5-6 pc of family businesses last beyond 3rd generation: Munjal

LUDHIANA: Just 5-6 per cent of family businesses last beyond third generation for reasons as varies as communication gap and lack of exposure, said Sunil Kant Munjal, Chairman, Hero Corporate Services.

Speaking at a CII meet on challenges faced by business families, he said, "If we need to change the scenario, we need to guide our successors... the family values which get transmitted somewhere in business... and also blend the experience of older generation with the exposure of new generation," he said.

He said in business the head of the family need not necessarily be the head of the business. Core competencies of family members should be considered while allocating roles and responsibilities, he added

Munjal asked youngsters to think like managers rather than the ones born to head companies. Only when you learn how to manage, then only you will know how to rule, he added.

Ramachandran K, a Professor with Indian School of Business, Hyderabad, said that all over the world, 60-70 per cent of all businesses were family businesses.

In India, however, this number is 90-95 per cent. "The first generation sets up the business, but attitudes and thinking become different by the time the third generation comes into the business. Most family businesses try and avoid conflict within the family, but the need is to work out issues through discussion," he said.

Adrish Ghosh , Head of Wealth Advisory , India , Barcklays Wealth India, talked about the family constitution, which laid down roles and duties of family members and the steps to be taken in case of any eventuality.

This will not only lead to clarity within the family but will also better the functioning of family business, he added.