Ego battles are common but when they enter the arena of the company profile, then it is bad news
The high-profile family feud between Vijaypat Singhania and his son Gautam over transferring ownership of the textile major Raymond group and the possession of a prized apartment has once again drawn attention to the scarring of the corporate atmosphere in family-owned businesses. Undoubtedly, the Raymond group is a household name today because of the 80-year-old Vijaypat’s pioneering efforts. It is also true that the company’s shares have held good with the dynamism of son Gautam despite the legal battles. But when the senior claimed his decision of handing over the company as “the height of stupidity,” and sent out the recent advisory of “Love your children and care for them, but don’t love them so much that you are blinded,” then there is certainly a question about the solidity of a brand philosophy that prides values but in actuality doesn’t implement them. Brothers Shivinder and Malvinder Singh of Fortis fame have also claimed headline space in pink papers and have thrown us back to the Ambani brothers’ duel when it became a public debacle with both carping in front of Ministers, exchanging letters with the PM besides dragging each other to the court. It is all quite known how beside their mother, the then President Pranab Mukherjee had to request them to solve their matters privately, citing impact on markets.
India, which reportedly has the third largest number of family-run businesses after the US and China, is likely to witness more such unpalatable power struggles. And with a new generation impatient to rewrite their own destinies and reload a Version 2.0, there is an urgent need to include corporate best practices in letter and spirit to better govern such businesses. This will ensure continuity of the legacy brand with checks and balances, professionalise structure and operations and make the entity immune from generational conflicts in a family turf. For ego battles are common in every family dispensation but when these enter the arena of the company profile, disrupt revenue generation or affect procedural hierarchy, then it is bad news. Transition involving heirs generally veers around to who ceded how much territory and to whom. This leads to massive disgruntlement and results in an air of uncertainty despite sound economic indices. Therefore, corporate governance demands that any disagreement and debate over how the business would be managed, run or heading be sorted out by an independent, neutral board. Also most family businesses do not codify the takeover and succession protocol in secure legal frameworks. This is exactly what happened in the Ambani case. And 97 per cent of such businesses in India do not have them either. Most feuds aggravate due to a lack of legal clarity and most businesses, while being sound on fundamental and broader issues, often do not factor in the possibility of changed circumstances in the future or provide for a legal redress in that scenario. Some experts have even suggested service contracts for each family member, detailing roles and responsibilities. Some have even proposed a family council, like a directive principle of sorts, where counsel comes from within the family and the territories are earmarked for inputs. The Dabur Burmans and the GMR group have drawn up such constitutions using professional consultancies and have kept the brand superior to their individual entities.
