`Family owned businesses need to appoint professionals'

HONG KONG NOV. 6. Family-owned and controlled businesses and corporations, which still dominate the global industry to the extent of 80 per cent, more so in Asia, need to induct professionals to lead their businesses in the increasingly knowledge-driven world but the most important criterion in selection of the professional head should be his values and their compatibility with the values and culture of the family.

This seemed to be the consensus of a springkling of CEOs from Asia, besides from the western world, at the Business Week's Seventh Annual CEO Forum, in its final plenary session devoted to the theme, "Leading the Borderless Corporation: Managing for Innovation and Inspiration.''

Venu Srinivasan, Chairman and Managing Director of TVS Motor Co, who shared the podium along with three other awardees of this year's Business Week Star of Asia Award for those who were at the forefront of change in Asia in this session, and received the award from the hands of Bill Clinton, former President of the U.S., himself heads a company that had been faced with a decade of rapid changes. Operating in an industry — two wheelers — which was delicensed much before the end of the licence raj in India in 1991, TVS Motors (formerly TVS Suzuki) has become a market leader after going through a phase of industrial unrest at its manufacturing unit in Hosur, and zigzags in its relations with its financial and technical collaborator, Suzuki of Japan, to emerge at present as an all-Indian company with its product innovation and rise in market shares. For Mr. Srinivasan, there is no big problem in "aligning the personal goals of the hired CEO with the goals of the business,'' provided the company's values were shared with the employees. What was needed was encouraging team achievement rather than merely individual achievement. "This my company learnt from Toyota and has steadfastly implemented,'' he said.

As for encouraging innovation, he felt that what was needed was to "recognise the freedom to fail,'' by evolving clear guidelines for innovators in the organisation. In respect of the question whether people hired "wrongly,'' namely, those who did not meet the company's demands, and for that matter, even to reduce surplus staff, TVS Motor did not believe in "ruthlessness of a Jack Welch (GE),'' as suggested by some in the conference, but in humane severance by assisting the unwanted to relocate in other employment and giving them sufficient time for the adjustment Richard Elman, CEO, Noble Group, Hong Kong, said the family businesses should go in for a hired CEO who "showed a passion for what the company did and believe deeply in it,'' and if such a person with required other skills could be found within the family (though that was not a common phenomenon), this should be the option.

Luis Conde, Chairman, the Amrop Hever Group of Spain, said it would not be advisable to induct young successors at top levels in the family into the business.