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Commenting on the bitter battle between Ambani siblings, the publication said in its latest issue that the feud further underscores the need for the businesses to outgrow from their mostly family-run setups.
“Nor are such tantrums limited to the Ambanis -- many family owned Indian monoliths still favour insider, hire relatives over better-qualified outsiders, squabble unproductively, and ignore independent director’s advice,” the magazine said attributing the views to a managing partner at a private equity firm which invests in such companies.
Pointing out that Indian firms have been growing in competitiveness globally, the magazine said that “conventional wisdom has also been that subcontinental powerhouses are getting sophisticated.” Newsweek cited the recent merger of country’s largest drug maker Ranbaxy Laboratories with Japanese pharma major Daiichi Sankyo as an example.
“Management is becoming more professional, too; bullish analysts point to the recent merger of Ranbaxy with Japan’s Daiichi as a sign of a new willingness among India’s CEO scions to move beyond the walled garden of family firms and team up with smart outside companies.” Apart from Reliance, other family-run businesses in the country, include diversified conglomerate Tata Group and Aditya Birla Group companies.
Corporate India, which has grown globally in stature, is still a far cry from the professional management as family-owned monoliths in the country still prefer insiders and relatives over better qualified outsiders and squabble unproductively, says US magazine Newsweek.
Commenting on the bitter battle between Ambani siblings, the publication said in its latest issue that the feud further underscores the need for the businesses to outgrow from their mostly family-run setups.
“Nor are such tantrums limited to the Ambanis -- many family owned Indian monoliths still favour insider, hire relatives over better-qualified outsiders, squabble unproductively, and ignore independent director’s advice,” the magazine said attributing the views to a managing partner at a private equity firm which invests in such companies.
Pointing out that Indian firms have been growing in competitiveness globally, the magazine said that “conventional wisdom has also been that subcontinental powerhouses are getting sophisticated.” Newsweek cited the recent merger of country’s largest drug maker Ranbaxy Laboratories with Japanese pharma major Daiichi Sankyo as an example.
“Management is becoming more professional, too; bullish analysts point to the recent merger of Ranbaxy with Japan’s Daiichi as a sign of a new willingness among India’s CEO scions to move beyond the walled garden of family firms and team up with smart outside companies.” Apart from Reliance, other family-run businesses in the country, include diversified conglomerate Tata Group and Aditya Birla Group companies.
With all the professional management, many western companies favour their own countrymen/women, hire other whites over better-qualified outsiders (read non-whites), to senior positions without caring for productivity any way, and there are no independent directors but nominees of self-interests. What is different Newsweek ?
The lack of trust and sticking with family is the root cause of India's problems. Take this example. People will make their house sparkling clean but will dump the garbage right outside their house. Its a psyche we just can't come out of.
Why only in business ? It is worse in politics which has now become an exclusive family affair. In the footsteps of Sonia Gandhi promoting her son to succeed Manmohan Singh as Prime Minister there are numerous other ministers and heads of the political parties who are trying to promote their siblings. If a party leader dies in harness his widow or son or daughter is nominated for contesting the election of State Assemblies or Parliament. More competent persons within the party are ignored in favor of the insiders or family members. Indian political stage is full of such characters. This is the most unhealthy trend which is not only undemocratic but prejudicial to the quality of governance.
Now America wants to preach again to India! Why management has to be done in the U.S. way? Many Indian enterprises start and grow as family business and then go public. Nothing wrong in keeping family and friends in top positions if they provide the results and are reliable (and trustworthy). Similar things are done in many big American corporations too. The Bush/Condi Rice/Karzai/Dick Cheney group is a good example.
Now America want to preach gain to India! Why management has to be done in the U.S. way? Many Indian enterprises start and grow as family business and then go public. Nothing wrong in keeping family and friends in top positions if they provide the results and are reliable (and trustworthy). Similar things are done in many big American corporations too. The Bush/Condi Rice/Karzai/Dick Cheney group is a good example.
I am working in the US company and i find family politics over here too. By hiring people from their family and still making success is not enough. If we won't find it a good way we will change it. So, please do not teach us.
There are problems in all kinds of business setups. After some time, the leadership needs to be shaken up. It is not wrong to give a job to the known persons, because they can understand the game very well. The newcomer has to learn the trade, and that will take time. And yes, in the west there is a lot of politics in the offices and there are virtual walls that you cannot cross. Practice is very different from the theory they are teaching.Indian management needs to learn a lot, that is true also.
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