Family business now need to be professional - The Economic Times Página 1 de 2

Sat, Apr 02, 2011 | Updated 12.01AM IST

22 MAR, 2011, 06.38AM IST, YASMIN TAJ,ET BUREAU

Family business now need to be professional

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So, how important is it to professionally manage a family business? Snehal Mantri, director marketing, Mantri Developers Pvt. Ltd points out, "Even in western
markets that boast of a developed capital market, a large number of companies are formed by sole proprietors and operated by families. However, to ensure
organisational success and entrepreneurial growth, it is essential to have a professional management system."

According to Kavil Ramachandran , Thomas Schmidheiny Chair Professor of Family Business and Wealth Management, Indian School of Business, Hyderabad, "As
an organisation grows, there is more complexity. It's an evolutionary process. The way you do business or the systems and processes you follow for the business
would be different, as the business expands and changes. So, understanding those requirements and providing the necessary inputs according to that is the key to
the success of the business and that is the essence to professionalisation too. Running a business professionally means understanding the critical requirements and
ensuring that those requirements are there."

Similarly, Nadia Chauhan , joint managing director & chief marketing officer, Parle Agro expresses that a professionally managed organisation gives way to
decentralisation of activities, empowerment of employees, decisions made methodologically and set systems and processes. "All these factors are critical to the
success of an organisation, as decentralised functions lead to decisions made at every level, which brings in a sense of ownership among the employees; set
systems and processes lead to smooth interaction between departments. Thus, it is important to manage the family business professionally," she asserts.

Talking about the multiple benefits professionalisation has for the business, Prof Ramachandran points out, "There are two kinds of benefits to professionally
managing a family business - one is that the business will grow as the environment changes and the opportunities emerge and the second is that the wealth created
by the business will come to the family. There are also additional benefits. One is in terms of the prestige and brand equity it brings. The second is that family
governance will be better. Family conflicts will come down if there is an agreement that they will run the business professionally. This also gives an opportunity to the
family members to withdraw from the operations and pursue something else that interests them," he elucidates.

So, what is the best way to hand over a family business to a professional management team? What are the key points that should be kept in mind and what are the
factors that influence professionalisation of a family business? According

to Chauhan, "Professionalising family business management is an evolutionary process that affects every family business interested in sustainable growth. It can be
done in the following ways: decentralising functions and empowering the managers to make decisions or handing the business over to a professional management
team - which ever works the best. In both the cases, the professional management team or managers hired for different functions need to understand the vision,
mission, beliefs and culture of the organisation. The basic philosophy, values, goals, basic work routines and expectations of customers, vendors and other business
relationships need to be re-evaluated as well. Because of the complexities, the professionalisation process is best accomplished over a protracted period of time; it
should be an evolution and not a revolution."

For Prof Ramachandran, the first thing is to understand the growth requirements of the business. "Also, awareness is highly important. Professionalisation is like
allowing the baby to grow on its own and letting him/her go for his/her passion rather than the parent making every decision." he avers.

Any organisation in a growth phase, having multiple products and spread across geographies, requires professional management and this is precisely why most of
the family businesses , which have been run by multiple generations of entrepreneurs are now getting professional management on board.

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