Passing the baton: What Anand Mahindra, Harsh Goenka feel about succession plans
Often clashes between generations happen due to control issues & differences in the thought process.
Many large business conglomerates in India started out as family businesses and continue to pass the baton on from one generation to next. The lasting success of the business is therefore largely dependent on the successful transition of leadership. And yet, it is perhaps one of the thorniest subjects that business families grapple with: succession planning.
A new study, undertaken by a wealth management firm, points out the key conflict areas between two generations. It’s the age-old problem, though. The kids think parents are too controlling. The parents feel their children are either not competent enough or ambitious enough. Among others.
“The older and younger generation have always had their differences — usually the younger generation is more eager to implement new ideas and willing to try new things, while the older generation, based on its hard-earned wisdom, tends to curb their enthusiasm,” says the report.
One area that this difference of opinion is quite glaring is the adoption of technology and digitisation.
While the older lot remain suspicious about the technology, the young ones are eager to give their businesses the cutting edge.
One of the most cited reasons for failure of inter-generational transfer according to the report is: “Parents thinking wards are not entrepreneurial enough and the younger generation feeling that the elders don’t want to let go of control.” And more from the younger generation hold this view as compared to the older lot, according to the findings. Additionally, there is more pressure on the next gen to live up to the achievement levels set by their elders.
Not always the right fit
The ‘it’s yours whether you like it or not’ is not a concept that flies with the younger lot anymore. If they feel that the family business does not fit right, they are vocal and decisive about walking away, the report says. It doesn’t always stem from a clash with the older generation though. Sometimes they just don’t find the business glamorous enough, sometimes it’s because their heart lies elsewhere.
Many Indian businesses today are inducting the daughters into the businesses, making no distinction between the genders of their children while picking successors. “It will take a while for the traditional mindset to change completely. Due to the differences in temperament and outlook, not all next gens find their place or find integration easy.”
Many business leaders have commented on various aspects of succession. Here is a quick look at some of their views:
Anand Mahindra on daughters Divya and Aalika choosing to follow their passion and not working in the family business:
“We’ve never viewed ourselves strictly as a family company. I myself thought for many years that I’d be a filmmaker and didn’t think that I’d come to the family business. It didn’t bother my father at all... we have a tradition of allowing our children to follow their hearts. And that’s what my daughters are doing and I’m very pleased.”
Harsh Goenka on the subject of ownership and handing over management rights to the next generation:
“By all means hand over management control, but do not hand over ownership unless you have decided to completely keep away or have at least kept aside enough financial backup for your twilight days.”
Sasha Mirchandani on why he thought it best to strike out on his own:
“As the company [Onida Electronics] progressed, my dad wanted to professionalise the company. Once the second generation starts coming in, you have one company and multiple children. It is difficult to divide roles. And then the professionals say, what about us.
A lot of times, the professionals are more competent than the founder’s children. Just because I am my father’s son, I may not be the best person to run his company.”