More and more family firms are facing up to their biggest problem: unwilling inheritors!
Joining the family business is no longer the default option for the new generation of inheritors.
Kavin Bharti Mittal, son of Sunil Mittal, Akshata Murthy, daughter of Narayan Murthy, and Ananyashree Birla, daughter of Kumar Mangalam Birla all decided to chart make their own path while business houses like DCM, the Birlas, the Dalmias and the Modis could not keep their flock together for more than two generations.
Not everyone who has the choice to join a family business wants to. They may have another career path in mind, or they may just not have the passion for what the family does.
“The new generation has got its own mind, values and also social systems. They may not be interested in the same profession as their parents. My daughter didn’t want to be part of our business. Earlier, children blindly followed their parents’ footsteps, but not anymore. Also, since their parents are already established, there is no monetary burden on them,” explains Dr Nageshwar Reddy, Chairman, Asian Institute of Gastroenterology.
Jayadev Galla, Managing Director of the Amara Raja Group, and TDP MP quips, “My two sons — Ashok and Siddharth are not a part of our business. They are interested in movies and taking acting classes. However, I am happy that they are following their dreams and passions.”
Some feel a family should convince the younger generation that taking over the family business is an opportunity, not a burden. “If the children see a big picture for the business, they will be excited to take it forward. As long as we have culturally aligned families with children who are well equipped to take on challenges, we will see more of family succession,” says Mohan Reddy, Founder and Executive Chairman, Cyient Ltd.
When Isha Ambani, the daughter of billionaire industrialist Mukesh Ambani, decided to become an entrepreneur, she didn’t join the family business. Instead, she worked as a business analyst with the management consulting firm, McKinsey & Company before being inducted on the Board of Directors at Reliance.
So does proving oneself outside the family business boost self-confidence and the individual’s reputation? If children join the family business without ever exploring other potential career paths, it could end up causing more harm than good — to them and their family.
“Family businesses looking outside for filling top positions is good in a way. It brings in a sense of professionalism. Even if the child comes on board, he/she should go through the gruelling schedule,” says Dr D. Nageshwar Reddy.
Explains B.V.R. Mohan Reddy, “If the children believe in the same values, the next steps are to equip them with abilities to run the businesses. This is a multi-step process and involves the best of education, good training, empowerment, accountability and mentorship.”
He adds, “The first step is to ensure the children are well educated. They then require sufficient experience. If they are directly inducted as senior leaders, they will never earn respect from others and will also be clueless about the business. Give them the ability to take decisions, and to be accountable for the same.”
Blazing their own trails
Members of the next generation are making a name for themselves by either venturing out on their own, helming the family businesses or getting groomed for succession.
“When I started getting involved in the construction business, it was trial by fire. All of my experience thus far was in the services sector and I was suddenly thrust into a sector focussed on selling a product. The company was already numero uno in the state and it was an extremely hard act to follow.
But what really helped me was my education and experience of starting and running companies outside my family business,” says Rakesh Reddy, Director, Aparna Constructions.
He adds, “Both my father C.V. Reddy and uncle S.S. Reddy insisted that I get exposure at a good university and do something on my own first. From an early age, I had a front-row view of what it took to make a business successful.”
An organisation can be sustainable only when it is built on a foundation of values and is equitable to all the stakeholders who make the company successful. “Values such as fairness, integrity, respect, sincerity and transparency ought to become the guiding principles of the company’s culture. A value-driven culture is fundamental for an organisation’s sustainability and succession planning,” sums up Mohan Reddy.
Paving their own path