Human resource experts said that one person making key decisions can often lead to discontent in family-run firms
The Singh brothers of Fortis, Malvinder Singh and Shivinder Singh are embroiled in a legal tussle after the younger brother moved the National Company Law Tribunal (NCLT) against his elder sibling, and Sunil Godhwani, former chairman and managing director Religare Enterprises, alleging oppression and mismanagement of RHC Holding, Religare and Fortis.
Human resource officials with whom Moneycontrol spoke to, said that this was in the making for the last few years, especially since one brother took several decisions.
A senior human resource official who heads the Asia Pacific market for a global consulting firm said that there have been instances where decision-making has been relegated to one individual.
“There has been a cause of concern in this instance (Singh brothers) and others in the past where one family member has a higher position of decision making than the others,” he added. He was associated with Fortis in the past as an employee.
"The collective, ongoing, actions of Malvinder and Sunil Godhwani led to a systematic undermining of the interests of the companies and their shareholders mentioned above as also the committed and loyal employees of the group," said Shivinder in a press statement.
Shivinder said that he can no longer be party to activities in which transparency and ethics are continuously and consistently negated.
Shivinder also said attempts to defame Gurinder Singh Dhillon, known as Babaji, the spiritual Guru of the Radha Soami Satsang Beas (RSSB), also made him open up.
However, insiders said that there were questions raised on the decision-making processes in the company.
“There were clear cases where individuals who have no business interests were taking a call on matters like restructuring and stake sale in subsidiaries,” said a former employee who runs his own human resource firm.
Family-run businesses versus professional firms
When it comes to family-run businesses, decision-making is not very open. According to Sunil Goel, Managing Director of headhunting firm GlobalHunt, professionally-run and founded companies have a more structured decision-making process where all the pros and cons are weighed in.
Further, the emphasis is on ensuring that decision-making powers do not get diluted from the one to two members. An insider told Moneycontrol that even during stake sale matters in segments like insurance, there were serious differences of opinion that were brushed aside.
Joseph Devasia, Managing Director-India at global recruitment firm Antal International said that while family-run businesses want to professionalise, they are unable to give up control.
"They (family-run firms) do bring professional talent but key business decisions are taken by a few family members. On the other hand, professionally-run and founded companies have a more democratic process," he added.
A key, said HR professionals, would be to give more responsibilities to all key management personnel.
"While it goes unsaid that such companies will have family members taking key decisions, it is key that all stakeholders are on the same page. Else, the Singh brothers' saga will be repeated time and again," said a former employee quoted above.