INTERVIEW — MADHUR BAJAJ

‘Basic paradigm of family should be maximising wealth’

Tarun Narayan in Mumbai

Madhur Bajaj

Lack of foresight and fickle managing style of entrepreneurs can render a family business into a fractured entity. The solution to survive the struggles of competition and the perils of a downfall for the family business, according to Mr Madhur Bajaj, vice-chairman, Bajaj Auto Ltd, is to “shape the inter-personal cracks and get sensitised to the survival norms”. In an exclusive interview with The Financial Express, Mr Bajaj drives home the dire need of further professionalising family business that is ensured by a mature-mix of “commitment to quality and the conviction to create objectivity in succession planning”. Mr Bajaj was chairperson for a seminar on “Family Business in India: The way ahead”. The seminar was jointly organised by the Confederation of Indian Industry (CII) in association with the SP Jain Institute of Management Studies and Research (SPJIMR) and The Financial Express, in Mumbai. Excerpts:

What are the ways in which competence is ensure to make a family-managed business successful?
Family is emotion-based, while business is task-oriented. The test of being task oriented can be successfully overcome only by taking the road to professionalism. Professionalism can be forcefully generated by making the organisation an unfettered brand, decentralising authority and creating performance-based compensation even for family members and appointing qualified external professionals with decision-making authority. All such initiatives should also be rolled into a stringent system for exits for the non-performing members of the family. When the concern starts displaying signs of impartiality in compensation structuring and recruitment, the first step towards developing competence has already been brought into action.

Wouldn’t external professionals with decision making authority totally delink family control from business. Is that the right way of the future for sustaining family business?
Professionalism will only reap profits for the FAMILY?? business. Delinking would not mean getting away from the core concerns of the business. It only reveals a pro-active readiness to create wealth. The management of a family-run business should be in supervisory functions and not in areas of actionable roles. If the basic paradigm of family members is guided by wealth maximising and not by the avarice of power, then authority delegation to professionals and retaining control can be maintained simultaneously.

How can a climate of leadership be created in new generation entrepreneurs of family-managed business?
The leadership comes by combining team-building with precision-driven performance. Team-building can be better created by making the family scions work with external members on a similar status, rank and hierarchy. Precision-driven performance can come by making the members handle challenging roles and be accountable for miscalculated ventures and negative fall-outs. Thus, they become team workers and performers displaying the ideal characteristics of a leader in the making.

What is your suggestion to family-managed business with frugal resources in this gloomy era of economic slowdown to sustain and also face competition particularly from transnational corporates?
They should build up on the quality management norms by adopting some of the philosophies and tenets of the South-East Asian models to create quality. Entrepreneurs should try and monitor the organisation challenge from time to time with a rare towards developing ready solutions in the wake of a crisis. Quality management, transparency and solution-based actions are the clear guidelines for the family entities to develop and grow.