Wednesday, February 17, 2016

It’s Not All In The Family

Top HR consultant, Ashish Arora, the MD of HR Anexi, says that family-run businesses have to change in order to remain successful

By Shevlin Sebastian

Rohit and Malini Ranade were feeling restless. After twenty years in the plastics industry, their business had not grown the way they had liked it. From a turnover of 35 crore, they wanted to make it Rs 100 crore, but they did not know how. So they got in touch with Ashish Arora, the MD of the Mumbai-based consulting firm, HR Anexi.

When Arora studied the company, he saw that the Mumbai-based outfit had a large factory in Silvasa, with an 800 plus staff. He also noticed that Rohit, 41, an engineer, as well as Malini, a chartered accountant, were dominating personalities at the workplace.

They never allowed the senior staff to express their views,” says Arora. “But when we studied the team, we noticed that they were some good team members, who had been with the company for over ten years.”

Arora then took the entire staff out for a two-day ‘visioning’ session. But he requested the Ranades to remain silent on the first day. So, when he asked for a vision for the company, the staff said that they could become a Rs 500 crore company. “The Ranades were shocked,” says Arora. “They thought that the staff had gone mad.” Later, the senior team stayed up till 2 a.m. and came up with a business plan, which included increasing exports and introducing a slew of new products.

A smiling Arora says, “In six years, the company has done a turnover of Rs 360 crore.”

Among his many skills, Arora is an expert in dealing with family businesses.

There are a lot of positives in a family business,” he says. “The decision-making is very quick. Most family businesses are run by entrepreneurs who are passionate about doing something.”

It is usually run on strong family values. “The owners bond with the employees,” says Arora. “There is no hire and fire. Employees are respected and taken care of. And they are always given financial support during bad times.”

However, there are weaknesses also. “Usually, owners have a tunnel vision and can rarely see the overall picture,” says Arora. “One reason is that they spend too much time on the day-to-day operations: purchase, people, production and supply-chain issues. So, they are not able to come up with a long-term vision and strategies for growth. The best way out is to hire top professionals to run the day-to-day operations, leaving the owner free to concentrate on expansion plans and getting more funding.”

And in order to remain successful, there should be a proper succession plan. “Most entrepreneurs want their children to take over,” says Arora. “But the son or daughter may not have the same passion or excitement about the business as the father. Usually, they are better educated and want to do something else.”

So, the parents have to find out whether their children are keen to carry on the business. If they are not inclined, then the company has to be run by professionals, but it can remain family-owned.

[Infosys owner] Narayana Murthy's son, Rohan, could have taken it over, but he has not,” says Arora. “Instead, it is in the hands of professionallys, but Rohan remains an owner. This has increased the future prospects for the company.”

Of course, there are many instances of the second and third generation taking over, and increasing the turnover of the business. “Like their parents, they also have enormous passion and dreams for the company,” says Arora. “When this happens, the parents should consider themselves lucky.” 

(The New Indian Express, Kochi and Thiruvananthapuram)

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