Set out a routemap for your company's future
The elections are done. And the stats are interesting. 30% of our MPs are dynasts. 43% have criminal records. And 80% are crorepatis of which a majority are worth Rs 20 crore
10 Jun 2019 | By Noel D'Cunha & Rushikesh Aravkar
These stats provide a good insight if these 543 MPs will work for We The People. Also, they suggest, be it, politics, Bollywood or business, the family rules. The issue is all the more pertinent in the case of the Indian print industry since most businesses are family-owned.
The line of succession follows from father to son. Solid logic says: when a son inherits his father’s business, it’s understood that both the legacy of the company and the wealth are in safe hands.
However, things are not simple. What’s happens when the company owner has more than one children? Or no children? And what happens when the children are not keen to join the business.
Very few firms are showing any interest in going public. This is a trend in abroad as well. However, we have observed that in Europe, the line of succession doesn’t usually entail the next generation taking over the business. Instead, most family-owned businesses hire outside professionals to run the company. In such cases, the owner and his successor remain the figurehead, but the business is handled by a professional. Be it: a CEO or a CFO.
In India, this trend is yet to catch on. Usually, the next generation receives the title of ownership as part of the succession deal, notwithstanding the person’s ability to run a business.
Truth be told, the next generation are often qualified to do the job — they are smart and tech-savvy. Many of them have degrees in printing technology from the US or Germany. This is a good sign.
Case Study 1: When the son joined his father’s packaging business in N, instead of inheriting his father’s job and title, the son was given a new domain. Today, both the father and the son work within their individual domains, which resulted in growth, adoption of new technologies and equipment, and development of new products.
Case Study 2: When it came to announcing the line of succession, this father (an industry legend) did a smart thing. He divided his printing business into three segments — commercial and book printing, packaging and security printing — one each for his three sons. This made sure his children did not step on each other’s toes and focused on their individual domains.
Case Study 3: Usually, the baton of succession is passed from the father to the son, whereas the daughters are usually "married off" to be homemakers. Not anymore. A multi-locational packaging company, with plants in Faridabad and Bengaluru, has the IIM-graduated daughter at the helm. And she is doing a great job.
Similarly, an Okhla-based commercial and book printer has hired his daughter to help him in the business. The father says the daughter’s creativity and hard work has helped him boost the growing business. Likewise, a Hyderabad-based packaging printer has also appointed his daughter in higher management.
Case Study 4: Not just daughters, even daughters-in-law are being encouraged to join the family business. A Kolkata-based book printer, run by a father-son duo has engaged the daughter-in-law in the family business.
Case Study 5: Though it’s rare, we have also noticed a reverse of the father-son succession rule. A Noida-based book firm was started by the son, and later, his father, a retiree, joined the business.
PrintWeek India tips for succession
1. Start early. Succession planning takes time. So take as much time as you need to ensure a smooth transition, typically five to 10 years ahead of expected retirement.
2. Learn to let go by delegating and working alongside the successor. Also, make sure that your successor learns to let go of his or her production tasks to move into management.
3. Be flexible. Remember, your succession plan doesn’t have to be carved in stone, but is an evolving process that can be changed and updated. Businesses and owners need flexibility.
4. Keep it simple. An economical succession plan in time and detail can minimise disruption, promote a smooth transition, and prevent everything things to come to a grinding halt.
5. Make room for mistakes and learning. The generation gap is natural and it can be a cause for the communication gap as well. The next generation will implement their ideas and practices; give them the space to do so.
See All