Family-owned businesses have dominated the Indian corporate landscape for decades. From Ambani-Adani to Birla, about 75% of businesses in India are family run and led. These businesses have long been the cornerstone of economies across the world. But with the new generation joining the family business, the question arises: are they well equipped to take the helm?
Seniors in the family business bring with them a wealth of experience, which can be instrumental in preparing the next generation for challenges and opportunities that lie ahead. When, Sunil Kant Munjal, chairman of Hero Enterprise Ltd., was given the responsibility of preparing the children in the family, he first asked them what their aspirations were. Instead of expecting them to join the business, the Munjal's asked the next generation to follow their passion.
"The idea was to see who's actually deeply interested, not just taking the position because they happen to have the same last name. So, the good thing was some of them then chose to do other things," Munjal said.
Next, Munjal asked the future generation to get a job elsewhere before joining the company. When his nephew was applying for a job, Munjal asked him not to use his last name to avoid getting recognised.
But for family-run businesses, striking a balance between personal relationships and professional responsibilities can be a delicate task. "By the third generation, 94% of the family-owned businesses destroy themselves. About 6% of family-run enterprises continue to grow generation after generation," Munjal said.
He explained the steps these 6% companies take to continue flourishing. "These businesses are able to make a distinction between ownership and management. Secondly, some of the successful businesses put the smartest people to manage the family, not necessarily the business."
Family businesses often have a set of values that are at the core of their business operations. And does maintaining company values increase sustainability?
"If you have a good culture and good value system at home, it's much easier to build a good business. You have to have consistent behaviour, that's how you build a good business," Munjal said.
Future generations should be trained to become not only good managers, but also responsible business owners, according to him.
With a rapidly changing business landscape, can family-led businesses continue to thrive? Staying competitive demands willingness to innovate and adapting to changing market trends.
"If we don't adopt technology, newer ways of thinking and working, the threat to business is real. Smarter companies are ensuring that they have a strategic view of the future," the Hero Enterprise chairman said.
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