Pros And Cons Of Family Business Management: A Case Study Of Kasana Builders Private Limited

1. Identify and discuss the criteria that academics and others use to assess how professionally a family business is managed
   
   
2. With reference to no more than two of these criteria, assess how professionally you feel your family business is managed Choose a business with which you are familiar if you do not come from a family business background

Professionalism in family business

The essay will light up the major pros and cons of the family business in terms of management. The idea of the family business will be explained by taking an example of the construction sector and the organization which is chosen for this essay is Kasana Builders Private Limited. Kasana Builders Private Limited is the private incorporated in the year 1988. It is well known and reputed Non-Government Company as well as it is registered at the registrar of companies in Delhi. They basically operate in the government sector and also they undertake numerous construction projects for the government. They are indulged in government contracting. This essay will cover how the family business is helping Kasana Builders Private Limited in accomplishing the construction projects and what are the consequences which might occur in the profession because of the family business. The whole research of the family business will be based on the models, concepts, and theories which help to find out the answers to the relevant questions (Writing, 2017).

Talking about the background of the company, Kasana Builders has started its business in the year 1988 under the direction of Mr. Kushal Pal Singh who is an engineer by occupation, later on, Mr. Narendra Panwar joined the organization and he is also an engineer by occupation. There are various prestigious projects which are completed by the company such as the library, meditation center, buildings, hostel as well as housing in Gautam Budh University and also they did projects on residential villas in Noida. Apart from this, the company is able to handle numerous rural road projects, various state highways projects. The company uses their own adequate equipment such as hot mix plant, different types of graders, excavators, dumper, and road rollers to deliver any kind of highways work (Sloan, 2017).

The company is able to manage the dealing in diverse industries, as well as the system, is coupled with the track record in collecting financial and human resources that make Kasana Builders the preferred choice contractor for major projects of any property. The services offered by the organization are library building, housing construction, institutions construction, factory buildings construction, and roads construction (Hiranandani, 2018).

Family businesses have been known to importantly impart to major efficiency all over the world. Yet, the number of family organizations fails to last till the third generation. The professionalism of management is one of the crucial factors for the family organization long-term life. Professionally managed organizations tend to be bigger, much more productive, grow up faster, and have high survival proportion. Even so, the family business faces many impediments to professionalism (O'Hara, 2016).

The professionalism of the family business does not commit adequate care to the operation of professionalism. The main questions for this study were: what type of processes does family business follows to professionalize their firm? What are the approaches they use? The report examines the major challenges which professionalism process poses to the position, the business as well as the family. Professionalism is the challenge for family businesses as it is the leading transition for both, the business terms and the family terms. For the construction business, it expresses modification from being a celebrity-driven firm to an operation-driven system (Hall & Nordqvist, 2008).

Professionalism process in a family business

Organizations basically make a change in the quality in the period of their evolution. During the initial state, the control procedures and systems are casual and chiefly based on the trust factor. As the family business keeps on growing, professional managers from outside the family are hired, resultant in the detachment of ownership and functional control. The trust-based schemes were no longer be a tested means of control; therefore, the company establishes formal systems as well as processes. From focused decision-making and a paternal culture, the company moves towards the localized decision-making, deputation, formal strategic design and control performance and also a culture of the social system. This progress of the business from the simplexes of enterprising management to the enlightenment of professional administration is the core of professionalism (Tucker, 2011).

The requirement to change and inter-firm transformations in professionalism have been examined in many family business firms. Business leaders with a great understanding of the development strategy recognize the necessity for infusing the fresh organizational ability, to move the firm into the fresh path. Therefore, family business leaders who are somehow clear about the position and rate of growth are more likely to begin professionalism of their firm in a systematized way and fulfill their goals (Cullaso, 2016). There are two types of benefits to professionally manage the family business. First one is that the business of Kasana Builders Private Limited has grown as the situation changes and also more and more opportunities come out. The second major benefit is that the financial condition created by the construction business firm of Kasana Builders will come to the family because it is a family business. There are also some additional benefits such as prestige and brand equity which brings them to the market and made Kasana a reputed construction firm. Another benefit is that the family governance will be much better than giving in other unsafe hands (Bloom & Reenen, 2011).

The establishment of the family business is totally based on the set of relation among the family businessman, management as well as the decided board members. An allied, affianced and trustworthy ownership group defrayal the performance of business and continuity. Furthermore, it helps the administration to focus on the business instead of worrying about the shareholder conflicts (Caspar, et al., 2010).

The above diagram represents a model which outlines the roles and the major responsibilities of the family ownership.

Contribution of ownership- Businessman can render significant value to the execution and cohesion of an organization if it is allied, committed as well as responsible. An ownership group which speaks out with voice free management to concentrate on the business rather than analyzing the fear of shareholder conflicts. Sharing up a long-term view supply strategic firmness and intensify risk-taking.

Purpose of Ownership- It’s the role and major opportunity for the owners to boost up their corporate values, their vision for the project and their aim as owners.

Values- Administration is efficacious if both family ownership, as well as the board, share an agreement on values, vision, and main goals. Businessman values, such as position, clarity, paternalism, innovation, trust and also democracy, shape up the prospect of the business. If the owner family is not clear about the values, then the business culture will become shallow and the family’s seriousness to ownership decreases. Pride of the ownership is mostly a purpose of a distinct and almighty business culture which reflects the values that are quite important to the owners (Ward, 2016).

Responsibility area of family business

Vision of the company- The values of owner shape the imagination which has for their construction business. There are two basic dimensions to the businessman vision: the first vision is the nature of the business and the other one is for the constitution of their control.

Goals- The businessman must make an effort to present the set of goals for the construction business which satisfies their interests as well as secure their commitment, thus far are reasonable for the management to meet. The four main goal areas which seem to be within the state of ownership are growth, risk, profitability, and also liquidity. These all four goals are interdependent on each other. More of one goal means the less of others. The key trade-offs that are made up of these goals show the personal family’s values as well as correct vision for the family business (Bonnier, 2007).

Policies- In addition to the values, vision as well as goals, the family needs of Owner Company is to address the main issues which specify its relationship with the company. Several policy areas where ownership is responsible for determining the growth are interactions with the management and directors, correct information, privacy, battle of interest, shareholder dealings expense, estate planning, redemptions, dividends, and charitable giving amounts.

Board potency- The board plays many valuable roles and the family is the one who develops such policies. The board basically offers the objective feedback on whether these policies being imitative are reconciled with the family’s declared values, vision, and their goals. The board is the one who can help the family to define the relevant processes for making the decisions. The process of decision making has to grow with time and with the entry of very next generation of the family owners in age as well as conviction (Uhlaner & Masurel, 2004).

Processes- Development of family agreement on the goals and policies of relation is not an easy effort, nor is it done once in a life and nor it lefts for all the time. Hence, at the heart of supplying an allied, affianced and trustworthy ownership group are some of the processes to learn as well as processes for decision making.

The businessman needs to have familiar and enlightened next-generation owners because commitment and unity are one of the major parts that play a big role in a construction business. Thus, providing education for present-day and also future owners is a part of ownership’s function. If the series processes and prospect for the authority and their control aren’t clear or adequate, the ownership conflict or contentment is necessary. Succession has to be addressed for the ownership, for choosing rights, for position and also for the leadership.

As the construction family business of Kasana Builders undergoes the changes effected by professionalism, there is no any need to hold up the business as well as family subsystems all together on a dynamical base. This generally requires the support performance to assist the fast process of professionalism by engrossing the conflict generated at the convergence of the system. An excavation of mentors can turn to be a great part of such type of support system. They assist by providing a guide to family and also for the non-family administration. Kasana had accomplished the potential endeavor of a strong board of directors in directing the construction company on its growing journey; therefore, its leadership decides to infuse self-directed experts on the board. Thus, it is observed that the family businesses with one or more great advisors to assist the company through with the changeover period are possible to go through with a smooth conversion to professionalism (Davis, 2001).

The above diagram displays some major factors that influence the family business governance. The family business consists of the mentor within the family and also the board members indulged in a team are the family members. Generation by generation the business grows and strength increases accordingly. Business decision system totally depends on the family members who are involved in the business. The main business processes were also decided by the family members or board of directors.

There are five basic models of the family business: owner-operator, partnership, distributed, nested, and public model.

Owner-operator model: The owner-operator model is the one which can become very successful for numerous generations. For the owner-operator model to work efficiently, the families need to find out a means for determining who acquires to be the owner-successor which is sensed to be fair.

Partnership model: In partnerships, only the leaders in the business can be the proprietor and gets benefit financially.  Kasana Builders worked with a massive construction company run by the family as a partnership. The sons expanded the construction business which they have inherited from their father into a worthy company. The partnership of Kasana worked just because the brothers impart more or less evenly to the enterprise success. They drew out the same salaries as well as profit distributions (Kjellman, 2014).

Distributed model: The distributed model is basically the default place in most of the family-owned enterprise. Parents generally want that all their children to acquire the business equally and, also, most of the assets must be wrapped up within the company. But there are some major challenges with this distributed model, too. Family members of Kasana builders employed in the construction business frequently disagree with those who are outside the business and conflicts might occur.

Nested model: Different family branches hold up to own some of the assets jointly and some of the assets separately.  This nested model in the cognizance represents that a small family relation group simply sit inside the larger ones and is peculiarly enchanting when the conflict or any kind of differences in orientation interfere with making decisions on a shared asset. The nested model is very helpful in reducing the tension among branches of Kasana builders while keeping the whole family together.

Public model: This model works great when the construction business requires an important extraction of outer capital, or when the owners are too numerous, spread out, or impartial to be involved actively in making decisions. The important question then becomes is that how the family businessman can hold up a control when they show such a minor role in making the decisions about the family business (Chrisman, et al., 2003).

The issues and challenges occurring in the construction business of Kasana builders in terms of their ownership, as well as business growth, are not so big that cannot be handled.  The company is able to deal with all the issues efficiently. Common issues that might occur in business growth are: Apart from the growth, about 70% of contractors determine that the construction companies are facing a hard time in finding up the qualified workers or experts to fill the required positions for the company growth. Kasana builders are also facing the issue which decreases their growth many times in construction market. Another conflict which might arise is the conflict which occurs between the generations.  The differences in opinions may cause several conflicts to arise within the board of directors. Technology has somehow transformed the industry (Riddell, 2017). The basic construction technology comprises of cloud-based software, incorporated collaboration, as well as mobile project management. Construction companies such as Kasana Builders must implement the technology slowly and steady to draw its benefits with minimum blow-back from the employees. Project complexity: Construction projects are nowadays becoming more and more demanding as well as complicated in terms of design.  This trend will keep on continuing as the year passes and it will also pose a challenge for the insufficient workforce.  Hence, the firms must be selective in the category of projects that they choose to work on. Taking too many construction projects might prevent the Kasana builders from completing the job on time or even cause them to get a loss from the slippage of data. As the construction sector heads up year after year, it becomes important to be aware of the new challenges that will be faced within the family business and prepare the people to take further steps to combat the challenges (Leeds, 2016).

Kasana Builders Private Limited runs their construction business professionally by depending on two criteria i.e. Management and leadership. Management is to be done with the respective tasks and getting the work to be done. Management has to do with overseeing as well as inspecting the construction work to be sure that it must be done correctly with good quality for the first time. Management has to set up the proper power, procedures, regulation, practices as well as systems which allows the construction work to get done expeditiously and impressively. Leadership has to deal up with the people and also the culture, as well as this criterion will create an environment in the company where the people enjoy going to the workplace. In a construction business, leadership plays a very important role. Leadership has to do with the coaching, supporting, motivating as well as inspiring their employees to give their best. Leadership is what the owners of the company and the top management team do to bring out the best qualities in their working staff. In a family business, one must have a leadership quality to handle the business (Ofori & Toor , 2009).

Conclusion

In this essay, it is concluded that family business plays a major role in the construction sector. There are some issues and challenges that may occur within the work but also it finds up a solution to come up. Kasana is well known and reputed Non-government company as well as it is registered at the registrar of companies in Delhi who can handle many construction projects. The issues and challenges occurring in the construction business of Kasana builders in terms of their ownership, as well as business growth, are not so big that cannot be handled. The services offered by the organization are library building, housing construction, institutions construction, factory buildings construction, and roads construction. The major benefit is that the financial condition created by the construction business firm of Kasana Builders will come to the family because it is a family business. Management and leadership are the two basic criteria which made Kasana a successful construction company.

It is recommended that the construction company such as Kasana must improve its professionalism. The company must build up a commitment to the professional mindset and continues by instantly acting in a professional way. Also, the company must initiate the relationship building efforts and be professional towards the internal as well as external people (Charbel & Georges, 2013). Professionalism is basically enhanced by the good leader; therefore, the professional leaders of the company must follow up the chain to maintain the growth of the business. The leaders of the company do not become arrogant while handling the projects.

References

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