Impact of "Family Bandwidth"

In the last post, I have attempted to establish the importance of "family bandwidth" in family businesses. In this post, my attempt is to discuss various consequences of mismanaging family bandwidth, as I have observed in my career. A caveat - my intention is not to comment on "family capability," at least in this post.

Individuals and families, who set up large and successful enterprises, are almost invariably highly capable, ambitious, industrious, enterprising and often ruthless people. Almost all of them are driven by some form of burning passion and vision - though not necessarily the ones articulated in their corporate websites. Such people are rarely satisfied with what they have - they usually have indomitable urges to grow their businesses (or "empires"), and often as persons. Of course, in the context of business, "growth" is often a prerequisite for survival. Therefore, except in deep recessions (when the focus is on protecting what has been built), the focus of most businesses, and especially family businesses, is on growth.

Consequently, as established in the previous post, the demand on "family bandwidth" rises. And as also discussed in the previous post, family bandwidth is often a major, if not the most critical, bottleneck in the growth of family businesses. Given the challenges in expanding family bandwidth as rapidly as today's highly dynamic business environment demands, "delegation" to "non-family professionals" often emerges as the only option.

And there lies the next challenge. Delegation necessarily demands two things - Trust and the willingness to relinquish control. Both are "tough virtues" among family businesses. I am not passing a value judgment here - "clannishness" is a very natural human (and primate!) quality.

The purpose of this post is not to discuss how this "delicate balance" between growth imperatives and developing trust / relinquishing control may be identified and established. It is to discuss certain consequences that family organizations suffer from when families attempt to deliver ambitious growth without striking this balance of trust and delegation with non-family professionals. Here is a list of what I have observed:

Working at odd hours and round the clock: Now what is wrong with a board meeting at 10 p.m., you may say? Especially in India, such behaviour may be rationalized through multiple reasons:

• The family owns the business and pays the hefty salaries, so they may call their people anytime they want
• The number of hours spent at work determines how "hard" the people are working
• Professionals, especially the highly paid types, cannot "afford" personal time
• How else will mundane professionals (who often compare signing a deal with winning a battle) feel important?
• How else will we have "corporate martyrs"? - The type whose only identity is their work life?
• The pace of growth (of position, pay and girth) in the corporate jungle is determined by how much personal and family time one has "nobly sacrificed" at the altar of their profession - It is a different matter that we Indians insist till hoarse that our social and family values are distinctly superior to the decadent west, while we are five times more likely to sacrifice our family time for professional and material gain
• So many top business leaders could not be brought together at any other time of the day
• Etc. Etc. Etc.

While we may consider ourselves to be supermen (we went to IIT / BITS / IIM / XLRI, and other assorted branded institutes, for God's sake - how can we not be supermen??!!), we cannot work productively beyond certain reasonable limits. Most Indians, in my experience, choose long hours over productivity - and we just need to pause and contemplate our national productivity statistics for a moment to understand the consequences of this choice.

Sacrificing the "important" for the "urgent": The relative importance of the "important" over the "urgent" has been eloquently discussed in myriad platforms. However, this relative importance assumes that a business leader takes on only as many "important" matters as he can fit into eight (or twelve / sixteen) hours a day, while leaving some time for those urgent matters which invariably crop up without warning. An agenda cannot be prioritized if the business leader takes up more important goals than can reasonably be fitted within his working hours (which happens when there is inadequate delegation). Often, this results in frustration and despair (for the business leader's secretary, if not the business leader himself) and the easiest response becomes simply selecting the “urgent” matters without worrying about the important. Urgent matters have a “here and now” element which can provide some semblance of comfort (and even accomplishment) while important strategic matters with deferred consequences may be easily swept under the carpet.

Lower levels of performance: All “important” strategic issues, if not dealt with on time, become “urgent” (There is a limit to how much can be swept under the carpet without forming clearly visible bumps. Urgent matters rarely allow time for meaningful action and the consequent negative results often transpire within a very short period of time and are visible to everyone. As a result, deferring the important till it becomes urgent often leads to significantly lower levels of performance, often very visibly.

Passing the buck, and consequently, lower morale: As performance suffers, a natural (though unfortunate) consequence is the search for scapegoats. This, as is known to practically everyone in corporate environments, leads people to focus on covering their posteriors rather than focusing on value creation. And as this vicious cycle gathers momentum, morale plummets.
Institutionalization of “bad practices”: The worst consequence of this vicious cycle is that it gets institutionalized. When this level is reached, meetings on Sundays are considered “business as usual.” Yes, people do attend such meetings “for the money.” But can one build institutions with mercenaries?
To be honest, most business leaders (including family business leaders) in my experience are very aware of this situation. Most of them honestly and sincerely want to correct it. But the challenge is how to correct it. Actually, that is not true. There are tomes written by experts and consultants on how to correct it. The challenge is how best these methods can be implemented. As David Maister so aptly puts it – the question is not which diet is best for the fat smoker, it is which diet will the fat smoker commit and stick to.