What Cyrus Mistry’s ouster says about corporate practices

Cyrus Mistry’s sudden removal as chairman of Tata Sons raises many questions pertaining to the ways and methods of work world. This is what the HR fraternity has to say on some key issues.

TimesJobs Bureau

Tata Sons-Cyrus Mistry controversy refuses to die down. It has shaken corporate India and the domestic stock market, and has also uprooted a belief that Tata name and its ways are above the ordinary. The happenings at the board meeting in Bombay House on Monday evening have provided enough fodder for economists, news rooms, corporate soothsayers and even the present employees and clients of Tata Sons.

At the same time it has put many question marks on the ways and methods and things at India Inc. While working, performing, failing, goofing up, excelling, over achieving are all a part in a day’s work, there are ways in which the companies and employees deal with such situations. Every office has its fair share of controversy but this one in particular has many layers to it and the happenings mirror the mannerisms of corporate India.

We spoke to industry watchers to understand some important aspects arising from this upheaval.

Is naming of under performers, especially from the top brass a good practice?
The HR fraternity – and even any average working Joe – agrees that under performance happens at all levels but there are ways and means to deal with it. “High professional performance is expected at all levels and more so at the top level who have to steer the organisation to greater heights. Top employees are under constant gaze and any action hinting at sub-par performance is bound to be highlighted,” says Naresh Sharma, Managing Partner, Antal International Network. “While it’s never easy confronting individuals about poor performance, tolerating it is a failure of leadership. However, a difference of opinion at top level is more accentuated and must not be highlighted as a performance issue. There is a need to handle the issue more diplomatically,” he says.

However in this case, it seems that more than efficiency it is the Tata name and legacy that weighs down heavily on every aspect and decorum. Sunil Goel, MD of executive search firm GlobalHunt says that some mega companies which are built on vision and fundamentals of its leaders, these companies are much bigger and stronger than just profit and loss statements. “It has also been observed that in such environment employees and stakeholders work for visionary leader than just working for the company… I believe it’s not shaming the under performers at top level, it is more like some decisions do not work out; like Tendulkar is a great batsmen but he never enjoyed the role as a captain. In such cases, an organisation has to go for transformation of leadership and continue to chase visionaries whose work style seems close to theirs”.

Do such public ousters hurt company’s reputation and more importantly stocks?
Yes, seems like an obvious and unanimous answer for this particularly when talking about stocks. “It does hurt company’s reputation in immediate future. Shouldn’t organisation consider all aspects before hiring a top functionary? Is this a hiring mistake? If yes, it’s indeed a damaging one which shows the organisation in poor light. Great organisations would take it as an opportunity to imbibe a culture of zero tolerance to low performance,” says Naresh Sharma.

Long term strategy and confidence building seems to be the fire fighting measure in this situation. It is not easy to replace any top shot, especially in the case of large business conglomerate and this does affect the company’s indices at stocks exchange, says Sunil Goel. “But yes, long term strategy and outcome of strategy implemented by the new incumbent makes a huge difference in reputation building for the organisation,” he adds.

What road lies ahead for leaders who have been sidelined?
“Their image indeed would take a hit as there are lot of questions to be answered. Legal actions, if initiated further would erode the credibility of the professional,” explains Naresh Sharma. “Their image indeed would take a hit as there are lot of questions to be answered. Legal actions, if initiated further would erode the credibility of the professional,” explains Naresh Sharma.