Family-run businesses survive if they adapt to changes, allow professionals from outside: Deepak Parekh

Long-term survival of family-run businesses depends on their ability to adapt to changes, inculcate right governance practices and having a succession plan in place, said HDFC chairman Deepak Parekh.

"Those that truly believe in corporate governance and its benefits are the ones that succeed over the long run," Parekh said Saturday.

"It is quite right when they say that well-run family businesses think in generations and not in quarters – or what is popularly known as “quarter se quarter tak”. Short-termism has often been the downfall of many organisations," he said at an event at Viraasat, celebrating silver jubilee of SPJIMR: Centre for Family Business & Entrepreneurship.

Parekh lauded the focus on education by family-run entrepreneurs for their younger generation, dubbing it the "biggest gamechangee" in family businesses today".

"Better education has helped bring in scale, vision, professionalism and diversification in businesses. Armed with better education, there is a deeper understanding of changing market realities which helps family businesses stay relevant," the veteran professional said.

Another significant step towards achieving success in such business houses is the ability to invite professionals in their board.

"The harder decisions in family owned businesses is the ability to honestly address issues on gaps in the company. The million dollar question is when should the family make way for non-family professionals? Having a strong, diverse and inclusive board without conflicts of interest helps family owned entities navigate through sensitive issues and tough decisions," he said.

Many large Indian family owned businesses today have boards that are inclusive, diverse, focus on sustainability and philanthropy. They actively seek out independent, professional directors – be it from the overseas or in India. They want governance structures that are best-in-class and many of them have strong ambitions to create a global footprint, Parekh said.