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Don’t let your family ruin the business

When family businesses are in a dilemma is when they require the best people, whether family or non-family, to run the business. This is in the context of a global and dynamically changing market place where there is intense competition. The emphasis of the business would need to be on building human resources, either family or non-family.

In this context, what would be the role and relationship of non-family professionals with the family?

The Chennai-based Murugappa group, now in its fifth generation, is one that has prospered with scores of non-family professionals in the upper echelons of management while the family has been at the helm of affairs. With a strong family and business governance code in place, the group has evolved its own framework for managing its businesses.

M.M. Murugappan, Vice-Chairman, Murugappa group

At a conference on family business organised by the Madras Esplanade Round Table 30 and the Chennai Business School over the weekend, M.M. Murugappan, Vice-Chairman, Murugappa group, outlined the role of professionals in the family-owned Murugappa group.

“It’s important for professionals to understand the parallel planning process in the business. His role is to lead and deliver stakeholder value,” he said. And the family, he said, “Must learn to let go. If you find someone who can do something better than the founders then why not let go,” he elaborated.

The professional, he said, is the interface between the family and the rest of the organisation. So, he/ she needs to understand and appreciate family dynamics, understand family objectives, have clarity of the family role, negotiate the decision space and boundaries and ensure congruence with family values.

From the family side, there is need for clarity on the role of the family (entrepreneurial) and the non-family professional (managerial).

At times, he said, these roles have to be separated and non-family professionals are always helpful in distinguishing between these roles. Further, families must be willing to dialogue this within themselves and also with non-family professionals.

The family must honour a business governance system and clearly understand and develop processes within the family and the business for governance, leadership and succession.

In the Murugappa group, he explained, the senior members of the family meet once a month while the Murugappa Corporate Board is a separate entity which has members of the family as well as professionals.

To conclude, he said, whether it is a family or a non-family professional, the role of each constituent must be clearly defined and a system of checks and balances instituted that encourages productive discussion and debate at each level, but ultimately results in consensus and determined action.

Pradipta Mohapatra, Chairman of the Coaching Foundation of India

Pradipta Mohapatra, Chairman of the Coaching Foundation of India, who spent a large part of his career in family-owned businesses, defined, what he called, immutable principles for professionals working in such businesses: earn the trust and respect of the owners, define your role and responsibilities, communicate frequently, articulate and build the vision and values of the group, offer oneself for regular reviews, discover the story behind the story and learn to stand up in a crisis and be the brand ambassador for your group.

Ravi Santhanam, Managing Director, Hindustan Motors Ltd.

Ravi Santhanam, Managing Director, Hindustan Motors Ltd, said professionals need to be imbued with a sense of ownership to contribute better to the organisation. “As a professional, pursue a career, not just a job,” was his advice to professionals in family-owned businesses.

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