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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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