View: Strengthening alignment in family businesses

After losing the test series, the Indian Cricket team also lost the one-day series with South Africa recently. While winning and losing are part of the game, the recent misalignment between the BCCI President and former Captain does raise a few questions about the impact of such differences on the field and on the game. We have also seen such scenarios play out in the case of family owners and the CEOs of family businesses if there is misalignment in values and roles and responsibilities are not well defined.
BCCI President Sourav Ganguly said that he had requested Virat Kohli not to step down from the T20 captaincy. However, in a press conference, former Captain Kohli contradicted this statement and said that he wasn't told to reconsider his decision. He also added "Obviously we haven't won an ICC tournament. I understand the logic behind why they took that decision." We will never know the whole truth. However, such controversies take the focus away from the game itself and are totally unnecessary. It will do good to all parties to avoid the differences, have clear and open communications, and align themselves for the best of the game.

As in cricket, so in family businesses. We saw the removal of Cyrus Mistry from chairmanship of Tata Sons due to the misalignment between the Promoter/Shareholder (Tata Trusts/Ratan Tata) and the Chairman. This not only has an impact on strategic decisions and day-to-day operations, but also demoralises the entire workforce.

The real issues need to be addressed at the fundamental level. The issues being a) misalignment of values between the promoters, the board and the management team and, b) lack of clarity in roles and responsibilities. Let us understand the importance of dealing with both.

Aligning Values
Values are the source of an organisation’s culture, its long-term sustainability, and the happiness of team members. They bind the whole team together. The behaviour of team members also flows from the values. Even though family businesses set goals and targets, there is inadequate effort on articulating and aligning the values of the promoters and the rest of the organisation. And even where the same is done, mechanisms for ensuring that the values are lived is not in place. Hence, the inevitable differences between the promoters and non-family professionals lead to discord. This weakens the CEO's standing in the management team and adversely impacts business performance. In fact, it might happen even if the CEO is a family member but not well inducted into the values of the entire family.

Therefore, family firms must invest time and effort in articulating core values and creating mechanisms to ensure that each person in the organisation is driven by them. Dalmia Bharat Group’s values journey is an inspiring example of the same. Dalmia promoters took the help of a family business advisor and expert to lead this journey and act as the ombudsman. Top 70 leaders of the company gathered and articulated the values framework by reflecting upon the group’s history, discovering its deep beliefs and keeping in mind aspirations for the future. Behaviours for living each value were also formulated. About 100 Value Champions were identified and were taken through a "Train the Trainer" programme. The Value Champions conducted a Values Workshop covering each employee of the company. Every year, the Values Champions come together for two days of Values Conclave wherein a comprehensive view of the year gone by is taken and a plan for the ensuing year is formulated. Many other ongoing activities such as annual rating on compliance of the values, a dedicated Values Portal with outstanding cases of Value compliance etc. are part of this journey.

In the words of Gautam Dalmia, Promoter and MD Dalmia Bharat Group, "The true value of this initiative has been the creation of values that have instilled the right culture of the group in a Dalmia way. This culture is a competitive advantage in delivering superlative business outcomes."

Clarity of roles
The other issue is that of clarity of roles. It is easy to define roles and responsibilities of the frontline workers. However, as we move up the hierarchy, there is ambiguity and overlap in roles. Professor Kavil Ramachandran, faculty at the Indian School of Business, rightfully states in his book "The 10 Commandments for Family Business" that the biggest challenge for the family business head is clearly defining the role of the CEO and respecting it always. In the absence of the same, the most talented CEOs do not survive long in family businesses. The cost of searching for new CEOs is also very high.

Also, as the organisation grows, and the scope of the roles keep changing, the senior team must have open communication and get clarity whenever there is an overlap or ambiguity. Most importantly, this is not a one-time activity, it is a continuous journey.

Key takeaways
Family businesses who have invested in values alignment and roles clarity at the family and organisation level have not only achieved rapid business growth but have also contributed to the well-being of the communities in which they operate. Thus, firstly, family businesses must articulate core values of the business and create mechanisms to encourage living them and secondly, define clear roles for all in the organisation and avoid ambiguity or overlaps. Cricket, being a festival and life itself to many in India, has much to offer in terms of learnings. The alignment, roles clarity, planning, training, teamwork, all require a lot of effort and patience, but it’s worth it. For both the game, as well as family businesses.



The author is Senior Consultant, BAF Consultants