Getting Professional, betting on the best
Ram Iyengar

The 21^st century corporations as never before are under attack as the traditional boundries of markets and ownership are collapsing even as new opportunities  are emerging rapidly. Vertically integrated value chains which have been the hallmark of family businesses are cominng apart and even among the professionally managed companies the trend is towards empowerment and  decentralised decision making  as rules get written and rewritten literally by the hour.  The net based commerce has added a new dimension to the whole issue by taking away the brick  and morter aspects of business and the sense of ownership that had been the hall mark any family business. 

Unlike Chaebols of Korea which are entirely family owned, India has a relatively lesser percentage of its companies owned by families. A recent CII study taken out for an entirely different reason of indicting these groups for being defaulters to banks swelling their Non performing assets (NPA) numbers stated that around 20 per cent of the Indian corporate assets are in the hands of about little over 300 families. Unlike in rest of Asia, Indian family businesses could not sustain large investments, except in the case of Tatas, Birlas, Thapars, singhanias, Jindals, Sahas and the Modis. Even here fairly early  many of the family business took the route of keeping only a few of their original businesses in their hands and spinning the rest off as professionally managed enterprises, adding a new dimension to the family ownership. 

In the case of Tatas less than six per cent of its enterprises of over 160 firms bearing the Tata brand name were actually owned by the founding family.  Ditto for Birlas, Singhanias, Thapars ….. “The ownership structures of Indian family business are such that it is difficult to distinguish their way of handling their employees from that of any professionally managed firm”, observers Sudipt Datta, author of Indian Family Business. Even then a fairly personalised HR policy is discernible in groups like the TVS  where  the culture still supports traditional HR style.
                                   
                                                        Family business : How it has moved

                                                             Traditional          Professional

                                                    Clear leadership          Collective leadership

                                               Usually conservative          usually liberal

                                         Patriarchical HR policies          Professional HR policies

                                               Loyalty, prime factor          professionalism, meritocracy

                                   Clear organisational structure         Constantly evolving organisation

                                          Simple Business model          Complex business model

                                          Absence of IR problems          IR problems are normal

HRD usually concerns with creating a climate of work culture, productive  efficiency and integration by a}building  the capabilities of people b)preparing for change and c} improving productivity and quality development and achieving organisational goals in a dynamic and competitive business environment.  Successful family businesses they are traditional or more  professional, hold the belief that HRD makes a difference and they have built systems and structures to manage their human resource.

The Economist Intelligence Unit commissioned Andersen Consulting  to  prepare “Vision 2010: Designing Tommorrow’s organisations.” The participating companies  identified four  forces as key drivers of today’s business strategy, irrespective of the ownership profile of  the organistation. They were:

• Customer  demand for higher quality and service

• An ability to attract and retain the best people

• International competition

• New and rapidly changing technologies

The Conference Board  in the USA identified five diagnostic questions which can be used as an assessment  tool for determining  the relative effectiveness and value of human resource services in a family business.  These were

• How do our human resource products and services contribute to the competitive advantage provided by our people?

• How do we foster innovation and creativity in our employees and within human resources itself

• How do we serve as agents of change in a way that assists our employees in managing change

• What is our contribution to the business partnerships with senior management, line managers,  and outside vendors and upper?

• How does human resources affect the quality of work and life of our employees?

American Management Association (AMA) came up with the answer as to how the HR of 21^st century organizations would be: Characteristic of 21^st century corporation

Flexibility, Agility, creativity, innovativeness, fluidity, futuristic visioning, clear communication, technology savvy, sensitive to human values and highly ethical. Now do these HR characteristics of the 21^st century family owned firms  get translated on the field in India. A sample.

Tata: The family owned firms of the Tata group under the Tata Sons umbrella  has professionalised the group totally and even are demanding the firms pay royalty for the use of the brand names. HR policies have no common thread within the group of companies, even though professionalism is the hall mark of Tata group HR policy.

Birlas: The group by and large managed still as family owned is also going the Tata way  with more openness and aggresssion in empowerring its employees.

Mahindra Group of companies: Anand Mahindra, the next generation  leader from the family  has brought in transparent HR policy with incentives linked to producitivity. He also emphasies on open learning  and continuous learning  environment which is encouraged actively in the company.,

Reliance Group of companies: The still first generation family owned firm has been professinalised beyond recogniition and the brotehr Mukesh and Anil Ambani believe strongly in  modern HR practicaes including 360 degree performance appriasal etc.,

Modicorp: The Modi group based in Delhi brought all the firms within the family under one Umbrella. The HR policy however is still traditional and fairly centralised under the personal scrutiny of Dr Modi, the patriarh of the group.

TVS Group: The south based traditional family business still retains much of its old world charm and the HR policies are fairly rigid and patriarchical. But just the same way as Tatas, many of the newer companies of the fold merely have TVS brand name but do not have any family investment  or common interest and as such present diverse HR policies. 

Ranbaxy: The late Parvinder singh the second generation inheritor of the family business however chose to hand the reins over to a professional Davinder Brar and not his sons, thereby bringing a new dimension to ownership style. However HR wise, the already highly professional company continues its policies even under Brar.