Professionalizing Family Managed Businesses

From L-R: Anupam Bansal, Executive Director, Liberty Shoes Ltd.; Kishan Bherwani, General Manager, Kings Lifestyle; B. A. Srinivasa, Jt. Managing Director & Chief Executive Officer, Vivek Ltd. and G. Venugopal, Managing Director, Naidu Hall Family Store

 

In addition to integrating professionals in to the business, you need structures to socially integrate them into the family without compromising the family’s social fabric.

 

Decoding this concept was the objective of the panel discussion on-Professionalizing Family Managed Businesses @ CRS 2013. Panelists for the session included –Anupam Bansal, Executive Director, Liberty Shoes Ltd.; B. A. Srinivasa, Jt. Managing Director & Chief Executive Officer, Vivek Ltd.; G. Venugopal, Managing Director, Naidu Hall Family and Kishan Bherwani, General Manager, Kings Lifestyle and Moderator: B. S. Nagesh, Chairman RAI & Founder, TRRAIN.

 

How do family managed businesses handle transition?

 

“Role mapping is the key in the transition to the second generation.  You bring in ‘professionals’ only for specific areas of competence which are missing within the family” –

Anupam Bansal – Liberty Shoes

 Its not about whether a FMB is professionalized or not – its about getting the balance right between skills and experience.

“Your responsibility as owners is to handover a great business to the next generation.  Professionals don’t have this view.”

B S Nagesh, Founder TRRAIN

The single biggest difference between owners and professionals

  •  Decision making by owners can seem subjective – because they will consider hard and soft factors – “SOPs” and “relationship” factors.
  • On the other hand, scale requires standardization of process, policy and decision making.

“Professionals don’t always bring in a sense of ownership –  in such cases, the owners intuitive solution works better than the skill set of a professional” –

G Venugopal – Naidu Hall

 

How do you empower the professionals?

 “The debate is more about finding someone with the right mindset for the business – someone willing to learn constantly. He could be an owner or he could be a professional” –

B A Srinivasa – Viveks

  • Its critical to ensure that the professionals feel empowered. Information about the business including metrics and financials should be freely shared.
  • Create processes by which owners and professionals are engaged in a regular, two way, dialogue.
  • Consider remuneration structures which give the professionals a share in the value creation AND the risks of building a business.
  • Once empowered, owners have to let go and let the pros do what they are good at. 

 

“In our case we have 9 family members running the business, but other family members set the measures by which we are measured as success or failure” –

Kishan Bherwani – Kingslifestyle

 Creating performance management standards

  • Decision metrics for family members and professionals cannot be different.
  • When the business is growing, its easier to manage the creative tension between KRA’s for professionals and family members.

 

“You do tolerate a disgruntled family member more than you would a professional. You would let the professional go.” –

G Venugopal – Naidu Hall

 

The following two tabs change content below.
RAI
Retailers Association of India (RAI) is the unified voice of Indian retailers. RAI is a not for profit organization (registered under section 25 of Companies Act, 1956), works with all the stakeholders for creating the right environment for the growth of the modern retail industry in India. RAI is the body that encourages, develops, facilitates and supports retailers to become modern and adopt best practices that will delight customers. RAI has a three charter aim of Retail Development, Facilitation and Propagation.