Details

Case

Educator Copy

NON-FAMILY MANAGERS AND SERVICE SALES CORPORATION

Arif Iqbal Rana


INDUSTRY : Service

AREA :

ORGANIZATION : Serive Sales Corporation (SSC)

LENGTH : 14

LUMS No : 30-005-2019-1

PUBLICATION YEAR : 2019

DESCRIPTION

KEYWORDS:

Family business, non-family management, control systems, family managers, Business Development Dimension


DESCRIPTION:

Service Sales Corporation (SSC) had shown exponential growth over a decade, under the leadership of Omar Saeed, a Harvard MBA. Omar had brought major changes to the supply chain and retailing systems of the company and also inducted many younger managers. Hand in hand with company growth had been a delegation of more and more authority to professional managers. The growth had also resulted in Omar gaining the trust of the rest of the family to the point that his investment decisions were unquestioned. Over the last couple of years, Omar had become more involved in other projects (new investments, charity projects, and teaching in a business school). He decided to hand over the control of the company to a professional manager, Aamer Mohsin. This meant that Aamer would now also be responsible for overseeing the finance function, along with the operations (that he was already heading previously). Aamer’s taking over charge resulted in mixed results. The CFO resigned in protest, and company sales slowed down after almost a decade of growth- and in the financial year ending in 2010, Bata’s growth rate outpaced SSC for the first time in 5 years. Losing industry leadership to Bata resulted in raised eyebrows within the company management, as well as its ownership. Some even questioned Omar’s handing over control of the company to non-family management.


LEARNING OBJECTIVES:

This case can be used to highlight and discuss issues in handing over the control of a family firm to professional managers. Among other topics, it can be used to discuss: • Strengths and weaknesses of family managers vs. non-family managers • Importance of control systems and job descriptions in delegating authority • Variety of options available towards professionalising the family business.


SUBJECTS COVERED:

General Management