Modern Leadership Skills in India’s Family-Owned Businesses

We conducted a study to capture current leadership development and succession trends involved in passing the baton from the current generation of India’s Family Owned Business (FOB) leaders to the next.

Here is what the research revealed.

The Need for a New Breed of Leader 

Historically, FOBs have bred highly execution- and task- focused leaders. Vision and strategy development, as well as primary decision-making powers, rested with the family owners. In many this has resulted in the second line of leadership being highly task and transactional in their approach and style.

They have also had traditionally very bureaucratic and hierarchical organizational structures. There was limited space to grow and blossom as an organizational leader. The family always called the shots. But FOBs now operate in a different kind of market. Domestic growth is again picking up, and they are aggressively seeking international growth. Competition from multinational businesses and domestic entrepreneurs will only increase.

The deeply ingrained realities are still causing inertia in a lot of FOBs. But there is evidence that some are now trying hard to transform their culture and practices to be better at empowerment, talent development and providing attractive career paths to their employees. The idea of grooming people from within the organization and trusting them with high profile leadership roles is a growing movement.

 The River Group Analysis

1. Mid-sized FOBs.  The mid-sized sector of FOBs will benefit from advice and support in their strategic approach to talent attraction, retention and development.

   The immediate need is to design and develop succession planning solutions in these organizations. At the same time, it’s essential to engage deeply with the owners to help them understand the need for professional management and broader leadership skills to complement family and functional skills.

2. Broader leadership skills.  The aim must be on developing capable, rounded leaders who can think strategically, and who are able to lead teams and manage others effectively. The design and deployment of assessment and development interventions must be aligned with both the business strategy and the competitive realities.

3. Win over the founder/owner.  FOBs must have strategic leadership interventions at the owner and C-Suite levels to ensure smooth transition of businesses from one generation to the other and align the organization towards the next phase of modernization, growth, and development.

4. Focus on future leaders now.  There needs to be significant focus on building the middle management of the organization by institutionalizing some key leadership development and succession planning frameworks. This would ensure home grown talent for Indian FOBs.

There are only two sources for this talent: internal and external. The generational and wealth retention needs of FOBs mean that internal sources are preferable. That means finding and developing great family talent. Or talent that is trusted by the family.

It will fundamentally change the culture of these FOBs by hiring and developing non-family leaders with strong enterprise-wide strategic skills, able to manage multi-businesses, and who are given greater decision-making authority.