Family Business – Mails to my Clients – 12 – To a Family Patriarch and Chief of the Family Business – A cautionary note on his ‘Joint Family’…….

Family Business – Mails to my Clients – 12 – To a Family Patriarch and Chief of the Family Business – A cautionary note on his ‘Joint Family’…….

Trust you are doing well.

I was extremely happy spending a day with the XPZ Family, and exchanging views on Family Business issues. It was also my pleasure having lunch with you at your very impressive Farm House and Estate.

As part of observations following my first visit, I feel it my duty to make very  important ‘recommendations for action’ to promote business performance of your Group Companies, and of the younger generation Family Members In Business, for the sake of harmony, cooperation, peace, and prosperity over the next 25 years. The first part is really some very personal and friendly advice I am giving you as the respected Family Patriarch and Leader, on a very sensitive issue of living as a Joint Family, across generations, and relationships:

1. With  a few possible exceptions, in today’s world of increased desire for personal space, and because girls, daughters and daughters-in-law, are more educated, the Joint Family system tends to suppress their natural desire to excel and build a family profile of their liking based on their background, education, and aspirations.

2. Lack of privacy and independence builds up suppressed emotions that threaten family unity and many times come to breaking point.

3. Relationship between husband and wife also tends to be under tension many times because of divided attention and over-all family discipline to be maintained in the constant presence of elders.

4. Whatever sense of unity that is apparent is only because of the presence of the dominant personality of the Patriarch and Leader, and not because of spontaneity in relationships between siblings and cousins.

5. There will be total breakdown in the event of the absence or passing away of the Patriarch and Leader, under such circumstances.

6. All the above issues also tend to affect the way family members interact and cooperate with each other in the day-to-day management of the Family Business, and over time the very existence of the Family Business will be threatened.

7. It is therefore my sincere recommendation that you should plan to keep the family together with a more progressive residential solution that is more productive, and prevalent, in today’s tougher family environment.

8. I am stating all the above because I have clearly noticed, and understood, strong but silent undercurrents within your family members indicating that everything is not normal. There are clear indications that negative vibrations of business dynamics within the daiIy grind of the Family Business flow back to the ‘Joint Family Headquarters’ and directly impact moods and relationships at ‘Home’, across the sub-families. I have consulted to Families in Business for 30 years and recognize symptoms when I see them.

9. Please do not doubt what I have said, and wait till it is too late for you to do the right thing….

Apart from the above, you will need to take some structural and performance related basic and necessary management action as follows:

  • Establish current Performance Status of each Group Company using recognized business parameters.
  • Based on the above, set Performance Targets for each Group Company for the year 2014-15 as of March 31, 2015.
  • Establish for each Group Company an Organization Structure that is clear on responsibilities and accountabilities of Key Managers including Family Members.
  • Re-deploy excess Family Members in Business (FMBs) to create transparent, lean, result-oriented Management Teams in each Group Company.
  • Establish ‘Clear Management Leadership’ in each Group Company.
  • Every Group Company will have a clear and transparent Capital and Expense Budget for each year and concurrent Delivery and Earnings Targets for which each FMB responsible will be answerable you and to the Family Shareholders.
  • Establish Financial Discipline across the Group Companies and across FMBs.
  • Establish a Professional Development System where FMBs’ deployment and performance progress is reviewed, and Professional Development Plan for each of the concerned FMBs is mapped out in line with the future needs of the Group and of the individual FMB.

The contents of this letter, in the form of my advice and recommendations, are based on just a few of my impressions of the situation in your Family Business, based on our initial meetings.

 

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
www.familybusinessadvice.wordpress.com   (Blogsite)
Strengthening Family Dynamics for Family Business Growth…….since 1985

 

Family Business – Mails to my Clients – 11 – My Advisory Road Map to a specific Family Business Client, before the actual work began……

From Raju Swamy: June 03, 2009

My Advisory Road Map to a specific Family Business Client, before the actual work began……

My dear friends from the XYZ Family,

Based on a very pleasant informal dinner meeting with all of you, I just thought I will write this note, based on a question from Xzee “We know all these things are required, but how will you implement it?”

1. Let us first look at the ‘why’:

1.1. At some point in a Family’s existence, family members begin to question themselves on whether they, as individuals and as constituent families, are meeting their goals and aspirations. Is the Family Business delivering according to expectations, helping them to fulfill personal and family desires on values, growth, wealth, and security, and therefore of peace within the Family? How will social status and financial security be ensured when active family professionals reach a stage of retirement?

1.2. In this context, it is imperative to understand that when families are together in business, business ups and downs can influence even emotional bonds of the Family, if not resolved in time. Primarily, Family Wealth grows from the Family Business. Good Business Performance is good for the Family. Bad Business Performance is bad for the Family.  Simple logic. We need Good Business Performance to support and promote Family Values, Wealth, and Well-being. It is pleasant to share profits but unpleasant to share losses, particularly where the light at the end of the tunnel depends only on hope rather than on being supported by facts and figures.

1.3. Therefore, we need to make a clear distinction between understanding within the Family and understanding within the Business Group. The Business Group fuels the well-being of the Family. Mixing Family issues with Business issues constantly over a long period creates problems at both ends as real issues never get resolved because of mutual avoidance of reality out of fear of the consequences.  Solutions must necessarily address both the well-being of constituent families and of the Family Business in terms of structure, policies, processes, and standards that will ensure Business Performance. It must be understood without ambiguity that Family Well-being is dependent on sustained success of the Family Business. A predominantly merit-based Family Business will ensure Family Well-being in the long run even during bad times. That is the strength of a Good Family Business.

1.4. In the language of Family Business Governance, is it possible for the Family Business to separate ‘Ownership’ from ‘Management’, so that the ‘Family’ maximizes the returns from the Family Business?

2. How will I approach the ‘How’? I cannot provide the entire strategy till I get to know all of you individually and as Individual Business Teams and as a Group, but broadly this will be the road map in terms of the first phase of Action Points for Implementation:

2.1. Introductory Presentation and discussion with the Family Business Group (FBG) to reach a consensus on ‘Issues to be addressed’ and ‘Goals to be achieved’, within a mutually acceptable time frame.

2.2. Identification of a Logistics Coordinator, and of a FBG Core Team, that will assist the Consultant on behalf of the Family to successfully carry through the assignment.

2.3. ‘One-on-One’ Meetings with each member of the Family Business Group to understand individual aspirations, and of personal suggestions on total improvement of the Family Business, to meet Business, Family, and Individual aspirations. The ‘One-on-One’ Meetings will on an average require a about 1.5 to 2.5 hours per meeting per person without diversions of any kind.

2.4. Individual Business Team Meetings to assess current business performance and estimating growth prospects, with SWOT Analysis, and reaching a consensus on ‘Solutions’ and Action.

2.5. A Second Family Business Group Meeting where the Consultant will make a presentation on the results of the ‘One-on-One’ and Individual Business Team Meetings, and make ‘Recommendations for Future Action’, to bring about the desired change. At this point, once the Family Business Group (FBG) agrees with the Recommendations, with or without changes, the Implementation Phase will begin.

2.6. The FBG Core Team will now be active in working with the Consultant on Implementation.

2.7. Please note that all my efforts as your Consultant/ Advisor will be to assist the Family Business Group arrive at the most productive solutions based on ideas originating from each one of its members, of each one of the Group’s businesses, and from conclusions arrived at each FBG Meeting. This is to ensure that all members of the FBG are actively involved and committed to make the desired solutions happen. During this process, beyond site visits, the Consultant (Raju Swamy) is available to all FBG Members, personally and on telephone, 24×7, to help with greater understanding of issues and processes, on clarifications required, and to listen to their views on any issue. All these will be active inputs for bringing about solutions that will finally enhance the well-being of the Family, enrich professional capabilities of members of the FBG, and of performance of the individual enterprises, and finally of the Group.

 

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
www.familybusinessadvice.wordpress.com   (Blogsite)
Strengthening Family Dynamics for Family Business Growth…….since 1985

 

Family Business – Mails to my Clients -10 – To a Family in (Serious) conflict: Performance Self-Appraisal-cum-Cost Benefit Analysis of waging a ‘Family War’…..

Family Business – Mails  to my Clients -10 – To a Family in (Serious) conflict:   Performance Self-Appraisal-cum-Cost Benefit Analysis of waging a ‘Family War’…..

Dear Friends,

Just a thought about a Performance Self-Appraisal-cum-Cost Benefit Analysis of waging a ‘Family War’…..after One Year, without a solution in sight…..

1. Peace of Mind: Are you on the Plus side now? Is it worse? If it is the same, what was the point?

2. Wealth: Increased? Decreased? Same? What was the point?

3. Lawyers’/ Share Brokers’/ Advisors’/ Fees/ Expenses: Loss or Gain? If Loss, what was the point?

4. Relationships: Better/ Worse/ ‘As was’: If Worse, what have you gained?

5. Solution: Reached/ Not Reached: If not yet reached, what was/ is the Expensive Time & Money War all about?

6. After all the damage, in terms of expenses and loss or stagnation in ‘Peace of Mind’, with a Solution still evasive, what has the ‘War’ achieved, for any generation, present and future?

I am nobody to send answers to, but please do make a Self-Appraisal for yourself, and see what you score out of 10: Is there a ‘Plus’ at the end of the “War’ Balance Sheet that has also promoted ‘Peace of Mind’? What use is a Victory without ‘Peace of Mind’?? What use is a Victory without gain?

If nobody has a ‘Plus’ at the end of the ‘War’ Balance Sheet, is there hope of changing tracks and finding an alternate route to your destination that will also increase ‘Peace of Mind’, reduce collateral expenses/ damage, and result in a solution that brings relief to everyone?

Is it a problem of who will speak the truth first? Is seeking a Settlement with Grace such a bad thing???

With regards,

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
www.familybusinessadvice.wordpress.com   (Blogsite)
Strengthening Family Dynamics for Family Business Growth…….since 1985

 

Family Business: Professional Employee Core Specs change with Business Competitiveness….( Raju Swamy/ PROMAG/ 1991/ Revised 2013)

Family Business: Professional Employee Core Specs change with Business Competitiveness….( Raju Swamy/ PROMAG/ 1991/ Revised 2013)

1. Traditional: “Landlord”

1.1. Authority (“Ownership”)

1.2. Loyalty + Subservience + Accountability without authority

2. Traditional: Business: Monopoly/ No Competition

2.1. Seniority + Loyalty + Authority

2.2. ‘Subservience’ minimized with emphasis on ‘Loyalty’

3. Traditional: Monopoly/ Some Competition

3.1. Seniority + Loyalty + Competence + Authority

3.2. ‘Competence’ becomes a necessary add-on….

4. Emerging: Monopolistic/ Significant Competition / Pricing + Profit Pressures

4.1. Seniority + Loyalty + Competence + Accountability + Authority

4.2. Accountability becomes indispensable…..even while supporting ‘Seniority’ and ‘Loyalty’….

5. Emerging: Free Market/ Intense Competition / Cost + Pricing + Profit Pressures/ Growth/ Viability/ Scaling Economics / HR Challenges

5.1. Commitment + Competence + Accountability + Authority

5.2. Competence + Accountability + Authority (Desperate ‘no choice’ situation)

5.3. Commitment replaces ‘Seniority + Loyalty’……in current practices towards ‘Professionalization’……

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
www.familybusinessadvice.wordpress.com   (Blogsite)
Strengthening Family Dynamics for Family Business Growth…….since 1985

 

 

Family Business – Mails to my clients – 9 – The Logic of Business is to Maximize Profit….Within a defined ‘Value’–based Operating System…..

Family Business – Mails to my clients – 9 – The Logic of Business is to Maximize Profit….Within a defined ‘Value’–based Operating System…..

The ‘Values’, that a Family in Business, with a history and heritage to be proud of, must continue to understand and to observe:

We have to make a success of our business, in perpetuity, while enforcing and observing the following beliefs, in Action:

  1. We will not shortchange our Customers.
  2. We will not shortchange our Suppliers.
  3. We will not shortchange our Employees.
  4. We will not shortchange our Shareholders.
  5. We will not shortchange our Family.
  6. We will not shortchange our Country.

When we make a loss, we shortchange everybody. And, if we think we are helpless, we are not ‘in Business’….We do not deserve to be in Business, any more….

 

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
www.familybusinessadvice.wordpress.com   (Blogsite)
Strengthening Family Dynamics for Family Business Growth…….since 1985

 

Family Business – Letters to my clients – 8 – A Moment of Truth…. SWOT Analysis of a 120 years old Family Business currently managed by the 4th Generation…..

A Moment of Truth…. SWOT Analysis of a 120 years old Family Business currently managed by the 4th Generation…..

Facing a Moment of Truth today, can fuel the Future with new aspirations and competitive energy….and consequent ongoing positives for the present and future generations of the ABC Group Families…

SWOT Analysis

Strengths:

  1. Foundation of  strong Inherited Personal/ Family Financial Security
  2. Internal Integrity
  3. Absence of Conflict
  4. Conservative, Non-ostentatious, Paternal Business Outlook
  5. ‘Running’ Businesses with opportunity and leverage to grow….
  6. Resources to support change…..
  7. Age Potential of the younger generation….

Weaknesses:

  1. Absence of Greed is Strength, but, Absence of Aspiration is a Weakness.
  2. Vision……..Where do we want to go…..for what……when…..why….
  3. Education/ Training…..Inadequate in the 4th Generation by current standards. While the next       Generation must get the best education in the World, to be able to manage Business….the Current Generation must make it up through World-class Entrepreneurial Programs, like in Harvard and Kellogg and IMD….To be competitive strategic thinkers, and also to be able to hire and manage highly qualified Professional Associates/Employees external to the Family.
  4. Competitive Entrepreneurial Energy and Motivation.
  5. Dependence on ‘Fait Accompli’ and Acceptance of Status Quo….lack of Result-orientation
  6. Work as a Ritual and not as a Mission to Achieve……No Goals…..Little Initiative….
  7. Approach to Business as a ‘Benevolent, Secure Landlord with a 9-to-5 job….’
  8. Very Old-fashioned paternalistic concern for people…..
  9. Total absence of Strategic Thinking…..
  10. Away from the business mainstream network, in India and abroad…
  11. S l o w…..Disinterested……Lost….
  12. Absence of a ‘Cash Cow’…..Group Company ’XYL’ could still be a possibility with the right strategy….
  13. Lack of Interest/ Concern for Brand Building……..
  14. Marketing
  15. Excessive Dependence on Single Sector Distribution…….
  16. Accountability

Opportunities:

  1. Infinite….with your resources….
  2. You have to look for them……they won’t come to you….
  3. You have to look at the ‘World’ as your market…..
  4. Create Time for ‘Opportunity’, not for ‘Work’….there will be people who will work for you….

Threats:

  1. Falling Business Growth erodes both wealth and confidence.
  2. Stagnation breeds conflict, breeds distrust….
  3. Conflict tends to multiply rapidly, with and without reason…
  4. Negative Emotions overtake reason, prevent damage control….Everyone loses, now and into the future…..
  5. Time runs out, on you, when action is scarce, and you do not know where you are going….

Wake up, for the World is yours, if you want it…..your forefathers gave you a head start, and you have no excuse to falter….And, you have nothing to lose when you do well….Growth perpetuates, Stagnation kills……

Many thanks for your understanding…..

Family Business – Letters to my Clients – 7 – Keep employees out of your conflict zone…..

Raju Swamy: June 12, 2012

Family Business: Letters to my Clients: Keep employees out of your conflict  zone:

In a Family Business, it takes very little to ignite a fire…….more so when theFamily Business Environment is undergoing Conflict, with consequential Trust Deficit, and again the consequential proneness to conveniently believe, or think, theworst, in the face of business challenges.

When an Organization becomes a ‘matchbox’, the Employees become ‘matchsticks’! The majority of Employees are good human beings primarily pursuing their livelihood and in the process trying to meet their aspirations and responsibilities. Like in any cross-section of society there are also those who are happiest keeping others unhappy. In a Family Business, Conflict and Misunderstanding are fodder for such employees to thrive. What can be the causes:

1. Lack of Unity in Leadership.

2. Developing a ‘my man’ ‘your man’ identity for various employees.

3. Discussing Family Business issues in front of employees, passing remarks, openly blaming other Family colleagues, implying wrong practices, and generally spreading uneasiness and insecurity within the organization, even while multiplying the internal problems of the Family Business.

4. In such a situation, certain types of employees become ‘conduits’ for carrying tales, spreading rumours, exploiting a Family Member’s frustration or anger through flattery, and generally making themselves ‘important’, and secure. Unfortunately,such type of employees are normally those whose professional incompetence shows up often, and therefore the need to cover up through negative action.

5. Many times, disgruntled employees with feelings of unfair treatment may also be the cause.

6. And there are also employees exposed to a Family Business’s possible unethical dealings, who will exploit the situation.

7. There are even some employees who are so used to surviving and actually doing well in a Family Conflict Situation that they actually feel insecure about any imminent positive change. There was this great Hollywood film a few years ago, ‘The One That Flew Over The Cuckoo’s Nest’: There is a mental hospital administered by a strong Matron, over many years. She has been part of this mental hospital for so long that any ‘change’ makes her insecure. And one day there is a new patient (Jack Nicholson) who has the will to fight his way out of his condition and begins to show signs of improvement. To the Matron, this is a threat to her position, and security. What will happen if her mad inmates become normal? She will lose her ‘power’….for she enjoys ‘power’ only so long as her inmates are ‘mad’…..she gets obsessed with this threat to her ‘status quo’ and does everything in her power to sabotage the new inmate’s efforts, and succeeds. As I stated earlier, there could be similar ‘Loyal, long-serving, hard-working, up-from-the-ranks but insecure’ employees who may find security in a conflict or ‘status-quo’ situation in a Family Business.

7. It is important for the Family Business Members to be level-headed and be determined to stick together when significant changes are taking place, and results appear to be positive.

 Please ensure togetherness, do not make unguarded loose statements, do not  mis-interpret each other’s views, spend enough time together to be on the same wavelength, be focused on Success……and on the well-being of the Family Business, and the Families depending on you, both within the Family and with the good employees who work for you……..for it takes very little to ignite a fire in the Family Business…

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
www.familybusinessadvice.wordpress.com   (Blogsite)
Strengthening Family Dynamics for Family Business Growth…….since 1985

 

 

Family Business, Family Business Board, Family Business Governance, Family Business Management, Family Business Strategy

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