Managing Family and Family Business

Did you know workplace structures affect family life in a number of ways and vice-versa?

Hailing from a business family, I know and have witnessed that a family business attracts the owner’s family members to the workplace. Although this is a common practice, it can get complicated with the growth and success of the company. When family members work together in, or share ownership of a business, it is virtually impossible for the business to function independently of the family and vice versa. Successful family businesses involve a delicate balance of sound business practices and family relationships. At times family members, whether Principal or NextGen, fail to recognize that running a business requires different practices than running a family. Right from inducting to fully integrating the family member joining the business, critical rules have to be adhered and emotions and other personal conclusions should be strictly kept at bay. There is also an additional challenge of balancing the needs and rights of family members who are not actively contributing to the business at par with the ones who are. Navigating through these uncomfortable issues constructively is one of the biggest challenges that plagues many business families in India.

The road ahead to maintaining harmonious relations at home while also managing a legacy business involves a few basic yet critical activities

-Set clear boundaries. Do not talk business round the clock. This would mix up your business, personal and family lives

-Method of communication. Establish a fixed timing and mode of communication, both in business and family settings, to address concerns.

-Empower family members to make small decisions that are well within their domain expertise.

-Treat a family business like a business and do not place too much emphasis on family relations at work. Treat family members fairly. Independent assessments should be done for all and rewarded/recognized basis their performance. Avoid favoritism when appointing and also promoting a family member. When dividing business wealth with the family, divide it fairly even with members who are not actively contributing to the business.

-Seek outside advice. Set up family constitution with the help of a 3rd party to avoid unbiased decisions.

-Develop succession plan. An extremely important plan, it should spell out the details of how, when and to who the torch will be passed onto. It needs to be a financially sound plan for the business, as well as for retiring family members.

In my recent episode of #CampdenInteractiveSeries, a conversation with Dhruv Rajani- Imperial Wealth Services led to a NextGen’s perspective on this topic. He opines that it is key to have equal dividends among all stakeholders & formulate a structure between directors, advisors & other members for day-to-day activities. This enables 2nd & 3rd generation to have a free-hand on utilizing their dividends for themselves while also plan for the next generation to carry the legacy. 

I couldn’t have agreed more to this perspective. Watch our recent episode and hear more on how Dhruv, based out of Goa and a 3rd gen member of the Damodar Mangalji family, manages legacy family business, family office and family relations successfully.

Amit Patni and Dhruv Rajani on capability to separate Family and Business.