Wednesday, Apr 01, 2015

Lack of role clarity hurts togetherness in Indian family businesses: Study

By: Press Trust of India | New Delhi | Updated: March 3, 2014 10:32 am

Lack of clarity in roles as well as indeterminate ways of sharing rewards and wealth negatively impacts togetherness in Indian family businesses, says a study. Listing out many factors that hurts togetherness in family businesses, the study has said the concept of togetherness in Indian family businesses is in a “state of flux”.

The findings are part of a study prepared by the Thomas Schmidheiny Chair of Family Business and Wealth Management at the Indian School of Business (ISB). It is based on a survey of 276 respondents from Indian business families.

“Lack of role clarity, undefined boundaries of family and business activities, indeterminate ways for sharing of rewards and wealth and absence of open channels of communication and transparency are all factors that adversely affect togetherness in Indian family businesses,” the study said. The study was done by ISB Professor Kavil Ramachandran and Research Associate Navneet Bhatnagar. In India, many top business groups are family-run. When it comes to financial and business operations, the study found that togetherness is mainly shared among those family members who are actively involved in business.

Also, when transcending to the business domain, the degree of togetherness does not remain that strong as lesser number of family members found themselves together on business issues,” it noted. Interestingly, the study also revealed that even within the economic and operational togetherness, family members are closer on operational issues compared to more strategic or financial matters.

“Much of it has to do with the lack of policies, systems and processes that allow ambiguities to creep in, which then lead to confusion, deviations and conflicts,” it said. Besides with regard to succession, inclusion of newer family members or retirement of older members, family members are often seen without any clarity or consensus.

“These issues highlight the weakness of Indian family businesses in evolving a shared future vision and strategy to take the business forward,” the study said.

First Published on: March 2, 20142:41 pm
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