New Manager

The glue that can hold a family together

Naveen Khajanchi | Updated on April 16, 2014

Trust and fair play are integral elements that tie the family business unit together and help keep controversies at bay

Family-owned businesses, as opposed to others, possess a highly intricate network of relationships. They are, therefore, subject to a much wider range of influences stemming from such relations, making complexity an inevitable aspect of family-owned businesses (FOBs). This complexity — which may be further amplified by elements such as rigid and redundant hierarchy structures (the eldest son is the successor by default), favouritism (favouring family members over others who may be more suited and capable) and gender bias — can cause personal grudges and opinions to seep into key business decisions.

To prevent such complexities, one needs to approach them with an open, flexible mindset.

Integral elements

The key is to tactfully deal with the complex nature of the relationship between the business associates. The decision-makers or advisors need to look beyond superficial dynamics and scratch below the surface. Encourage an environment where a healthy exchange of ideas, thoughts and opinions can take place. Business discussions without pointing fingers at individuals are important for each one’s awareness to be raised and succession planning to take place. This sows the seeds for thinking deeper and touching those taboo points which are best discussed in advance; as an advisor I would hold the discussion in advance and set the stage with each stakeholder and member.

Trust and fair play are other integral elements that tie the family/business unit together and help keep controversies at bay. Encourage people to come out of their comfort zone, shed their fears and lighten up. Members at times have a hidden agenda and tend to pick on each other. Bringing up issues that are not relevant just to prove a point is a common practice in joint families. For instance, in the case of appointing a woman to a senior position, the point of her marriage is bound to be raised, which may or may not be relevant depending upon her age and aspirations. Past failures, too, commonly crop up in such discussions. Families need to have space where when people fail, someone always looks at them with trust and hope.

Time for bonding

Personal relations are bound to seep into the business when it comes to FOBs. But now, most families are moving away from the joint family structure to nuclear families. However, it’s important to have the environment of the joint family system without necessarily living together. The ethos being that ‘we are a family and yet letting each one have his/her privacy and freedom of choice’. Nuclear families are here to stay but they may be heading towards unknown alienation which can have a huge impact on the personal and professional lives of members. Encourage the family to get together regularly for discussions, recreation and social and religious occasions. Make special efforts to ensure equal participation in business meetings. Evaluate each member’s needs and contributions to make sure everyone receives their fair share of responsibilities and benefits.

To foster an environment where family members can effectively work as team members, offer short-term opportunities to collaborate. In India, a marriage or religious event is a great opportunity to learn, organise and bond with cousins or siblings. This involves planning and creates the need to collaborate with all age groups. Such team-building will inevitably have its bearings on the workings of the business.

Back to roots

Values like integrity and gracefulness — important takeaways from ancestral anecdotes — are the strongholds of any business, family-owned or otherwise. Promote visits to one’s roots that is, ancestral homes and villages. Family gurus or grandparents can indulge in powerful storytelling, where value systems, efforts and successes of the founding fathers or business come to light.

These can have a strong influence on the young members’ personal and business psyche and go a long way in ensuring sound decision-making. Sharing anecdotes of erstwhile entrepreneurial stalwarts can be a great tool of learning. Personally, accounts of GD Birla’s life that highlight his value for time as well as the ‘Parta’ system used by the family, led me to become punctual and meticulous myself.

Wealth management

Complexities also arise out of the wealth garnered by a family business, in terms of its management and profit-sharing between the members. Fair wealth management is need-based as well and takes into account the contribution of each unit within the family. Consider, for example, a family of three brothers, where the eldest brother has five children and the others have two and one, respectively. When it comes to wealth management between the brothers, dividing it equally between the three would be unfair to the eldest brother with five children.

Not only does he have more mouths to feed but also the collective contribution of the five children towards the growth and profitability of the FOB is also greater. Wealth can be a means of common joy for the family if managed well; otherwise it may create rifts.

Good words, good thoughts and good deeds foster an environment of love, peace and harmony, where both family and business can thrive. The Tatas are a great example of an FOB wherein there is an essence of this at a global level. They have a unique blend of professional management and a strong family culture passed down generations. This, coupled with their efforts to give back to society by engaging in CSR initiatives at various levels has earned them both goodwill and success.

As inevitable as complexities might be, they are definitely not insurmountable.

They can surely be tackled in a civil manner, just so long as there is mutual respect and trust among the members. When we are willing to discuss with openness and make small sacrifices the most difficult things can be resolved.

The writer is an executive coach, author and family business advisor to leadership.

Published on April 16, 2014

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