Family owned and run businesses are ubiquitous to the Indian business ecosystem, originating from the ancient Bazaar system, they have been significantly contributing to the economic and societal growth. Today India ranks third globally in the number of family businesses, closely following China and the US. These businesses have an enormous potential of creating a brand, provided they are efficiently managed and professionally organized for future growth. This opportunity has given rise to a focused family business management course offered by various entrepreneurship colleges in India. An Indian family business has to operate in a complex relational environment where culture and tradition play an important role. The next generation of business leaders will be critical players in transitioning their businesses and rewriting the role of business in the current economic scenario. Therefore, it’s essential for both the generation to create a healthy working relationship and take up the mantle of change. Here are five tips on how both these generations can work together:
The best way of getting the next generation interested in business is by exposing them to it early in their life. This helps them get a closer look and appreciate the hard work it takes in running a business successfully. An internship or shadowing executives, involving them in the events or informal business meetings could be a good start. Such ongoing engagements in formative years will also help them in identifying how they want to contribute to the business and can also lead to choosing their further education accordingly. Opportunities like these do not create any pressure, rather provides a calm atmosphere for learning and helps the members bond over mutual interests.
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Talk about expansion and diversification
The next generation will always view the family business from a newer angle; this comes from their desire to create something more relevant with a promising future, explore beyond the legacy business and also an urge to emulate their forerunners. Having a positive outlook towards expansion and diversification is essential to compete with the professionally run counterparts. A continued healthy dialogue about this is motivating for the young turks of the future generation. Also, it serves as a catalyst for them to pursue their own business idea, where they can grow and find autonomy for themselves. Many families have used low-cost related diversification projects to induct their next generation into the business, making them effective change agents. One such business family who used diversification strategy successfully was Kalyan Group. TS Kalyanaraman came from a background of a well-established family business of textiles, but soon he realized the potential of organized business in the jewellery segment. Their decision to diversify gave rise to 10,000 Cr jewellery brand “Kalyan Jewelers”.
Mentoring and Reverse Mentoring
Desire to join the family business becomes stronger when the next generation buys into the dream and vision of the company. This is where telling the family business story helps; it makes them understand the history and passion that drove the founding members in building the legacy that exists today. It also fosters a mentor-mentee bond among the members. Many advisors are of the view that the seniors in business should act as mentors rather than a boss or member of higher authority. Creating a space where they can express themselves freely, will make them innovate and carve their place.
Mentoring should also be a two-way street, as the millennial successor today has a fresh and more times relevant perspective on many aspects of the business. Reverse mentoring can help the older generation explore new ways of doing business like social media, newer technology etc. and can also be an opportunity for them to understand their modern leadership style.
The next generation should have a broader experience.
Indian business families are deeply rooted in their community and feel strongly about their identity in society. Due to this, the individual identity gets shadowed under the family umbrella. Experience of working outside your family business can help the next generation create legitimacy as a successor and find their place in society. It opens up a whole new world of learning; it teaches the importance of being professional, connecting with employees, managing team dynamics and develop diverse skill sets. Rajiv Bajaj, son of Rahul Bajaj, worked on the shop floor of the competitor’s company for a year before joining the family-controlled Bajaj group. If not a job, even an internship or an Entrepreneurship Course can expose them to different business cultures, practices and inculcates professional management capabilities.
Start with a role that plays on their strengths
To successfully induct the younger generation in a family business, it’s essential to place them in a role that leverages their strengths. With skills learnt during their business education and experience, the next generation will always be eager to implement changes and innovate. It’s critical for them to be happy and enthusiastic about their role in the business. Making them work up the organizational ladder is always helpful in building their credibility among the employees and also gets rid of the entitlement mentality. It’s the role of the older generation to mentor and tutor them for success, give them the opportunities and advice them from their own experience. Looking at them just as future CEOs can at times be a narrow approach, they need to go beyond a role that can be outsourced.
Transition in a family business can be smoother when both the generations look at each other as peers, provide an environment where their opinions are valued and look at succession not as ownership but as trusteeship. In the world of the professionally managed companies, family businesses are successfully jostling their way forward and still keep themselves rooted in their family values. When generations work together as a united family and desire to create a mutual legacy, success and our longevity of the business are bound to follow.