GMR scripts succession plan through a family constitution

The demerger of business families, with all the trauma and acrimony attached to it, is fairly common in India. But it was the bitter and ferocious war between the Ambani brothers and its continued after-shocks that jolted Indian businessmen to think seriously about succession planning. A question that came up repeatedly during those days was — why did Dhirubhai, with all his brilliance, fail to see that his sons would not be able to work together? Many believed that an Indian father, no matter how clever he is, refuses to contemplate a family break up.

That Ambani saga also pushed other fond fathers into facing reality — Rahul Bajaj was one of them. It is no secret that the Bajaj siblings — Rajiv and Sanjeev — do not see eye to eye and the differences between Rahul, his brother Shishir and especially Shishir’s son Kushagra frequently make headline news. Last week, Rahul Bajaj ensured that he does not repeat the mistake that Dhirubhai made and announced a mega demerger that separated the role and responsibilities of his two sons before their disagreements rancorously spilt into the open.

These big names apart, succession battles, power struggles and property disputes have destroyed or debilitated several business empires. In this scenario, G M Rao, the low profile, 56-year old founder-chairman of the GMR group has put in place an astonishingly detailed plan to avoid or settle all family differences in a business-like manner. Rao, a first generation industrialist, acquired nationwide recognition when GMR emerged as the only successful bidder for the prestigious Delhi and Mumbai airport development projects in a power packed field. Until then, he was perceived as a regional player despite the completion of several successful infrastructure projects in power and road development.

How exactly does the GMR group hope to avoid bitter succession battles? Rao quotes from an internal presentation, which says that there is only a 2 per cent chance of today’s founder driven family business remaining intact for 100 years when it is in its fourth generation. Rao firmly believes this. He also believes that no succession planning can be complete without involving the women in the family and setting up specific structures to resolve their differences. All business families know this for a fact, but rarely address it directly.

After several meetings, deliberations and presentations from top management consultants, the group draws up a clearly articulated set of rules and governance practices for dealing with every issue or dispute that may crop up within the family and create a mechanism to deal with it. These address issues such as management succession, ownership succession, control and power sharing.

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