Incorporating a professional mindset across the organisation in family businesses
Ease of Doing Business for MSMEs: Building a professional culture begins with the promoters and senior leadership team becoming professionals in their attitude and behaviour.
By Simran Senani
Ease of Doing Business for MSMEs: “Family and Business are two of the most powerful forces in the world. Our families provide our nature in the form of our genes and much of our nurture. Businesses employ our most valuable resources – our people, our time, our capital. When combined, family and business amplify their impact and their complexity.”
These words by Josh Baron and Rob Lachenauer in the HBR Family Business Handbook precisely capture the true nature of family businesses.
Many family businesses inherit the founding generation’s dreams, principles and behaviour which motivate them and set them apart. However, in the eyes of professionals, family businesses are perceived as emphasising less on skills training and their career growth which is typically found in professionally-run companies.
The success of family businesses depends on the consistent efforts put into building and sustaining a professional culture in the organisation. Building a professional culture begins with the promoters and senior leadership team becoming professionals in their attitude and behaviour. Let me explain what is meant by becoming professional at both these levels.
The professional mindset of promoters starts with the delegation of power. Promoters often hold employees at all levels accountable despite hiring the best of professionals. A professional mindset means ensuring delegation of power by clarity in roles and respecting the chain of command.
In other cases, owners become dependent on their capable managers and do not hold them to account because of the fear of losing them. Owners with a professional mindset are willing to be accountable and have the ability to hold the managers to account.
Professional managers are functional experts who are willing to learn. They are always looking for new ideas and better ways of accomplishing tasks. Their emphasis is on making and refining the structures and processes so that dependence on them is the least.
While the promoters and senior leadership team must delegate power and responsibility to their subordinates, they must not let go of the values of the family business which form its bedrock.
Successful family business leaders co-create values and code of conduct which drive the behaviour of all in the organisation. They do this by visiting their history, discovering their deep beliefs and thinking and sharply articulating their aspirations for the company and self. They also set up mechanisms for compliance of values such as starting their meetings reminiscing about their values and talking about them for the first few minutes, quarterly rating of value compliance of each employee by their boss and subordinates, conducting learning sessions for deepening of values etc.
The promoters and top management team of a family business based out of Indore started their professionalisation journey five years back. They made many changes in their organisation such as:
- Setting up a Family Business Board and clarity in roles and decision-making power of Family Business Board and Top Management Team
- Brought about a change in the mindset of the top eight leaders (promoters and professionals) by getting coached by a professional family business coach.
- These eight leaders further invested in mindset change of their top 30 managers
- Took extensive help of coaches, consultants and advisory board members for refining their business strategy and increasing productivity
Essentially, the promoters became open to being questioned and are building a culture of continuous learning. The result of these efforts is that in the last four years, their sales have more than doubled and profits have increased by more than five times.
To summarise, the key steps for building a professional culture in a family business are:
- Promoters need to become professional by truly empowering their team and respecting the chain of command
- Senior Leadership Team/Managers must be lifelong learners who ensure the good functioning of systems and processes
- Creation and implementation of values and code of conduct by all in the organisation
Simran Senani is the Senior Consultant at BAF Consultants. This is the second article in the series ‘Making Family Businesses Succeed’. The next feature will focus on the aspect of doing a successful leadership transition while professionalising the family businesses.