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January 21, 2021

Rise of the falls

Business

January 21, 2021

LAHORE: The want of true as well as insightful entrepreneurial vision is one of the biggest reasons that shot many companies down not long after their successful blast off, especially in Pakistan.

In most cases the downfall started after the next generation of owners, largely cocky youngsters, took the helms of affairs and tried to undo the business culture their predecessors worked so hard to develop.

The company during its success period might have hired the best talent that developed good rapport with the founder owner but when a new generation steps in without any experience that rapport is lost. Most young heirs try to assert themselves and sometimes ignore the sound advice of the professional human resource. It usually ends in disaster. This is the reason many small and medium enterprises close down after the founder meets his/her maker.

If we look at our major conglomerates, we will find that those still performing strongly have the founder at the helm of the affairs even after four decades.

Nishat group is one example, Descon, Jehangir Siddiqui & Company, Packages are other examples. We have seen some of the major groups like Adamjee, Valika, and Sargodha groups losing their prominence. The Saigol group fragmented after the death of its founder and some of the heirs are flourishing while others are reduced to nonentities. Dewan group also disintegrated after the demise of its founder.

Businesses in Pakistan are passing from first to second or third generation.

The business culture has transformed at a very rapid pace during the last three decades. Companies in Pakistan need to develop modern culture and hire the best talent. There are certain cultural traits that are universally favored as every company desires its employees to be ambitious and accountable for their actions. The company would look patronisingly on employees that care about their assignments.

However, these attributes alone do not constitute a high-performance culture. Employees in a manufacturing concern for instance may be motivated and doing a good job but they may lack the behavior essential for a company's strategic needs such as ensuring timely deliveries.

The engagement of the employees with their work could not resolve this problem. In the current day competitive environment, organisations need ambitious and involved employees fully committed to not only their work but also to the strategic goals of the organisation. They should be willing to go an extra mile to achieve organisational goals.

It is wrong to assume that culture is determined by mindsets as culture is primarily based on Organizational Context. Most of the top executives of companies are unaware of the impact they have on organizational behavior. It is they and not the mindset that drives and sustains culture. Desired behaviors can emerge spontaneously when the context changes.

Higher executives are usually at loss when it comes to how and where to intervene in order to change employees’ behavior. They have to consider many factors as their relationship with the organization's culture is very complex. If one understands the organizational context and the interplay among its different employees, the culture could be effectively changed.

To change the organisational culture leaders should take the lead. Mian Mansha, Razzak Dawood, Babar Ali, and Jehangir Siddiqui have shown the way to grow sustainably through professional management.

The way they communicate in reinforcing desired behaviors and how they manage their priorities is very important. The competence of employees recruited is crucial for a successful change in the working environment of a company to optimise benefits from high tech opportunities. Only time will tell how well they succeeded in synchronising their next generations in their conglomerates. They are prudent businessmen and have survived both the friendly and unfriendly governments in Pakistan.

The instability of most business ventures in Pakistan has checked its growth as well. One thing common in successful conglomerates is they have diversified their investments in various sectors, they keep their companies updated with the latest technology; they hunt for the best talent in the market and let professionals run day to day company affairs.

The professionals must however operate within the mandate provided to them by the majority shareholders.

The businesses that remained shaky even after decades of existence are those that failed to diversify when the times were good. The spinners for instance preferred establishing another spinning mill and then another. They did not go for moving up to add weaving facility and then a stitching unit.

Nor do they move into new sectors like engineering, cement, power or auto. As Pakistan’s economy regularly undergoes boom and bust cycles, those confined to one sector face the music when their specific sector is hit more during the bust period.

Pakistani entrepreneurs would have to come out of ‘Saith’ mentality and accept the fact that there are more talented people outside the family that could take their businesses to new heights.

Every company that makes effort to improve the quality of its human capital experiences a distinct, measurable, and meaningful business performance return. It is worth noting that most of the companies meticulously manage balance sheets but rarely manage their talent that is hard to quantify.