Article

The debate about whether family-owned businesses or non-family-owned businesses perform better has been ongoing for years. While family-owned businesses are often praised for their long-term vision, unique culture, values, commitment to quality and community involvement, non-family businesses are often credited with their professional management, scalability and adaptability. The crucial question to ask is which type has the edge when it comes to performance.

Many businesses in India are Family-Owned (FO) and Family-Run (FR). Family Business Advisory consultants  operate differently from other organizations because they consist of family and business. The family’s primary concern is the care and raising of family members, while the business’ main concern is the production and marketing of goods and services. Although the family and the business are separate institutions, in principle, there is always competition between business and family.

A persistent question in management research has been: which type of business is better, the family-owned or the non-family owned? An alternative question which in this respect can also be asked, is in the light of the PERFORMANCE.  Which type of business is more likely to become and stay high performing, the family-owned or the non-family owned?

According to researchers, the way to define a high-performing organization has always remained challenging and subjective especially when there is a comparative study between  Family & Non-Family run businesses. Most of the studies give mixed results and conflicting responses.

Drawing from GatewaysGlobal’s experience, we have been able to say that the organizations which have got the ability to recognize the need to adapt to the surroundings in which it operates can be considered as High performing organization. These organizations can quickly and efficiently change their operating structure and practices to meet needs, focus on long term success while delivering on actionable short-term goals, that are flexible, customer focused and able to work highly effectively in teams. The culture and management of these organizations support teamwork, diversity and adaptability to the environment.

Organizations spend much more time on continuously improving their core capabilities and invest in their workforce, leading to increased growth and performance. High performance organizations are sometimes labelled as high commitment organizations.

The answer to the question that has been raised earlier about Family-Run & Non-Family-Run business in becoming and staying high performing needs bit more delving into the differences in the way how a family and non-family businesses deal with the factors of high performance.

In a traditional Indian family-run business, the key bottlenecks that hinder the organization from becoming a high-performing entity can be categorized into six main areas, such as:

1. Organizational Design

Most Family Business consultants find that traditional family-run businesses operate with strict hierarchies, making it difficult for cross-functional collaboration. There are always some kinds of undefined barriers between functional units. Sharing of information across levels is constantly challenging in both bottom up and top-down processes. This is particularly evident in organizations that are dependent on multiple family stake holders handling the business.

2. Organization strategy and vision

A common understanding of the organizations strategy and direction is shared among only a set of employees at higher levels. Vision, values, and mission statements which guide their organizations are not clearly defined. Even though they are defined the statements may not be specific, strategic, and carefully crafted.  One of the bigger challenges in most of the traditional family run business is that during the growth stages the vision, and values of the organization which act as foundations on which the organization is built is not sufficiently communicated the across the organization. Reward and incentivized behaviour may not be in line with the organization’s goals. They may not be any reward programs or systems that aim to benefit employees who follow the values of the organization.

3. Family Leaders

In a traditional family run business, one can identify that leaders (family owners) closely monitor or supervise their teams. Leaders are more concerned about day-to-day administration concentrating on the short-term results and will take more hands-on approach even into small operational issues. They act more as supervisor upon their team members by instructing every aspect of the project at hand. The leaders expect their team members to adjust to their leadership style irrespective of the needs of their team members. Leaders are not consistent with the values they propagate which tends to create a reduced sense of belongingness among teams.

4. Employee Teams

Employee teams mostly depend on family managers or owners to set schedules, manage quality, and solve problems. Teams struggle to share information across levels of the organization and are continually under direct supervision of owner managers. Members of teams have limited autonomy and idea input, ultimately reflecting in less job satisfaction, and operating at lower potential. Team members who are part of such family run business show little personal commitment to growth and success of the team as well as the organization.

5. Innovative Practices

Information sharing is not streamlined via communications channels even though there may be a set up with state-of-the-art information technology. Internal communication is restricted, and open exchange of information is considered as a misconduct. There is very little focus on improving products, manufacturing processes, or services in order to gain a competitive advantage. Any improvement models or systems (Like TPM, TQM, Six Sigma, Process re-engineering) are seen from cost incurring perspective.

Even when it comes to hiring of new employees, there is very little involvement of managers or department heads in hiring of their team members. Certain family run business limit their HR systems to administration purposes and may not allow them to focus on implementing skill & ability development programs. It is typical for these kinds of organizations to have high rate of skilled employee attrition.

6. Flexibility & Adaptability

Failures in family run business are majorly due to their inability to have structures in place that allow them to quickly adjust to the environment that they operate within and the ability to reconfigure themselves to meet the demands of the marketplace is one of the biggest challenges faced by these entities. There is no structured systems or process which can survey and monitor the environment to understand the context of their business, identify trends, and seek out any competitors. Traditional family run business l have a low external orientation, less focus in meeting customer demands and developing close relationships with customers, not giving importance to understanding their customers’ values, and needs.

We GatewaysGlobal have developed a tool called ‘Orgefficience’ which can help the family run business to identify the gaps and analyse them for arriving at better specific interventions. The “ICI” approach followed by GatewaysGlobal has helped transforming many family run businesses in management quality, belief and trust in others and fair treatment of all stake holders. The initiatives introduced by us in the organizations improved open culture, long term orientation, safe & secure workplace in terms of physical and psychological aspects.  Unique strategies customised and implemented in each organization have upgraded employee quality and made the organization focus more on continuous improvement which ultimately made the organization a performance driven entity.

In India Family-owned businesses have traditionally been regarded as the engine room of the country’s economy. Our experience showed that family businesses can significantly outperform non-family-owned businesses. However, the family run business must focus more on “Keeping the business performance first” rather than “Keeping business in the family” to become a High Performing Organization.

Ultimately, the key to success lies not in whether a business is family owned or non-family owned but, in its ability, to balance competing demands, adapt to changing circumstances, and make strategic decisions that drive growth and profitability.

Blog courtesy: M Anantha Krishna, Consultant Organisational Performance.

In the bustling city of Kochi, two family businesses, Bright Ltd. and LB Ventures stood at the dawn of a new performance year (company names altered to conceal identify). Each beginning brings an opportunity to reflect on what went right and what did not. So, like most companies, both these companies too conducted their annual reviews. Both operate in the same industry, and both were founded three generations ago. However, they had contrasting approaches to business. Bright Ltd. was led by a visionary and future focused CEO Sheela Bright. LB Ventures was led by CEO Eric John who lacked a structured plan and focused on day -to -day operations.

After the annual review, both companies engaged an external consultant – Bright Ltd. engaged the consultant with the primary goal to double the turnover by the next financial year. LB Ventures engaged the consultant to find out why the company had failed to reach the financial target for the current year. Coincidentally, both companies engaged the same consultant – GatewaysGlobal Human Capital Solutions.

GatewaysGlobal took a deep dive into Bright Ltd. first and then into LB Ventures. They found that despite facing similar market conditions, the two companies exhibited different approaches to all aspects of the business, leading to divergent outcomes. The specific areas where the two companies were different in both approach and implementation were:

1. Strategy Planning at the beginning of the year provides clarity of purpose, direction, efficient resource allocation, and a guiding framework that empowers the business to capitalize on opportunities and navigate challenges in the pursuit of sustainable growth.

By staying ahead of market trends, and proactively addressing challenges, Bright Ltd. achieved sustained growth, expanded market share, and enhanced brand reputation. Employee morale and engagement were high, fostering a culture of innovation and continuous improvement.

In contrast, LB Ventures relied on historical precedents and short-term fixes, most often guided by immediate concerns rather than long-term vision.

2. Succession Planning ensures a clear roadmap for smooth transition of leadership and management responsibilities from one generation to the next. By identifying and grooming potential successors early on, the family business can maintain continuity and stability, safeguarding its legacy and reputation.

Bright Ltd. made deliberate efforts to identify and develop potential successors within the family. They were seen providing the right education, mentorship, and hands on experience to prepare their potential successors for leadership roles. LB Ventures on the other hand, was seen procrastinating on grooming successors.

3. Financial management at the beginning of the year ensures that funds are directed towards activities that support the family business’s strategic goals. By prioritizing investments and expenditures, the business can maximize its return on investment and optimize its use of capital. By reinforcing commitment to maintaining accurate financial records, adhering to accounting standards and ensuring transparency in financial reporting, the business can build trust with stakeholders and uphold its reputation.

At the start of the year Bright Ltd. meticulously made a comprehensive budget outlining revenue target, expense forecasts and investment priorities. This allowed them to align their financial resources with strategic goals and anticipate potential challenges. They also implemented a strict cash flow management system. They closely monitored their receivables and payables, negotiating favorable terms with suppliers, and maintained adequate reserves. As a result, they could sail through fluctuations in cash flow without facing liquidity crises. They also conducted thorough financial analysis and feasibility studies before making any major investments. Through their prudent tax planning-leveraging tax incentives and optimizing tax structure through legal means, the company reduced its tax burden while ensuring regulatory compliance.

LB Ventures on the other hand lacked a coherent budgeting process, leading to inconsistencies in financial projections and resource allocation. They struggled to prioritize expenditures. They paid little attention to cash flow resulting in delayed payments to suppliers, missed opportunities and strained relationship with creditors. Neglecting tax planning led them to miss potential tax savings opportunities. Their lack of attention to tax compliance exposed them to penalties, further straining their financial resources.

4. Governance & Decision Making promotes transparency and accountability within the family business. Clearly defined roles and responsibilities and decision-making frameworks ensure that decisions are made by authorized people and that they are held accountable for their actions.

Bright Ltd. had established a clear governance structure that defined roles, responsibilities, and decision-making authority within the family and business. This facilitated transparency, accountability, and efficient communication. Moreover, their decision making was based on data driven insights and inputs from various stakeholders. Regular board meetings and management reviews provided for risk assessments and course corrections as needed. They also had an effective conflict resolution mechanism which minimized disruptions and maintained harmony in decision making process.

LB Ventures lacked a clear governance structure resulting in role ambiguity leading to conflicts and power struggles and hence inefficiencies within the organization. Decision making was based on impulse and emotions rather than strategic considerations. This created tension, distrust, low morale, and low productivity.

5. Communication Architecture is crucial for creating a solid foundation for businesses. Clear and consistent communication channels, both horizontal and vertical facilitate dissemination of information about business goals, core values etc. it also enables unity and shared purpose among family members besides ensuring that relevant stakeholders are consulted, informed, and involved in key decisions. It preserves family harmony and cohesion by enabling family members to address conflicts constructively. Effective communication between the management and employees is possible, the business can solicit feedback, recognize achievements, and address employee concerns leading to enhanced employee morale and productivity. Strong customer and client relationships, loyalty and retention which are the cornerstones of a successful and sustainable business require an effective communication architecture.

Bright Ltd. had created a strategic communication framework to foster transparency, alignment, and collaboration within the organization. There were both vertical and horizontal communication channels to share ideas, concerns, and feedback periodically. Regular town hall meetings, employee forums and suggestion boxes facilitated two-way communication and promoted a culture of engagement and inclusivity. Communication guidelines to ensure consistency, clarity and effectiveness in internal and external communications were laid down. Regular updates and reporting mechanisms kept stakeholders updated about the company’s performance, initiatives, and key developments. All this helped in creating transparency and hence trust among employees, customers, and investors.

LB Ventures relied on ad hoc communication practices resulting in misunderstandings. The lack of effective communication channels led to silos, miscommunication, and lack of alignment between different departments and stakeholders hindering collaboration. There were no efficient reporting mechanisms leading to confusion, uncertainty, speculation, and trust erosion.

6. Risk Management is important as substantial family wealth is locked up in the business. Addressing them proactively can sustain business and ensure continuity apart from minimizing the risk of disruptions.

Bright Ltd. had a proactive risk management strategy comprising of regular risk assessment across all functions, risk analysis of the impact of the risks so identified, risk mitigation to reduce the likelihood and impact of such risks, and risk monitoring to track and monitor key risk indicators and early warning signals. They fostered a risk aware culture throughout the organization embedding risk management into day-to-day operations. As a result, they encountered their risks efficiently safeguarding business continuity and reputation.

As for LB ventures, their approach to risk management was fragmented and ad hoc with little collaboration between departments. Rather than taking a holistic view of their risk landscape, they exhibited knee jerk reactions to immediate threats. This myopic view exposed them to systemic risks undermining their long-term viability. As a result of this, they experienced increased volatility, and uncertainty in a dynamic business environment.

7. Customer & Market Analysis helps identify and capitalize on new market opportunities like niche markets, underserved markets and areas of growth which helps in defining their marketing strategy.

Bright Ltd. crafted a customer centric approach to market analysis; they conducted a thorough customer segmentation to identify distinct customer groups with unique needs, characteristics and buying behaviors. They utilized demographic psychographic and behavioral data to tailor their marketing strategies, product offerings and customer experiences to different segments. They also invested in market research to gather insights on market trends. They used a prudent mix of qualitative and quantitative market research methods like surveys, focus groups, interviews, and data analytics for informed and data driven decision-making. They developed a compelling value proposition based on a deep understanding of customer preferences, pain points and aspirations. They positioned their products as solutions to these needs as compared to that of their competitors. They proactively took customer feedback and incorporated relevant inputs into product features. They regularly benchmarked their performance against industry peers and monitored competitors’ pricing strategies.

As a result of their customer-centric approach, they were able to build strong customer relationships and were agile enough to respond to changing market conditions without major disruptions.

LB Ventures relied on assumptions rather than data driven analysis. This resulted in generic marketing strategies that failed to resonate with target audiences. Their market research was ad hoc often resulting in superficial analysis that was of little use to drive the business. Rather than having a compelling value proposition, they sought to do product centric messaging that failed to differentiate them from their competitors, much less address their preferences or pain points. There was no customer feedback mechanism which deprived them from getting a solid understanding of their customer satisfaction levels. Such a reactive approach made them vulnerable to market disruptions, have a weak customer connect resulting in value -erosion for both the customers and the business.

8. Talent Management

Bright Ltd. was able to attract, retain and develop top talent because of its future focused approach. They conducted regular assessment of the current and future talent needs. Critical roles and skills for future success were identified and they framed strategies to fill the current gaps through recruitment of fresh talent or upskilling of existing ones. They invested in them through workshops, team, and individual coaching. Recognizing the importance of continuity in leadership, the company identified high potential employees and provided them with opportunities for leadership development. By grooming future leaders from within, they ensured a smooth transition across generations. They also ensured a culture of empowerment.

LB Ventures was observed to rely on ad hoc recruitment activities and allocate minimum resources for employee upskilling or leadership development. So, there were evident skill gaps. There was no focus on identifying and grooming future leaders from within, leading to instability during leadership transitions. Due to this lack of investment in talent development, they experienced high attrition especially at senior levels.

9. Family Values & Culture should be the anchor that holds the family and business firmly rooted. Its very identity is bestowed by the values that it espouses. By embodying values like integrity, trust, responsibility and empathy, enduring relationships can be built enhancing goodwill and reputation the market.

Though both companies were rooted in family ownership, their approaches to endorsing and integrating family culture and values into their organizational ethos varied significantly. Bright Ltd. prioritized the preservation, promotion and integration of its family heritage and values by commemorating and honoring them at appropriate forums and family events instilling a sense of pride. They integrated their core values – integrity, respect, honesty, and trust – into decision-making at all levels of the organization- employee relations, customer interactions, strategic planning etc. They also had a family governance structure which formalized roles, promoted transparency, and formed the basis of conflict resolution and succession planning.

LB Ventures though takes pride in their family heritage and values was seen struggling to align family values with organizational practices. The inability to formalize these core values and weave them into the overall organizational fabric led to inconsistency and confusion among employees. This disconnect also resulted in a fragmented organizational culture and low employee morale. It deterred top talent from joining the organization.

In conclusion, it may be said that having a strong start is a necessity and no longer an option. The CEO of Bright Ltd. had meticulously crafted a robust plan at the beginning of the year that aligned with their long-term goals. Hence it was easy for them to review it at the end of the year and take stock of what went right and what did not. The CEO of LB ventures had a myopic view with a focus on day-to-day operations only. There was no concrete plan. Hence at the end of the year there was no clarity on what they had set out to achieve.

There could be other factors too like technology, administration, logistics and business development to mention a few. As people and strategy advisors, GatewaysGlobal observed that the above-mentioned were the fundamental areas that differentiated the two companies.

Would you like us to unlock your organization’s full potential with expert diagnosis? If so, we are just a click away. And it is not just another assessment, it is a transformative journey….

Sheela Warrier
Consultant- Organisational Performance

The collaboration between the Finance and Human Resources (HR) departments is becoming increasingly important in today’s business environment for the success of the organisation. Given the dynamic nature of the corporate environment and the increasing value of human capital, this kind of collaboration is especially important for Indian enterprises. Though finance and HR have always been seen as separate departments with different goals, their confluence has become essential for making strategic decisions, encouraging innovation, and promoting long-term success.

In the past, the departments of Finance and Human Resources have worked independently, concentrating on their specialised fields of employee relations and financial management. However, a more integrated approach is now required due to the changing corporate landscape, which is characterised by rapid technological breakthroughs, altering demography, and changing regulatory frameworks. These days, businesses understand that accomplishing organisational goals depends on the efficient administration of both people and financial resources.

Drawing from GatewaysGlobal’s experience working with family businesses over the years and through our approach ICI in consulting, in here we are narrating our observations and suggestions.

Talent acquisition and retention are two important areas where collaboration between HR and finance is showing up. Financial data and analytics are becoming more and more important to HR professionals in their efforts to draw and keep top personnel. The collaboration between HR and finance in talent acquisition and retention can be exemplified through various scenarios.

1. Budget Allocation for Recruitment Campaigns: Here, the finance department can provide insights into the available budget for such campaigns based on the company’s financial health and objectives. For instance, if the company is aiming for aggressive growth, finance might allocate a larger budget to HR for recruitment efforts.
2. Determining Compensation Packages: When HR is devising compensation packages for new hires or existing employees, they can collaborate with finance to ensure that the offers are competitive yet financially sustainable for the company.
3. Analysing ROI of Recruitment Initiatives: HR can work closely with finance to evaluate the return on investment (ROI) of various recruitment tactics. They can analyse the cost per hire, time to fill positions, and retention rates to determine which recruitment strategies are most effective in terms of both acquiring talent and minimizing financial costs.
4. Aligning Hiring Practices with Financial Goals: HR professionals can collaborate with finance to ensure that their hiring practices are aligned with the company’s financial goals.
5. Employee Benefits and Incentives: Finance can provide insights into the financial implications of different employee benefits and incentive programs. For example, when HR is designing employee benefit packages or incentive schemes, they can consult with finance to ensure that these initiatives are financially viable and contribute to the company’s overall growth objectives.

The establishment of a culture of employee engagement and growth is another area greatly aided by the coming together of finance and HR. To determine their efficacy and justify investment, HR initiatives including training programmes, career development pathways, and performance management systems need financial analysis and support. HR and finance can work together to make sure that resources are used effectively, optimising the return on investment in employee development programmes and coordinating them with the strategic goals of the business. Let’s say the HR department proposes implementing a new training program for employees to enhance their skills. Before proceeding, they need to analyse the financial implications of such a program. This could involve calculating the costs associated with hiring trainers, developing training materials, and potential lost productivity during training periods.

Compensation and benefits management is another crucial area of cooperation between HR and finance. Financial performance and employee satisfaction are highly impacted by salary structures, incentive programmes, and employee perks. Financial and HR professionals working together can create pay plans that balance affordability with market competitiveness. HR can customise pay plans to draw in and keep talent while upholding financial responsibility and guaranteeing consistency with the organization’s financial objectives by utilising financial information and insights.

Further, personnel planning and resource allocation are areas in which finance and HR collaborate. Businesses may foresee their future talent requirements and allocate resources appropriately by combining financial projections with HR analytics. Companies can effectively traverse transitions such as entering new markets, introducing new products, or reorganising their organisational structure by coordinating their efforts in finance and HR. This helps to optimise resource allocation and minimise risks.

The collaboration between finance and HR takes on even more importance in the Indian corporate environment, where talent scarcity, complex regulations, and volatile markets presents certain challenges. Businesses that operate in highly skilled talent-dependent industries like financial services, pharmaceuticals, and information technology stand to gain a great deal from a collaborative approach between these divisions. Indian businesses may strengthen their competitive edge, promote innovation, and maintain long-term growth in a market that is becoming more and more competitive by utilising their HR and financial know-how.

But good coordination alone won’t suffice to achieve finance and HR partnership; organisations must undergo a culture transformation. Establishing a culture of mutual respect, trust, and open communication among various roles is crucial for companies to promote cross-functional collaboration and knowledge sharing. Investing in technological platforms that combine HR and financial data can help departments work together more easily and make data-driven decisions.

In conclusion, for Indian businesses hoping to prosper in the dynamic economic climate of today, cooperation between finance and HR is a strategic must rather than an option. Companies may improve employee engagement, allocate resources more efficiently, and promote sustainable growth by coordinating their financial goals with their human capital plans.

The future success and resilience of organisations will also be greatly influenced by the development of synergy between departments, as their roles continue to change. We at GatewaysGlobal understands these changing needs and also that every organization needs tailor approach, we are here to help you in achieving the organizational goal.

Mr. Shehzan P P
Senior Associate Consultant

As tables take turns, women affirm that they are no longer the backseat passengers in the arena of business. While women entrepreneurs are flourishing despite age and other myths, India, as a fast-developing nation, has evidenced 15.7 million women-owned enterprises, which represents 22% of all enterprises in the nation (Source: Instamojo). Taking a broader view of the global statistics, we witness an upturn of 252 million women entrepreneurs, serving one-third of the total crowd.

Despite these favourable figures, one cannot deny the fact that steering a business is more challenging for women, as evidenced by statistics. According to World Bank reports, merely 7% of entrepreneurs in India are women. Moreover, studies validate that the role of women heirs in generational family businesses is scant, and the factors within family and family-run enterprises are a matter of discussion. Drawing from GatewaysGlobal’s experience working with family businesses over the years and through our approach ICI in consulting, we have been able to make the following observations:

Impediments Of Unforeseen Succession 

As successions unfold in unforeseen ways, particularly without adequate preparation, the future course of the family business takes a downturn. Historically, planned successions are rare occurrences for women heirs, who are often thrust into positions due to unlikely circumstances such as the sudden incapacitation of the person in power. The unexpected leadership and shortfall in preparation build-up hindrances affecting the future trajectory of the business. This is where we hold hands with our Family and Non-Family Sr. Leadership Succession.

Limited Access To Mentorship & Coaching

Regardless of having potential, quest towards generational business entrepreneurship remains challenging, the limited exposure to business dynamics fails to foster their competence and hinders them from gaining trust. 

This is where GatewaysGlobal can assist you, our thought-provoking and creative process that inspires to maximize personal and professional potential. 

We are an expert in the field of Executive Coaching and has successfully created powerful links between executive development, long-term organisational development, and business growth.

Family Structure & Succession Challenges

Family business transition is an emotionally challenging issue that may provoke disputes over leadership roles and ascendancy. Conventionally, irrespective of their potential, female heirs often find themselves at a disadvantage due to aspects such as a prejudiced mindset, family traditions, societal barriers, gender bias, etc. In contemporary times, despite efforts made to bring about gender neutrality, male counterparts mostly handhold the business economic system. The 2021 report by the World Economic Forum betokens a significant gender gap of 72% in India’s labor pool.

The majority of the business sectors held by women in the country has lower revenue, while men predominantly control the more lucrative sectors. Developing a transition management board and designing a next-generation development and coaching program for the heirs, irrespective of gender, will bring out the true talents, thereby providing an opportunity to reflect on future strategy.  Ensuring a conducive environment that fosters a strong entrepreneurial spirit would not only empower women to excel but could also foster women as the strong suit of generational family businesses.

Thus, the need of the hour is a multifaceted approach addressing succession planning and leadership preparation, thereby bringing in gender parity. It is essential to create an inclusive and supportive environment for successors in family businesses, and this is where GatewaysGlobal Human Capital Solutions LLP adds value . 

Ms. Safiya Nazirudeen
Associate – Business Development

Family Businesses are unique with their own set of opportunities and challenges. Here personal relationships and family dynamics intertwine professional roles and responsibilities. The play of emotions -both pleasant and unpleasant, is high and can be complicated. An effective tool to navigate this intricate landscape is Coaching.  This powerful process can address holistically the multifaceted challenges and opportunities inherent in family-owned businesses, paving the way for a more peaceful and sustainable future, where both the business and the family can thrive. Coaching in family business is not only about enhancing individual skills and leadership qualities but also about nurturing the cohesion, productivity, professionalism, and longevity of the business itself. In this sense, it is a dynamic and transformative approach. In specific terms, the significance of Coaching in family business is elaborated below.

 Personal Growth & Development:

Family business coaching can lead to personal growth and self-awareness, benefiting both the business and the individuals involved. It is a supportive process that can enhance individual effectiveness and balance in various life domains, promoting overall fulfillment. Good coaches can help identify and address self-limiting beliefs and self-sabotaging behaviors. Their constructive feedback and support help individuals adapt and improve themselves on their personal growth journey.

Professional Development: Coaching acts as a catalyst for improving the professional skills and capabilities of the family members involved in the business, by providing them with the required guidance and support. They help upskill family members, improving their ability to contribute effectively to the business. The specific focus and approach may vary depending on the needs and objectives of the individuals and/or the business. The result is an empowered professional who feels in control of his business.

Relationship Building:

Coaching can strengthen relationships among family members, which is crucial for a harmonious and productive family business. Effective communication, active listening, self-awareness, helping individuals understand their own emotions, encouraging empathy, establishing healthy boundaries to maintain respect and balance in relationships, providing constructive feedback are some of the areas that coaches can work on to enhance bonding among family members, whether they are part of the first or subsequent generations.

Objective Decision Making:

The Coach, being a neutral entity, offers an impartial perspective, helping family members make objective decisions and avoid emotional biases. He/she encourages data driven and informed decision-making. He/she also uses techniques to manage feelings like anxiety or fear that can cloud judgment, helping in rational decision making leading to more effective and acceptable outcomes. A third-party perspective stimulates the thought process helping to arrive at win-win solutions wherever possible.

Conflict Resolution:

Conflicts are inevitable in any business. The family business is no exception. In fact, here the conflicts can be emotionally charged resulting in more complications. Coaching helps family members address conflicts constructively by using various techniques. Developing empathy for others’ perspectives can help address and resolve conflicts that often arise in family businesses. Negotiation, mediation, conciliation etc are some of the methods that trained coaches use to resolve conflicts effectively. Therefore, they facilitate a faster and a more rational approach to resolving issues. The result is more harmonious work relationships leading to more productivity.

 Accountability:

By virtue of their very nature, family enterprises could be found wanting as far as role clarities are concerned. Coaches help define those lines more clearly. They set clear expectations and hold family members accountable for their roles and responsibilities within the business. This reduces ambiguity and uncertainty thereby promoting clarity. Coaches also help establish accountability structures, such as regular meetings and reporting mechanisms to track progress and address issues in time before they escalate and blow out of proportion.

Succession Planning:

Most family businesses struggle with this aspect of ensuring a smooth transition and the continuity of the business.  Coaches help prepare the next generation for leadership roles, they start by identifying members with the potential, the right skills, competencies and above all the values to align with the organizational goals. Then comes the drill down to create Individual development plans for each potential successor, develop training programs, provide on- the -job opportunities to take on leadership opportunities in a phased or controlled manner, continuously providing timely feedback for making improvements & corrections. Though a long process, it results in a confident and able future -ready generation fully equipped to step into the shoes of the seniors.

Strategic Planning:

Coaches assist in developing and providing guidance for executing strategic plans, ensuring the long-term growth and sustainability of the business. They help create clear roadmaps which set the direction. This may change depending on multiple factors-both internal and external. Covid is a classic example of how businesses were shaken and had to seek new ways of operating. Coaches can help in this journey by fostering confidence, encouraging out of the box solutions, and imparting a sense of control to those involved. It’s not only about the owners but also about the impact of such changes on the employees that needs to be thought through.

These are some of the value -adds that family enterprises can gain through coaching. However, the coaching journey is by no means a bed of roses. It could be time and resource intensive, can take several months or years and hence turn out to be expensive. Ideas from coaches may conflict with the family’s ideas or vision. It may be difficult to hear/agree to alternate viewpoints that the family doesn’t immediately see the benefits of. A rigid business structure may not be accommodative of coaching or other such interventions.

In conclusion, Coaching in Family Business provides impactful insights, third-party perspectives and exploration into avenues hitherto not considered. It can serve as a vital catalyst for the harmony, growth, and continuity of these unique enterprises. It recognizes that success in family businesses goes beyond financial achievements; it encompasses personal development and the preservation of familial bonds. The journey of coaching in family business is an ever-evolving process. And the Coach can be the pivot that catapults the organization to the next level.

Ms. Sheela Warrier
Consultant – Organizational Performance

It is often seen that Family Owned & Family Manged (FOFM) Organisations at some point intime, hire nonfamily experts from within or outside the industry to accelerate growth andenhance the business. Family businesses may appear to be attractive employers for non-family professionals because of their informal and less bureaucratic structure. However, oncethey are in, most of them face challenges not anticipated by them or experienced in theirprevious employments. They can be as daunting as they can be rewarding.

The Case of Indian MNC Professional

“Zest Bliss” is one of the long sustaining personal care manufacturers, who started with oneproduct and now have a wide range of products. As it moved to the third generation, theproduct portfolio, revenue and size of operations grew. The first two generations, family leadersran the business by themselves. They depended on their close circle and people referred bythem. Family members managed all key operations. Once the third generation took charge ofthe Board along with second generation, the idea of hiring nonfamily professionals to key rolesarose and then came Ms. Yola as the Chief Marketing Officer- she was the Sr.Vice President inone of the largest FMCG companies.

Ms. Yola joined “Zest Bliss” with a lot of expectations. She anticipated that she did not have to report to multilayered corporate leaders. Sitting in the Head Office, she thought decisions would be faster, she would have more operational and financial freedom.

These points had been discussed and agreed during the initial meetings with Board ofDirectors. However, on joining she realised that the situation is far from reality. She neededapproval for everything, very action/meeting was questioned and needed approval from theowners. She had little powers for financial approvals and people authority. “This is the way wedo things here” /MNC culture will not work here” etc were the commonly heard phrases fromher peer group and subordinates. What added to her frustration was that so called progressivethird generation members also advised her to be patient.

Ms. Yola started contacting her recruiter.

This is the situation faced by most of the professionals when they join FOFM organisations, especially in the first phase of their professionalisation journey.

Are there any tips for such Non-Family Professionals who are contemplating joining or have just joined a family business? Well, here are a few pointers that could help them navigate the new environment more effectively and avoid disappointments.

1. Understand the Family Legacy & Culture: Family values, culture and traditions are mainly handed down over generations and are unique to each family. Professionals who sensitize themselves to this at the very beginning will be better placed to manoeuvre and integrate into the system.
2. Understand the Organisation Culture: Study the organisation in detail, understand the employer branding, take feedback on work culture either directly (from known employees/ex-employees) or from social media.
3. Introspect on your alignment to the Organisation: Gauge if you can align to the Family Vision. Accept the role only once you are fully convinced that alignment can happen. It will allow you to make a much stronger case for change right from the start. Be rational and don’t let the grievance on current role or need of a job cloud your decision.
4. Understand your Role: Deep dive all aspects of your role before meeting the board / director for interview. Clarify areas of concern, reporting, decision making etc. It is always better to clarify your doubts directly.
5. Learn about the Current Leadership: Study about the Reporting Manager, their relationship with Board. As it’s a family board (mostly) try to understand the role of the Director especially the one who has direct connection with you during decision making. During the process of recruitment and familiarisation meet with Directors one to one and collectively.
6. Ensure to meet all members of the Family Board before joining: This will help you to identify the long-term plan of the Board. It will also help to explain your operation style and plan for the organisation. Observe disagreements and challenges along the way. Notice the synergies. Visit the workplace and locality officially and unofficially a few times to know more about the local culture and facilities.
7. Adapt to Change: This is one of the most desired attributes. Moving out of comfortzone, and not expecting to replicate everything you in the previous job will help. Every organisation is unique. Create what is suitable for this organisation. Since family traditions are long-established, decision-making may be slow. Maintaining balance inbeing patient while at the same time offering fresh perspectives can go a long way.Preparing oneself to go through transition will reduce the impact of the changes.
8. Build & Maintain Trust: Though important in every organisation, its criticality in family- owned ventures is amplified because of the need for loyalty and honesty. Maintain confidentiality and establish personal credibility. It will go a long way in getting accepted into the system faster.
9. Observe Boundaries: Intentionally or otherwise, non-family professionals may get pulled into family conversations. Always maintaining professionalism, not crossing the line, not taking sides and not giving unsolicited opinions are of utmost importance. Be neutral.
10. Be Flexible: As family members have the same background and upbringing, they may be used to doing things in a certain way. Hence there is the risk of groupthink and resistance to change. More so if the reins of the company are in the hands of an elderly person. On the other hand, the professionals may be used to certain other systems and processes. Getting buy in and making slow and steady changes rather than my way or the highway approach is important.

It is observed that most of the FOFM organisations are extremely hospitable and welcoming during the initial period of the new leader. However, conflicts start arising when they both are rigid, not able to change and not able to see each other’s perspective. This is where you need an Executive Coach, Most of the FOFM organisation appoint Executive Coaches for their Sr leadership team to guide them through the transition.

An experienced and Qualified Coach can guide the non-family professional bridge the gaps between the individual’s background and the family culture and help him/her assimilate better. Expectations mismatch on both sides can also be clarified by the Executive Coach. He/she can work with them to identify the right communication, processes and behaviours. In short, he/she can serve as an invaluable and objective resource to ensure an effective and smooth transition.

Thus, the professionalisation of family business will not exist only in paper but will be visible through the growth of the organisation.

Mr. M.R. Rajesh Kumar
Lead Partner

Ms. Sheela Warrier
Consultant Organizational Performance

Family businesses are unique entities that operate under a set of dynamics that are unlike those of other businesses. They are built on the foundation of family values, traditions, and history, and often strive to leave a legacy for future generations. However, to sustain and grow the business, it is crucial for family businesses to have a clear sense of direction and purpose. This is where the concepts of a vision statement come into play.

In simple terms, a vision is a statement that outlines the long-term goals and aspirations of the business. Even though family members are more likely to be on the same page when it comes to values, they are also more likely to have disputes about the business than non-family member employees. So, a long-term well-defined vision is critical for a family business as it helps in achieving a common goal and formulating a family succession plan.

The importance of having a clearly defined vision cannot be overstated. Here are some reasons why:

Provides Clarity and Direction
A vision statement sets the course for the future, outlining where the business wants to be in the long term. It provides clarity and direction to the family members and employees of the business, giving them a sense of purpose and direction.

Builds a Strong Brand Identity
A well-crafted vision statement can help build a strong brand identity for the business. This is particularly important for family businesses, which often have a unique story and history that sets them apart from their competitors. By articulating the values and purpose of the business, a family business can create a strong brand that resonates with customers, employees, and other stakeholders.

Helps to Attract and Retain Talent
In today’s competitive job market, it is important for businesses to attract and retain top talent. A clear and compelling vision statement can help to attract employees who share the same values and are passionate about the purpose of the business. This can lead to a more engaged and committed workforce, which is crucial for the success of any business.

Guides Decision-Making
Having a clear vision can guide decision-making within the business. When faced with difficult decisions, family businesses can refer to their vision statement and use them as a framework for making the best choice. This can help to ensure that the business is aligned with its values and purpose and can avoid decisions that may be detrimental to the long-term success of the business.

Facilitates Succession Planning
Succession planning is a critical process for family businesses, as it ensures the smooth transition of leadership from one generation to the next. Having a clear vision can help to facilitate this process by providing a framework for the future direction of the business. This can help to ensure that the business remains true to its values and purpose, even as new generations take over.

Increases Resilience
Finally, having a clear vision can help to increase the resilience of family businesses. By articulating the purpose and values of the business, family businesses can create a strong sense of identity and purpose that can help them weather difficult times. This can be particularly important during times of crisis, such as economic downturns or natural disasters.

In conclusion, the importance of having a clearly defined vision cannot be overstated for family businesses. Vision statement provide clarity and direction, build a strong brand identity, attract, and retain talent, guide decision-making, facilitate succession planning, and increase resilience. By taking the time to develop and articulate these statements, family businesses can ensure that they are well positioned to face any adversities.

Shehzan P. P.
Senior Associate Consultant
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One of the companies we associated with had well-established processes and tools meant to digitise their day-to-day activities. Yet (not very surprisingly), we found gaps during the initial investigation (understanding the gaps between what is presently available and what is required for growth).

Investigation revealed the tool was not robust enough to manage the operations of the company, which were led and defined by processes or policies. What you, as a decision maker in a company, need to understand is that “one size fits all” is not applicable in terms of software. While any software can increase efficiency and provide transparency, it could be limited based on the services it provides. Keep in mind that the software you select today will define the company’s operational efficiency for the next few years; lift and shift is time and resource intensive.

One of the reasons family businesses start looking for HR software is to automate all processes that are time-consuming and interdependent in nature.

Our extensive experience working with various businesses over the years should benefit you as decision-makers.

Software selection is not as simple as you may believe. Ask yourself, as a business owner, first, “Why do you need HR software?” The need typically arises either because there is a problem or because you anticipate having one in the near future. So, to begin with, you have to recognise your problems or gaps and prioritise their resolution, and that becomes your requirement.

How do you do it?

1. Recognise pain points and define

This is not guesswork. List and define persistent and recurring problems that may be solved with automation. A pain point is a difficulty that is preventing your business from experiencing positive growth. It could be simple or complex and difficult to identify.

2. Prioritize

Determine the severity (the impact on business). This goes without saying, but the pain point with the highest severity would need to be immediately looked at and resolved.

A quick tip, not every persistent problem would need a high priority or critical tag. Sometimes those rarely recurring problems can have much more impact on business. This exercise needs to be carried out keeping the above in mind.

A way to look at the issue.

• High: If we do not fix this, this is going to continue consuming man-hours.
• Medium: There are a few barriers to efficiently executing a task. It impacts overall performance.
• Minor: The process is tedious but not chock-a-block. This could be revisited later.

3. Foresee the business challenges

As a decision-maker, you should anticipate challenges while keeping the company’s goal in mind. Regardless of what the goal is, it is vital to build a strong process surrounding operations and reduce man-hours spent on carrying out day-to-day operations, etc.

Running a risk management exercise from time to time helps figure out the scenarios most likely to occur and the potential outcomes of those situations. Put your thinking cap on and brainstorm ways you can reduce the risks. The solution could be revamping a process, automating it, eliminating flows, etc. Identify how HR software can possibly help resolve it.

One would eventually see that the points mentioned would become criteria for the evaluation of the software.

4. Designing credible evaluation criteria

Following the identification of challenges,

• List the existing operational process and every task/flow within it.
• List down ideas (already planned) to revamp the processes to make them efficient and effective (risk analysis is a good way to go about it)

5. Identifying potential vendors

With requirements determined already, you can now start the search for HR, from searching the internet to speaking to known business associates in the same industry. Make a list of possible vendors and narrow it down to a few to approach.

How to evaluate a software?

Demonstrations on an actual scenario (an existing process) are the best way to evaluate a software’s capability. While your top consideration for evaluation should be how easy it would be to “Lift and Shift,” we advise you consider the below points as well.

• The majority of software packages on the market now provide a somewhat comparable solution; what you should consider is how much it can accommodate the current processes. Simply put, can it effectively alleviate your pain points?
• Note the manual involvement that is required. If it does not save at least 50% of man-hours, it is probably not the best option.
• Their (the vendor’s) ability to meet feature demands. Company operations and processes are always changing, and as a result, the module would also need to be adjusted. Choose a tool or vendor that is amenable to criticism or has ideas that can eventually be put into practise.
• While automating current operations is a key prerequisite for implementing HR software, consider what else it might provide that you might employ in the near future for the company’s advantage.
• Ensuring that the software we choose has prompt customer service.
• Choose a vendor who believes they can bridge the gap between idea and reality.

Making a wise choice from the many software options is a significant undertaking in and of itself, but there are still many steps to take before the system is configured and ready for use, which we will cover in our following post.

ROSE MARY S
Senior Associate Consultant
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The year 2023 started off with a bang at GatewaysGlobal and for me especially. As usual and a every year’s last week custom, was on personal leave celebrating Christmas, our two wonderful sons’ birthdays followed by new year celebrations.

With covid protocols taking back seat and talks of global recession and layoffs among some of the big names taking the headlines; below are some areas that would be in focus during 2023 as per our interactions with clients who are predominantly in family business space and HR fraternity

• Workplace Stress – It is the emotional, mental, and physical strain caused by the demands and pressures of a job. It can stem from a variety of sources, including heavy workload, tight deadlines, lack of control over one’s work, conflicts with co-workers or supervisors, and job insecurity. Prolonged stress can lead to burnout, physical health problems, and decreased job performance.
• Employee Experience – The moment of truth or the real-time experience of employees in their day-to-day working is very crucial for any organization, especially in a family business to succeed and improve. These experiences help foster a positive work culture, boost innovation, engaged employees and ultimately lead to better outcomes like brand reputation and customer service & satisfaction.
• Employee Development – Family businesses take advantage of global recession & layoff’s and lower attrition by developing their key / critical resources. They would invest in employees to acquire new skills and knowledge which allows them to be more effective in changing technological advancements. This in-turn helps these businesses to improve employee performance, retain top talent, stay competitive and support long term success
• Employee Engagement – With relaxation in covid protocols and as businesses are slowly opening their doors for employees to work full time in offices, the work-life balance and employee mental and physical well-being are of paramount importance. Any organization’s growth and success is hinged upon the emotional and intellectual commitment that their workforce have towards their work and organization. So now we are seeing multiple engagement activities being planned & actioned by family business owners to build up their engagement scores.

Family businesses will be focussing on the above areas to improve their results in the coming year. But there are multiple strategies to overcome and there is no one-size fits all solution. Every organization should tailor their approach to their specific workplace. If you are planning initiatives in this space, feel free to reach out to us.

Senior Consultant – Organizational Performance

VIJAY GOPI AYYANATTU
Vijay is the senior consultant at GatewaysGlobal. Well-grounded with two decades of experience, Vijay specialised in Global Workforce Management, Human Capital Strategies, Redesigning of HR processes/improvisations taking advantage of the Lean Six Sigma and ISO Standardisation tools and so on.

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Here we are again, what is coaching exactly? do I need a coach? a mentor? a trainer? and, after all, what is Sales? Art or Science?