10 MBAs to help run family-managed business better
Gone are the days when business families used to send their wards to international B schools to learn the tricks of the trade before they are finally inducted to family businesses. A good number of Indian B-schools now offer special courses on family business management and the demand for such courses is on the rise. The demand for management programs especially targeted to family-owned business has grown 30-40 per cent in the last two years. This trend can be attributed to the growth of such companies and the small & medium enterprises (SMEs) sector.
Need for family business MBA : Family-owned businesses play a crucial role in the economy of a country. A good volume of retail trade, small scale industry, and the service sector is run by family businesses.
Further, family-managed businesses employ half the world's workforce and generate well over half of the world's GDP. In the United States, 24 million family businesses employ 62 per cent of the workforce and account for 64 per cent of the GDP. In India, it is estimated that 95 per cent of the registered firms are family businesses.
The contribution of family businesses has gone beyond simply paying taxes and employing people. Most of the business families face unique management challenges because of the difference in the attitude and aspiration of family members. As new generations join the business, it is an enormous challenge to keep the family and business together.
It is observed that just 13 per cent of the family businesses survive till the 3rd generation and only 4 per cent go beyond the third generation. One-third of the business families disintegrate owing to generational conflicts.
FMB MBA is playing a crucial role in mitigating these issues. Here, business heirs are taught how to face problems in day-to-day functioning and in time of a crisis, methods of modern management in all its aspects and ways to grow the business. In a nutshell, the objectives of an MBA for family business are:
• Equip a young member of a business family with management concepts and techniques for meeting the distinct challenges in managing a successful, growing business
• Prepare him/her for developing a strategic and general management understanding of the business backed up with a global perspective
• Inculcate in the family member the attributes of continuous learning and reflection which would enable him/her to keep abreast of the future
• Develop a keen business interest in the external world beyond the family and the business
• Understand and synergise the dual role – as a member of the owner family and as a business manager
Course content : The contents are not very much different from normal MBA courses – there are additions and alterations keeping in mind the specialized nature. The course is a mix of classroom lectures, case studies and project assignments. Frequent interactions with reputed professional manager/entrepreneurs are an important part of the program. The course requires candidates to regularly visit industries and listen to guest lectures by industry experts. International trips are also organized to give students a global perspective.
The course curriculum is often developed on the basis of inputs provided by family businessmen, entrepreneurs and subject experts, and consists of compulsory and elective courses. The compulsory course package provides students with the concepts that form the foundation of a business.
How is it different from a regular MBA? The differentiating factor is that while other full-time programs create quality management professional for various organisations, this program seeks to professionalize the approach of owners of family business in the nitty gritty of modern management. The course often helps students identify family dynamics that affect most business decisions, and learn how to overcome day-to-day operational hurdles to continue growth and profitability. Since the stakes are different, the focus is different as well.
Now let us have a quick look of the differences:
• Standard MBAs are trained for seeking jobs in various companies whereas FMB students are trained with management skills to be entrepreneurs
• MBAs are tailored to create employees whereas, FMB students are trained to be employers
• MBA trains a student to have specialization in one/two function such as marketing, operations, finance, HR, etc, whereas FMB provides knowledge of all functions as required by the head of a company
• MBA divides management into functions whereas FMB integrates all the functions
• MBAs are, typically, not responsible for major decisions of the company in the early stages of their career whereas, FMBs are sculptured to take important decisions for their own company immediately
• MBA programs are designed to sustain the needs of the company while FMB program is designed for the rapid scale up of your business
Check important facts & figures
Source: MBAUniverse.com research
B schools offering courses for family businesses : During the last five years, a number of famous B schools have started offering courses for family managed businesses.
IIM-Bangalore (IIM-B) is offering a course called Management Program for Entrepreneurs and Family Business (MPEFB). The course takes into consideration the limited time with entrepreneurs, while not compromising on the learning process. The objective of this program, according to IIM-B, is to enhance the quality of business management skills in the entrepreneurial firms by providing a workable model for the entrepreneurs. A certificate would be offered by NSRCEL on completion.
IIM-Indore (IIM-I) has started a Post Graduate Certificate Program in Family Owned Business and Entrepreneurship (PGCFOBE). Aimed at entrepreneurs, members of family-owned businesses and managers of entrepreneurial and family-owned businesses, the program aims to benefit those who want to grow their business and would also be beneficial for professionals wishing to start their own business.
For those wishing to expand their family business, the Institute of Management at Nirma University offers an MBA in family business and entrepreneurship. The two-year full-time program, approved by the AICTE, is designed to meet the career requirements of young men and women hailing from business families.
Ahmedabad-based Entrepreneurship Development Institute of India offers a post graduate diploma in business entrepreneurship. The course provides competency-based training targeted at graduates who intend to launch and manage business units or family business.
Mudra Institute of Communication, Ahmedabad (MICA) has introduced a course in Leadership in Family Business Management in its Post Graduate Program in Communications, Management and Enterprise (PGPCME) course.
Narsee Monjee Institute of Management Studies (NMIMS) offers a two-year full-time post graduate diploma in business management (family business).
ISB offers the Management Program for Family Business (MFAB), a unique program that focuses on the next generation of business scions. It is designed to provide future leaders of family businesses world-class management education and international immersion with special emphasis on learning to manage challenges relevant to family businesses. MFAB aims to help family-run businesses realise their true potential by developing a leadership pipeline that is capable of running the business in a professional and efficient manner. It is a 15-month course.
Delhi-based International Management Institute (IMI) is launching the 'Global PGDM (MBA): Family Business' programme, the duration of which will be 18 months. The course is slated to be launched in 2013. Under the IMI program, candidates will do a six-month project at their respective family businesses.
Welingkar Institute of Management's family managed business program explores and analyzes best management practices, governance practices and family continuity challenges, including issues relating to first generation entrepreneurs. It's designed for candidates who are looking at making an existing successful business even more competitive and also for those who are keen on creating business turnarounds or starting new ventures besides their existing ones.
Besides the above-mentioned institutes, Amrut Mody offers 15-month full-time entrepreneurial MBA.