Vishwas Panijar, partner in business consulting firm Nangia Andersen LLP, who leads the firm’s family office business, in an interaction with Dipak Mondal of The New Indian Express on the importance of amicable split of Godrej family business.
How significant is the Godrej family split in the context of Indian business history?
Considering the magnitude of the family operations that have been developed over the past century and its influence on Indian business landscape, the split may cause short-term instability in the market.
We have seen that in most cases, the fate of the transition is determined by how well the business, board, and family were prepared.
What factors contributed to the split in the group business?
I would not want to speculate the factors behind the split, however going by the official statements as well as the Family Settlement Agreement, it appears to me that the fundamental reason for the split seems to be that the newer generation have diverse interest and perception of Growth for the Group.
How important it is to resolve family disputes through amicable means, especially in the context of preserving both the family’s legacy and the stability of the business?
We have seen numerous instances of nasty family disputes coming into the limelight. In fact, we have been roped in some of these high-profile family disputes ourselves. Such disputes not only tarnish goodwill of the family but also seriously hamper stakeholder’s confidence. A well-defined conflict resolution mechanism within the family can address this systematically to ensure that all family disputes are resolved amicably with minimum disruption to existing business.
What insights can you share regarding effective succession planning strategies?
In my experience, clear and transparent communication amongst family members regarding the vision for the business is the key contributor to developing an effective strategy for succession planning.
While the family leaders play a significant role in setting the tone during the planning phase, it should be kept in mind that succession planning is not an exact science, but an art and hence should first begin with a simple question: Family first or business first?
How does the Godrej Family split serve as a case study for future generations of Indian entrepreneurs?
It is not the split per-se that is important but the manner in which Godrej Family was able to execute the split is a case-study on the ‘business first’ outlook and how to accommodate aspirations of the newer generation of family leaders in an amicable way without causing disruptions.
What lessons can other family-owned businesses learn from the Godrej Family split?
Succession planning is a way for business leaders to have an element of control over the way in which their business passes to the next generation.
Family leaders should proactively create a robust family charter that is foundationally rooted in the core values of the family but also flexible enough to survive multiple generations. Without formalised plans, it is easy for family members to disagree about how to manage the business when the leader steps away. By transparently articulating the rationale behind such decisions and ensuring equitable distribution, family leaders can promote harmony within the family.