There is a huge interest among the members of Indian small and medium sized business families to have a written constitution detailing policies and procedures, finds a study.
There is a huge interest among the members of Indian small and medium sized business families to have a written constitution detailing policies and procedures, finds a study.
“Absence of policies and processes in critical operational business areas leads to family disputes and business break up," Kavil Ramachandran, head Thomas Schmidheiny Chair Professor of Family Business and Wealth Management, Indian School of Business, said recently. He was speaking to reporters in Chennai on his study on 'Togetherness in Indian Family Businesses'.
"Members of family businesses should realise the changing socio-economic values and draw out written policies and procedures on various governance issues," Ramachandran added.
Citing his survey, he said majority of the respondents managing family-owned enterprises have realised the importance of staying together rather than splitting the business.
"Staying together gives the business strength, brand power and other benefits which the current generation has realised," Ramachandran said.
Out of the 276 respondents to his questionnaire, 66 percent were below 40 years of age and 70 percent of them were first generation businessmen.
He said Indian business groups like Dabur and GMR have written family constitution/policies/procedures on different aspects of managing business and the emerging scenario.
"Ideally, business families should draw up the constitution before the second generation kids grow up. The constitution would detail the succession procedure, in-laws/woman in the management, funding of new ventures by the promoter siblings and others," Ramachandran said.
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