Family-run businesses must distinguish between owners and management to stay relevant: Gautam Singhania

Gautam Singhania recently shared with students the complexities of running a family business, and why it’s important to divest a few responsibilities.

Gautam Hari Singhania, chairman of Raymond Ltd, was one of the keynote speakers at IIT Bombay earlier this year. Speaking to young students, he discussed the complexities of running a family business and the challenges he faced in taking Raymond to the next level, including putting his professional life ahead of his personal one.

“Raymond, like many family run businesses, had adopted the family first approach. However, since 2015, we have changed our approach to business first,” he said.


Dwelling on the on-going spat with his father Vijaypat Singhania, he reiterated that the bone of contention was a duplex flat in the renovated JK House, which could not be given to his father as shareholders had rejected a resolution. “Despite being the largest shareholder, I abstained from voting though I would have also voted against the resolution. I have suffered on the family front for doing what is right for the business,” he said.

Singhania also pointed out that if family businesses don’t adapt and bring in the distinction of ownership and management, then they run the risk of being obsolete. “It is in the best interest of the family to ensure that the management delivers and enhances the value of the family’s holdings,” he said.


Hands-off
Having stepped down as chairman from some of the group companies, Singhania said that giving up responsibility of day-to-day management of multiple businesses was crucial.

“I look at my present responsibilities in three distinct areas — communicate, motivate and simplify,” he said.

“Communicating with the management and helping them communicate with other stakeholders on what we are doing. Motivating our senior management, our employees and associates to help realise our objectives. Simplifying the complex issues that are emerging as business challenges in the current global scenario and planning for them with responses is the third area.”

Sharing his experience of being hands off, Singhania said that he was informed about the appointment of an independent director on the board of a group company over an email. This kind of approach, he said, helps professionals feel a sense of ownership. And it has its benefits. “I am busier than ever before, as I have more time to plan on what needs to be done and meet more people who matter, rather than be busy with operational matters.”