Harmonizing Family Business Dynamics: The Role of Mediation in Sibling Rivalry

This article was first published in the Financial Express on April 22, 2024. Co-authors: Sougata Ray, Tara Ollapally; https://www.financialexpress.com/opinion/harmonising-family-business-dynamics-the-role-of-mediation-in-sibling-rivalry/3464998/ 

Sibling rivalries within family businesses have historically posed significant challenges, often leading to adverse outcomes for these enterprises. The ongoing dispute between Baba Kalyani and his sister Sugandha, of the prominent Kalyani Group in India, highlights the complexities and repercussions of such conflicts. This case mirrors the damaging effects witnessed in other renowned family businesses globally, such as the Ambani brothers' feud and the Rothschild brothers' dispute in the 19th century, underscoring the pervasive nature of these challenges and their potential impact on business sustainability and growth.

Moreover, countless family businesses have been entangled in protracted court battles, resulting in stagnation or downfall, due to sibling rivalries. In this context, mediation emerges as a compelling alternative, offering a structured, constructive, fast, and economic approach to resolving intra-family conflicts, thereby safeguarding the longevity and prosperity of these enterprises. This article explores the transformative power of mediation in resolving such conflicts, using a real-life case as a backdrop to illustrate its efficacy and process.

Sibling Rivalries: In family businesses, conflicts between siblings can simmer beneath the surface, exacerbated by competing visions and divergent paths. Many a times, the rivalries often stem from deeply ingrained dynamics forged during childhood or formative years, which resurface when challenges arise in adulthood, particularly during discussions surrounding succession, inheritance, or leadership responsibilities within the family enterprise. These conflicts are exacerbated by a myriad of factors, including disparate personalities, ambitions, perceptions of fairness among siblings, and unequal roles, responsibilities.

Additionally, competition for control, recognition, or individual legacies within the business context further fuels discord among siblings. Generational transitions and divergent visions for the future direction of the enterprise also contribute to clashes over strategic decisions and succession planning.

Take, for instance, the case of a successful automobile parts manufacturing business led by two brothers, each with distinct roles and aspirations. Tensions escalated during discussions on business expansion, culminating in a grave altercation where the older brother inflicted severe injury upon the younger. Legal proceedings ensued, charging the older brother with "Attempt to Murder" under Sec 307 of the Indian Penal Code.

Understanding the Dynamics: Delving deeper into the roots of the conflict unveils a narrative shaped by patriarchal influences and familial expectations. The father, a revered figure in the industry, imposed his aspirations upon his sons from an early age. While the older brother adhered to the path laid out for him, the younger pursued higher education and personal aspirations. Eventually, the younger brother returned and joined the family business. Soon, disagreements over business strategies and asset ownership started to surface between the siblings, threatening both familial bonds and business stability. Legal proceedings followed.

The Role of Mediation: Amidst the legal proceedings, the court recognized the scope for resolution in this deeply personal dispute and referred the case to mediation. Here, the mediator embarked on a journey to unravel the intricacies of the brothers' relationship and unearth the underlying emotions fueling the conflict. The older brother’s feeling of entitlement to the larger share was driven by a strong sense of ‘giving up’ earlier to comply with the father’s wishes. By fostering empathy and compassion the mediator was able to help the younger brother see his older brother’s struggle and invoke his own higher wisdom.  The mediator facilitated transformative dialogue, transcending legal entanglements, and preserving familial bonds.

Key Learnings from the Mediation Process: The process allows the participation of other key members. This brought greater understanding of the emotional and mental landscape of the two brothers as well as the dynamic between them.  Insights gleaned by the mediator through numerous conversations helped the brothers see their realities more effectively, which was critical for informed decision making. The mediator's ability to connect with the parties on a human level paved the way for reconciliation. By delving into the parties' emotional landscapes and fostering empathy, the mediator transformed the conflict into an opportunity for healing and growth.

Implications for Family Businesses: Family business disputes are as driven by the emotional experience of the family members as the financial and professional pulls of the business. The case study serves as a testament to the transformative power of mediation in harmonizing family business dynamics. The ability of the process to focus on resolution over legal victory allowed the brothers to not only preserve the legacy of their ancestral enterprise but also reaffirmed the bonds of kinship. This highlights the importance of proactive conflict resolution strategies in fostering sustainable business continuity and nurturing harmonious relationships for generations to come.

In conclusion, mediation is an alternative way of navigating sibling rivalries within family businesses. Mediation offers a transformative path towards resolution, transcending legal entanglements and preserving familial bonds. As family businesses continue to grapple with conflicts, embracing mediation as a proactive conflict resolution strategy can pave the way for healing, growth, and harmonious coexistence.

Two is Company

This Book Review was first published in the Business Standard on March 25, 2024; https://www.business-standard.com/book/two-is-company-124032500642_1.html

Book: An Uncommon Love: The Early Life of Sudha and Narayana Murthy

Author: Chitra Banerjee Divakaruni

Price: 799/-

Pages: 352

Year: 2023

Publisher: Juggernaut Books, India

Chitra Banerjee Divakaruni's latest, a non-fiction, "An Uncommon Love: The Early Life of Sudha and Narayana Murthy," unveils the captivating narrative of two eminent figures, Sudha Murty and Narayana Murthy. It offers an exploration of their formative years. Divakaruni's adept narrative style, characterized by poetic simplicity and robust character portrayals, particularly resonates with aficionados of profound storytelling.

Departing from the world of mythological heroines, the book unfolds the ordinary yet remarkable lives of the Murthys before the establishment of Infosys, portraying their journey as an allegorical epic awaiting narration. Vividly depicted are the everyday trials and triumphs of a working couple, encapsulating the essence of support, sacrifice, and solidarity, compelling readers to root for their success.

Their story reminded me of the scenes from Basu Chatterjee’s 1976 classic Choti si Baat, starring Amol Palekar and Vidya Sinha. A simple boy. In love with a simple cotton saree-clad girl. Enjoying small things such as holding hands, walking on the roads, and eating at Poona Coffee House. “With her [Sudha] by his [Narayana] side, he felt he could take on even the toughest challenges” (p85).

You want them to succeed. You cheer for them. You feel for them. Sudha and Narayana Murthy's early life experiences together are relatable and Divakaruni captures them in the most endearing manner.

The narrative poignantly addresses the dilemma faced by individuals who find themselves overshadowed or relegated to supporting roles, despite possessing substantial capabilities and accomplishments—a sentiment to which Sudha Murty's journey lends credence. It would have been easy to portray Sudha Murty as the victim, as someone who had to give up her career to support Narayana Murthy’s passion, and it would have been largely true. However, it would do grave injustice to Sudha’s resilience and commitment to personal growth, exemplified through her writings, contributions to the Infosys Foundation, and her subsequent foray into public service [the recent nomination to the Rajya Sabha]. Divakaruni maintains a fine balance that never lets Sudha’s character slide into being inconsequential.  Rather she serves as a beacon of inspiration.

Another aspect that touched a chord with me was the challenge of imparting values amidst prosperity, as Sudha navigates the complexities of instilling humility and “living withing one’s means and not trying to keep up with the ‘neighbours’…the importance of being practical in matters of spending, recognizing wasteful behaviour, and getting good value for your money” (p309-310) in her children. This segment will resonate deeply with individuals who have experienced economic scarcity and now grapple with the task of nurturing similar sensibilities in their offspring.

On the professional development side of the couple, of notable significance is the portrayal of Narayana Murthy's evolution from a socialist idealist to a compassionate capitalist, alongside the inception of Infosys, underscoring the fervour, altruism, and perseverance that culminated in its establishment.

Unlike conventional biographies of business luminaries, which frequently overlook the intricacies of personal challenges and emotions, Divakaruni's portrayal transcends superficiality, reveals the interplay of relationships among its seven founders and elucidates the philosophical underpinnings of the compassionate capitalism intrinsic to Infosys's corporate ethos. Furthermore, the narrative sheds light on Sudha Murty's sacrifices and her steadfast support of Narayana Murthy's endeavours, emblematic of the pivotal role spouses play in each other's professional pursuits.

The exemplary financial stewardship demonstrated by the Murthys underscores a vital lesson for startup founders and business owners: the importance of judiciously managing company and investor funds. In an environment rife with instances of poor companies- rich promoters, the Murthys' narrative serves as a beacon of integrity and foresight, illustrating the enduring value of principled financial management for long-term sustainability. By assimilating these invaluable insights, aspiring entrepreneurs can play a pivotal role in cultivating a culture of accountability and integrity within India's corporate landscape, thus fostering a legacy of responsible entrepreneurship and sustainable growth.

I am reminded of an incident when I accompanied my brother to the optician, a family friend, shortly after his graduation from an IIT. Upon learning of my brother's employment at a multinational corporation, the optician remarked, "We heard so much about you. That you are so good in studies and all. And you still didn't get a job in Infosys?" This anecdote encapsulates the profound impact of the Murthys' creation, Infosys, on the national consciousness. It was a pleasure to delve into the lives of this extraordinary couple, whose visionary leadership catalyzed the information technology wave in the country, capturing the imagination of a nation and leaving an indelible mark on the annals of Indian business history.

In sum, "An Uncommon Love" is a testament to Divakaruni's narrative prowess and her ability to unravel the complexities of human experience. Through meticulous storytelling and emotional depth, the book illuminates the transformative journey of two icons, offering readers a compelling narrative of love, sacrifice, and resilience amidst the backdrop of nascent entrepreneurship in India. 

Navigating Succession Storms: A Mediation Odyssey in Family Business

This article was first published in the Financial Express, March 11, 2024; Co-authors: Ray, Sougata & Ollapally, Tara; https://www.financialexpress.com/opinion/navigating-succession-storms-a-mediation-odyssey-in-family-business/3421424/

Succession continues as a paramount challenge for the sustainability of family enterprises, compounded by gender dynamics within India's patriarchal society. Deeply entrenched norms frequently impede the seamless transfer of leadership within these businesses. In recent times, dissatisfaction with succession outcomes has prompted many families to pursue legal actions, resulting in intra-family lawsuits. Such disputes not only exacerbate rifts within the family but also put the business at risk.

In such a context, mediation emerges as a crucial and constructive alternative to adversarial legal battles. By providing a structured yet adaptable platform, mediation facilitates constructive dialogue among family members, allowing them to navigate emotional complexities and collaboratively craft succession plans that honour both familial expectations and business needs. imperatives. This approach, rooted in open communication and understanding, offers a viable path to preserving both family harmony and the continuity and longevity of the family business.

This article delves into a real-world case study where mediation played a pivotal role in resolving succession-related issues and fostering family harmony. The backdrop is a family enterprise spanning several generations, where traditional roles, evolving dynamics, and unforeseen challenges converged, leading to a complex web of emotions and legal intricacies. This article seeks to offer insights into the mediation process, the intricacies of family dynamics, and the crucial role it plays in preserving businesses and relationships.

The Genesis of Conflict: The roots of this family conflict trace back to a business founded by a patriarch with a vision, whose descendants navigated divergent paths. One son separated and built a successful business, while the rest of the family continued the ancestral business. The patriarch's egalitarian upbringing of his four children—two daughters and two sons—set the stage for contrasting expectations and interpretations of their roles in the family business.

The Unforeseen Downturn: Several decades later the family business faced a downturn, burdened by debts and an aging patriarch. His desire to bequeath a generous share to his daughters clashed with the encumbrances on the immovable properties. The sudden demise of the patriarch without a written will intensified the complexity of the situation.

The Catalyst: Mother's Terminal Diagnosis: As the sons stepped in to navigate the business through its challenges, the mother, aware of her husband's intentions, grappled with the urgency of settling the inheritance matter. Terminal cancer heightened the need for resolution. A mediator was engaged in the eleventh hour, with limited time to convene and gather essential documents due to the mother's deteriorating health.

Mediation Dynamics: The mediation process commenced with an air of cordiality, swiftly evolving into a storm of disappointment, anger, and disbelief as the daughters confronted the reality that the business was intended for the sons. Legal rights clashed with perceived fairness, and negotiations became tense. The imminent passing of the mother forced reluctant concessions from the daughters, resulting in a settlement just days before her demise.

Post-Mediation Journey: The mediator's role extended beyond the settlement, addressing unresolved emotions and rebuilding fractured relationships. The brothers, now in control of the business, upheld their promises, clearing debts, and ensuring the business thrived. The subsequent generosity towards the sisters and the continued success of the business underscored the effectiveness of mediation in preserving both familial bonds and business prosperity.

Focus of the Mediator: The mediator's primary challenges included communicating the father's intentions to the daughters, managing their emotions of disappointment and anger, and facilitating constructive negotiations. Cognitive biases, particularly the sisters' refusal to acknowledge the business's depreciated value, posed negotiation challenges that required the mediator's adept handling.

Mediation vs. Legal Battles: Had the dispute entered the court system, the potential consequences loomed large. The family business risked collapse under the weight of litigation, endangering the financial solvency necessary for addressing liens on immovable properties. Inter-sibling relationships stood at risk of irreparable fracture, with the brothers facing uncertain prospects within the business.

Observations and Ripple Effects: The mediation's instructional value extended beyond the immediate case. The brothers, understanding the necessity for a proactive stance, opted to independently and amicably divide their properties, drawing upon insights gained from prior mediation experiences. Their respective sons now oversee separate divisions, operating independently. The arrangement has fostered a harmonious continuity and coexistence.

Conclusion:

In the realm of family businesses, the intersection of tradition, emotions, and legal complexities demands delicate navigation. This case study illustrates the transformative potential of mediation in averting protracted legal battles, preserving harmonious family ties, and safeguarding the sustainability of the business. As family businesses continue to grapple with succession challenges, the lessons gleaned from this mediation odyssey serve as a beacon for those seeking a harmonious transition between and even within generations.

Mediation in Family Business Disputes: A Holistic Approach Beyond Failed Negotiations

This article was first published in the Financial Express, March 03, 2024; Co-authors: Ollapally, Tara & Ray, Sougata; https://www.financialexpress.com/opinion/mediation-in-family-business-disputes-a-holistic-approach-beyond-failed-negotiations/3411920/

Family businesses, which hold a significant role in the global economic landscape, are inherently prone to conflicts due to the intricate interplay of familial and business dynamics. Disputes can arise from succession planning, divergent business visions, or conflicts of interest among family members. Globally, illustrious family enterprises, such as the feud between the Ambani brothers in India and the disputes over the distribution of the family wealth and control of the business in the Pritzker family, exemplify how conflicts can lead to the dissipation of wealth and fracture familial bonds.

Resorting to traditional litigation often exacerbates these conflicts and underscores the critical need for effective dispute-resolution mechanisms. When traditional negotiations fail, mediation, as a facilitated negotiation, proves to be a compelling alternative.

What is Mediation: Mediation is a nuanced and strategic facilitated negotiation process wherein a professionally trained neutral third person helps families in dispute find their own solutions through a better understanding of their own needs, the other party’s needs as well as the reality that they face. It distinguishes itself by transcending traditional approaches in its focus on understanding the needs of the parties and emerges as a highly effective and efficient mechanism for achieving harmonious resolutions in family business disputes. In family businesses, where personal and professional lives intertwine, a process that addresses emotions, business realities and the law become paramount. The expertise of the neutral mediator in managing the multiple facets of the dispute becomes the guiding force in steering disputing parties towards mutually acceptable solutions This nuanced approach not only facilitates meaningful and sustainable resolution but also cultivates an environment conducive to preserving relationships and the long-term health of the business entity.

Why mediation Works: Beyond the resolution of disputes, mediation offers a myriad of advantages, making it an attractive choice for family businesses. The ability to exercise control over outcomes is crucial, empowering parties to shape resolutions that align with their unique circumstances. Confidentiality in mediation safeguards against the potentially detrimental impact of public disclosures, recognizing the sensitivity of family matters.

Mediation's efficiency is a key differentiator, offering a swift and cost-effective resolution compared to the protracted timelines of traditional legal avenues. The high degree of compliance stems from the active involvement of parties in crafting the agreement during the mediation process, fostering a sense of ownership. The focus on a win-win scenario becomes paramount, preserving both familial harmony and the health of the business.

How mediation Works: Mediation helps parties move from entrenched positions to underlying interests, fostering constructive communication. The mediator's role is pivotal, reframing communication dynamics and guiding parties toward a more holistic and meaningful interest-based negotiation.

Flexibility is a defining feature of mediation, allowing the inclusion of the right individuals and information in the negotiation. This inclusivity ensures that all pertinent perspectives are considered, contributing to the improved quality of negotiation. The process is party-centered, allowing the outcome to be determined by the parties themselves, promoting a voluntary and confidential environment.

The Legal Framework: The Indian Parliament passed The Mediation Act in September 2023, recognizing the value of mediation in promoting and facilitating the resolution of disputes. Mediation is now a recognised legal process wherein the fundamental tenets of confidentiality, self-determination and voluntariness are legally protected. A mediated settlement agreement has the same validity as a court decree, that cannot be appealed except under rare circumstances.

Other legislations like the Commercial Courts Act have also been amended to endorse mediation as a prerequisite for commercial disputes before resorting to court litigation. This reflects a growing acknowledgment of the efficacy of mediation in achieving swift and amicable resolutions.

Conclusion

To ensure the longevity and harmony of family enterprises, mediation must not be a mere consideration but an unequivocal imperative. It is the proactive and strategic approach that transforms disputes into opportunities for constructive dialogue, steering family businesses away from the destructive path of litigation.

Promoting a culture of collaboration, where mediation becomes embedded in dispute resolution clauses, charts a course towards efficient resolutions. By immersing themselves in the lessons drawn from successful cases, family businesses can elevate their acumen, becoming not just resolution seekers but architects of a 'dispute-wise' culture. In this transformative journey, disputes cease to be stumbling blocks; instead, they become the catalysts for innovation and lasting familial and business success. Embracing mediation can open doors for family business longevity and harmonious legacies.

India’s cherished “joint families” system is under threat. What can be done to preserve its values?

 This article was originally published in Family Capital, January 24, 2024;

https://www.famcap.com/2024/01/indias-cherished-joint-families-system-is-under-threat-what-can-be-done-to-preserve-its-values/

In India's business world, the Marwari community is a formidable force. A part of its success is often attributed to the system of “joint families", which has created many great business dynasties. But the system is in decline, leading to concerns that its advantages may be irreplaceable and thus pose challenges to the business dominance of communities like the Marwaris.

The “joint families” concept is based on the idea of living together of and shared business responsibilities among grandfather, father, sons, their sons, and other family members or close relatives.

Marwaris, which originally come from Marwar, a region of western Rajasthan state- has given rise to great family business dynasties such as the Birlas, the Mittals, and the Agarwals.

The resources created by joint families, including the pooling of financial resources, collective decision-making, and shared responsibilities, have provided a robust foundation for entrepreneurship in India.

The joint family system facilitated a collaborative approach to business, where the collective wisdom of the family contributed to strategic decision-making and sustainable growth.

Assessing the impact of joint family disintegration on businesses remains elusive and largely anecdotal. Hence, there is a pressing need to investigate the mechanisms that fostered familial cohesion and identifying critical factors that facilitated harmonious coexistence among family members.

By gaining insights into these dynamics, contemporary families may incorporate pertinent traits to preserve the advantages of a diversified resource pool while upholding individuality and freedom.

Basant Hetamsaria, the head of the Hetamsaria family, shares a compelling narrative of the organic evolution of their joint family in Ramgarh, in the state of Jharkhand. From a small family of three, the family expanded to 30 members across four generations, diversifying economic pursuits while remaining tightly united. His unexpected role as the family head at a young age underscores the indispensable need for a universal head.

"In the familial framework, I emphasize the pivotal role of a universal head—a unifying force offering direction and leadership, even within collective decision-making. The essence of prudence, fairness, and transparency in our decision-making cannot be overstated. We must strike a delicate balance between authority and respect, endorsing an informal code of conduct that nurtures mutual respect and consideration among us, the family members," says Basant.

The challenges of decision imposition and the necessity for transparency underscore the importance of a unified approach within joint families. “Every adult and youth in the family must have a voice, preventing unnecessary controversies and promoting a harmonious environment. Furthermore, ensuring suitable opportunities for education and employment aligned with individual abilities is crucial for the collective well-being of the joint family,” says Basant.

Strong family values, including familiarity, love, affection, harmony, and cooperation, are essential for the success of joint families. Basant's insights highlight the need for an adaptable family dynamic that can navigate changing environments, ensuring the continued relevance and resilience of joint families.

However, the disintegration of joint families, which was considered one of the strengths of business families in India, poses certain challenges for contemporary business families, such as communication and bonding. Despite the array of communication tools available, such as instant phone calls, WhatsApp, and emails, the absence of physical proximity can lead to communication and personal challenges.

Face-to-face interactions in joint families foster a deeper understanding of individual strengths, preferences, and challenges, which is often difficult to achieve through virtual means. The nuances of non-verbal communication and the daily interactions that build personal bonds are diminished when family members are geographically dispersed.

“In today's era, the concept of joint families may be considered unconventional, and a more open and liberal model should be explored as a potential sustainable family solution amidst the challenges of modern relationships, increasing tensions, growing distances between spouses, and fractured relationships,” says Basant.

Perhaps, establishing a structured leadership model within the family, designating a family leader who plays a pivotal role in providing direction, fostering transparency, and ensuring fair decision-making would help the business families, despite not being in a joint family system.

This leader should embody the qualities of prudence, fairness, and transparency, striking a delicate balance between authority and respect. This structured approach would help maintain a cohesive family unit and facilitates effective decision-making.

Similarly, a culture of collaborative decision-making where the opinions and perspectives of every family member, both adults and youth, are valued, should be encouraged.

Families should develop a framework that ensures active participation from all members, preventing unnecessary controversies and promoting a harmonious environment. By integrating diverse viewpoints, families can tap into the collective wisdom of individual talents, similar to the collaborative approach seen in joint family systems.

The success of many business families that were joint families, lies in their unique ability to create a rich resources basket, fostering collaboration, and providing a robust foundation for entrepreneurial endeavours.

Basant Hetamsaria's insights underscore the importance of a universal head, prudence, fairness, transparency, and commitment in maintaining the resilience of joint families.

Despite the challenges posed by modernity and the disintegration of joint families, its principles continue to be of relevance. It offers valuable lessons for contemporary business families. Incorporating what joint families offered in a modern setting would retain entrepreneuring families and their rich resources basket.