Family Business Plans – How To Hold Them Together?

Family businesses are intrinsically entrepreneurial. Also, family dynamics play a significant role in defining the way these business function.  Yet, conflict management in such cases is poorly handled.

Family businesses have several other issues that work against the successful continuation of the business. The next generation have their own ideas and expectations from the business—they are open to diversification, digital and technology, and would also, in times to come, like to leave their mark on the business. However, they do face some challenges and gaps: a generation gap, a communication gap and the credibility gap.

In India, there has been some progress in and recognition of this very important aspect of family business. According PwC (Price water house Coopers) India Family Business Survey 2016 India about 85% of those surveyed (up from 77% in 2014) said they had a mechanism in place to deal with conflict. However, when we inquired about succession, they found that only 15% had a robust, documented and communicated plan in place.

The problems associated with succession planning are acute in India, where family managed businesses thrive. Only a third of all family businesses successfully make the generational transition to the second generation. Such companies through discretion to the wind and spend time on dividing the family silver among the next generation rather than in grooming the right person to take over the top job.

In Strategic Issues in Succession Planning A. V. Vedperiswar states succession planning if executed efficiently helps the organisation in various ways:

1. Engages senior management in a disciplined review of the leadership talent available within the organization

2. It guides development activities of key executives.

3. It ensures continuity of leadership and sends the right signals to employees as well as external stakeholders.

4. It guides the promotion policies and helps to ensure that the right people are promoted at the right time.

5. It facilitates a critical review of selection, appraisal and management development process of the organization.

Succession planning becomes extremely critical in the emerging markets where the legal and institutional arrangements regulating the corporate entities and the corporate governance practices are being developed. Visit our Website: www.winningbizness.com/