Name: Ramsha

Imran Malik

SAP: 6981
BS (A&F)- 06
Decision
Making
Submitted To: Sir Khurram Khan

Case Study:

Qadri-Group: Sustaining Beyond the First 100 Years

Summary
The case describes the situation of over a hundred years old, family-owned and male-managed
business group Qadri-Group (QG). QG was facing challenges in family's interplay with the
group's business. Meanwhile QG also foresaw several new business opportunities and
challenges in domestic and international markets that required greater focus and harmony
among the family members and group companies. QG's Board of Directors (BoD) felt that a
unanimously formulated Family Constitution was needed to manage the increasing complexity
in the family and ownership, as the group ventured out to benefit from the emerging business
landscape. Rizwan, a third generation family member of the BoD, initiated and advocated the
idea of developing a family constitution as soon as possible to address the complex and
lingering matters that the family faced. Rizwan appreciated that the challenges related to
involvement of the family's fourth generation in the business and ownership would complicate
the situation in subsequent years, during which more challenges related to QG business were
also anticipated. He took on the responsibility to provide suggestions on how to govern
increased family complexity and business complexity. Also he had to give suggestions for the
process to be followed for arriving at a mutually agreed family constitution.

Issues faced by Qadri group are;

1. Family complexity

(In terms of diversity of educational backgrounds, allocation of incentives to family members

according to their profiles, involvement of daughters and their in-laws in QG's business etc.)

2. Business complexity

Problems

The Major 3 issues recently faced by Qadri group are as follows;

1) Clarity on the issue of employment of daughters and daughters-in-law in the business.

2) Involvement of in-laws (unrelated by blood) in the family business.
3) Compensation for family members; competitive and merit based career planning.

Solution

1- Employment of daughters and daughters-in-law in the business:

According to law;

Daughters will now be treated on par with sons of coparceners and will be granted equal
coparcenary rights in their father's property on their birth. Further, daughters' marital status
will not affect the rights conferred on them by the 2005 amendment – hence, they continue to
be part of their father's HUF post-marriage.

Daughters can now request the partition of their father's coparcenary property and seek an
equal share with their siblings and other coparceners. On acquiring a share in a coparcenary
property, a female coparcener can bequeath her HUF share to any beneficiary that she chooses
(and to the exclusion of others) in her will.

Daughters and Daughters-in-law is a valuable “asset”, and should be treated as such. Families
should ask themselves what qualities these daughters-in-law may be able to offer to the
business, to the family? They may also want to consider nominating a family member as a
mentor for the new daughter-in-law, as she familiarizes with both the business and the family –
this will help her understand much faster not only how both systems work, but also about the
relevant relationships and the culture.

For daughters-in-law, in turn, working in husband’s family company should be viewed as an

excellent way to build a professional carrier on the one hand, and to better understand (and
grow closer to) her new in-laws on the other. If the family seems skeptical of opening up and
letting in-laws get involved in the business, it may also be related to some negative experiences
the family had in the past, which has nothing to do with the new daughter-in-law personally.

So, Qadri group should provide equal and according to law shares and rights to their daughters
and daughters-in-law. If their daughters and daughters-in-law are educated and professional,
they should permit the working of them. May be she have new ideas for their business.

2- Involvement of in-laws (unrelated by blood) in the family business:

Qadri group involving in-laws in the family business, consider these general suggestions:

Implement a Family Work Policy and Clarify Business Goals

This decision shouldn't be taken lightly, and family business operators should consider creating
a written family work policy in reaching this decision. The phrase "make sure it's in writing"
rings true. Documenting a family work policy is an excellent way to ensure transparency and
avoid conflict in a family business.

After a family business owner has made the decision to either include the in-laws or not,
creating a family work policy that defines who can and cannot work in the business will be
beneficial moving forward. When conflict arises, this is the document that can be referenced
for clarification. This document should include specific rules on who can work for the family
business, under what circumstances these rules can be amended, and perhaps the plan for
succession of the business.

For example, say a family business owner's child gets married. The new son or daughter-in-law
is interested in joining the family business. Should he or she be included? Perhaps, the family
work policy will allow for his or her involvement, since he or she is the spouse of the business
owner's child, who will likely be taking over the family business.

However, let's say the son or daughter in-law's sibling would like to join the family business.
Should he or she be included? The decision to include the in-laws can get complicated.
Therefore, documenting these types of details in a family work policy is crucial.

Additionally, take the time to clarify the goals of the business and what is needed from the
family to achieve these goals. The success of any business requires that all members are
working to achieve common objectives. Create trajectories and set time aside for meetings with
your family business members that allow for open discussion and dialogue.  

As your family expands and more members come on board, it's important that everyone be on
the same page in achieving the business goals. Family businesses that are considered to be the
most successful are ones that share values, openly communicate, and are founded on trust and
respect for each other.

3- Compensation for family members; competitive, merit based career planning

One of the more difficult challenges that a family business must face is determining
employment qualifications for employees, both family and nonfamily. The lack of a clear
employment policy and process can lead to major conflicts in the company. 
 In Qadri Group, all male members from the fourth-generation were hired at the same salaries
and designations, regardless of their educational and professional qualifications. Due to these
Issues such as employment of daughters and daughters-in-law in the business, compensation
for family members, competitive and merit-based career planning were increasingly being
raised by the family members.

As a result, many family businesses may end up with more employees from the family than the
company needs, and some of these people may not even be qualified or suitable for the jobs
they have been given. “Some family businesses even find themselves acquiring businesses that
have no relationship with their original business or keeping some unprofitable business lines
just to make sure that everybody in the family gets a job within the company.

Written family-business employment policy

A written family-business employment policy can solve a myriad of problems because it spells
out the specific terms for family and nonfamily members with respect to recruiting, hiring,
promoting, compensating, and terminating. One recommendation is that an ideal family
employment policy should include the following;

 “Explain the family employment policy’s purpose and philosophy.”

 “Describe how family members will apply and be considered for positions.”
 “Cover the general conditions of employment, including compensation and supervision.”
 “Outline the approach to be taken in developing and promoting family business
members.”
 Make clear that family members will be completing the same applications that other
candidates will complete.
 Include an inspiring and upbeat reminder that the policy’s purpose is to help the family
business succeed and to support, develop, and motivate family members to lead
successful and productive lives.
 Have all family business owners sign the policy, indicating they have read and agreed to it.

Salaries and Compensation

As difficult as hiring decisions may be for the family business, decisions about salaries and
compensation are probably even worse. No matter how well intentioned and well designed the
company’s compensation plan may be, there will still be jealousies, hard feelings, severed
sibling relationships, and even lawsuits, particularly among those family members who feel they
have been treated unfairly.

Recommendation for salaries and compensation are;

Family members meet three qualifications before they are allowed to join the family business
on a permanent basis:

 An appropriate educational background;

 Three to five years’ outside work experience;
 And an open, existing position in the firm that matches their background

THE END