A Family-owned Business Goes Global
As director of human resources (and CEO of a prominent subsidiary), Santrupt Misra oversees the Aditya Birla Group’s strategy for cultural change as it steps out onto the world stage.
Named the best employer in India in a 2007 study, the Aditya Birla Group is also one of the hardest-charging multinational corporations emerging from that country. The Birla Group produces and sells such products as fiber, chemicals, cement, metals, yarns and textiles, apparel, fertilizer, and carbon black (a petroleum-based material used in the manufacture of rubber and plastic). It is a US$30 billion conglomerate operating in about 25 countries, with 60 percent of its revenues now coming from outside India. Its current director of human resources, Santrupt Misra, is credited with developing pay, promotion, and professional development processes that have helped transform this insular family-led company into an outward-facing global enterprise.
The origins of the Aditya Birla Group date back to the 1850s, when it was the Birla family’s trading company. In the 20th century, then chief executive Ghanshyam Das (G.D.) Birla was one of the country’s wealthiest industrialists and a close associate of Mohandas (Mahatma) Gandhi. Starting in the 1970s in Southeast Asia, and with accelerating pace through the mid ’90s, Chairman Aditya Vikram Birla (G.D.’s grandson) expanded the company outside India. He said that his life’s ambition was to create a world-class Indian multinational, “taking India to the world.” In 2005, after Aditya’s untimely death, his son Kumar Mangalam Birla was appointed chairman.
Santrupt Misra had already been recruited by Kumar Mangalam Birla from Hindustan Lever in 1996. He was now asked to lead a complete overhaul of the group’s human resources policies and practices to restore confidence and foster global growth. Misra moved quickly to develop a variety of merit-driven personal growth and talent management processes.
In 2009, Misra was appointed CEO of the group’s carbon black business. Previous to this, he was one of the senior M&A leaders at the Aditya Birla Group, facilitating a series of acquisitions of European and North American companies. For example, in 2007, the Birla Group’s Hindalco Industries Ltd. subsidiary purchased the Atlanta-based aluminum company Novelis Inc. for $6.4 billion. The strategic intent was to combine Novelis’s aluminum rolling assets with Hindalco’s growing primary aluminum operations and its downstream fabrication capabilities, thus enabling it to expand in high-growth emerging markets. At the time, this was the second-largest foreign acquisition ever made by an Indian company, following the Tata Group’s purchase of Corus Steel.
Interviewed at his office in Mumbai, Misra reflected with strategy+business on the Aditya Birla Group’s continuing imperative to sustain world-class performance, and to create the kind of multinational culture that makes this possible.
S+B: The Birla Group has had operations outside India for decades. How is this new phase of international growth different, and how is it continuing to change the company?
MISRA: Our late chairman, Aditya Birla, was a visionary. Long before globalization was a fashionable word, he saw that there was opportunity outside India, and he went for it in an entrepreneurial way. He sent one or two men to live and find opportunities in Southeast Asia, and to build on them. We are continually trying to maintain and strengthen that spirit. We will send somebody to South Africa, for example, and say, OK, find opportunities for us.
But there is much more to it than that. We are learning to think more in terms of customers and vendors outside India, and benchmarking and collaborating outside India. We recently ran a leadership development workshop at corporate headquarters to discuss what it means to have a global mind-set. Gautam Ahuja, a professor of strategy at the University of Michigan’s Ross Business School, led the discussion. Many of our senior leaders from around the world attended.
S+B: What in your view is a “global mind-set”?
MISRA: It means thinking in different frameworks rather than within one single narrow framework. As we grow outside India, we must be more aware of different regional perspectives. For example, even before the global recession, the U.S. economy was growing more slowly than India’s annual growth of 7 to 8 percent. We think some targets are achievable, but our colleagues in other parts of the world may think they are a stretch. When they ask how we expect to achieve a goal in their region, we have to understand why they are doubtful — but also start wondering, from our perspective, how to accomplish it.
India was a very insular economy for a long time. Most people from India still think in terms of local GDP; they don’t consider how a fire in an oil refinery in Iraq might have consequences for them. They are not used to that level of connectivity.
A global mind-set also has to do with the way we act as individuals. We are helping our employees recognize norms in other countries. Employees may see their counterparts in India working on weekends, with their boss asking them to do so. That’s new to non-Indians. As a company, globally, we are exploring a lot of different management issues involving centralization, decentralization, and empowerment. And we are encouraging more training in multiple languages. We have been overly dependent on English, and we think our executives should learn Mandarin, Spanish, or at least one European language.
S+B: What kinds of language-related issues have you encountered?
MISRA: Some of our policies and branding use words of Sanskrit origin; we may need to change those. We also need to think about which aspects of our Indian corporate heritage may catch on with non-Indians, while finding ways to express our culture in more universal ways. For example, our traditional Birla corporate tagline was “Taking India to the world.” As we become a global corporation, that seems less relevant. So our latest slogan is, “Let’s reach for the sun,” to symbolize our company’s new frontiers of exploration. At the same time, it connects to our identity: Aditya in Sanskrit means “the sun.” A sun is part of the logo for the Aditya Birla Group, which is named for our late chairman and founder.
S+B: Day by day, what are some of the adjustments people are making as the company moves outside India?
MISRA: We are learning to use information technology to coordinate work across regions and reduce travel. The time discipline required can be a challenge for Indians. Very few Indians are particular about time. A 2:30 appointment doesn’t necessarily mean 2:30 sharp. But when you have a videoconference or teleconference with seven people, and you are the only one not there, you cannot catch up later. You have to be on time.
The Birlas have always been vegetarians, and for a long time, vegetarianism was a core part of food preparation in our cafeterias. At company functions, we never served anything non-vegetarian. Three or four years ago, I discussed this matter with our chairman. What people eat is a very personal habit. We agreed it was time to serve different kinds of food. We started by serving cuisines from other countries — some Asian, such as Thai, some Western, such as Italian — at corporate functions.
S+B: But the accommodations must go both ways.
MISRA: Absolutely. I think the globalization process has created a tremendous learning culture in the organization. People take the attitude that, “These are new colleagues, with new systems, so what can I learn from them?” I think we have all been able to learn from one another.
Yet when we have acquired companies, we have felt the burden of learning is heavier on us. You expect employees from the acquired company to learn your ways, but the fact is that you acquired their company, so you need to be even more prepared to understand, accept, and include them. Language is an interesting example. The vast majority of people in India believe they speak English, but people speak English differently in different parts of the world. This has required us to be much more conscious of differences in our oral and written communications.
S+B: What are some of the most pronounced differences in management styles and operating philosophies you have found between Indian and U.S. companies?
MISRA: The way we look at corporate governance in India is very different from the way it’s looked at in the West. In India, when we talk about a “promoter-driven” organization such as the Aditya Birla Group [in which initial capital is raised through limited partnerships or direct investments rather than through an exchange], we are usually talking about a company controlled by its founding family, with values that are a legacy from them. This is very different from corporate governance in the Western sense. When we acquire a company, we run courses about our values — first for the top 200 leaders of the incoming company, and then for the rest of the organization.
S+B: How have these differences played out in acquisition integration?
MISRA: Every time we make an acquisition overseas, people in the acquired company expect us to come in with a 100-day plan, replace everybody at the top, put in our people, and then leave. But we have always believed more value is created in acquisitions by leaving the management team as it is. To our horror, we discovered that this is seen as a weakness on our part. “Don’t they know what they want to do?” people ask. “Don’t they know how to manage a global company?” It has been difficult to convince people in the acquired companies that not making changes in management is a part of our strategy.
When we acquired Novelis, we hired a third-party firm to conduct a management appraisal of the top 20 people. This helped us to get an independent perspective rather than drawing our own conclusions about who was the right person for each position, or what new roles we needed to create. This was particularly important politically since Novelis was a spin-off from a company called Alcan. Some parts of the company had ingrained Alcan practices; others did not. The regions operated independently rather than seeing themselves as part of a whole. Europeans had one view of the company, and North Americans had an entirely different view.
Then we came in and complicated matters. Explaining our Indian conglomerate’s diversified company structure was difficult because North American companies tend to be very focused. They don’t understand a diversified company with so many businesses.
S+B: Because they bring different organizational cultures together, acquisitions often raise the question of corporate values. What values are most important to you at Aditya Birla?
MISRA: Caring for employees is a very strong theme in our company and in India. Unemployment has been very high for a long time, and only lately have white-collar career opportunities been an option for many people. Social relations and social standing are also very important. Part of an individual’s dignity comes from the relationship with his or her family. In that context, you can’t just tell a person, “Tomorrow morning, don’t turn up at work.” If you are a CEO of a Birla Group [subsidiary] company considering layoffs, you will have to think about whether it is the right thing to do in light of the group’s values before going to the board with a plan. We think about what a laid-off employee is going to tell his children when he has to explain why he has lost his job. A lot of my Western colleagues don’t understand this because it’s different; in the West, it is OK to hand someone a pink slip and tell them to pack and move out immediately.
There is no point in judging who is right. One must understand where the other person is coming from. These discussions are as challenging for our non-Indian colleagues as they are for us.
S+B: The Aditya Birla Group has won recognition as a great employer in India and in Asia. Beyond making employees feel good and enhancing your image externally, what do you think is the value of this reputation?
MISRA: We have won awards, but we don’t chase the recognition. That’s why you’ll find that we do not participate in every survey every year. Our formal policy is to participate in one such survey every other year. Our intent is to benchmark and know where we stand. We want to know what other companies are doing and what we are doing. That helps us compare what is working for us to what works for other companies, and discern what we might need to do differently.
- Vikas Sehgal is a partner with Booz & Company based in Chicago. Working with the global engineered products and services team, he specializes in emerging-markets strategy, product strategy, engineering globalization, and policy formulation.
- Ganesh Panneer is a Booz & Company senior associate based in Chicago. He specializes in product strategy for emerging markets and innovation for clients in the automotive and industrial sectors.
- Ann Graham is the editorial director of Human Potential Accounting, a U.K.–based consulting firm, and its online library and network, HubCap Digital. She is a former deputy editor of strategy+business.