MEDIA

Legacy might not be sustainable for some family businesses

We have witnessed dissent between family members over control of their family enterprise turn into a public, corporate fracas. Billionaire family members have engaged in long feuds over the future of their century-old global business empire. More recently, we have seen companies being put on the block, because of the unwillingness of the next-gen to run low-margin businesses.

On the other hand, several businesses have become innovative, nimble and adaptable to change. There’s little doubt that being flexible while staying transparent and inclusive is the best way for family-run businesses to take their legacy forward.

Gen-Z business heirs, who often have business degrees and global exposure, are placing fresh perspectives on the table. They are taking calculated risks, expanding their company’s product range, entering new markets, investing in new business lines and forging new partnerships. They are quick to embrace new technologies to streamline their operations. Family enterprises are investing heavily in technology to connect with new customers and offer a premium experience.

As businesses grow, families might not always find the most qualified persons for specialised roles, within the family. To have a choice of avant-grade professionals who align with the company’s goals and values, businesses are engaging recruitment partners who not only streamline the hiring processes but also find the right fit for core roles.

Advisory boards often comprise friends and family members. While this may satisfy compliance, it does little else. Board members must be equipped to provide strategic direction and unbiased opinion. In a shift from the past, businesses now enlist the help of professional services for structured coaching to board members.
To resolve the succession debate, farsighted Indian business families are adopting family constitutions. This Code of Business Conduct is framed after the buy-in of all members and enforces family governance. It discusses values and beliefs, percentage of each member’s stake, succession planning, voting rights, contingency plans, roles and duties, remuneration, retirement, etc.

Serious focus on concerns such as diversity, equity, inclusion, sustainability, the environment, and CSR are key to modern businesses. Increasingly, women are being included in leadership roles in family-run businesses. For example, a family-run healthcare business catapulted into becoming one of Asia’s largest chain of hospitals, thanks to the strong leadership by the founder’s daughters.

As India’s family-run businesses evolve, this section of business that contributes around 79% to the nation’s GDP must take progressive, need-based decisions.