Guest Column

Ask a senior professional to work in a company which is Family Owned and the first reaction is likely to be , “What? Me work in a Lala-company? No thank you. ”

Speak to any “Lala”, the most widely used term for the Promoter/Owner of a Family Owned business, about employing a professional at senior levels and a common reaction is, “Professionals are selfish and full of attitude. Much as I need them in my business it is very difficult to work with them.”

Corporate India is grappling with a problem that is likely to intensify in the coming years, namely of growing the family businesses. To take the family businesses on the growth path the Owner will need, at some stage, more than just the family members at senior levels of his business. Data shows that family businesses are most vulnerable when the second generation takes over the reign of the company. Co-incidentally this is also the time when the need of the senior professionals in the business is the highest.

So why should family businesses need senior professionals in the first place?

This question can be answered by looking at the evolution of a typical family business. It starts small but with a passion which is large. The Owner works day and night to get the business going. The family, even the extended family, contributes according to their capabilities. The entire focus, in the initial years, is to ensure that the business becomes viable.

As the business grows it expands and vice-versa. There are new products/services that are added; there are more offices around the country/world that are opened; the number of employees increases. It is at this stage that the business cannot be run on passion and family alone. Till the teams are small the ad hoc processes work. However as the teams grow in size and get spread over a larger geographical area the need to bring a structure in the business emerges.

But getting in professionals is not an easy task. Professionals, as the name suggest, are qualified personnel who have entered the work place to make a ‘career for themselves’.  Therefore they want to work with organizations that have a good brand, give them operational freedom and pay well. Unfortunately, at the earlier stage of business the owner may not have established his brand well into the market; in fact he wants senior professionals to come into the organization and work to get the brand established.

Then there is the bit about ‘control’ versus ‘operational freedom’. Since the owner has built the business from scratch he believes that there is nothing about his business that he does not know. So it is difficult for him to hear an ‘outsider’, never mind if the said outsider is a professional, tell him to do things differently.  And, yes, pay the same ‘outsider’ professional well   “ for what ? To tell me things that I have done wrong to get my business from zero to here !....” splutters a first generation business owner.

Ironically the Owner –Professional relationship is one that neither party can run away from. Each one needs the other, and increasingly so.  More than two thirds of all companies listed on the BSE are family owned. If one looks at all companies, listed and unlisted, the ratio is even more skewed in favour of family businesses. Around the world there is no change in these ratios either.

So the large number of professionals in the market cannot close their eyes to the vast employment opportunities presented by the family businesses. Similarly the owners, as they set to grow their business and take them across a larger geographical area, depend only on family members and/or trusted family loyalists to help them achieve their objective.

So is this relationship, which is a mutual –need relationship, a doomed one?

Surely not. As with each instance of an Owner versus Professional discord, the industry has an instance of the Owner and Professional working together well. So what is it that successful Owners do differently when it comes to getting in professionals into their businesses?

 Imagine a successful family business owner going to his doctor for a general check up. Would the owner want the doctor to tell him that all is well or would the owner want the doctor to tell him exact state of his health along with the list-of-things to do (or Don’t!) going forward? And should the doctor, knowing fully well that it may be painful for the patient (Owner) to hear about the state of his health, keep away the bad news from him? The answer is a no-brainer.

Transpose this to a senior professional who has been brought in by the Owner for the good of the business. Successful Owners treat the professional as a business health specialist and do not take the feedback personally. Instead they work with the professional for a common objective, namely, to take the business even higher.

Success mantra: Work out the common objectives with the professional and do not be afraid of the bad news. Imagine if the bad news was kept hidden how much more damage could it do!

 

A successful owner will find the ‘right fit’ professional

Each one of us is a ‘type’ and when the ‘right types’ get together to work magic can be created. Conversely the right people but the wrong type can make even a normal situation volatile.

For an Owner getting in a senior professional to work closely with him getting a ‘right fit’ person is important. Behavior specialists argue that two professionals of equal ability may behave and deliver differently when working with an owner. Thus having established the credentials of capability the owner needs to spend disproportionate time on finding if the person is the ‘right fit’ for his business, where the ‘fit’ is about culture, value systems, working style of the Owner and the other intangibles. A highly capable professional who does not ‘fit in’ is likely to create more bad than good in the business. Conversely a capable professional who will ‘fit right in’ is likely to hit the ground running and, together with the owner, will achieve the desired results for the business.

Success mantra: Spend time with the potential candidate in informal meetings, along with your and his family members as well. These relaxed meetings give a deeper insight into the person than the typical ‘role ‘ interviews

 

A successful owner will Delegate well and ‘Trust But Verify’ at all times

Successful owners, after having inducted the right fit professionals into their business, will delegate a large part of the decision making to the professional. Having agreed upon the deliverables with the professional it will be useful for the owner to provide the enablers. One the biggest enabler for any professional is a smooth decision making process. By helping the professional in this, the owner must remember, that it is own business that he is helping

 However the owner will alsol do what Ronald Regan famously advised – “trust but verify”.  Even a professional organization has its own system of checks and balances to keep an eye of the people who run the various businesses. Similarly an owner needs to have his own system of checks and balances to keep an eye on the use of the delegation of authority.

Success mantra: Organising Town Hall meetings at least once a year, if not twice, is a good way to keep the hand on the pulse of the business. A good follow up on all points promised during the Town Hall meetings will inculcate even more trust in the employees and they will be more forthcoming with their feedback during the successive Town Hall meetings.

Anecdote

This is an anecdote about a second generation businessman (SGB). The SGB was part of a large business family based in Delhi who own a renowned and trusted brand of consumer goods. He had studied in the US and had returned to become part of the business.  Armed with is MBA learning the SGB prevailed upon his father to get in a professional CEO to grow the business even more.

A renowned search firm was given a mandate and after almost 6 months of intense search a professional CEO was inducted. A person with a  brilliant track record, the CEO took just about a couple of months to work on the 5 year Business Plan. The SGB liked the plan but was apprehensive as the implementation would mean a major commitment of capital in both Opex and Capex.

After much discussion with the family the SGB was able to prevail and convince the family to commit to the capital and expansion. Thus, the capex was approved and the business moved into third gear to expand geographically.  New branches were opened, more staff recruited and the Corporate Office strengthened.

Half way through the implementation the CEO left the company as he got a better offer from another organization.

The SGB  said that he faced two problems. One was to find someone who could take the implementation forward. Any professional he interviewed had his own idea about the implementation which meant changing the execution plan and more expenses.

But the second problem was that his father smirked and said “I told you so”. Looking back SGB laughed and said that his father sang an old Hindi song which went “pardesiyon se na ankhiyan milaana, pardesiyon ko to hai ik din jaana… !”  implying that the professionals came and went at their own will without any thought for the company.