Are employees in a promoter-led organisation more driven and loyal?

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While an empowering organisational culture surely does drive employees and makes them loyal, companies with greater influence of promoters witness faster decision-making, which, in turn, motivates employees. 

Majority of Indian businesses are either family run or promoter-led organisations. With 108 publicly-listed family-owned businesses, India holds the third position globally according to a Credit Suisse report. Many such businesses have today evolved into world-class business corporations and also expanded their presence overseas. Such promoter-led organisations are driven by the aspirations of the promoters for a quantum leap in growth of business, through basic values of mutual trust, cost consciousness, profitable growth and quick decision making. Are employees in such setups more driven or loyal?

Employees in these organisations are motivated by the ability to relate with businesses similar to that of the promoters’ expectations, and here, loyalty and dependability play a huge role. The organisations’ work culture is dependent on the leadership teams’ ability to manage promoters’ expectations and trust.

In the initial phase, employees may have to adjust before being accepted into the system, but once they succeed almost become entrepreneurs in their own sense. However, there are a few things in promoter-driven firms that can prove to be a boon for employees.

“In promoter-led organisations, employees need to possess the outlook of entrepreneurs as well, wherein every action has to have an outcome of profit or something in the interest of the enterprise. As long as these outcomes show up, employees are successful. Promoters do not look to hire just employees but partners in business. Decision making is faster in promoter-led organisations. Once there are clear positive vibes, employees have the opportunity and freedom to think and act as entrepreneurs to drive growth,” says Rajendra Mehta, chief people officer, DHFL.

Pradyumna Pandey

It has been seen that when MNCs take over a promoter-based company, the job appears to be contractual in nature for employees and the feeling of a family culture vanishes.

When ideas move faster within an organisation, employees are motivated and driven. For those employees who can prove their worth in promoter-driven businesses, there is always an opportunity to grow faster, expand their horizons and seek greater responsibilities to explore capabilities with lesser constraints.

However, leaders with considerable experience in MNCs feel that only those employees who are in proximity to the promoter carry the owner’s mind-set. The influence may diminish at the lower levels. “The roles are clearly defined for employees in MNCs as compared to promoter-driven organisations because lines may slightly blur as they start to behave like entrepreneurs,” said one senior HR leader on condition of anonymity.

A few HR professionals opine that it’s the ecosystem of an empowering culture that drives the employee and it doesn’t matter whether the organisation is an MNC or promoter driven.

“A passionate workplace is a function of clarity of purpose and an empowering culture. The essence is in how well the organisation and its leadership have managed to inspire teams through their vision, how clearly colleagues are able to see ‘how their role contributes to business’ and degree to which colleagues are empowered to do their bit. It is not a function of ownership structure as much as one of culture and vision”, says Mahalakshmi R, Head HR, India, Mondelez International.

Rajendra Mehta

In promoter-led organisations, employees need to possess the outlook of entrepreneurs as well, wherein every action has to have an outcome of profit or something in the interest of the enterprise. As long as these outcomes show up, employees are successful.

Even an entrepreneurship spirit is equally encouraged in an MNC setup, to drive innovation. In promoter firms, there can be a case of use of the top-down approach, which can kill the entrepreneurial spirit. Hence, it depends on the culture of empowerment and clarity of purpose.

Some agree that the involvement of a promoter plays a major role in the organisation. “It has been seen that when MNCs take over a promoter-based company, the job appears to be contractual in nature for employees and the feeling of a family culture vanishes,” says, Pradyumna Pandey, vice-president & head-human resources, JK Tyre & Industries.

Mahalakshmi R

A passionate workplace is a function of clarity of purpose and an empowering culture. The essence is in how well the organisation and its leadership have managed to inspire teams through their vision, how clearly colleagues are able to see ‘how their role contributes to business’ and degree to which colleagues are empowered to do their bit. It is not a function of ownership structure as much as one of culture and vision.

Most employees in promoter-driven companies have longer innings, as polices are welfare oriented and respect for employees is higher, unlike MNCs, which follow a hire-and-fire policy, believe some leaders. The leadership is empowered to take care of employees and help them even beyond policies.

However, where multiple family members are part of the operating units, the dynamics alter. It creates more than one centre of authority and powers, which becomes a challenge for the employees. After all, high capability is required to manage the environment.

In cases where the promoter is insensitive to ensuring professionalism, and there is lack of clarity on issues besides nepotism, the culture takes a beating, and growth suffers too. However, when the promoter takes genuine interest and has greater influence, the same culture percolates into the system, driving employees to seize the opportunities, which exist in the marketplace, for the organisation.

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