In a family business it’s important to know when to hold, when to fold

Power and wealth have a way of corrupting even those who appear most genuine and loyal. Succession planning, therefore, must account not just for the foreseeable but also for the unthinkable. Professionals who once swore by their loyalty can change sides; family members can have divergent ambitions; business environments evolve and family dynamics rarely remain the same across generations.

Ultimately, the objective must be to ensure the survival of the business and the preservation of family relationships, anchored in the broad values that define its legacy. Steward leadership is much talked about, but remarkably rare when it begins to challenge personal power, wealth or ego. This is precisely why a robust framework must be put in place during relatively normal times, so that even extraordinary situations do not spiral out of control.

My own philosophy is simple: every family member should have access to basic security during difficult times, while retaining the independence to lead their own lives within the broad boundaries of shared family values. Family gatherings should be rooted in affection, not obligation, and when a crisis strikes, members should be able to count on one another.

In family businesses, succession can become a test of patience and restraint. For some family members, the chair is already theirs in their minds, almost as an entitlement by virtue of birth.

The Tata Group offers a compelling backdrop to this debate. Late Ratan Tata retained the chairmanship and did not induct Noel Tata onto the Tata Sons board, for reasons best known to him. With N. Chandrasekaran’s resignation, reappointment and the subsequent opposition to his continuation now drawing attention, the question of who eventually leads Tata Sons has once again come into focus. Tata Trusts, the group’s largest shareholder, under its chairman Noel Tata, has initiated the process of raising concerns in what it considers the larger interest of the institution. When the chemistry between the old guard and the institution begins to fracture, sometimes the most dignified course is to recognise the moment and make way gracefully.

Mr. Noel Tata has consistently demonstrated an ability to rise above personal considerations in the larger interests of the family and the institution. He has served under three Tata Sons chairmen — Ratan Tata, Cyrus Mistry and N. Chandrasekaran — maintaining dignity and restraint through changing circumstances. His understated style, attention to detail and willingness to listen are qualities that deserve recognition. His leadership at Trent has also demonstrated his agility, resilience and ability to build a formidable business.

As chairman of Tata Trusts, Mr. Noel Tata is well placed to play a decisive role in navigating the present transition, should circumstances require it. His approach will need to balance institutional interests, family expectations and the group’s long-term legacy. The next generation, including his children Maya and Neville, and the wider family, will ultimately inherit the consequences of decisions taken today.

Importantly, the Tata Group is not short of leadership talent. It has a strong internal pool of professionals, including managing directors of group companies who have the experience and institutional knowledge to assume wider responsibilities. What the Tata Group needs most is a stronger revival of Tata-ness — the values, institutional integrity and sense of purpose that have earned it admiration across the world.

A successful succession is about safeguarding an institution for generations. Noel Tata’s greatest test will be to bring together the head and the heart, ensuring that the group’s legacy remains larger than the ambitions of those entrusted with its stewardship.

(Naveen Khajanchi is Director of Executive Search Service and author of Evolutionary Leadership A Holistic Perspective. Views expressed are personal)