Metamorphosis of Tata Steel -the Challenges of Change Management

Topics: Steel, Tata Group, Steelmaking Pages: 17 (4847 words) Published: February 27, 2011

"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things." — Niccolo Machiavelli

The Prince (1532)

"In times of rapid change, experience could be your worst enemy." — J. Paul Getty


1. Tata Steel is the largest steel company of the country and at present stands as the 10th largest steel firm in the world. The company with its headquarters in Jamshedpur operates in 20 countries with a presence in about 50 countries across the world. The past few years has seen Tata Steel growing from strength to strength through the path of M&A, wherein, they have acquired Anglo-Dutch Steel company Corus(renamed Tata Steel Europe), Millennium Steel (renamed Tata Steel Thailand) and National Steel Holdings of Singapore. Its annual capacity of production is approximately 30 million tons of crude steel and has set an ambitious target to achieve a capacity of 100 million tonne by 2015. Managing Director B. Muthuraman stated that of the 100 million tonne, Tata Steel is planning a 50-50 balance between greenfield facilities and acquisitions.

2. Tata Steel is part of the Tata Group of companies and like any other group companies, it is known for its good corporate governance, transparent system, employer friendly atmosphere and excellent Corporate Social Responsibility (CSR). Therefore, the questions which trouble are “why did Tata Steel require a change?” and “how was the change managed and was it difficult?”. To understand how the winds of change took place at Tata Steel and what were the hurdles, as well as the strategy to overcome them, it is essential to understand the History and Culture of Tata Steel prior to implementation of change in 2005-2006.


3. Tata Steel was established in 1907 in a nondescript place called Sakchi (The present day Jamshedpur) by Jamsetji Nursserwanji Tata and his son Dorabji Tata. Establishment of Tata Steel also had a nationalistic fervour, as Jamsetji wanted India to be self reliant in metals. The uniqueness of this company was that for the first time in the history of India, the whole company was financed by the Indian populace (masses, affluent and Mahrajas) with Tata contributing 11% of the stake. The Steel Company obtained its first colliery in 1910, adding six more in course of time. Several mines were spread over the states of Bihar, Orissa and Karnataka. The Tatas had a holistic plan, wherein, they established a township for its workers with all the amenities, which was named after the founder as Jamshedpur. Today Jamshedpur can boast of being one of the most planned cities in India with best of the amenities.

Organisational Culture

4. The house of Tatas including Tata Steel has always stood for and is known for their honest dealings, corporate governance, welfare of their workers and CSR. The following instruction by the founder to his son that “Be sure to lay wide streets planted with shady trees, every other of a quick growing variety. Be sure that there is plenty of space for lawns and gardens. Reserve large areas for football, hockey and parks. Earmark areas for Hindu temples, Mohammedan mosques and Christian churches” epitomises their concern for the workers. It is a known fact that even during the great depression; Tata Steel did not layoff a single worker.

5. In addition, the Tatas were the first employers to introduce an 8-hour working day (1912), free medical aid (1915), workers’ provident fund scheme (1920) and many other welfare schemes even before they were introduced in the West. The “employee association with management” programme initiated in 1956 gave the workers a stronger voice in the affairs of the Company. Forty-one joint departmental councils were formed to encourage their involvement in matters as diverse as production, quality...
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