india inc: Introducing the next generation in the family business

The growth and continuation of the family business depends on the successful transition of the business to the next generation. Unsuccessful transitions often lead to the failure of both business and family. This article aims to focus on one of the reasons for this failure, which is the inability of family businesses to introduce the next generation to the business or due to mistakes made in the process.

Family business owners want their children to join the family business and usually do not even know if they are interested in joining the family business or not. In addition, even if they are willing, their willingness to put in the effort and time to learn how to run and run a business is not tested. Young people who do not want to or do not present themselves do not run a good business and this affects the growth of the business. Ashish Bharat Ram, Managing Director, SRF rightly said: “If a family member does not have the passion or does not want to take on the responsibilities of running a day-to-day business, he or she must ensure that they take on the role of responsible family owner and should not interfere. in business management. ”

Challenges

In many cases, when the next generation member joins the business, family business leaders don’t know how to get started. Next-generation members simply start going to the office with family members and are told to find a job initially to engage them. This creates ambiguity and slows down the process of mastering the actual work and the necessary leadership, management and personal skills. In addition, they are often seen as owners from day one. This sometimes puts a lot of pressure on them to start running the business as soon as possible.

One common fear among business owners of all sizes and industries is that their children will grow up to be eligible. The right does not come only by virtue of being born into a wealthy family. Well-meaning parents of business families, without realizing it, provide false protection to their children, which makes them feel entitled.

Another challenge facing the next generation in the family business is that they have new ideas and a lot of enthusiasm to implement their ideas, while the older generation does not agree with them in light of their many years of experience in the industry. Such recurring cases lead to the accumulation of emotional baggage in family members of both generations, which is relevant to business performance.

In light of the challenges they face in the absence of a clear implementation plan, family business organizers need to plan how to introduce their next-generation members just as they join the business. At the same time, the clarity in the family’s mind that finding the direction in which development should take place is a prerequisite. This is often overlooked and the focus is on how quickly the next generation member becomes CEO.

In addition, setting unrealistic expectations and speeding up the implementation process will be detrimental in the long run and will also jeopardize family relationships. A crucial condition to be met in this process is the next generation member, who wants to join the family business, must either work abroad for the first three years or report to non-family senior management.

How to deal with challenges
Key stakeholders such as parents, senior staff, mentor, etc. they must be involved in the process from the outset and they must meet quarterly to stay in line with the process and propose and decide on changes in the course of action where necessary. In some families, one of the older family members who is active in the business takes on the role of mentor. Introducing the next generation to the family business is a sensitive activity, which is why many family businesses engage an expert who acts as a mentor in this process.

The successful implementation process can be planned and implemented in three stages, led by the mentor. We call these stages – Enjoy, learn and

. Very much against the usual approach of starting with big goals and a lot of motivational conversations, the introduction process should start with a lighter note and the mentor should find out why the mentee joined the business and connect with the interests of the mentee. In the light of these interests, the mentor should facilitate guidance in deciding on certain small, atomic habits such as reading, meditation, exercise, learning a language suitable for business, etc., which together will yield results over a period of time. time. The purpose of this first stage, the Enjoy stage, is twofold. First, that the mentor feels understood and connected to the mentor and second, that he perceives this process as a pleasant journey, full of learning and opportunities.

The second stage is the “Learn” stage. It can start with the mentor deciding in which department / function he / she wants to start studying – production, sales and marketing, accounts, finance, etc. The mentor can set a duration with the heads of the mentoring training department. The head of the department and the mentor must decide the person to whom the mentee will report. Formal feedback should be obtained from each manager to whom the mentee has reported. The mentee must keep in touch with the mentor on a weekly basis and share their knowledge.

The third stage, the Excel stage, allows mentees to start working under one of the HODs in the company with clear results. Here the mentor must see how the current knowledge is applied and guide the mentors accordingly. This process can lay a solid foundation for the next generation member to lead or play a key role in the business.

To summarize, the following are the 5 Dos:

  • First determine the direction, then focus on speed
  • Do not rush with young people
  • Follow the three-year rule for reporting to someone outside the family
  • Involve key stakeholders in the journey
  • Plan ahead using the three-step process – Enjoy, Learn, Excel

Chandrasekar is a partner and Senani is a senior consultant, BAF Consultants

Leave a Comment

Your email address will not be published.