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Indian family businesses prefer professional managers to next-gens

The owners of Indian family businesses are looking beyond the next generation to non-family professionals when it comes to appointing new managers, according to research from Barclays Wealth.
Indian family businesses prefer professional managers to next-gens

The owners of Indian family businesses are looking beyond the next generation to non-family professionals when it comes to appointing new managers, according to research from Barclays Wealth.

Nearly seven in 10 respondents to the study, carried out by research firm Dun & Bradstreet, said they prefered hiring independent professional managers for leadership roles, rather than their relatives.

Just 15% of those questioned indicated a preference for leaders from within the family.

Almost half of those surveyed said “worthy leadership qualities” are inherent and couldn’t be taught, compared to 39% who believe training, mentoring and experience develop a person’s ability to lead.

The findings show that high net worth individuals are “differentiating between business and family succession”, and are “willing to hire capable professionals to focus on continuity of their businesses”, said Satya Bansal, chief executive of Barclays Wealth India.

“This provides them with the dual benefit of professionalising their business for long-term growth and also creating strategic diversification opportunities within their group. This new thinking also throws light on how family businesses may be looking at succession in a more open and conscious manner.”

However, there were country-wide discrepancies when it came to appointing professional managers, with family business owners from Delhi, Chennai and Kolkata more likely to choose those already working in the company, while Mumbai and Bengaluru residents gave almost equal preference to professionals within the organisation and from the general industry.

The research also found that governance is becoming more important – 93% of respondents said corporate governance will be vital for long-term business sustainability.

Despite this, 69% had restricted the implementation of good corporate governance either entirely or to certain areas.

The disclosure of sensitive information, the threat of losing control and concerns about costs were listed as inhibitors for implementing corporate governance, as well as limited guidance or ambiguity on guidelines. 

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