Oct 22-Nov 6, 1997
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The CEO As Family Man(ager)

In an age when business groups are desperately decentralising and professionalising their operations, M.V. Subbiah, the 58-year-old CEO of the Rs 2,600- crore Murugappa Group, is treading a contrary path. He's binding the three generations of the family more closely than ever before to their companies, using a rare mix of collective responsibility and cross-family decision-making to strengthen both blood bonds and business strategy. 

By George Skaria

M V SubbiahThe family that sticks together does business together. With that simple prescription, Murugappa Vellayan Subbiah, the 58-year-old chairman of the Chennai-headquartered, Rs 2,600-crore, 45-company Murugappa Group, is trying to stir tradition and modernity into an elixir of survival and growth. Preserving the identity of this gene-linked Indian keiretsu, spanning four generations and 10 male members of the dynasty--as well as nine businesses--is Subbiah's self-chosen leadership mandate. His top-most priority isn't managing his companies, or his employees, or his customers. It is managing his family.

'Twas ever so. In 1981, the then-Union Finance Minister, and later the President of India, R. Venkataraman, offered eid Parry--which had been run aground by a group of professional managers--to the Murugappa Group. Subbiah, then a works manager in one of the abrasives factories of the group, was one of the few who opposed the idea, arguing that the future lay in sunrise industries. Not only did the wishes of the majority in the family prevail, three years after the takeover, Subbiah was the one despatched to revive the company from the death-bed. He did so--without a murmur of protest.

In 1995, when the then-group chairman, the late M.V. Arunachalam, announced his intention to retire at the age of 65, his natural successor--the eldest member of the family--the 61-year-old M.V. Murugappan, declined to accept the stewardship of the group. Although he was next in line, Subbiah spent weeks trying to convince Murugappan to assume charge even though that would block his own coronation. Only after the attempt failed did he finally assume charge, in April, 1995. Explains Subbiah (Subbu to relatives and friends): "If the family needs me, I will do anything. My personal interests are not important."

For Subbiah, the legacy of leadership passed on to him by Arunachalam is a tough act to follow. For, his predecessor's achievement lay in keeping the family together at a time when many dynastic groups were disintegrating. Says J. Rajagopal, 42, managing director, Coopers & Lybrand: "It is one of the few south Indian groups that has embarked on a process of change after maintaining the family's unity and its ethos."

What's more, the family credo--of being a successful Indian business group with investments in areas that will serve the national interest--is no easy cause to champion in post-reforms India, where competitive pressures are emerging as the most powerful force shaping business. But in Subbiah's worldview, family unity can become useful for a business group by building a common pool of assets and resources that every business can use, be it to invest in growth projects or to repair financial damage. Naturally, that will not be possible unless the members of the family think of themselves in collective, rather than individual, terms. As M.A. Alagappan, 53, coo, Murugappa Group, puts it: "The family believes that the more united we are, the more risks we can take."

Moreover, the collective interest acts as a deterrent against individual folly. "If one of the group members goes astray," explains Subbiah, "the others provide the checks and balances." Achieving unity, therefore, is Subbiah's biggest objective--and he isn't averse to national interest as a glue. "Being Indian is the core of the family unity," he asserts. Sums up Tarun Das, 57, the director general of the Confederation of Indian Industry, who has known Subbiah for the past 20 years: "It is possibly one of the few instances in the country today of a CEO setting himself the objective of creating a family business as opposed to a business group." Just what leadership initiatives is Subbiah using to achieve this purpose?

Leading By Change

To preserve family bonds, Subbiah has consciously tamed his aggressive style into a mellower one. Nicknamed `Abrasive' Subbiah for the combative, bellicose approach he used while working in the abrasives division of the group, he conducted a ruthless self-audit as soon as he took over as the group's CEO. His conclusions: unlike his predecessor, he neither oozed charisma nor had the networking skills within the business community that an adroit CEO could use effectively.

In this situation, he reasoned, to pursue his bull-in-a-china-shop way of getting things done was bound to prove counter-productive. While it may have mowed over resistance from employees, it wouldn't win him friends and influence people within the family. Already, he had learnt that pushing his peers at conclaves--a practice he was accustomed to--generated only resentment, not admiration.

To ensure that he abandoned this approach, Subbiah's solution was inge nious: he simply abdicated his right to chair the all-important quarterly planning and review meetings of the group in favour of his cousin, Alagappan. In fact, to eliminate the temptation of butting in, he decided not to attend the meetings at all; instead, he set up a system of briefing Alagappan in detail before each meeting, and debriefing him afterwards. Says Subbiah: "I told him that I was going to depend on him to motivate the rest. And that he could depend on me to analyse what was wrong, and where we should focus. That's the kind of team-building I am trying to inculcate."

The skilful opportunity-seeker that he is, Subbiah also realised how he could leverage the move for establishing his credentials as a family-oriented CEO. He quietly let it be known that his absence from the meetings was actually a statement of complete trust in the ability of his cousins. Says Subbiah: "What I have done is to assess the strengths and weaknesses of each member of the family, including myself. I am a very intense person by nature, and was, possibly, demotivating my colleagues by my style of functioning. I could not change myself fully overnight. So, we decided to do things differently." Naturally, such loosening of controls demanded a lot of Subbiah. Says Suresh Krishna, 58, the chairman of the Rs 305-crore Sundram Fasteners, who knows him well: "Letting go has not come easy to Subbiah. That demonstrates his commitment to the job."




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