Family
businesses dominate the economic landscape in nations around the world and
India is no exception. Many of India’s largest and most celebrated companies are
nurtured by a small group of promoters and family members. Family or
Promoter-driven businesses have made, and will continue to make, a huge
contribution towards the growth of the Indian economy.

By
definition, a Promoter-driven organization is one in which the majority of the
stake is held by the person who has established the company and at least one
representative of the family is involved in the management or administration of
the business. They typically started small with what worked best for their
concern, gradually clawed their way up in the market stakes, and learned along
the way.

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For
years, companies in India have been transitioning from family ownership to becoming
more professionally run operations. The need to transition emerged from
multiple factors, such as increased scale and complexity in operations, fiercer
competition, changes in the business environment, technology, and government
regulations. However, it is not surprising to see that many of these
organizations experience mixed success in driving transformation programs.  

This
case highlights how Talbros, a traditional promoter-driven organization is transforming
from their traditional business style to adopt the latest management practices
to sustain in this competitive business world amidst the Multi-national Companies.

Talbros
Automotive Components Ltd., the flagship manufacturing company of the Talbros
Group was established in the year 1956 to manufacture Automotive and Industrial
Gaskets in collaboration with Coopers Payen of UK. The business is broadly
divided around three joint venture companies Nippon Leakless Corporation for
gaskets, Magneti Marelli for chassis, and Talbros Marugo Rubber for rubber
components while their technology partners are Sanwa Packaging and Interface
Solutions.

Their
customers include some of the largest OEMs like Ashok Leyland, Bajaj Auto,
General Motors, Hero Honda, John Deere, Mahindra and Mahindra, Maruti Suzuki,
Tata Motors, and international corporates like Carraro, DANA, KMP Brand, Maxi Force,
and GKN Driveline.

The
President of the organization had recently moved on and the Joint Managing
Director had to take over the reins of the company. He set the company on a
rapid growth path with the aim to grow business significantly by the end of the
financial year – a significant leap over the last few years. However, the
management frequently found them tied up in the day-to-day operational aspects
of the organization, and their focus deviated from the strategic matters.

With
the advent of newer and more effective technologies, emission norms – BS 6, and
the introduction of GST, Talbros felt the need to improve their product
development capability and focus on innovation to capture greater business
opportunities. The organization started looking forward to increasing
production capacity, improving processes to increase yield, looking at
localization of raw materials, reducing costs through waste management and diversifying
horizontally in other segments such as two-wheelers and passenger cars.

The
management had been running the organization by managing everything tactical as
well as strategy related. Most of the time, it was involved in handling
emergencies, leaving little time for them to strategize. The promoter of the
organization wanted the top management to focus on strategy and clearly
demarcated roles, accountabilities and decision-making authority at all levels.

For
the envisaged growth trajectory, the company needed stronger systems and clearer
distinction of roles and responsibilities and level of decision-making. A
single team was managing research and development and Sales, which also
included activities related to supply chain and logistics. Plants acted as an
individual entities rather than a part of a larger organization. The
procurement, research and development and accounting were done separately for
the plants.

The
organization had people working with them for a long period and they had
started complaining about the systems and infrastructure issues. There was a
need for better systems and improved capacity and manufacturing processes,
along with streamlined internal processes and policies across plants. The promoter
wanted to do a benchmarking of the salary that they pay to know where they
stand as per the market. He also wanted to change the culture from loyalty
based to performance based.

The
bequest structure was proving to be ineffectual in supporting the changing
dynamics of organizational needs. Talent management policies and processes required
a revamp in a bid to streamline the processes and professionalize the
organization. In this context our association with the client began initially
for organization restructuring, implementation of performance management system
and compensation benchmarking.