel Organizational Change

Source: Management Helix for the Sustainable Organization

Tata Steels has recently divided its organization structure from 14 levels to 5 executive teams to make the company
more linear. Level 1 is Executive Director, 2: GMs, 3: Division Managers, 4: Senior managers and 5: Assistant
managers and officers. (www.tatasteel.com)

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The proposed Helix organizational structure segregates management tasks into two different lines of equal
accountability, power and authority, as under:
Manager A: The value creation manager will be entrusted on setting priorities for the business, managing day-to-
day work, creating value and delivering a substantial customer experience. Manager B: The capability manager
emphasizes on capabilities to get work done by developing people’s skills and resources, setting standards for
working and driving functional excellence. The new structure will bring a strategic balance between Business
delivery and technical excellence. The future work force of the firm will leverage to create an agile organization
(www.businessstandards.com).
The two managers under sustainable Helix structure (Fig:9) should emphasize on Governance, Operations, Innovation,
HRD, culture, communication and stakeholder engagement which minimizes complexity and maximizes agility. We
propose sustainable, Helix structure at Level 2 (General Managers) and Level 3(Senior Managers) for best outcomes,
in the following four areas: (Hargroves & Smith 2005).
1. Explore the Sustainability Opportunity: Sustainable business practices in tune with vision and mission.
2. Key initiatives and pilot projects: Setting clear objectives and success matrix, by implementing pilot projects
across all units.
3. Sustainability leadership: Augment shareholder value and productivity while decreasing environmental burden.
4. A Restorative Company: Sustainability Helix process final stage will attain a high level of competitive advantage,
which maximizes shareholder returns, benefits society and other stakeholders.

RESULTS AND RECOMMENDATIONS

1. Following the discussions above, it is recommended that Tata Steel should adopt a ‘Helix structure’ by
2025.
2. Incorporate a strong AI/AA in all their manufacturing units by 2025.
3. Imbibe a ‘Agile culture.' This culture will be an asset to enable digital innovation growth, continuous
learning, developing resilience, and improving capability and team dynamics through consistent development
required for high performing organization.
4. Tata Steel as steel producer, should emerge as a ‘global’ company spreading across all continents through
strategic alliances like Joint Ventures, Merger & Acquisition and attain environmental sustainability at a
global level, by 2025.
5. Setting up additional multi-locational steel plants to become financially viable and sustainable. E.g.,
Kalinganagar Steel plant in Orissa.
6. Enhancement of remuneration and incentives of global standards by 2025 to work force for attracting and
retaining talents across nations.
7. Provide State-of-the-art knowledge sharing workshops globally to build workforce capability, improve
the morale and well-being of the work force.
8. Augmenting strategy through focus, cost differentiation and leadership to serve customers better.
9. Organic growth strategy towards debt reduction by maximizing operational cash flow and optimum capital
structure at Tata Steel Europe operations to mitigate financial risk.
10. Adhering to more ESG compliance by developing new processes called Hlsarna(www.accenture.com) to
manufacture steel which lowers Co2 emission, to all its units, which improve companies global rating.
11. Make a thorough feasibility study of Corus in Europe whether to infuse further capital or divest.

CONCLUSION
Under the able leadership of Tata Steel, agile strategy represents a shift in mindset to be continually innovative and
make changes to remain sustainably competitive in the market through trust and confidence. Flexible working mode
and innovative ecosystem, R&D units, digital platform, remote working and external partners are embedded into the
process to ensure that they collaborate seamlessly and create a workplace for the future generations. This will help in
attracting, retaining, and developing high-quality employees for better work-life balance as part of organization culture
(Schein, E. H. 2017).

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The organization structure in any high-performing organization must be in tune with the organizational strategies:
understanding the culture, and consistent with the existing practices and processes. The structure must enhance the
decision-making process, accountability, and internal and external communications.
Tata Steel is dedicated towards environmental protection and prudent usage of natural resources by adopting the
requirements of ISO 14001 (www.tatasteels.com). It believes that CSR and ESG positively influence value creation
for shareholders and positively impact communities and the State. Tata Steels, thus creates a more proactive corporate
citizenship and code of ethical conduct, based on trust and transparency, needed for its success as a high-performing
organization. The study has shown that Tata Steel is prepared for agility and sustainable competitive advantage for
the benefit of all stakeholders by 2025.

APPENDICES

APPENDIX 1

Figure 1: Pest Analysis of Tata Steel

Source: Tata Steel Annual Report, 2018-19

Figure2: Porter’s five forces Analysis of Tata Steel

Sources: slideserve.com

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