Cyrus Mistry to choose his own governance model: Ratan Tata

The JRD model was seen as a more decentralised one,giving considerable space to individual chairmen to manage operations and implement their vision.

Written by ENS Economic Bureau | New Delhi | Published: January 6, 2012 1:43 am

Cyrus Mistry,chairman-designate of Tata Group,will be free to choose his own governance model once he formally takes over as group chairman from Ratan Tata in December this year. This means Mistry will have the option to either be the chairman of all flagship companies — as Ratan Tata currently is — or revert to the model practised by JRD Tata in which some group companies had separate chairpersons of their own. This was stated by Ratan Tata at his meeting with editors in the Capital on Thursday.

“That is for him to decide,” Tata said in reply to a specific question whether Mistry will also become chairman of all Tata Group companies as practiced currently.

Tata’s statement giving Cyrus Mistry the freedom to choose his own model of governance is significant considering the group’s history.

As per the tradition established by JRD,the chairman of Tata Sons,the holding company for the group’s over 80 companies,had the option to appoint others as chairmen of some of the key group companies. During JRD’s days,chairmen of two flagship companies — Tata Steel and Tata Motors — were Russi Modi and Sumant Mulgaokar.

The JRD model was seen as a more decentralised one,giving considerable space to individual chairmen to manage operations and implement their vision.

Once Ratan Tata took over,he assumed chairmanship of all flagship companies while the second and third-tier firms had individual chairpersons. Of course,Ratan Tata’s departure from the JRD model had a certain context as Tata Group satraps of the day like Russi Modi and Darbari Seth had shown a tendency to hold on to the power they enjoyed by virtue of JRD’s somewhat hands-off approach. It will be interesting to see which slice of history Cyrus will seek his inspiration from.

To a question whether he would stay on the board of non-Tata Group companies after he steps down as chairman,Tata said the decision lies with the companies concerned. Ratan Tata is currently on the board of certain non-Tata companies such as Fiat.

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