The Hindu Business Line : Spreading their wings

When Ravindra Pai, Director, Century Building Industries Pvt Ltd, decided to take a detour in his career before joining the family business, his family was not surprised. "A B-school course and a stint in an MNC before jumping into the family business was a pre-meditated move for me," he says. Though his career in the family's property development business was a predetermined decision, Pai decided he needed `exposure' to the outside world before taking up the reins.

Arjun Ranga, who belongs to a Mysore-based family involved in the perfumes and incense sticks business, worked his way up in a similar fashion before being anointed Managing Partner, N. Ranga Rao and Sons. He signed up for an MBA at the Thunderbird Graduate School of International Management in the US. In fact, the Ranga family has made it mandatory for all members of the younger generation of the family to cut their teeth in professional life by first working outside for a couple of years. Arjun Ranga worked as a business consultant for a chemicals company in the US for a couple of years , "where I got used to the idea of getting yelled at by a boss," he confesses.

For Pai, it was the common admission test and a gruelling two years at the Indian Institute of Management, Bangalore (IIM-B). Consequently, he took up an IIM-B placement offer from Oracle in a sales position. Are family business heirs increasingly going through the rigour of a management education and work experience outside the family business before taking over the reins at home?

Arjun Ranga, Managing Partner, N Ranga Rao and Sons

According to Mathew J. Manimala, Professor of Organisation Behaviour at IIM-B, and Jamuna Raghavan, Chair Professor of Entrepreneurship at the institute, a majority of those who seek management education for members of the second generation of the family are businesses that are interested in growth and diversification. Others who want to continue in the same line, pursuing natural growth would not seek management education, but a technical education in their fields of operation, he adds.

On takeaways from these experiences, Manimala says that we generally assume that business needs are changing, which may not be the case for a majority. "For those who are in the opposite situations, management education will provide significant benefits mainly in terms of professionalising their businesses and capitalising on the emerging business opportunities," he adds. Ranga speaks of his experience: "Work discipline, structuring business meetings and discussions are some of the biggest takeaways from my stint abroad."

Similarly, Pai's experience shows that a management education, especially the experience at leading institutes such as the IIMs, makes you think in a different way. "The experience itself is a big teacher. IIM is a microcosm of the world. There is politics, competition, pride, success and failure, all packed in the two-year period. These experiences give you a lot of confidence," he points out.

Oracle helped Pai bring plenty of lessons to the Century boardroom . "There is a sense of urgency after you have worked in an MNC that demands quarter-to-quarter deliverables." The result is that you try to put in place some systems and processes in the family business. Ranga feels that if you kick-off your career in your family's backyard, then chances are you will get pampered. "Work experience outside will get you used to getting yelled at by a boss, facing deadlines and working weekends," he emphasises. On the flip side, family businesses also add value to the individual, he feels. There is a lot of learning that happens in this environment; like learning to command respect, changing people's mindsets, putting systems and processes in place. The most important thing is that there is a lot of responsibility in family businesses.

Ranga , says the biggest takeaway from his B-school experience was confidence. "When people know that I am educated and have worked abroad, they tend to listen to me," he says. In fact, Ranga and his cousin Pavan attended a programme for family businesses at Harvard that gave them a complete insight into succession. "It taught us how to move the older generation people into advisory roles and also helped us accomplish it," he says. Others who attended the forum were people from multibillion-dollar groups such as Caterpillar and Swarovski, where they could share their experiences with one another.

One of the sensitive areas in family businesses is succession planning, which is a tough and complicated decision. "This is where the B-school education helps," says Ranga .

IIM-B's Manimala says work experience in the corporate sector is important to people whose ventures are looking for growth and diversification. There is another category of people in the family business who seek employment in the corporate sector. These are the second generation people who want to fight the `caste system' in the SME sector, where there is an implicit expectation from society that a son or daughter coming from a business family should continue with the same business, whether or not he or she is interested in it.

"The second generation may want to go into professions or into other kinds of businesses. In either case they need to take up jobs in the corporate sector. Even for those who want to continue with the same business, an exposure to the way others do this business especially in the large scale would be quite useful," he feels. But do Indian universities and B-schools offer specialised programmes for this category of people? According to Manimala: "There are very few courses in India specifically for those hailing from family businesses. One reason for this may be the lack of demand for such courses."

In his opinion, courses specifically for homogeneous groups are likely to prevent broad based learning through interaction with people having experience in diverse settings. "This probably is the difference between education and training. On specific issues like family business management and so on, it would be better to organise training programmes rather than create MBA programmes," he says.

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