Political dynasties and their similarities with family businesses

By: Kavil Ramachandran

The rapidly deteriorating relationship in the Mulayam Singh family and the Samajwadi Party echoes scenes often witnessed in family businesses. Several well-known family businesses have experienced similar agonising moments and lost wealth and reputation in the process. With ideology giving way to personal loyalty, politics is increasingly seen as the marketplace for family members. Like family businesses that have split in multiple rounds, like an amoeba, political parties too are likely to be so if the current trend continues.

What makes family businesses and political parties successful? Successful family businesses have certain key features such as clarity of purpose and values shared by their members, like a good political party that is driven by a set of ideologies. They follow transparent policies and processes for choosing leadership and succession. Family membership does not automatically enable people to be selected as business leaders.

Members of good family businesses follow an accepted code of conduct, and practise professionalism in management. Families are aware of the stakeholder expectations and undertake activities accordingly. Essentially, leaders of successful, multi-generational family businesses practise good governance religiously. They follow clear principles of succession and choose leaders who are custodians of the family heritage.

There are obvious parallels between well-governed political parties and well-run family businesses. They not only have shared ideologies and values among the members, but also have strong organisational structure, systems and processes. Transparency in the selection of leadership and decision-making are common features of strong political parties. They have a certain code of conduct. Business and political families with a history of family feuds and splits are deficient on several dimensions of institutionalisation. They fail to keep the family above personal agenda of individuals. They want to acquire power and tend to drift and lose out on several fronts.

What Ails Family Parties?
Histories of the Samajwadi Party and DMK have several parallels to family businesses that have withered away or lost out in the marketplace. These parties, often set up with a social vision, are like entrepreneurial ventures. A typical dilemma faced by such leaders is about succession, when their children grow up. Their parental love and anxiety to protect the “family wealth” lead them to install trusted family members as successors. To ensure a smooth career path for their children, they entrust them with powerful organisational responsibilities at a young age. Naturally, they lose sight of the larger vision with which they started the journey.

Read Also: How India’s political families have handled internal strife

Akhilesh Yadav, Rahul Gandhi and others belong to this group of inheritors by bloodline, disregarding their capabilities. Their basic qualification of family membership is obviously not good enough to lead a sound political organisation. Rahul seems to prove the old saying about destruction of wealth by the third or fourth generation. Besides, they tend to build their personal power base in the party, like the leaders of quarrelling business families.

Like the founders of business families, party founders should recognise that their family members may not have the capabilities to step into their shoes. Unlike a family business, where ownership is controlled by shares, political parties cannot control their cadre as loyalists beyond a point. People tend to switch loyalties if their demands are not addressed dynamically. In a family business, owners can appoint non-family professionals as managers and still control the business. That cannot happen in politics.

In essence, political parties cannot be run as family businesses as long as ownership control remains outside the family. While there are apparent similarities, the critical success factors for each are not the same. The competitive capabilities required for operational leadership cannot be cultivated easily, in politics and family business. What keeps family businesses together are ownership control, shared purpose and practice of strong values without hunger for divisive powers. As long as individual members of political families are driven by a hunger to have power at any cost, it is not possible to have unified family political parties, let alone continue the party as a family heritage.

Read Also: How India’s political families have handled internal strife

(The writer is professor and executive director of the Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business)