Family Business: People and Professionalism Promote Profitability…… (Raju Swamy/ January 05, 2017)

  1. People:

1.1. In a highly Family-ownership controlled Public Corporation where critical Top Management positions are held by Family Members in Business (FMB), it is difficult to attract and retain the best or the most appropriate level of Professional Managers.

1.2. Professional Managers who do work for such Family-controlled businesses might be finding it difficult to express an honest opinion, or to be fair in their interactions up and down the line, or even to deliver the best they are capable of, in the face of un-accountable, authoritarian, untested, or un-verified decision-making from FMBs heading the Division or Organization.

1.3. Professional Managers can become even more confused when more than one FMB is part of the Division or Organization in what they consider to be ‘Equal’ positions, and where the ultimate responsibility or accountability for the results of the Division or Organization are left compromised and un-defined to cater to Family sensitivities. Organizational and Family Politics will most certainly compromise Performance under these circumstances.

  1. ‘Professionalism’, in the Family Council, and in FMBs:

2.1. When FMBs occupy positions of Power and Authority more because of Family Pressures and Sensivities, and less on a proven track record of merit, ‘Professionalism’ in terms of Accountability for Quality and Delivery of Performance most certainly gets diluted.

2.2. When Family Pressures and Sensitivities prevent appropriate and timely corrective action to be taken against questionable discipline, inadequate performance, and poor leadership, ‘Professionalism’ is as good as dead.

2.3. When Family Pressures and Sensitivities prevent an obviously, result-backed High-performing FMB from being recognized and rewarded, not only will ‘Professionalism’ be prevented from rising, new and more powerful seeds of discord will get planted within the Family Business.

2.4. ‘Conflict of interest’ also most certainly compromises ‘Professionalism’.

  1. Profitability:

3.1. The difficulty in attracting and retaining good external non-family professionals with the required domain expertise and capacity, adversely affects ‘Operations’ and the quality and delivery of desired results, and therefore of ‘Profitability’.

3.2. Absence of ‘Professionalism’ in FMBs prevents maximization of Profitability through suppression of merit-supported, fact-supported decision-making.

3.3. Decisions based on Family Pressures and Sensivities, as against Organizational needs, kill  or dilute Profitability.

3.4. ‘Conflict of Interest’ dilutes Profitability.

The above represents in summary the need for a Family Business, particularly a Public Corporation , with external Stakeholders, to arrive at a productive fusion of Family Business Strengths with Professional Discipline, to maximize Profitability, today, and well into the future.

 

Raju Swamy   

Founder & Advisor to Family Business

PROMAG Consultancy Services

Apt. 206 Brigade Rathna 42 Ranga Rao Road Shankarapuram

Bangalore – 560004 INDIA

Tel. +91-80-26676298/ Cell: 9845271498 Email: rajupromag@hotmail.com

www.promagconsult.in

http://www.familybusinessadvice.wordpress.com   (Blogsite)

Strengthening Family Dynamics for Family Business Growth…….since 1985

 

 

 

 

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