Family Businesses are the most prevalent form of business around the world & as well as the most complex system of organisation management. The three sub-systems namely family, business & owners make management of family business a multifarious task with internal pressures, external pulls, and friction at interfaces. This leads to members wearing multiple hats at various times, which makes the decision-making a challenge. With a constantly changing business environment & growth, family businesses are a convoluted entity to manage.
To achieve long-term sustenance & success, family businesses must inculcate strong values and pass on the same to the next generation leadership. While talking about values in the family business, Dr Navneet Bhatnagar from Thomas Schmidheiny Centre for Family Enterprise (Indian School of Business) and Hardik Kotecha, Director (Kotecha Group of Companies) shed light on the various aspects of values & next-generation leadership.
What are values?
Values are principles that guide behaviour in family & business. They are shared higher-order beliefs meant to act as a guide for conducting & managing businesses. Just as the lighthouse leads ships to harbour, values guide family businesses to desirable actions.
What do values do?
Values denote what family & business stands for by influencing attitude and shaping behaviour. They are the key to the long-term growth & sustenance of family business, guiding organisational culture & the way business is conducted.
What is the importance of values in the family business?
Values are the essence of family business identity and reflect what the business cares about. They inspire and energise people by providing decision-making guidance. A value-driven family business always finds better recruits & retains talent for a long period. Most importantly, values translate performance, helping businesses gain a competitive advantage in the process.
Values to the action!
It is of utmost importance that values should not remain confined to written words and should be believed & shared by all in the family & business. When communicated well to employees, customers & other stakeholders, values build & strengthen the core of the family business. Businesses should strive to institutionalise values through documentation, define behaviour through those values and revisit those to refine them.
Significance of Next Generation Leadership
Family businesses rely on the next generation to take the business forward. Next-generation leadership is a crucial family human capital that infuses fresh energy and ideas in business growth & development. A vital link in the transfer of family expertise & tactic knowledge, generational leadership acts as a catalyst for change and innovation. Most importantly, next-generation leadership is key to family continuity & legacy.
Hence, the next generation in family businesses must train professionally, equip themselves with new-age skills, prove outside the family business and value family values & beliefs to transform into steward leaders.
Dr Navneet Bhatnagar is a Senior Researcher at the Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business. The above article summarises his interactive session with Hardik Kotecha (Director, Kotecha Group of Companies) on the topic “Values in Family Business & Next-Gen Leadership Development” organised by ISB.
Author: Paritosh Garlya