Family businesses in India have become more liberal with respect to the opening of leadership roles for professionals. A report released by Barclays Wealth says of the 200 respondents spread across businesses in various sectors, nearly 67 per cent believed they were open to having non-family professionals in various leadership roles in their business.
The report, brought out in association with Dun & Bradstreet India, shows the promoters of the family businesses surveyed (all had an annual turnover over Rs 200 crore) wanted to keep the ownership of the business but preferred hiring professional managers in leadership positions.
“In a challenging economic environment like today, it is important to select the next set of leaders. In such times, taking decisions with respect to management and leadership become critical," said Satya Bansal , chief executive officer, Barclays Wealth. The response to the survey showed how Indian businesses were endorsing the idea of having professionals from outside to take up bigger roles in their firms to successfully sustain their ventures, he added.
Only 15 per cent of the respondents said they wanted only their family members to take up the top positions. Of all respondents 18 per cent were first generation entrepreneurs. Of the metro cities, the respondents in Mumbai and Bangalore were more inclined to have people in leadership positions outside the organisation.
Decision making and execution were the key factors influencing the decision of promoters with respect to choice of leadership patterns. Nearly 16 per cent and 14 per cent of the respondents wanted to have professionals in top leadership roles for astute decision making and execution, respectively. Other crucial determining factors included planning and values & ethics.
“In Indian businesses, the issue is with execution, not with the intent. The need of professionals is being felt by family businesses, as the importance of corporate governance and professional values is fast increasing, " Bansal said.
The study also revealed that decision making and the capability of enhancing business prospects were the main factors in the process of choosing a successor. The other important factors considered included networking abilities and business acumen.
Corporate governance was considered by 13 per cent of respondents as a key factor in deciding a successor. “More than 25 per cent of respondents had plans for raising capital through the Initial Public Offering route, of which 63 per cent viewed governance as a paramount factor in the success of an IPO," said Bansal.
