Article: Need of HR in Family run business - WorldHRDiary

October 13, 2016

Article: Need of HR in Family run business

By Krishna Gupta, Founder Director of KAPL with inputs from Meena Bansal 

Need of HR in Family run business, with special reference with KAPL 

Family Set ups

•           Stability: Family firms have flexible structure due to the highly personal relationships, the inherent loyalty and commitment, but they also make them challenging to sustain for the long term. The goal then, is to recognise and understand both the strengths and the weaknesses of such set ups.

•           Succession Planning: Many Family setups lack succession plans, either because the leader doesn’t have the desire to admit that one day he or she need to step down, or because there is too much trust in the family.

•           Nepotism: Family firms are reluctant to let outsiders into the top tier, and the result is that people are given jobs for which they lack skills, education or experience. In particular, it’s very difficult to retain good talent at lower levels if their performance or ability to succeed in the long run, is consistently being affected by incompetence at higher levels.

•           Unstructured Governance: Governance issues such as internal hierarchies and rules, as well as ability to follow and adhere to external corporate laws, tend to be taken less seriously at family businesses, because of the level of trust inherent .Unfortunately, it can be gravely detrimental.

At a time like this when KAPL is rapidly growing ,the need for HR is a must to professionalize the business now more since we have initiated SAP and ERP  .The need of the hour is to do business  in a structured manner. The keys to long term success are expert management and keeping the family committed to and capable of carrying on as the owner. HR definitely will help in stabilizing the company on a continual basis.

Few of the responsibilities of the HR Manager -
•           Formalize the business legal structure
•           More Defined business strategies and plans
•           Better Branding
•           Financial Forecasting and sound financial management
•           Update policies and procedures and ensure organisation is in compliance with legal and safety requirements.
•           Responsible for hiring and retention of staff, Payroll Calculation.
•           Plan, monitor and implement employee performance appraisal at set times.

An example is the 2005 dispute between the sons of Dhirubhai Ambani, Mukesh and Anil divided India's largest petrochemical manufacturer. When all was said and done, Mukesh retained control of the petrochemical business, while Anil became the chairman of Reliance Capital, Reliance Communications and Reliance Energy.

For a family business to be successful, the following dimensions should be working well and in synchrony:

 (Views are personal) 

1 comment:

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