The Hindu Business Line : Next Gen must be trustees of family biz, not treat it as gift

Chennai, Nov.7 The next generation of a family-run business should understand that responsible ownership is to act as trustee of the business and not treat it as a gift, said Mr Narayan Sethuramon, Managing Director, WS Industries. He was addressing a conference on Family Business - Role and Development of Generation Next, organised by the Chennai Business School (CBS).

Globally it has been seen that 40 per cent of the next generation involved in the family business at an early age would join the family business. The best way to manage transition of family business across generation is to develop informal channel of communication with children at an early age of 6-11 years in terms of periodic visits to the family enterprise, said Mr Sethuramon.

Another vital element for developing the next generation to get interested in the family business would be to provide the appropriate education required to run the business. He said that in the case of manufacturing enterprise an undergraduate in technical education and masters in business administration would give the required qualification as well as knowledge of growing business.

Mr Sethuramon said that to get firm grounding in the business having a structure induction of the family member into the business should be done by the family patriarch. Learning every facet of the business would enable the younger family member to have a better perspective of the company and prove helpful when he is at the helm of affairs.

To develop sustainable ownership structure it is necessary to have an early plan on who would succeed, giving it in writing will help and also the plan of the patriarch retirement, he said. Talking about the same theme, Ms Sangita Reddy, Founder and Managing Director, Apollo Health Street, said that the sustainable structure of family business should be put in place during good times so a lot of unnecessary mess could be avoided. When family members are closely involved with business management, clear and structured communication with clarity played a critical role, she said.