Leading By Patriarchy

Retrogressive as it is by the standards of gender equality, Subbiah believes in leaving the group's business in the hands of men only. There are no heiresses in harness--such as the Rs 104.78-crore Rajshree Group's Rajshree Pathy, or the Rs 750-crore tafe Group's Mallika Srinivas--in the Murugappa Group. Nor will there be under Subbiah's stewardship. "None of the daughters, wives, or sons-in-law enters the family business or holds shares," he pointedly points out.

The only concession he has made: permitting the third-generation women to join some of the family trusts involved in social service. The rest, if they harbour entrepreneurial instincts, are set up in personal business ventures: Subbiah's sister, Valli Muthiah, for instance, runs a flourishing export house which sells silk to Japanese kimono-makers. "The family believes in continuing its business activities through its male heirs," explains M.M. Murugappa. And Subbiah is not willing to make an exception if it will jeopardise his original objectives.

So steeped is the Murugappa family in the traditions of its male members that women marrying into the family are informed at the outset not to expect their husbands to deviate from the family traditions for the sake of their wives. For instance, the system of not being allowed lavish lifestyles until they have covered a certain distance up the hierarchy applies to everybody--and their wives. Shrugs Subbiah: "As a member of the family, my wife has to understand the Murugappa Group culture even though she comes from a different family and a different culture." From his point of view, nothing must weaken the family bonds. That's why, when his son, S. Vellayan, 28, who works for McKinsey & Co. in the US, decided to buy himself a Mercedes-Benz, Subbiah requested the young man to scale down to a less ostentatious model since his seniors in the family use only Made-In-India cars.

Leading By Grooming

For all his tradition-driven tactics, Subbiah's system for preparing the next generation to take over the reins is both contemporary and stringent. He ensures that training starts with summer projects for the male students of the family, with specific time and cost budgets to be adhered to. For instance, M.M. Venkatachalam was put in charge of a construction programme for a group company while he was studying for his B.Com. degree. In fact, Subbiah himself had been assigned a peon's job in the Colombo office, which was run by an agent, during his student days in the 1960s. "You could be the owner's son," Subbiah recalls, "but he was the boss. That is the kind of training that we want for today's generation."

Later, Subbiah makes every young member of the family serve a personal apprenticeship under one of the trusted professionals working for the group companies. Only with his mentor's seal of approval can a youngster progress through the ranks. When Venkatachalam came back from Washington University with an mba in 1982, he was posted at the sugar factory at Nellikuppam, and not promoted or transferred till he had attained the target set for him--processing 8 lakh tonnes of canes per day--which took three years.

To grow cross-functional skills among the future CEOs of the group, Subbiah has also intensified the job-rotation routine. He also encourages the scions to not only study management abroad, but also to work for blue-chips to amass experience. Son Vellayan, for instance, has completed a course in corporate strategy under management guru C.K. Prahalad. Similarly, Alagappan's son, Arun Alagappan, 21, works with ge Capital in Delhi. Subbiah's objective: leverage tradition, but be business-like too.

That's how he presses home business imperatives too. As S. Viswanathan, 58, president, group finance, Murugappa Group--a professional manager, and not a member of the family--points out: "There is a greater sense of urgency under Subbiah." Nor does Subbiah rely only on soft issues. Comments another professional manager in the group, M. Anandan, 47, director, Cholamandalam Securities: "One of Subbiah's critical achievements has been the forging of a group identity, backed by suitable human resource and investment policies across the group."

Despite these moves, however, there is the danger that Subbiah's notion of fusing the family and the business, often to the exclusion of management imperatives, may turn out to be regressive rather than rational. Collective management of all companies by the family elders may create confusion, and dilute strategic direction. The practice of handing over stewardship to the eldest male member of the family, irrespective of his capabilities, is fraught with peril.

Likewise, systematically shutting out professionals from the CEO's post, reserving the corner room for a member of the family, will not attract top-flight professionals. And using contemporary management principles like core competence and focus to restructure the business portfolio will be impossible so long as Subbiah believes in investing in businesses of national importance.

Even as the more visionary business groups around the country increasingly carve out leadership roles for members of the family, leaving management to professionals, Subbiah is doing just the opposite. If Subbiah isn't willing to put strategy ahead of the family, therefore, he could well lead his group into an uncertain future. After all, bottomlines care little for blood relationships.