Family businesses: Need for good corporate governance and succession planning

Family-owned businesses are prime mover for economic growth, drive socio-economic development of a country; contribute about 70 percent of GDP, 60 percent of employment; and have outperformed their peers across regions, sectors and sizes. Family-owned businesses, in general, are self-made and are loyal to principles and ideals of their respective founders and have been transformed from ‘Owner-Managed’, to ‘Sibling Partnership’ to ‘Cousin Confederation’. Family-split and disputes are a key dampener for sustained performance. Robust corporate governance framework is a step to resolve role overlap and potential role conflict; this is illustrated by three leading Indian business groups to identify common threads to align that with corporate governance. Family business is an interplay between three overlapping circles of Ownership, Family and Business. Group patriarch plays a critical role to overcome the conflicting role as reflected by the overlapping circles by adopting strong corporate governance, defining roles and responsibilities of each family group/member so that each sector can operate in an independent transparent defined manner, thereby complementing other sectors and increase the overall family ecosystem.