GenNext – Taking Lead in Family Business

the HRM

After Shiwaj Neupane completed his undergraduate from the United States in 2014, he returned to Nepal for a break. Neupane had little knowledge of business, but he decided to stay and join the family-run business.  

Shiwaj, the son of Ambe Group founder Shovakar Hari Neupane, first started as a Manager in the factory of Jay Ambe Steels in Nepalgunj run by the group and made his way up as the company’s Managing Director in 2015.

“I stayed in Nepalgunj to learn the business. As a young mind, I wanted to learn, and working in the Nepalgunj factory was the best decision at the start of my career in Nepal,” he shared with the HRM.

While working, Neupane realized the company needed a massive revamp–in terms of branding and marketing. The company, according to his plan, started to invest in marketing. The result was felt in no time. The company greatly benefitted from its marketing campaigns. The sales were up, and so was the revenue.

Neupane, who is now in his early 30s, succeeded in his family-run business as the company’s sales prove it. And he is not finished yet. Neupane has already set plans to make Ambe Group the leader in the cement and iron steel market segments of Nepal and has also aimed to penetrate the Indian market. 

Neupane is just an example who, as a member of a family-run business, has succeeded in handling the already-succeeded business.

Like Neupane, Nishan Dhakal, the elder son of Chandra Prasad Dhakal, Chairperson of IME Group, joined the family business two years ago. In a short period of time, IME Motors, which Nishan is handling, has made its presence felt in the market. The market share of the vehicles, which IME Motors is selling, is constantly increasing. 

Lately, millennials, who were born into business families, are slowly taking over leadership roles. They are returning to Nepal after completing their further studies abroad.

The new generation members of the families are different from their predecessors in many ways. They have received foreign education and have experience of working outside Nepal. Also, they belong to the new age of entrepreneurship where millennials have completely changed the rules of the game.

From Golchha Group to IME Group, the big business conglomerates now have millennials in key leadership positions. These millennials are being groomed to fully handle their family-run business in the future.
The Difference
Being involved in a family-owned business as a second or third generation member has its pros and cons. “When you implement new ideas, especially in digitization, there is a pushback,” shares Neupane, giving his own example. At one point, Neupane stopped spending on branding and marketing as the management hierarchy was a hindrance.

According to Gaurav Goel, Director of HR Goel Group, the changes are mostly based on the requirement of the time. “And this is the big change Nepali businesses have witnessed lately. The way business was done before was different. Now, new facilities and equipment and tools have been introduced,” said Goel, adding that the shift from manual work to digitization is another big change businesses have witnessed in a decade and a half.

The mindset of businesses, according to Goel, has completely changed in terms of expanding the market. “In the past, businesses just focused on local markets, and going to international markets was a tough nut to crack. But with time and the emergence of new faces in business, the goal has been set higher. This is where the difference is felt,” said Goel, who started to work in Nepal a decade ago.

Rahul Shakya, Managing Director of Ace Hotels and Resorts, believes the primary difference is in the management styles and the openness towards innovation. “Our generation has been defined by rapid development in technology and business practices and so we are required to be changing constantly, which is evidenced in particular in management styles. In the past, the relationship between employers and employees was vastly different, decision-making would be concentrated among the owners. But the younger generation believes more in merit and decentralizing that authority,” said Shakya, who is a third generation member of his family involved in business. Shakya is the son of Yogendra Shakya, Chairman of Ace Hotels, who has been in the hospitality business for more than four decades.  

“The values are ultimately the same, particularly in my family, focused on the core business values that is ACE (Attention, Comfort, Experience), that defines how we see and conduct our business,” said Shakya.

Jayadin Lal Shrestha of ICTC Group observes that the older generation has worked really hard to bring about business growth both within the family business and for the country as a whole. “While the newer generation has benefitted from the platform of the family business in terms of the basic ways of doing business, the newer generation has to in addition adapt to the evolving new business environment that is combined with changing technology, business processes, more competition, the proliferation of businesses, etc. to which the young generation is adaptive,” said Shrestha, who currently handles ICTC Pvt. Ltd. and CEMAT Consultants. Shrestha is also the Director of Hyatt Regency Hotel.

Shrestha, who joined the group in 2007, believes the young generation needs to be humble about the situation so that they can better prepare themselves for the responsibilities as well as cope with the challenges that naturally come along in terms of doing business. 

According to Shakya, there will always be differences in ideologies and management styles with every generation. “There will never be only one way to do things. Having said that, there is nothing more educating than learning from someone who has past experiences,” he said, adding, “In my case, when I am trying out something new, I always refer to my parents. I try to understand what worked for them and what did not. Based on that I derive a plan of my own.”
International Exposure
In the context of Nepal, parents increasingly trust their children, who are mostly millennials, as they have the experience of studying and working abroad. Mostly all the businesspersons send their children to study abroad as they get better experience and education abroad. The quality of education grooms the new generation to handle the business properly, with the integration of global practices.

“I think the exposure you get abroad is different. In my case, I and my dad both learn from each other. The older generation listens to the experiences of their children who have returned to Nepal. This is also the reason why young generations are being introduced in business,” said Neupane. 

According to Dhakal, the quality of education separates the old generation and the new generation. “My father did not get the same education I received. But he has all the experience one needs to succeed in business. So it’s a blend of my expertise and his,” he mentioned. 
Management Skills
It is the management skills that set apart the older generation and the new generation members of families in the business sector.

“While the younger generation probably looks for data and concrete information in business planning, eased by the available technology, the older generation possibly relies more on their intuition and gut feelings–not to say it’s not scientific–and for good reason too, as the business is where it is at because of these very feelings,” said Shakya. 

According to Neupane, the older generation just want businesses to run smoothly. “They were hesitant to take bold decisions. I don’t know if I am fearless or reckless, but I take bold decisions when it is about the company,” said Neupane. Lately, Neupane has replaced key persons in different departments of his group, and productivity has improved a lot. 

“I have introduced many young faces in key departments. They bring new ideas. They are open for discussion. And even in our steel factory, human error has declined by a massive rate lately,” shared Neupane.

Goel also feels there are some differences in management skills that set the young and new generations apart. “It is not like the overall dynamics have changed. But the available resources and ability to integrate new tools in business have been helpful for the new generation. In the past, communicating with your employees would take a long long time. But now, with just a click or through the HR department, your decisions, and ideas are communicated to employees,” said Goel. “We can also prepare presentations after differentiating the age groups of employees in the company. There might be someone who understands the concept through pictures. And others may need more literature or videos. So, the new generation is a mend of both old and new ways.”

Shrestha believes there should be a blend of skills of both new and old generations. “We, as the new generation, systematically seek, follow, and execute the older generation’s vision and passion for business growth, while also adapting to the changing overall business environment in the country,” he opined. 
The Value of (Re)branding
It’s the new generation who are keeping the older generation business leaders up to date with the new trends in the market. From aggressively using social media to introducing new software and tools, the new generation has been helping the older generation.

For Neupane, it was all about rebranding the image of the company. “I knew the company had to rebrand itself in the market. For that, I needed to invest in marketing and advertising. But there have been heated discussions in our group in this regard. At one point, my dad said we’ve always had this brand and this has always been the technique of our marketing,” he said, adding, “Frankly if they’d stayed with that the businesses would not be in this position.” 

The Ambe Group advertised their cement and steel products in Dish Home. “When consumers opened the television, they saw our brand first. This changed the perception of consumers towards our products. It increased our sales,” said Neupane. 

Talking about branding, Goel said that industries are becoming much more competitive, so branding and marketing are a must. “In the cement segment, regardless of the brand, the usage of the cement is the same. In the banking sector, the overall service is the same. But how one differs from the other depends upon the customer relation and services provided to the consumers. So you have to be quick to understand the customers. That is when you have to research and know what consumers actually need,” said Goel, adding that businesses, earlier, were much more focused on the product they were designing. “Now it is a time when we have to understand the consumers before designing the product. Now if you design the product before knowing the consumers, it is a risky venture. So, you have to understand and find out what consumers are actually looking for.”

According to the young generation business family members, the concept of investing in branding and marketing is completely different between the two generations. “The older generation’s ideology was more of ‘a penny saved is a penny earned’ while we think ‘you’ve got to spend money in order to earn money’ when it comes to marketing and promotional activities. And, with social media and the constant barrage of advertising that consumers face, we see huge value in targeted marketing and promotional activities,” said Shakya. “In the last couple of years, we have attempted different kinds of promotion, some have worked and some haven’t, perhaps we are inventing our own wheel of digital marketing.”
Empowering Employees
Before 2015, Ambe Group had an HR department, but its function was only limited to releasing salaries and other small administrative tasks. After Neupane joined the Group, he started to analyze data and find weak areas with the help of the HR department. “The employees started sharing their learning and ideas,” he said. 
The time has changed, and employees should get a feeling that their efforts and ideas are valued. And open communication between employees and leadership is crucial for a business to succeed, say young generation business leaders.

“At ACE Hotels, I am personally very involved in HR management. In the service industry, if the employees are happy, then guests will be happy. We are constantly ensuring that technology is assisting efficiency, particularly considering the emigration of labor,” shared Shakya, adding, “It is not like in the past where there was an excess supply of labor, if you want your employees to stay then they have to be happy, and for that HR management is critical.”

Shrestha of ICTC Group feels that employees are the assets of the company. “Depending on the type of industry, the top executives’ involvement in people management differs in each company. For instance, the top executives tend to be involved more in the initial stages of a company. Our group strives to initiate and practice bringing professionalism to most of our companies. The top executives, as well as the management, are supportive of the HR executives for better management of our people who are our most high-value assets,” he said. 
The Challenges
The bureaucratic hurdles and political situation of the country frustrates the young generation members of business families. “Most have received their education abroad, and when they come back, facing a corrupt political situation and the bureaucratic hurdles at each point, running a business becomes challenging and frustrating,” expressed Shakya.

For Shrestha, the major challenge for Nepal is the problem related to brain drain. Although 500,000 people enter the job market every year, at least 70 percent of them are going abroad in search of better opportunities.

For Shakya operating the business during the Covid-19 pandemic was a major challenge he had faced. “The pandemic brought the hospitality industry to a complete standstill and is barely recovering which is quite a shame considering that 2019 was probably one of the best years for the tourism and hospitality sector in Nepal,” he mentioned. Many businesses shut down but we are fortunate that we managed to stay open. During the first lockdown, we had to keep 10-20 staff in-house (even though all our staff generally go home) to take care of three-four guests who stayed at the Hotel Ambassador,” he added. 

How Millennials See the Current Crisis
It has been a tough time for businesses for the last one year. And the millennials hope things will change with the formation of the new government. 

“Times are very difficult to run a business. The money is not coming from the market. Even sustaining has become hard, and it is not just limited to one particular sector. As there is a shortage of money in the market, consumers are not getting financing facilities from banks,” said Goel, who hopes the situation would change after the formation of the new government.

Likewise, Shrestha also expects the government to ease the difficulties. Meanwhile, Shakya doesn’t have any hopes from the upcoming government. “The political leaders themselves are the problem,” he said. 

For Dhakal, the liquidity crisis is a major setback for businesses at this point. “The banking channel doesn’t have enough investment-grade liquidity. The automobile sector is such that consumers buy vehicles only after getting financing services from banks. So, we are hit hard,” he said. 

Leave a Comment

Scroll to Top