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Family Business Readings: Soft Preconditions for Robust Family Trusts

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Arising out of my consulting experience in helping family firms with family governance, charters and so on, I have a few learnings to share with Family Business Owners, Family Business Advisors and Trust professionals.

Arising out of my consulting experience in helping family firms with family governance, charters and so on, I have a few learnings to share with Family Business Owners, Family Business Advisors and Trust professionals. While wealth consolidation, protection and transfer is the central and obvious agenda, many associated "softer" issues need attention. Creating a Family Trust and then "living" it, are both involved activities. The process of forming the Trust can influence the content of the Trust deeds. Many business families hasten to form Family and Business Trusts and begin this work prematurely, only to hit roadblocks of dysfunctionalities within the family. The main learning is that family governance, the  ownership culture and values must be r…

Human Resources and the Strategic Space – A Model

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Human Resources and the Strategic Space – A Model - PM Kumar The significance of individuals in the HR Department has not kept pace with the shift in the importance of the function. Most people, in most organizations do not think much of the HR Chief and his lieutenants, even as they acknowledge the criticality of the function. The function can evolve and share the strategic space only if the individuals who staff the department refurbish their personal and professional credibility in the eyes of other people in the organization and amongst their senior colleagues in the top management.
Before proceeding further, it may be useful to layout the maturation process for a service function in any discipline. The process has four distinct levels of value addition:
Level 1 Maintenance Involved in administrative support, hygiene and sustaining of well tested systems and policies Level 2 Key Success Factor Offers focused and specialized inputs in areas significa…

FAMILIES AND THE BUSINESS OF GOVERNANCE

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FAMILIES AND THE BUSINESS OF GOVERNANCE – PRASAD KUMAR 

A family business refers to a company where the “voting majority “ is in the hands of controlling family including the founder(s) who intend to pass the business on to their descendants.

THE IRONY :

Several studies have shown that family-owned companies outperform their non-family counterparts across several business parameters. It is also a fact, that many family companies have a very short life span beyond their founder’s stage and that some 95 percent do not survive the third generation of ownership.

THE STRENGTHS :

Their inherent strengths include – commitment, knowledge continuity, reliability and pride and the entrepreneurial drive.

THE PROBLEM :

The main cause for such high premature mortality rates is poor governance. The primary difficulties in governance arise from:

1. Complexity: Family businesses have to engage with an additional variable that their non-family counterparts do not have to: the family. Adding famil…