Managing Change in Family Business
By Naveen Khajanchi
The peculiarities of a family owned business (FOB) come from the merging of the bonds of familial relationships with those of the pragmatism of business. FOBs can be a source of happiness or unhappiness, depending on the situation and the people involved in them. The lines of business and work are blurred here. Dinner table conversations will often feature work-related matters. Work conversations will involve family matters. Next-generation FOB members come into the business with their notions, biases, likes and dislikes, having had access to a grapevine ready to feed them with positive and negative views. There also exists a degree of control that senior members want to assert, leading to conflicts. And that is why, FOB leaders and members need to carefully balance both sides. Stakeholders and shareholders need to be more aligned. Every experience should be taken as a learning opportunity.
In orchestrating this delicate balancing act continuously, stress and anxiety can often be at high levels. The ATM of Happiness, when applied to FOB situations, can help in gaining perspective, peace & prosperity .
“A” for Acceptance
Acceptance in an FOB is all about Expectation Management. Expectations make or break the relationships in a family and FOB. Each family member is different and, sometimes, there is poor acceptance and intolerance of the other’s shortcomings. The succeeding generation needs to be taught family values and acceptance. They may sometimes grow up apart from their cousins, so they need to be taught to accept differences. One way to get everyone to work together is to have a joint development programme, with ice breaking sessions. This will give clarity on the whims of every FOB member and how they operate as a part of the team.
Quite often, this teamwork and attitudes emerge even when organising family functions like a wedding. The herculean task brings together people both as a business unit and a family unit. I am reminded of a wedding in which a senior FOB member pointed out flaws in the wedding arrangement to his nephew, who was in charge of organising it. Instead of taking offence, the nephew took the criticism in his stride and apologised on behalf of his team. He took corrective action and this senior also ploughed in to volunteer. It was OUR family & its reputation that mattered. This sense of collective responsibility is a very good sign for an FOB leadership.
A Carnegie Mellon University–led study says that acceptance training is key for stress management. Mutual love and respect is a starting point for healthy professional discussions, where there is a balance of objectivity with compassion.
“T” for Take Charge
FOBs have to take charge of what is happening in their business. With members spanning multiple generations, there is a lot of learning from past experiences. An FOB has to constantly innovate, stay in touch and keep abreast of technological changes to stay relevant, just like any other business. With technology enhancing and streamlining so many business functions, it is easier to keep track of suppliers, vendors, employees and customers. Sometimes, the importance of this is lost on the older members of the FOB, who insist on doing things the way they were always done. In one particular business, two younger generation family members took the initiative to push the agenda of having an e-portal to streamline business functions. This implementation helped the FOB achieve greater success and it became a fulcrum point to deal with people. The seniors felt comfortable in allowing a smooth succession. Taking charge is as important as letting go. It is paramount that the old guard pass the baton effortlessly with all the support they can give.
“M” for Make the Most of what you have
This part can be best illustrated with the example of an FOB that was in the readymade garments business. With the advent of e-commerce portals, home delivery and the whole paraphernalia of services that came with it, this traditional business saw a decline in its customer base. They knew that they had to act soon. At their monthly meeting, a senior FOB member suggested that they upgrade and revamp the interiors of their stores. Another younger generation member took charge of setting up a basic website and a loyalty program to retain and attract more customers. Both these initiatives were achieved at minimal cost. But the combination of their existing brand and these upgrades ensured that the business thrived and flourished. The family made use of their existing resources, they recognised the need to change and tweaked their way of doing business, instead of completely overhauling everything. They made the most of what they had and listened to each other.
The ATM of Happiness is for individuals and the FOB as a whole. These simple practices will help in maintaining healthy relationships and flourishing in personal and professional settings.
A – Accept the present situation with objectivity, let go of the past and stop worrying about future
T – Take charge of your thoughts, expectations, fears and hopes in a manner that negativity can be reset to positivity / neutral position for it to move forward
M – Make the best of what you have in an effective manner with gratitude
The writer is CEO & Director of Executive Search Service (a division of NKH Foundation P Ltd), which specialises in Leadership Search for Large Conglomerates. An alumnus of INSEAD, he also is an Executive Coach and Family Business Advisor.
Twitter @naveenkhajanchi www.naveenkhajanchi.com