Tata Group founded by Jamsetji Tata

TVS Group founded TV Sundaram Iyengar

Aditya BIrla Group founded by Shiv Narayan Birla

Godrej Group founded Ardeshir Godrej & Pirojsha Godrej

Reliance Group founded in by Dhirubhai Ambani

FAMILY BUSINESS
 Meaning
The following list outlines the gist various definitions of family business used by
various authors and academicians:

1) High percentage of share capital owned by a family either jointly or

individually.
2) Family members employed in the highest decision-making posts
3) Expression of intention to maintain family involvement in future
4) A number of generations of the same family involved in management or
ownership.
5) Management or ownership control by direct descendants of the founders.
Family businesses have certain advantages over other businesses

1. There is a long-term orientation as the continuity of the firm is of great

concern to the older generations
2. The family culture is a source of great pride for family and non-family
employees alike
3. A family firm functions in a less bureaucratic manner and is not impersonal in
dealing with employees and customers
4. A family firm shows greater willingness to weather the bad times by ploughing
back profits
5. It is structured to impart training to younger members of the family
Family businesses do have some serious disadvantages too

1. A family firm may have a confusing structure where the role of many family
members is not clearly defined.
2. The style of functioning may be autocratic or patriarchal
3. Many family members of the younger generation may not be worthy of their
position and role in the organization
4. There can be very strenuous succession battles
5. Sometime, family members can selfishly drain the finances from the company
The founder
In a family business, the founder plays the most important role. The founder is
invariably the head of the family and these dual roles place him/her in a position of
paramount importance
The varied roles and responsibilities of the founder of a family business include
the following:
- Starting the business
- Building the organisation
- Providing guidance and direction to employees and family members
- Constructively involving family members in the business
- Planning for succession
 A study called India: State of the Family Business Report,

A study called India: State of the Family Business Report, over the period May 2022–October
2022, with a sample comprising 350 family businesses from across India. Most businesses
studied were small and medium family firms. More than 80 per cent of the businesses
continue to have the founders playing an active role in the family business. We found that
about 75 per cent of them have experienced the induction of a next-gen member and are now
second-gen businesses.

It is, however, in terms of the state of the family that family businesses seem to be floundering.
The top family challenges faced include: Lack of a clear successor/succession plan; lack of
clearly defined and/or written roles and responsibilities for all family managers, including
women; lack of a conflict resolution mechanism within the family business; lack of a retirement
age for the senior generation and a roadmap for the next generation’s induction into a
leadership role; and lack of a family constitution.
Entry of family members
The founder and others will have to develop some ground rules regarding the
entry of family members
Will all family members be encouraged to join the family business irrespective of of
their ability and aptitude?
ROLE? Do incoming family members fill an existing vacancy oe will a new position
be created for them?
COMPENSATION? Will the compensation for them be the same or different?
NON-FAMILY MANAGERS?performance?
SUCCESSION?
 SURVEY BY DELOITTE
Indian family businesses are increasingly formalizing governance standards and
focusing on succession planning, with many open to professional management,
according to a survey by Deloitte India.
“More than half of the survey respondents enumerated that a formal family
constitution including will, entry and exit provisions and conflict resolution
mechanisms were of utmost importance. Such a constitution helped promote open
and transparent communication and settle conflicts.
The second priority was holding regular family meetings to align with the culture,
values, vision, and direction of the family business. The regular cadence helped
build communication skills, increased transparency, and ensured greater harmony
amongst family members," said Deloitte’s India Business Survey Report.
Best practices

● Documentation
● Communication
Of all agreements
Formal or informal
and the will
Free and frank, issues to be discussed
● Conflict resolution
Regular meetings- non-family managers
Inevitable
● Independence
Establish conflict-resolution mechanism
Have distinct roles………….no overlapping
● Shared vision
Efforts to agree to a path of action for the
whole company
Why is it difficult to separate family issues from
business issues in a family business?
Should family members be compensated equally or
according to their abilities? Is it possible to do both at the
same time?
Would modern-day MBA persons prefer to work in a
family business when they have other equally
lucrative offers from other firms?
THANK YOU