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Making the transition from western multinational to an India headquartered global business

India is a global powerhouse of talent, with the country’s managerial force being leveraged by MNCs in Silicon Valley, Europe and beyond to place Indian-bred or Indian-trained talent at the helm. But even beyond these high-profile staffing decisions, there are multinational companies in India and abroad that believe in the strong talent pool, work ethic, and technical foundation that comes from the sub-continent for their next-level hires. Not to be left behind, Indian promoter-led businesses too, have always been on the lookout for talent that brings this blend of traits combined with experience working for global organizations.

Many of the leading MNCs once began as family businesses and transitioned to larger organized multinationals as generations passed, refining the business plan along the way, with external talent hired to helm key positions. Today’s promoter-led businesses too may be at crucial moments in their journey where they are undertaking what’s often dubbed as ”professionalization”. Balancing profitability and growth with stability and operational efficiency and managing the family’s expectations falls to those hired into leadership positions. These are positions that can have great autonomy and offer the satisfaction of heralding the business through a turning point in its history.

Increased decision-making power and control, extensive capital expenditure plans, M&A(merger and acquisition) deals, private equity investments, and performance on the stock market offer compelling reasons to make the move. But as someone making the leap from an MNC environment to a promoter-led business in India, there are some things you need to know.

Understanding The DNA of The Indian Promoter-led Business

Family-run businesses are a huge contributor to the Indian economy and account for the bulk of companies that make up the fabric of India Inc. They are major employers and contribute to a significant chunk of the national output as well.

Yet, such businesses in India are quite different from those in countries in Europe and America. In India, as with other emerging markets, family members are in key managerial positions in 90% of Indian family businesses. However, in Europe and USA, about 60% of businesses have family members purely as investors, without any managerial responsibility. And that changes the dynamic*.

The amount of control and degree of autonomy you are granted may vary from one business to another and will depend on the reporting structure, the degree of involvement of the family on a day-to-day basis, as well as what stage of transitioning to a professionally run more MNC-like business they are at.

There could also be unrelated diversifications stemming from family views around hedging risk or driving new revenue streams. Sometimes, this could also be a result of a particular family member’s areas of interest. But this is a legacy you will inherit and have to manage. On the flip side, the possibilities too, are endless. There could also be aggressive aspirational goals that require the company to raise additional funds – with loans or via the equity route. A growth focus has meant that some of the fastest growing companies in India today are promoter-led. In fact, 3 of India’s most successful profitable unicorns - Zoho, Zerodha, and MuSigma - are all promoter-led**.

Managing Mixed Expectations: Different Generations at Play

As a senior leader, you will often find yourself working closely with various family members of a promoter-led business. On the one hand you might have the patriarch/matriarch who has seen the business grow into what it is today and is reluctant to let go of the reins to let the next generation take over. Or you might find someone ready to hand over thwarted by succession planning challenges. Power transfer could be an evolved process as with some large conglomerates or may be ridden with strife. The next generation - who are often technically trained and well educated, many from premier institutions overseas - can sometimes be aggressive and keen on making quick changes. Or they could be less interested in treading the much worn path of their inherited legacy and willing to let someone else handle it all.

Finding a balance between these sometimes clashing goals will be part of the ask for someone in a leadership role.

Whatever the circumstances, maintaining family relations remains important and could be the key to how successfully you navigate your time in the organization.

The Unique Work Culture Of Promoter-Led Businesses

In general, for a promoter-led business, the company echoes the values and desired culture of the main promoter/family members. That said, certain values define most promoter-led businesses in India***:

  • Agility

  • Focus on execution with trial-and-error over step-wise strategy

  • Intuition-led decision making

  • Higher innovation output

  • Importance given to relationships

  • Trust

  • Cost consciousness

  • Centralized decision making

  • Higher risk taking, to drive ambitious growth plans

  • Chaos from snap decisions led by instinct or the heart vs. a data-driven decision making process

Know Your KRAs: Why Promoters Hire Professionals

There are certain critical junctures at which promoter-led businesses may feel the need for external talent and professional management.

  • To bridge any gaps in skill/experience within the family, to take on fierce competition with organized and large players

  • Before an IPO, when having a highly skilled management team with a stellar track record is important

  • When expanding to run global operations, to bring in better governance and management according to global best practices

  • To build sustainable businesses that endure

  • To foster a strong organizational culture and drive ‘culture-building’; integrating some of the best practices from MNCs and drawing on their global exposure to create a distinctive cultural fabric for the organization that brings together employees, stakeholders, vendors, partners, and customers.

Navigating a Move to a Promoter-led Business: Your Survival Checklist

Even before you sign on the dotted line, be sure to gear up for your new role with the right groundwork. Here are some areas to focus on, to be sure you are making the right choice:

  • Check for autonomy: As someone in a senior leadership position, it is imperative that you are given the authority and power to take decisions and strategies. While non-family businesses tend to have standard checks and balances as well as clearly-defined decision making power, the lines can be blurred in family-run businesses. This could work in your favour, allowing for greater speed/agility if you’re seen as a loyalist to the promoters, or could work against you.

  • Check for a potential glass ceiling: Find out whether high level and key positions are always reserved only for family members of the promoters. This could be a possible glass ceiling and a barrier to your vertical movement.

  • Track attrition rates and reputation as an employer: Is the company known to be a meritocracy? Are connections with the promoter the only way to get ahead? Scour the market for information about high-level exits, attrition in general, and hear from current and ex-employees about the company as an employer.

  • Research the promoter’s family and the company for any red flags: Red flags include things like tax issues, reports of regulatory misconduct, default on bank loans, or poor reputation for payment clearance among dealers/suppliers. All these can make work life challenging and are likely to be issues you will have to cope with as a senior leader.

  • Ensure there are no power tussles within the family: Discord between various co-owners/family members can wreak havoc with the best-laid plans. Avoid getting caught in the crossfire.

  • Speak to existing leaders in the organization: Get a window into the business and organizational culture by speaking to as many people as you can in the promoter-led business to understand the dynamics better.

Today, promoter-led businesses in India constitute an estimated 75 percent of market capitalisation on our stock exchanges. Unlike at MNCs, in the absence of red tape and external dependencies, you could leverage the speed and autonomy to make a difference in a short span of time. You may be able to herald the company through a time of historic change and build truly lasting value. The only question to ask yourself is whether you are open to the possibilities and willing to embrace the differences that make the Indian promoter-led business the thriving engines of growth that they are.


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