Tata Iron and Steel 
Rural Development Society in India

·································································································

 

 

 

The private sector should realise that they have to play their part in the spirit of trusteeship advocated by Mahatma Gandhi. No business success is worthwhile unless it serves the needs or interests of the country and its people, and it is worthless if it is not achieved by fair and honest means.

JRD Tata

 

 

 

 

The Tata Group, India’s largest business house, owns some 80 highly diversified companies ranging from watches and tea, to hotels and steel, and has a turnover in the region of US$5 billion a year. The group is one of the developing world’s emerging champions – not only in terms of its business strength, but also in terms of its social commitment.

From the outset, the Tata family have pioneered the trusteeship idea of management, with the result that not only is 80% of the parent company, Tata Sons Ltd., held in philanthropic trusts (which have been responsible for establishing a number of India’s most respected public institutions in the fields of science, technology, medicine, energy, social services and the performing arts), but the philosophy of social conscience still pervades the company’s manifold business activities today. It is a philosophy that has not only enabled the Tata Group to enjoy an excellent relationship with its thousands of workers, who have not engaged in a strike for over 70 years, but one which also underpins the company’s unparalleled reputation for commercial integrity which, combined with its diversified industrial strength, makes it a first stop for many foreign investors entering the Indian market.

The group’s flagship company Tata Iron and Steel Company (TISCO) is based in Jamshedpur and employs 72,000 people. It offers one of the best examples in the world of how a company’s approach to social responsibility outside its factory gate, has evolved from paternalism to partnership.

TISCO first established a social welfare scheme in 1916 to provide assistance in the rural areas surrounding the steel town of Jamshedpur. The scheme is now supported by some US$2.5 million a year from TISCO and encompasses a community development programme, a trust for family health and the Tata Steel Rural Development Society (TSRDS). Established in the late 1970s, TSRDS was set up as an independent society, which receives an annual grant from the company but is independent to forge other partnerships and funding relationships. In essence it is an NGO, with a strong business ethos, focusing on: education and literacy; health and medical activities; agriculture and irrigation; drinking water; vocational training; and income generation.

After 10 years of operation TSRDS’s managers felt that the society wasn’t delivering the type of rural development support that was needed and undertook a major reassessment. They drew up a set of lessons which have fundamentally reshaped TSRDS’s approach and effectiveness. They include:

Participatory development – TSRDS realised that this was not happening as much as it should. Today they acknowledge that even building a simple well can, and must, be done as an exercise in local participation, and that every single input can play a role in empowering people. Over the years they have built more than 2,000 wells – in addition to schools, community centres and other types of infrastructure – and are now appreciating the important cumulative effect that these efforts can have on getting people involved in determining their own development. 

 
Professional and local staff – they realised that in many cases community development managers in their company were often the wrong people, with the wrong reporting lines and working within the wrong structure – normally in public or industrial relations. Although they recognise the critical importance of keeping corporate staff aware and if possible involved in the company’s social activities, they have seen the need to create a professional team of development experts. As a result TSRDS is now structured as a separate group to the company, operating like a large development NGO (albeit with corporate support and strategic direction). Its 800 staff are trained and developed as part of a permanent, professional organisation, and receive salaries and benefits in accordance with company practice. Equally important, 50% of the staff are from the different communities and ethnic groups which TSRDS serves, and although women are still under-represented on the staff team there is an effort to change this. Viraf Mehta, the visionary director of TSRDS, dedicates time and energy to keeping his own awareness levels high. Every year he spends at least 30 days sleeping, eating and living in different villages.

Top management support – this is deemed to be crucial and has long played a key role in Tata’s successful and adaptable community development ethos. Today TISCO has six managing directors – personnel, marketing, production etc. ...and the sixth is social development.

More money isn’t always the answer – TSRDS realised that vast budgets can sometimes be a hindrance to sustainable rural development. They can make it less necessary to consult and co-operate with others and can result in pampering beneficiaries and actually making them more, rather than less, dependent on hand-outs from external sources. A few years ago TSRDS voluntarily froze its budget and has spent the last three years focusing on developing consultative, partnership-driven solutions, including an emphasis on the contribution of beneficiaries to the process – such as their time and labour. Today TSRDS is collaborating with over 400 organisations – both NGOs and many smaller community-based organisation (CBOs).

Accountability – the organisation regularly undergoes a comprehensive process of analysis, accountability and audit – including social audit. It has always invited external auditors to come in and do its social audits – of which there have been several. Six years ago it also started to do a few other things: it is putting mechanisms in place to make itself more accountable to the entire community; its partner organisations are encouraged to make inputs to the process; and expert NGOs from around the

 

country and the rest of the world are invited to spend 4-5 months with TSRDS – both advising on, and learning from their approach. As Viraf Mehta explains, “I am chasing quality rural development, and I benchmark against other NGOs – the best I can find.”

Changed terminology – an emphasis has been placed on moving away from paternalist terms such as “adopting” a village. TSRDS is training its staff to stop calling projects “our” projects, and to encourage a village-by-village approach to needs-assessment and local ownership of development solutions. In this way TSRDS sees itself increasingly as a facilitator which can leverage financial, technical, organisational and managerial resources for the beneficiaries to make use of themselves, rather than an organisation which is “doing development”.

Encouraging local CBOs – increased effort has been put into helping small, community based organisations to register and develop themselves. TSRDS helps them with institution and capacity building, shares its training programmes with them, and has established a forum through which they can exchange ideas and experiences and access an on-going support network of like-minded organisations dealing with similar problems.

Mainstreaming back to the company – despite its growing focus on evolving as a professional development NGO, TSRDS still places great importance on keeping the business units in the Tata Group informed and aware of the important linkages between the group’s commercial and social activities. The Group derives some clear commercial benefits from the successful TSRDS approach, including: good industrial relations; rapport from local communities and good relations with local government; international exposure; and enhanced reputation. Equally important is the fact that TSRDS /TISCO serves as an internal consultant for Tata’s other 78-80 companies, and is currently helping them all to establish their own company-based community programmes in partnership with the best NGOs in their areas, building on the lessons TSRDS has learnt. By 1997 some 50 out of the 80 Tata companies will have these programmes established.

 

 

The above material is extracted from chapter 2.6 ("Integrated Community Development") of: 

Business as Partners in Development: Creating wealth for countries, companies and communities  

Jane Nelson/Prince of Wales Business Leaders Forum [now International Business Leaders Forum], in collaboration with The World Bank and The United Nations Development Programme , 1996, pp. 198-199.

© 1996 the Prince of Wales Business Leaders Forum