The focus on short-term results in business is a disaster, according to the head of an Indian industrial giant. Dr. J.J Irani, Director on the board of the giant Indian multi-national Tata, an empire of more than 80 companies, 32 of them publicly quoted, in fields from steel, tea, power generation, cars and trucks, chemicals, hotels, telecoms, software was giving the 4th Caux Lecture of the 2006 conference season on ‘The Importance of Trust and Integrity in Corporate Leadership in an Emerging Market’, in Caux, Switzerland, today.

‘The focus on short-term, quarterly results is a disaster,’ Irani said. He pleaded for a longer-term view that integrated social responsibility and ethical values. ‘The end never, never justifies the means,’ he continued. ‘Values provide the necessary brakes to keep leadership from going astray. Values essentially provide us with an internal discipline. Values transmit trust; trust is not only at the heart of leadership but forms the essence of all relationships.’
Irani spoke of the Tata group’s policies of Corporate Social Responsibility. A decade ago, at the time of an election, the Prime Minister had called on big business to put 1% of their net profits into community programmes outside the direct area of their businesses. Irani, and the then head of the Tata holding company had remained silent – they didn’t have the figures to hand. But they discovered that over the previous decade, in the good years, they’d been giving 3%, and in bad years over 20%! Tata pioneered a whole series of social policies: the 8-hour working day was introduced in 1912, a world first, according to Irani, which only became compulsory in 1948, free medical aid in 1915 and maternity benefits in 1928. For Irani, such costs are an essential part of doing business. ‘A business cannot hope to survive if it remains a spike of prosperity in a sea of poverty,’ he noted.
Dr. Irani tried to break the Western caricature of India as a country of elephants and snake-charmers. Two hundred years ago, India had 20% or world trade, he said. This had dropped to 6% by 1900, 2% at the time of independence in 1947 and a mere 0.6% in 1991 when there was a major opening up of the economy. But now India’s economy is growing annually at 8%, second only to China, and is the 10th largest economy in the world. At independence, Irani went on, a tariff wall had been erected to keep out foreign wolves – but it also ‘prevented our tigers from going out’. For decades, India had lived under the threat of bad monsoons, natural disasters, and man-made events and conflicts. The last few year’s growth had been achieved despite all three, including the Tsunami. India had the benefit of a young, well-educated and growing work-force. 50% of the population is under 25 – whereas China, because of its one child policy, already has an ageing population.
There was a modern fashion for talk of ethics and corporate responsibility, Irani noted, but he found few fresh ideas when travelling outside India. These mottos were part of the Tata experience, where they have been trying to be faithful to their founder’s values for over a century. ‘ “Profit” is not a dirty word – but creating wealth would sound better,’ Irani suggested. Charity and philanthropy can only follow the creation of wealth. None of the Tata family or the Tata directors figure in the list of the greatest fortunes in India. Irani quoted J.R.D. Tata: ‘The wealth gathered by the founder and his sons formed but a minute fraction of the amount by which they enriched the nation. The whole of that wealth is held in trust for the people and used exclusively for their benefit. The cycle is thus complete, what comes from the people has gone back to the people many times over.’
Irani concluded, ‘Ethics in business is vital and it pays. You should play the game by the rules even if your competitor does not. The long-term prosperity of a community is more important than the short-term profits of a corporation. And trust is the essence for future growth and prosperity.’
The Tata group, founded 130 years ago, is even older than the venerable Caux Palace Hotel which in 1946 became the Initiatives of Change conference centre.
Jean-Pierre Méan, a senior manager with SGS, the world’s largest control and inspection company, represented in more than 130 countries, and also a member of the board of the Swiss Chapter of Transparency International, partners with Caux – Initiatives of Change in organizing this conference, gave the vote of thanks. Méan stressed the importance of ‘enlightened leadership’ in ‘making the tough calls’. ‘Evil disguises itself,’ he went on, ‘and leaders must see through the disguises.’ Tata had been partners with TI in a pilot project in India.
The current Caux conference, on the theme Trust and Integrity in the Global Economy has three components running in parallel: The Farmers’ Dialogue, the International Communications Forum and a forum on ‘Ethical Leadership in Business’.
The conference centre, which marks its sixtieth anniversary this year, sees a series of five sessions which continue until August 17. The first session, Leadership, Responsibility, Leadership (6-12 July) was largely lead by young people from Eastern Europe, many of whom have actively worked to establish their young democracies. It was followed by Tools for Change (14-21 July) and Renewal Arts – Transforming the Way Things Are (23-29 July). This year’s Agenda for Reconciliation session in August (7-17) will take the form of An Honest Dialogue for a Clean and Just Africa. Organized by Africans, at their initiative, it will deal with good governance, corruption, peace and conflict resolution, trade, health and food security issues.

Andrew Stallybrass

Conference Report