Community engagement models in real estate—a case study of Tata Housing Development Company Limited

Abstract

According to the Economic Survey of India, 2012–2013, the real estate sector contributed 5.9 % of the India’s total Gross Domestic Product (GDP) in the Financial Year (FY) 2011–2012, while remaining the second largest employment generator after agriculture in India. The urban population in India is projected to touch 600 million by 2030, from 377 million in 2011, thereby fuelling a housing shortage (at the current pace of housing growth) of around 26 million. However, the perception of Construction industry, like other sectors of the economy, is that of creating “human habitat in a manner generally focussed on profitability without consideration of its long-term impacts.” Under such circumstances, Tata Housing Development Company Limited (THDCL), a closely held Public Limited Company under 99.86 % subsidiary of Tata Sons, is the first Indian real estate company to have reported the triple bottom-line Global Reporting Initiative (GRI) G4 Sustainability Reporting Guidelines in its Sustainability Report FY 2013–2014. THDCL aims to volunteer its resources to the extent it can reasonably afford, to sustain the environment and to improve the quality of life of the people of the area in which it operates. This Situational Case Study, targeted towards management students and practitioners, and social and developmental workers in the areas of Corporate Governance, Strategic Management, Business Environment, Business Policy and Community Welfare, aims to identify the community engagement model of THDCL; analyse it in terms of its implementation and impact; and initiate discussion about the role of strategic partnerships under Corporate Social Responsibility (CSR) in an emerging economy. This work may be used for developmental related workshops/training programmes for students and working professionals of innovation, CSR, sustainability, social and developmental sectors and shared, among others, in various Chambers of Commerce and Academic forums on the same. It is, however, not intended to serve as an endorsement, source of data or illustration of effective or ineffective management. Certain names and information could have been disguised for confidentiality.

Appendices

Annexure 1: Eden Court—a project by Tata Housing (Eden Court 2015)

Eden Court, a project by the THDCL, is in close proximity to the Netaji Subhas Airport, Kolkata and Salt Lake, and situated closest to the Central Business District in Kolkata’s (India) new Information Technology (IT) hub: Rajarhat. The complex is spread over a land of nearly 8 acres with five majestic towers.

The vision for the project is to create a unique dynamic design for a mixed-use community, with a distinguished commercial center, and uplifting residential lifestyle complex. This is a fresh green environment, beautifully landscaped, stylishly designed and an oasis of calm away from the hub of Kolkata.

Annexure 2: Tata Group (Leadership with Trust 2015)

With its pioneering and entrepreneurial spirit, the Tata Group has spawned several industries of national importance in India: steel, hydro-power, hospitality and airlines. The same spirit, coupled with innovativeness, has been displayed by entities such as TCS, India’s first software company, and Tata Motors, which made India’s first indigenously developed car, the Tata Indica, and the smart city car, the Tata Nano. Pursuit of excellence has similarly been manifested in recent innovations like the SilentTrack technology, developed by Tata Steel, Europe, and the next-generation Terrain Response, including infra-red laser scanning to predict terrain, and Wade Aid to predict water depth, by Jaguar Land Rover.

Many Tata companies have achieved global leadership in their businesses. For instance, Tata Communications is the world’s largest wholesale voice carrier and Tata Motors is among the top five commercial vehicle manufacturers in the world. Tata Steel is among the top 10 best steelmakers and Tata Consultancy Services (TCS) is amongst the top 10 global IT services companies. Tata Global Beverages is the second-largest player in tea in the world and Tata Chemicals is the world’s second-largest manufacturer of soda ash. Employing a diverse workforce in their operations, Tata companies have made significant local investments in different geographies.

In tandem with the increasing international footprint of Tata companies, the Tata brand is also gaining international recognition. Brand Finance, a UK-based consultancy firm, valued the Tata brand at $21.1 billion and ranked it 34th among the top 500 most valuable global brands in their BrandFinance® Global 500; 2014 report.

Tata Sons is the principal investment holding company and promoter of Tata companies. Sixty-six percent of the equity share capital of Tata Sons is held by philanthropic trusts, which support education, health, livelihood generation and art and culture. These companies collectively employ over 600,000 people. There are 30 publicly listed Tata enterprises with a combined market capitalization of about $134 billion (as on 31 March, 2015). Tata companies with significant scale include Tata Steel, Tata Motors, Tata Consultancy Services, Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and Indian Hotels. Each Tata company or enterprise operates independently under the guidance and supervision of its own board of directors and shareholders. In FY 2014–2015, the revenue of Tata companies, taken together, was $108.78 billion.

Going forward, Tata companies are building multinational businesses that seek to differentiate themselves through customer-centricity, innovation, entrepreneurship, trustworthiness and values-driven business operations, while balancing the interests of diverse stakeholders including shareholders, employees and civil society.

Annexure 3: Tata Code of Conduct core principles—2015 (Tata ebook 2015)

The Tata Code of Conduct (TCoC) is a mandatory pan-Tata policy that defines how Tata employees can conduct themselves, which includes the following points:

• “1. We are committed to operating our businesses conforming to the highest moral and ethical standards. We do not tolerate bribery or corruption in any form. This commitment underpins everything that we do.

• 2. We are committed to good corporate citizenship. We treat social development activities that benefit the communities in which we operate as an integral part of our business plan.

• 3. We seek to contribute to the economic development of the communities in the countries and regions we operate in, while respecting their culture, norms and heritage. We seek to avoid any project or activity that is detrimental to the wider interests of the communities in which we operate.

• 4. We shall not compromise safety in the pursuit of commercial advantage. We shall strive to provide a safe, healthy and clean working environment to all those who work with us.

• 5. When representing our Company, we shall act with professionalism, honesty and integrity, and conform to the highest moral and ethical standards. In the countries we operate in, we shall exhibit culturally appropriate behaviour. Our conduct shall be fair and transparent and be perceived as fair and transparent by third parties.

• 6. We shall respect the human rights and dignity of all our stakeholders.

• 7. We shall strive to balance the interests of our stakeholders, treating each of them fairly and avoiding unfair discrimination of any kind.

• 8. The statements that we make to our stakeholders shall be truthful and made in good faith.

• 9. We shall not engage in any restrictive or unfair trade practices.

• 10. We shall provide avenues for our stakeholders to raise concerns or queries in good faith, or report instances of actual or perceived violations of our Code.

• 11. We shall strive to create an environment free from fear of retribution to deal with concerns that are raised or cases reported in good faith. No one shall be punished or made to suffer for raising concerns or making disclosures in good faith or in the public interest.

• 12. We expect the leaders of our businesses to demonstrate their commitment to the ethical standards set out in this Code through their own behaviour and by establishing appropriate processes within their Companies.

• 13. We shall comply with the laws of the countries in which we operate and any other laws which apply to us. With regard to those provisions of the Code that are explicitly dealt with under an applicable law or employment terms, the law and those terms shall take precedence. In the event that the standards prescribed under any applicable law are lower than that of the Code, we shall conduct ourselves as per the provisions of the Code.

  Remember: ‘Good faith’ means having a reasonable belief that the information you have provided in truthful. It does not mean having ‘all the evidence’ about the potential violation or case reported.”

Annexure 4: Tata Business Excellence Model

Tata companies use the Tata Business Excellence Model (TBEM), which covers business aspects that range from strategy and leadership, to safety and climate change. Adapted from the renowned Malcolm Baldrige model, TBEM encourages continuous improvements through a formal system of benchmarking and assessment. The TBEM initiative falls under the aegis of Tata Business Excellence Group (TBExG), an in-house organization mandated to help different Tata companies achieve their business excellence and improvement goals (Tata Business Excellence 2015)

The TBEM, introduced in 1995, has played a major role in bringing the companies together, helping to define their common purpose and philosophy, and strengthening the Tata brand. The model has provided Tata companies with a framework for assessing their businesses holistically, and adopting measures to improve their competitive strength, financial performance and operational efficiencies (Tata Article 2015).

Annexure 5: Tata Index of Sustainable Human Development (Tata Housing Imprints—Sustainability Report: 2013–14, 2014)

The Tata Group has formed a partnership with eXtensible Business Reporting Language (XBRL)—a global standard for the exchange of business information—to create a social and environmental dimension and to co-create significant sustainable value to the existing form of XBRL as a special offering

The main purpose of this offering is to set business reporting and information management in the emerging triple bottom-line context, as well as in the larger context of integrated business reporting. The taxonomy is specially designed for enlightened businesses, investors, governments and regulators, enabling them to make informed choices and decisions that will sustain their own and their stakeholders’ interests.

The Tata Index for Sustainable Human Development provides a way of fixing objective coordinates of organizations on a comprehensive scale. This is done by a team of internal and external assessors who jointly analyse the impact of the organization’s vision, strategies, and systems and processes on all stakeholders.

Annexure 6: CSR Leadership in THDCL (Tata Housing Imprints—Sustainability Report: 2013–14, 2014)

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Table 6 CSR Leadership in THDCL (Tata Housing Imprints-Sustainability Report: 2013–14, 2014)

Annexure 7: Tata housing supply chain diversity policy (Tata Housing Imprints—Sustainability Report: 2013–14, 2014)

“Tata Housing recognize that a diverse supplier/contractors base is integral to its profitability and sustainability. Building and maintaining a community of diverse suppliers increase Tata Housing’s opportunity to come across new ideas, apply different innovative approaches, and gain access to additional solutions/resources towards making the business more sustainable and the world more equitable and habitable.

Keeping the above objective in mind, Tata Housing will proactively encourage diverse suppliers/ contractors/ vendors to participate in its procurement /contract process for goods, works and services that can offer value to Tata Housing. Without compromising on quality of material, workmanship and services, applicable terms and conditions of the Company and government regulations, Tata Housing Supply Chain Diversity Policy will be guided the following principles:

• Engage: Make Tata Housing procurement / contract activity and processes directly accessible to Diverse Suppliers/ Vendors through non-discrimination, equal treatment, transparency and fairness. The engagement may include but not limited to organising vendors/ suppliers meets to create awareness about the policy, Company’s Code of Conduct and supply and contract requirements.

• Encourage: Encourage Tata Housing Suppliers/ Contractors/ Vendors to cascade the spirit of diversity through their respective Supply Chains.

• Enable: Considering that Scheduled Caste (SC) and Scheduled Tribe (ST) have remained socio-economically excluded for long, the Company will endeavour towards building an inclusive society by enabling them to be a part of supply chain through following enabling mechanisms to SC/ST individuals or organizations owned (at least 51 % stake) by SC/STs. These enabling mechanisms will also be applicable to co-operatives where all the members are blind/deaf/ deaf and dumb/ physically challenged.

  • Wavering of Tender Fee

  • Fifty per cent concession in EMD up to contract value of Rs. 5 crores

  • 0.25 % relaxation in price above the final L1 quote for contracts up to maximum value of Rs. 5 crores

  • Opportunity to match the price of L1 if the supplier of a product is not L1

  • All other things being equal SC/ST vendor/suppliers/contractors will get precedence over others

  • Single Point of Contact (SPOC) in Procurement and Contract Team to guide and help

The management will commit all the resources required to meet the objective of this policy.”

Annexure 8: Salient features of project Synergizers (the employee volunteerism programme) (Tata Housing Imprints—Sustainability Report: 2013–14, 2014)

The Salient features of Synergizers are as follows:

• Company will facilitate employee volunteering by tying up with NGOs and by organizing volunteering events where in employees would devote their time, energy and skill

• Such volunteering events would generally be organized during non-office hours and holidays so that employees would devote their personal time

• In case of specific employee volunteering activities involving employees’ professional skill and expertise the employees can volunteer their service as pro bono (during office hours) with written permission from their reporting managers. While granting such permission, the reporting manager should keep in mind that such volunteering time is not in conflict with the peak work schedule, work related urgencies and or create a situation where in the company’s business interest is adversely affected. In case of doubt, they should seek guidance from Human Resource (HR) and corporate sustainability team.

• Company will motivate employees to do volunteering by appropriate branding and promotion including rewards and recognition to volunteers

• Company will keep a database of all such volunteering activities rendered by the employees whether it is company sponsored events or employees done volunteering on their own.

• In case of volunteering done by the employees on their own, the employee are expected to inform such activities to the respective corporate sustainability team within a reasonable period post participation, however not later than 1 month from the date of volunteering. They can upload such information in the Corporate Sustainability (CS) portal as well. Company will accept such information in good-faith.

• During all such volunteering activities, the employee volunteers must be mindful of cultural sensitivities of the communities they are interacting with.

• The employee volunteers are expected to maintain high standard of integrity during all volunteering activities and must keep in mind always that they represent Tata Housing in public and must not do anything which will have adverse impact on the image and brand of the company.

All the employees of Tata Housing are expected to follow this Employee Volunteering Policy in letter and spirit. Any change in this policy must have approval of the Managing Director & Chief Executive Officer (CEO) of THDCL.

Questions

• 1. “The Gandhian concepts of trusteeship, truth, non-violence and satyagraha or truth force are in perfect sync with, but go much farther than, the modern expectations of corporate stewardship.” Explain with suitable examples.

• 2. Do you think Strategic partnerships are the key to meeting strategic goals? Justify.

• 3. Strategic and tactical plans should be in sync with the organizational vision and mission. What is your opinion regarding this?

• 4. What is Corporate Social Responsibility? What are the advantages of “doing good?” Explain with suitable examples.

• 5. Should THDCL be expected to make significant resource investments in community engagement, or whether it is the responsibility of the government to provide social security? Community is whose responsibility?

• 6. Critically analyse the “Conscience of a Corporation” with regards to THDCL’s Community Engagement model.

• 7. “CSR is an investment or an expenditure?” Discuss.

• 8. What is Strategic CSR? Do you think THDCL has resorted to Strategic CSR? Explain with suitable examples from the case.

• 9. Has the nature of CSR really changed/evolved over the years in India? Is the THDCL Case Study a rule or an exception?

• 10. What are the regulatory environment in India with regards to CSR?

• 11. “With regards to the socio-economic environment of India, any work in the community engagement area is a boon.” What is your opinion regarding this?

Teaching notes

• 1. Community engagement: Community engagement refers to the process by which organizations and individuals build ongoing, permanent relationships with the community for the purpose of applying a collective vision for the benefit of a community/ community development (Community Engagement 2015).

• 2. Companies Act, 2013: To promote CSR activities in India, the Ministry of Corporate Affairs, Government of India, launched CSR Voluntary Guidelines in 2009, known as the National Voluntary Guidelines (NVG). In December 2012, the voluntary guidelines evolved into an Amendment in The Companies Bill, 2011, passed by the Lok Sabha, which was then passed as an Act in August 2013, allowing the country to have a modern legislation for growth and regulation of corporate sector in India.

  Section 135 of the Act lays down provision for spending at least 2 % of the average net profits made by certain companies during the three immediately preceding financial years on CSR every financial year. It specifies the formation and composition of the CSR Committee, their dissemination and accountability along with Schedule VII, which states the priority areas that may be included by companies in their CSR Activities (Mitra 2015).

• 3. Compound Annual Growth Rate (CAGR): The CAGR is the mean annual growth rate of an investment over a specified period of time, longer than 1 year (Compound Annual Growth Rate 2015).

• 4. Corporation conscience: Goodpaster and Mathews (2003) opines that a corporation can and should have a conscience. The language of ethics does have a place in the vocabulary of an organization. Organizational agents such as corporations should be no more and no less morally responsible (rational, self-interested, altruistic) than ordinary persons.

• 5. Corporate Social Responsibility (CSR): The World Business Council for Sustainable Development (2007) defines CSR as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the work force and their families as well as of the local community and society at large.”

• 6. Effects of CSR: Effects of CSR is a broad area of study. The research and experience of Business for Social Responsibility, a leading non-profit global organization have concluded that companies have experienced a range of bottom-line benefits in integrating CSR in their business operations and strategies, including reference to several of the following:

  • Increased sales and market share

  • Strengthened brand positioning

  • Enhanced corporate image and clout

  • Increased ability to attract, motivate and retain employees

  • Decreased operating costs

  • Increased appeal to investors and financial analysis (Kotler and Lee 2005)

• 7. Emerging economy: A nation’s economy that is progressing toward becoming advanced, as shown by some liquidity in local debt and equity markets and the existence of some form of market exchange and regulatory body (Emerging Market Economy, 2015).

• 8. Evolution of CSR in India: CSR has been into the corporate culture of India for long. The evolution of CSR development in India can be viewed through four broad phases of India’s socio-economic paradigm (Illustration 1) (Mitra 2015).

  Illustration 1: phases of evolution of CSR in India (CSR Compendium, 2013)
  Phase	Phase 1	Phase 2	Phase 3	Phase 4
  State of CSR	Pure philanthropy and charity during industrialization	Social development during the independence	Under the “mixed economy” paradigm	In a globalized world in a “confused state”
  Period	1850–1914	1914–1960	1960–1980	1980 until the present
  Modus operandi	CSR activities were carried outside companies; involved donations and charitable initiatives for social welfare causes	Mahatma Gandhi’s theory of “trusteeship”, the aim of which was to consolidate and amplify social development, women’s empowerment, rural development and abolishment of untouchability	Legal and regulatory framework of businesses, activities and the emancipation of public-sector undertakings	Characterized partly by traditional philanthropic engagements and partly by steps taken to integrate CSR into a sustainable business strategy

• 9. General/SC-ST community: General Class (also known as Forward Class, Forward Community) is a term used in India to denote groups of people who do not qualify for any of the positive discrimination schemes operated by the government of India. These schemes are known as Reservation Benefits (Forward Caste 2015).

  On the other hand, the Scheduled Castes (SCs) and Scheduled Tribes (STs) are official designations given to various groups of historically disadvantaged people in India. The terms are recognized in the Constitution of India and the various groups are designated in one or other of the categories. During the period of British rule in India, they were known as the Depressed Classes. In modern literature, the Scheduled Castes are sometimes referred to as Dalits (Scheduled Castes and Scheduled Tribes 2015).

• 10. Gross Domestic Product (GDP): The GDP is one of the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific time period; one can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year (Gross Domestic Product 2015).

• 11. Kanter from spare change to real change: Kanter (2003) feels that traditionally, companies viewed the social sector as a dumping ground for their spare cash, obsolete equipment, and tired executives. But that mind-set hardly created lasting change. Now companies are viewing community needs as opportunities to develop ideas and demonstrate business technologies, find and serve new markets; and solve long-standing business problems. They focus on inventing sophisticated solutions through a hands-on approach. This is not charity; it is Research and Development (R&D), a strategic business investment.

• 12. Mahatma Gandhi’s philosophy: Stands for caring for other peoples’ money and resources entrusted to the care of corporate directors and executive management, transparency and accountability, eschewing physical and emotional violence at the workplace as well as against natural and environmental resources, and for upright and conscientious behaviour on the part of directors in doing what they are convinced to be in the best interest of all shareholders and other stakeholders (Illustration 2) (Balasubramanian 2010).

  

• 13. Malcolm Baldrige model: The most popular and influential model in the western world is the one launched by the US government called the Malcolm Baldrige Award Model (also commonly known as the Baldrige model, the Baldrige criteria or The Criteria for Performance Excellence). More than 25 countries base their frameworks upon the Baldrige criteria.

  The Baldrige model consists of practices that are incorporated into six Approach categories plus a Results category consisting of Leadership; Strategic Planning; Customer and Market Focus; Measurement, Analysis, and Knowledge Management; Workforce focus; Process Management; and Business Results.

  The Baldrige Values include Visionary Leadership; Customer-Driven Excellence; Organizational and Personal Learning; Valuing Employees and Partners; Agility; Focus on the Future; Managing for Innovation; Management by Fact; Social Responsibility; Focus on Results and Creating Value; and Systems Perspective (Baldrige Model 2015).

• 14. Organizational vision and mission: Vision constitutes future aspirations that lead to an aspiration to be the best in one’s field of activity. They have several benefits. The process of envisioning involves dealing with the two components of core ideology and envisioned future. The core ideology defines the enduring character of an organization that remains unchangeable. The envisioned future has a time-bound, long-term goal and a vivid description of what it will be like to achieve that goal (Kazmi 2012).

  Mission, on the other hand, is a statement which defines the role that an organization plays in the society. The definition of mission has gradually expanded to represent a concept that embodies the purpose of existence of an organization (Kazmi 2012).

• 15. Skill India: The main goal of “Skill India” programme, a dream project of the Prime Minister of India, Narendra Modi, launched in March 2015, is to create opportunities, space and scope for the development of the talents of the Indian youth and to develop more of those sectors which have already been put under skill development for the last so many years and also to identify new sectors for skill development. The new programme aims at providing training and skill development to 500 million youth of India by 2020, covering each and every village (Skill India 2015).

• 16. Socio-economic environment of India: According to a UNESCO¹ report (2014), India has 287 million illiterate adults, accounting for the largest population globally and 37 % of the world total. The number of poor (2013), was estimated at 269.3 million, of which 216.5 million reside in rural India. On the Human Development Index (HDI), India ranks 136 among 186 countries (Human Development Report, 2013 by UNDP²). On the other hand, with its overwhelming human population of over 1.31 billion, India is predicted to have one of the world’s youngest and thereby the largest working population by 2026 (Mitra 2014).

• 17. Strategic CSR: By taking a strategic approach, companies can determine what activities they have the resources to devote to being socially responsible and can choose that, which will strengthen their competitive advantage. By planning out CSR as part of a company’s overall plan, organizations can ensure that profits and increasing shareholder value do not overshadow the need to behave ethically to their stakeholders. Strategic CSR provides companies with solutions for:

  • Balancing the creating of economic value with that of societal value

  • How to manage their stakeholder relationships (especially those with competing values)

  • Identifying and responding to threats and opportunities facing their stakeholders

  • Developing sustainable business practices

  • Deciding the organization’s capacity for philanthropic activities (Strategic Corporate Social Responsibility 2015)

• 18. Strategic partnership: An arrangement between two companies or organizations to help each other or work together, to make it easier for each of them to achieve the things they want to achieve (Strategic Partnership 2015).

• 19. Strategic/tactical plans: The strategic plan is a document which provides information regarding the different elements of strategic management and the manner in which an organization and its strategists propose to put the strategies into action (Kazmi 2012).

  Tactical planning is a systematic determination and scheduling of the immediate or short-term activities required in achieving the objectives of strategic planning (Tactical Planning 2015).

• 20. SWACHH BHARAT Abhyan: On September 24, 2014, the Prime Minister of India, Narendra Modi approved the Swachh Bharat campaign, which was a modification of the Nirmal Bharat Programme, launched by the previous Government. The Swachh Bharat Abhiyan was launched formally on October 2, 2014, the birth anniversary of Mahatma Gandhi. The objective is to make India a clean India by 2019, the 150th birth anniversary of Mahatma Gandhi. The plan is to provide toilet and sanitation facilities in all rural and remote areas, to create public awareness of cleanliness, to clean roads, streets, encroachments and make India one of the cleanest countries of the world (SWACHH BHARAT Abhiyan 2014).

Table of abbreviations (in alphabetical order)

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Table 7 Compilation of all the abbreviations used in the case study, including the ones used in the Teaching notes and Annexure for easy reference