Family Business

Family businesses constitute most businesses

in India.
What is a family business:
Formation, ownership and control are held by a
single family for two or more generations
A majority of ownership rights held by family
members
Single family effectively controls the firm
through the ownership of largest ownership
rights than any single owner outside the family

 Governance and Leadership in family business:

Good governance and leadership constitute healthy
family business
Clarity in roles, rights and responsibilities for all
members
Discipline and devotion and dedication infused into
the family and business by the head of the family
The success of family business attributes to the
founder and head of the family and how successfully
he nurtures the family members in next generations
to emerge as business leaders

 Form and structure of Family Business:

Most business were started as Sole Proprietary
concerns and ran for considerable time most
cases one or two generations in the same form
This mode is chosen because of simplicity of Sole
proprietary form of business where formation is
simple with least or no external accountability
When the business started growing the formats
change into private limited and public limited
companies still holding controls by holding
majority of shares

Family Vision, Governance and Strategy:

It is the vision of head and his capability to create a family governance
system and strategy.
Creating clear cut role responsibility structures for family members
Establishing an organized governing structure by involving family members
based on their capabilities and contributions
Ensuring the creating of platform for periodic meetings among family
members in a formal structure
Convening Board of Directors Meetings and documenting the proceedings
and resolutions
Brining in necessary support structure from outside family members on to
the governing system by appointing CEO, CFO etc.
Utilizing services of management consultants and Organization
Development Specialists to bring in corporate governance practices into
business

 Rights and responsibilities of family

shareholders/partners in family business:
Knowledge about business operations. It is
equally important to ensure that family members
taking active roles are trained and have
experience in such operations
Knowledge about financial structure operations
and health of company
Participate in Board meetings, shareholders
meetings and AGMs
Support all management decisions

 Some key dimensions that determine the

cohesiveness of both family and business
are:
Succession Planning, remuneration and
rewards planning, retirement and rewards
for non family professionals, retirement
and estate planning, induction and
grooming, ownership structure, preserving
wealth, resolving conflicts, business and
family vision, strategy and governance