Great Businesses, Unhappy Families

Great Businesses, Unhappy Families
Written by Anil Sainani | New Delhi Last Updated at June 14, 2013 17:58 IST

Why is that business leaders fail to manage their own family dynamics?

The recently reported differences in the leading business families of the country, which in some cases led to rather unpleasant incidents (the bitterness between the Ambani brothers, the filing of police case by one branch of Ranbaxy family against a family member from another branch, reported dissensions in the Bajaj and Patni families, and so on) are quite intriguing. One really wonders as to how highly intelligent, capable, hardworking and successful people who successfully manage complex business challenges singularly fail in the task of managing their own family dynamics.

When a business leader or family fails to address its family disputes, it more often than not impacts negatively the business and by its corollary different stakeholders of the business. As differences accentuate into disagreements and then to disputes and conflicts, confusion spreads in the organisation, delaying decision-making or worse sub-optimal/negative decision-making. The first to get adversely impacted are the executives who invariably get caught/sucked into dispute and side-taking. The negative impact on the bottom line not only affects the shareholders but also the employees, who will find the resource crunch affecting them negatively (lesser opportunities for growth, lower increments, lower training budgets and so on). Also lower profits adverse the society negatively “” it means lower taxes and lower investments.

Some people might argue that disputes in family businesses are not always bad by citing the example of Reliance family where the post-split Reliance has created more wealth. While this is a matter of fact nevertheless one really wonder’s how much more wealth the two brothers could have created had they been together and aligned. It would be pertinent to mention here that while Mukesh Ambani has oil, Anil needs it for his energy business. Similarly, Reliance has huge needs of connectivity for its large operations especially in retail, and Anil has the telecom business.

Perhaps the two brothers together could have created more wealth not only for themselves and their shareholders, it could have also been good for society as it could have meant more jobs for the unemployed and more taxes for the government. Also had they remained together, they could have given immense happiness (in place of the pain) to their mother and sisters and could have been a role model for their children and others.

I think there would hardly be any person who would dispute the fact that founding and developing business empires in today’s hugely competitive world is an extremely challenging proposition. Discounting the luck factor, everyone would agree that business leaders (Ambani brothers, Bajaj brothers, late Paraminder Singh, Analjit Singh and the Patni brothers) have exceptional qualities in terms of intelligence, foresight, ability to judge people, manage ambiguity and complexity and do hard work. This leads us back to our original question as to “why extremely talented and foresighted people have been more often than not failing in resolving their personal and family issues?”

Implementation is the key: I believe that the underlying causes of any problem (including personal, family and business issues) are the same. Also there have been number of cases where leaders/families have been able to solve their family issues amicably. For the past nine years, CII has been organising an international conference on Family Business Governance every year where issues such as succession, conflict and communication in family business, managing change, sibling rivalry and so on are discussed at length. Different speakers in the conference have shared examples of families that have lived and prospered together over multiple generations spanning over hundreds of years.

While there have been few families and leaders who have acted upon this knowledge and worked to establish family governance systems that would ensure perpetuation and growth of their families and business (most notable among them to my knowledge are the Murugappa and GMR families), a vast majority do not act upon this knowledge. This reminds me of one of the most important points that the late Sumantra Ghoshal had made in one of the conferences at Mumbai. He said, the key issue today is not of “knowledge” but of “implementation”.

The possible direction of solution: Going to the next level of detail as to why exceptionally talented and foresighted people who, despite having broad knowledge of the problem and its possible solution, fail to act upon that knowledge in resolving succession and other issues in their family business, I would like to make the following points:

Business leaders fail to realise that family as a separate unit has its own dynamics and like any other organisation needs time, effort and nurturing for its smooth running. Members of family business like most of us find it difficult to effectively manage differences in their families. They keep on denying/ignoring/suppressing differences.

Small differences neglected for long, fester and turn into disagreements, which again over a period of time lead to conflict. Conflict if left unattended for long may become acute and lead to split which again could be peaceful or acrimonious.

Surfacing differences and attempting to resolve them is difficult and at times painful. However, with little practice one can become adept at it.

If the business leaders could take a bit of reason, logic and systems (something as simple as creating a forum for dialogue and periodically using the same) from their business into their families, it could make the task of implementation a lot easier.

In the end I feel if the leaders could divert a fraction of their time and effort that they spend on their business to family affairs, we would have far more happy, prosperous and long living families and businesses.

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