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On a work day I get to meet owners of various family owned businesses. And in all the interactions as we navigate the euphoria of growth aspirations, discuss expansion prospects and revel in sheer temptation of opportunities, we seem to keep coming back to a key challenge that these business owners face—the dilemma of professionalization.

At some point or the other, most owners / leaders of family owned businesses engage in the experiment of professionalization. Each will tread the path achieving multiple levels of success and seeing varied tribulations. Some will start gingerly feeling their way through this unknown path to creating a professionally managed business and some will travel a more stuttering path, taking a few steps forward and then a few backwards. There are still others who will start full throttle only to realize, at times, that they need to slow down and create a more realistic roadmap for professionalization. And finally, those rare cases where everything fits just right and the journey to professionalization is smooth and mutually rewarding.

I have been using the word professionalization quite liberally until now. This could mean two interconnected systems of introducing professional management practices—One by systems and processes and the other where these practices are common sense-driven and are traditionally passed on. This form of professionalization can be driven either by business owner or he/she could bring in professionals to drive the change. This brings us to another dimension of professionalization—to bring professionals into the business and give them real management responsibilities. Here I will talk about the latter aspect of professionalization—bringing professionals into the business.

When opening up their organizations to professionals, these are the top five challenges business owners grapple with:
1. When is the right time to professionalise?
2. Will the professional carry my legacy forward?
3. Will the professional commit to my business and
see things through even in adversity?
4. Will the professional understand and respect
the values that I follow?
5. Where and how do I find the right professional?
Here we will discuss when you should professionalize and what you should keep in mind as you select a professional, leaving the rest to be talked in the second part of the series.

The first challenge is to know when to bring a professional on board. Most owners respond to the natural yearning of being an entrepreneur, starting a new business, meeting customers, making big deals, looking into the future, scouting for new opportunities and setting up businesses rather than spending time in the details of managing those. As business grows, the need for management increases and so does the demand on a business owner to play a more managerial role and be involved in the day-to-day execution.

At times entrepreneurs are not comfortable playing this role. In others, trying their hands at managing an ever-growing business makes them realize that learned expertise is required in areas such as strategic planning, supply chain, market development and people management etc. Whatever be the reason of fuelling
the need to bring a professional on board, the actual decision is often precipitated by something more urgent—a crisis that needs to be dealt with. Thus an idea born out of rational need ends up being executed in urgency or crisis. This is a key reason why many attempts to bring professionals on board are doomed at inception.

I was once working with the owner of a large industrial goods manufacturer who was setting up this massive production facility. He had invested millions of his own money and had also borrowed heavily from the bank to fund the project. The company had never executed a project of this magnitude and he knew at the back of his mind that he needed a professional project manager. However, he continued to use his in-house experts in critical functions like procurement and project management and 18 months into it, the project was in crisis mode. Even then he struggled with the decision of taking external help.

After six more months of escalating costs, time delays, numerous instances of procurement issues such as realizing that the long awaited equipment was of wrong specification, he decided to bring a professional projects head on board. It took another five months to find and bring aboard the new projects heads. By that time, the project had been in crisis overdrive for a year and the mandate given to the projects head was to deliver the project on cost and time parameters promised to the bank. Six months later in a review session the projects head was deemed to failure because while the losses had reduced, the project continued to bleed. More so because the projects head refuted the initial timeline and cost estimates for the project and said these were untenable; and had the audacity to demand the rationale behind the same.
This is a small example of how imperative professionalizing at the right time is.

Once the owner has navigated the maze of selecting a “qualified” professional, he is plagued by the thought that whether or not this professional will realize the owner’s dream for the organization. In most cases, the business owners’ identity and his dreams are inextricably intertwined.
Till the recent past, this problem was resolved by handing over the business to the next rightful heir—a natural progression or handing over the legacy from one generation to the next. A professional on the other hand is largely an unknown person on board so questions crossing owners’ mind are not unjustified, given the owners’ struggles and sacrifices.

I once had the privilege of working with an entrepreneur, heading a group of fast growing companies. What drove him was his desire to become one of the biggest players in his sector in India, establish a global footprint and take on the established big players in their backyard. He had already grown the business aggressively in India, set up operations in the US and was in the process of setting up operations in Europe. When looking for a CEO for his business, he wanted to see this passion to grow in the individual he selects. He zeroed down on a relatively inexperienced candidate from a small company who had a passion for growth, risk appetite and shrewd business acumen. After five years when this CEO quit, the owner found it hard to replace him.

Businesses do go through difficult times. Times that need fundamental reorientation, tightening of the proverbial belt and executing other harsh measures. Most owners would like to bring on board professionals who commit to their business over the time. Action orientation and loyalty are the traits that an owner eyes and is willing to go uncommon lengths to accommodate people who demonstrate a strong passion for his business.

Professionals on the other hand are generally wired to deliver year on year on a preset of objectives. The owner has the advantage of being inextricably linked to the organisation and hence has the inherent advantage to think about the future of the business.

This is first of a series that will examine the questions that cross a business owner’s mind before professionalizing

MITALI BOSE is Managing Consultant & Building Effective Organisations (BEO) Practice Leader, Hay Group

©Entrepreneur August 2011

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business, company, entrepreneur, hire, management, mitali bose, owner, professionalize, professionals