Shareholder's and Manager's Priorities (in a Family Business) Are the Same

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Priorities for family businesses

By Kushal Khandwala

Family businesses accept always been an integral part of the Indian economic system and club. Largely founded on the articulation family principle of buying and direction, their contribution has ever remained very high. However, family unit business every bit a system has inherited an identity associated with features such as, not-professionalism, conservatism and poor governance. The fast-paced changes in business surround in the by two decades have contradistinct this to an extent. Today family owned businesses are perceived as much more than respected, entrepreneurial, growth driven and much better governed, contributing immensely to the state's growth story.

90% of businesses are in the dominant control of the families, from small Kirana stores to big Conglomerates, Corporates and SME's. A family-owned business may be defined equally any business in which two or more than family members are involved and the majority of ownership or command lies within a family. In India there is a huge emotional connect in addition to the business concern aspirations. Families have established and running large businesses which are growing further. The commitment levels and the passion accept been phenomenal. What makes information technology special is the relentless participation of the side by side generation in the existing businesses for further growth with a modern and a much matured professional outlook.

Every business concern arrangement has a unique gear up of challenges and problems. A Family business is a commercial system or economic system which is owned past several members lineally descended from a common ancestor. But in today'southward era, the joint family business organisation is degrading due to disputes amongst family members which atomic number 82 to partition in business. Some reasons for a sectionalization include mismatch of ideology, mismatch of the thought process, the expiry of a member, etc.

Family businesses contribute to the national economy very highly. Over the past two decades, the performance of family businesses has been better than either a public sector or even multinational companies. This ways that the Indian economy is highly dependent on the destiny of family-run businesses. SMEs should larn from the experiences of the big companies. There are plenty examples for the companies which started from scratch and became big.

The central challenges perceived among Indian family unit businesses over the next five years are more or less the same as those perceived by family businesses across the world: the need to introduce, keeping pace with digital and new technology, attracting or retaining talent and dealing with contest. The full general economic situation, which is ranked lower by Indian family unit businesses, is the exception-and rightly so given the positive economical outlook for India.

One of the most important challenges faced past family business is ensuring the successful transition of the enterprise to the next generation. Succession Planning can practise just that. While non-family-held businesses unremarkably take a conspicuously defined hierarchy and hiring process to fill up open positions, family enterprises oftentimes don't have a programme for handing ability to the next generation, leading to disharmonize and divisions. Implementing a succession strategy is a circuitous process involving trust, thoughtful planning, and specialized approaches that address sensitive issues and critical factors for the business.

Managing conflict in the course of succession at the middle of how Continuity serves its business families. Continuing family relationships are crucial and the needs of all stakeholders must be taken into account in both the planning and implementation phases.

Some of the priorities that Continuity Family Business organisation Consulting manages in building the right succession programme are:

- Identifying the next generation leaders and developing their skills to lead
- Ensuring that the estate planning documents match the intent of the owner(s)
- Making sure stakeholders have an aligned vision for their family unit and their enterprise
- Reviewing shareholder agreements
- Structuring governance for effective oversight, mentorship, and conflict management
- Developing organizational policies to accommodate the needs of adjacent generation leadership
- Evaluating the company's financial health
- Managing conflict and expectations within the family business organisation system
- Identifying actionable ways for the family leadership to back up the business organization succession program
- Good Governance is Essential to Succession

While management and controlling hierarchies are more formal in the business than in the family, creating an organizing governance construction with policies and procedures tin ameliorate the bond between family leaders during the succession process. A family council tin promote effective and timely decision making among family unit members while also reinforcing the shared values that are critical for cohesive asset management and healthy, continuing relationships during a transition.

According to PWC family businesses survey, 74% said that they understood the tangible benefits of moving to digital and had a realistic plan for measuring this. This is significantly college than the global average of 59%. Nonetheless, Bharat numbers driblet and the gap with global reduces when one discusses strategy conception to incorporate digital, integration of digital as part of the concern'due south civilization and the power of the business organization to deal with a data breach or cyber-assault.

The writer is Director, KIFS Trade Capital

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Source: https://economictimes.indiatimes.com/familybusinessforum/insights/priorities-for-family-businesses/familybusinessforum_show/61820897.cms

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