B Swaminathan
Indian economy predominantly depends on how the SMEs are functioning. India’s major SMEs are still not ‘corporatized’. Even though the impacts of the global phenomenon like maintaining books, creating emails are increasing even at grass-root levels, according to the market leaders, the difference in the generations are not allowing organizations to decide quickly on advanced technologies.
What stops them?
“Generations play a key role in family businesses in India. Right now in many organizations, a grand-father, a son and a grandson handles various functions of a business. Even if the third generation, having a global exposure to the business, tries to implement a new policy or device, the first generation stops it, fearing it will impact the security of the organization”, says Jitesh Chauhan, MD, Rubik Infotech. According to him, the level of awareness is high with respect to cyber security, but it also stops organizations from expanding. Thus, most organizations decide to stay on premise unable to scale up.
Biren Shah, MD, Adit Microsys recalls the past when technology was new to them. “When the organizations were starting to adopt technology, everyone was taking baby steps on how to make their business automate. To be frank, those days, there was no IT department at all.” He also added that those days quoting a textile mill. “The IT procurements use to happen quickly because there were no conflicts of interests and the founder himself/herself will be the final authority in IT decision making”, he said.
In most family businesses, the role of IT plays in different ways. The first generation business owner still gets the work done on his/her telephone. The second generation enters and tries to implement a latest technology that helped them on basic automation, back-up and networking. They used IT for sustaining the business and taking the existing businesses to the next level. The third generation sees the emerging start-ups and wants to go global even without complete knowledge of the business. While IT is very important, many young decision makers do fail to understand that implementing IT without complete knowledge of the business are key reasons for the difference of opinion in the family business.
Family business members should learn that no generation is wrong but each generation has different skills and
culture. Once families will understand about these changes and need to appreciate different perspectives whether
young or old, they will be able to harmoniously work with professionals and across generations. Parent
generation need to accept the involvement of new generation. The next generation has to learn to appreciate
parents’ wisdom and understand that there is no substitute for hard work. Thus if family businesses can manage
these dynamics, they will have great range of opportunities in Indian economy.
There is no any clear written document in many family businesses which will
define the role and responsibilities of each family member, policies and business norms for family members.
Issues like salaries, share of profit, dividend, compensation and retirement plan, exit policy from the business
are always raised and creates conflict in the business due to lack of any written documents. Ultimately it disturbs
the family as well as business harmony
Jaydev Dudhia, MD, Netlogic calls this common in many family businesses. “In most cases, the first two generations want every IT activity in front of their eyes. Thus, they are always conscious about having their data on-premise and never wanted to be on cloud. When the new generation decision maker adopts ‘data on cloud’ the actual problem starts”. Jaydev is also on the opinion that businesses should unleash technology. However, only if the business demands for an adoption, it should be used.
Effectively Managing Family Businesses:
While there are many ways, family owned businesses can outshine IT. However, Biren Selarka , MD, Acma Computers who has ages of experiences in managing family businesses, says, “In many family-run businesses, the process of making a decision is often as important as the decision itself. A decision-making methodology is essential for long-term success and stakeholder harmony. Balancing objectivity with speed in decision-making can be challenging, but especially so when navigating uncertainty.”
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