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 pro’s 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
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