Mr Farhad Forbes, Director, Forbes Marshall, shares his perspectives on the management of family business in an exclusive interview.
Excerpts: JANUARY 2011 | CII-FBN INDIA CHAPTER JOURNAL 7 INTERVIEW
Forbes Marshall is in business for over half a century. From a family business perspective, how has the management of the company evolved over these years?
Forbes Marshall was founded by our grandfather, J. N. Marshall, and our father, Darius Forbes, in the mid 1940s. Our father ran the company until the mid 1980s when my brother Naushad and I became responsible for the day to day operations of the business. Today, my wife Rati who handles HR and all the Community and Social Development activities of the organisation, my brother Naushad and I are the three family members in the business. We are part of a management team that includes other highly competent and motivated non-family managers who are each responsible for different parts of the business. Our parents, with our father as Chairman, continue to be involved on the Board and are aware of important policy matters. We also have a Supervisory Board that consists of external non-family independent directors. Even though we are privately held and there is no statutory requirements that the Board needs to fulfill, the Supervisory Board is an invaluable asset to us in terms of providing overall guidance and governance.
With business diversification, was there a need for greater induction of professionals in top management? Did that alter the family control on business?
Our father was involved in almost all the day to day details of business operations and it would never have been possible for Naushad or me to be involved to the level that he was. We had to depend on others in his management team at the time, and then subsequently on others who succeeded the original management team. Moreover, like many other Indian companies, Forbes Marshall too benefitted from India’s economic liberalisation in 1991 and the growth we have had made it imperative for us to develop and rely upon a team of very able non-family managers. The family, however, continues to provide overall direction to the business and also influences the organisation’s values, culture and operating philosophy. This influence has not diminished at all.
How is the company’s founding vision maintained over decades? Does it change as the baton of leadership changes hands?
The company’s founding vision as established by our father and grandfather went through some evolution in the early 1990s to reflect the changed post-liberalisation economic environment. Our values, though more formally articulated later, remained much the same and continue to remain rock solid even today.
What have been the key challenges in terms of success planning?
Both Naushad and I were very fortunate to have an easy succession because of the far- sighted and progressive attitude of our father. While he did not necessarily agree with some of the changes that were being made, and although he made his views clearly known to us, he allowed us to make our own decisions and would back us 100% even if he originally disagreed with a decision. Naushad and I also found, in hindsight, that he was often right on a particular issue and this made us greatly value and respect his opinions and views on policy issues. Given how contentious succession can sometimes be we feel extremely fortunate at how smooth our succession process was, and we hope we handle our succession as well for our next generations in future.
Would you say that family business management needs to be viewed differently from the management of professionally-managed companies?
Family managed firms can be as professionally managed as nonfamily firms and the professional managers can as well be family members as non-family members. So, I don’t think a family business with family in management is any less professional than one that does not, provided of course there are good governance practices in place and that these governance guidelines apply equally to the family members in management. There is one further challenge one has in a family business situation and that is that, as a family member involved in the business, one needs to also invest time in managing the family. More often than not we spend a great deal of time on the business but little time on managing the family.
We need to put in place processes and practices on the family management aspect of things before problems arise. Would you advocate the need for knowledge sharing between family businesses within India?
Absolutely! There is so much we can learn from each other. Though each family business situation is different many of the issues are indeed the same and we can greatly benefit by learning how others have dealt with those same issues. CII FBN provides our members with this opportunity to share and learn from each other through our various activities and forums. It is also a network of sensitive individuals willing to share knowledge and experiences with others in the network.
Do you see a role for external family business consultants in your company?
We have used external consultants and facilitators in our business both within the family and also to work with our management team. We have also benefitted very much from attending the annual CII FBN Family Business Convention with Prof. John Ward that CII has held for the past twelve consecutive years. We try and attend this convention with the whole family present so we all receive the same inputs and then share ideas that we can then implement. There are many good practices that we have learnt from John Ward at these conventions and some of these learnings have been implemented as a result.
What is the impact of globalisation on Indian family business?
Globalisation has affected family business as much as it has nonfamily business. Globalisation brings greater competitive pressure, but it also provides opportunity – for growth of our businesses and also for sharing of knowledge, learning, and adopting best practices. It also enables otherwise small family businesses that would have remained small to create linkages and alliances with other similar firms elsewhere in the world for their mutual benefit. !