In India about 70 percent of businesses are family managed, wherein the Family is actively involved in the day to day affairs of the business. Many of these businesses are companies listed on the stock exchange and families have a controlling stake of 50 to 75 percent.
In case of such listed companies, government regulations require that Independent directors sit on the board and they are expected to protect the interests of minority stakeholders. However, since these directors are appointed by the Family, the Family is virtually fully in control.
Family managed businesses in India have always been very successful and some of their key traits include:
- Lean Structure,
- Cost effectiveness, and
Working with family managed organisations as a Mentor and Coach, and post my previous Executive role in professionally managed companies, this is a totally new and enriching experience for me. And I would like to share some of my learnings here.
Extra care and awareness are required in family businesses
Family managed organizations have business challenges like any other business.
Some of the additional challenges peculiar to them are:
- Issues of relationships and emotions.
- Personal agendas that may not be overtly shared.
- Individual aspirations, sharing of wealth, succession, and favouritism.
As they say, ‘Family business can fail not because of business but because of family!'
A difference of approach is required when working with these executives in a family business, whether it is between Father and Son, between Siblings, the involvement of their Spouses which is also quite common, to those executives working for public companies.
In my work I have been fortunate to have Coached several individuals from different families; acted as a Mentor to some families and evolved strategies and way forwards to overcome business challenges, family emotions, succession and wealth distribution issues.
Appropriately managing multiple boundaries with all the competing agendas as the independent mentor and coach
First the coach needs to build trust with the main stakeholders. These people, both independently and collectively, have run their businesses for a long time, and so the coach must have good business acumen otherwise they will not be very accepting of the coach.
The 4 most important skills which the coach needs in various strengths and combinations are:
- Business acumen,
- Listening skills,
- A deep understanding of people, and
- Tact to handle conflicts.
This coaching ‘cluster’ of skills is typically put to the test when there is a need to build consensus. Sometimes this requires talking separately to individuals and opening lines of communication which may be closed. You have to resolve issues without leaving bad feelings, because the family is still together, and bad feelings and resentment can easily get multiplied through alternative lines of communication. Compared to external professionals, after work they are able to go back to their own families. Family owned businesses do not have such distinct compartments. Family relations and emotions are constant and a big factor in the running of the business.
And then through mentoring, I provide an independent view to the family that should always be perceived as unbiased, unemotional and an honest arbitration.
This is important because normally what happens, as you get deeply involved into the family and their business operations, there will also be a lot of lobbying by individuals to convince you of their point of view. While you listen to all points of view, it’s important to remain neutral and be someone who is constantly looking at the family interest rather than just the interest of the individual. What I tell them is this, "I am here to look at your family interest overall so that everyone benefits, and in that if some individual interest is not taken care of, then you have to bear with me, in the interest of promoting and building value for both the Family and the Business.”
Doing all this is emotionally quite exhausting as the mentor and coach. It involves tact, sometimes saying unpalatable truths, breaking deadlocks, moving forward and still retaining trust.
The Trust Equation: Building and retaining trust
The trust equation is basically made up of two things which I believe clients are looking for,
- Building trust, and
- Bringing something to the table, that some extra business acumen or looking at it in a different way, which they had not looked at before.
To achieve this, you first of all need to be very patient. You must understand where they are coming from but you should also be able to give your opinion, sometimes fearlessly at some risk. You need to be perceived as a person who while listening to different views will not be easily influenced or pressurised by both the situation and the individual who is sitting in front of you.
If you question any assumptions that may be perceived by the receiver as being threatening then it could potentially result in a breakdown in the relationship, whereas if you question them in a non-threatening way there tends to be an improvement in the relationship.
Sometimes it is also better to directly ask the family, “Please tell me if there are any ‘no Go’ areas so that I do not ride into these.” Of course, such ‘no go areas’ should not conflict with the Coach’s ethics. If they do, you would need to disengage. This has not happened to me.
I also tell the family patriarch upfront, “I will give you my point of view. Sometimes it will be in conflict with yours. You, however, know your business and family far better than me. If you don’t accept my suggestion I won’t feel bad.” This reduces pressure on both sides to be too diplomatic and discussions are more forthright. Surprisingly I find 90% of my suggestions accepted anyway.
Eventually you may be treated like a family member because of the things they share with you (which they may not even share with each other).
How you manage and maintain this healthy dynamic will determine the Trust, Comfort and Benefit you bring to the table.
Bringing something to the table
Working in many diverse organisations of various sizes, the coach has to bring business acumen along with the normal mentoring and coaching skills. To take an example, there could be a difference of opinion between family members of how a business should function or the path it should take, and your views are sought to help resolve the issue.
In these situations you have to be resourceful, tactful but also frank. It is very important that you make the family members realize that you are a neutral participant and that your advice - based on your business experience and insight takes into account the overall family benefit.
In summary, my top 3 counsel for mentoring and coaching family managed organisations
- To be a success as a Mentor to family managed business, besides normal Coaching skills to work with the individual members, you need to have good business acumen that can only come if you have handled a variety of senior executive roles.
- You also need to build trust and ensure that individual interests are subservient to the Family and Business Interests.
- You are ‘Family’ and still not Family; independent and unemotional yet always tactful.
To connect with Aubrey
Business Consultant, Executive Coach and Mentor
Mobile: +91 9821019731
Aubrey brings to the table over 40 years of rich & varied Corporate Experience as CEO, Director, and Business Head with Tatas & Bayer.
Aubrey has strategised & managed a major merger, was CEO of a large NBFC, & Profit Centre Head of a large Business.
In all his assignments he has rapidly scaled up revenues & profits. In many areas he has also built up Structures & Processes from scratch.
Post retirement Aubrey continues as an Advisor to Tata Company . Aubrey is also an expert in Family managed Businesses serving as a Business Consultant & Mentor to Business Families.
Aubrey is an Engineer from IIT Bombay & a First Rank Gold Medallist MBA from IIM Ahmedabad. He is also a Certified Executive Coach - International Coach Federation & NEWS Switzerland. He has several hundred hours of coaching experience at the MD & CXO levels.