Leadership in Family Business

1. The phenomenon of ‘shirt sleeve in three generations’ (demise of the family business in three generations) is widely known. At the same time, a number of family businesses have defied this and survived beyond several generations.

2. This apparent paradox underlines the significance of having relevant leadership capabilities on both the family and business fronts for their perpetuity. In most families, leadership is assumed to be based on seniority of age, while logically that may not be the prudent criterion to follow.

3. One should command respect, not demand! Also, the challenges of leadership are often not understood well by all, that too in different contexts. For instance, the capabilities required to lead are dynamic in an ever-evolving organization, whether family or business.

4. Similarly, rapid changes in social and family traditions in recent times have led to the emergence of nuclear families, redefining the meaning of joint family system and the role of family leadership in our society.

5. The recent growth in the Indian economy and resultant entrepreneurial opportunities have tempted many to think in terms of the need for greater freedom to pursue their interests, giving an impression that without unquestioned leadership authority vested in themselves resulting in family splits, their ambitions would be curtailed.

6. How should leaders address such multiple challenges? In other words, leadership challenges of family business are many and growing, and families have to consciously choose the person to lead them carefully.

7. To start with, most families do not explore the meaning of ‘togetherness’ that is essential to define the destiny of business and family. It is taken for granted that all family members understand and share the meaning completely. Unfortunately, this is a baseless assumption.

8. Some of the basic questions are: do we have shared goals, values, and ambitions? Do we have clear policies for decisions and processes to create policies in different areas? Are we clear about the implications of accepting the scope of any definition of ‘togetherness’? Are we ready to openly discuss these issues? In the absence of some answers to the above, leadership will naturally become a tougher role to play.

9. One of the basic reasons for this role to be challenging is that it is often a discovery-driven journey for the leader. In most cases, the leader has never functioned in similar situations earlier; this is particularly so for leaders of rapidly growing mid-size family businesses who face structurally different challenges often. They need to constantly upgrade and update themselves in terms of their knowledge, skill, and attitude to make their capabilities relevant for addressing emerging situations.

10. A leader’s position is that of a king who does everything in the interest of the people. It is a responsibility. Families have entrusted in good faith in the hands of the leader the responsibility to preserve and grow their material and spiritual wealth.

[By Kavil Ramachandran]

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