🔥 A factory fire in Punjab taught me an important lesson about family business leadership.
A few years ago, while consulting a family-owned business, I witnessed an incident that went something like this.
A fire broke out in one section of the factory.
The supervisor on the scene immediately raised the alarm, mobilized the firefighting team, and called the owner.
“Sir, there is a fire. I have activated the firefighting team and we are bringing it under control quickly. Don’t worry sir ji. I’ll keep you updated.”
The owner, sitting hundreds of kilometers away, was understandably concerned. He immediately called the plant manager.
The plant manager was driving to the factory and had not yet been informed.
Within minutes, the fire was brought under control. Fortunately, there was no major damage.
But a different fire had just started.
The owner was upset.
“How is it possible that I knew about the fire before my plant manager?”
The plant manager was equally upset.
“Why did the supervisor not inform me immediately? I am best equipped to mobilise resources and bring it under control ? Why is he wasting valuable time in first informing the owner when the immediate action required is local. And why is he directly reporting to the owner ? It is my job to keep him informed.
The relationship between the supervisor and the plant manager never recovered.
What happened here?
Many founders and family business owners maintain informal channels of information. They have trusted employees who keep them informed about what is “really happening” inside the business.
The intention is usually good.
They want unfiltered truth.
The problem is that there is no such thing as completely unfiltered information.
Every informal messenger has opinions, loyalties, fears, ambitions, friendships, and grievances. Information inevitably gets coloured by the relationship between the messenger and the people being reported on.
Research on informal organizational networks shows that these networks exist in every company.
However, leading organizational research also suggests that when the informal network starts bypassing the formal chain of accountability, confusion and a breakdown of trust often follow.
The consequence?
The best founders I have worked with do something different. They never undermine the authority of the people they have appointed to lead.
If a plant manager is accountable for running the factory, then he or she must remain the primary channel of operational accountability.
Trust is built when information flows freely.
And organizational confidence is built when information flows through clear and respected structures.
Family businesses don’t need secret informers. Or hidden organisation structures inside the official organization structures.
They need transparent systems, strong managers, and owners who know that they should not bypass the very people they hired to lead.
Do you think an informal information network strengthens a business—or weakens it?
Harsh Chopra
Family Business Advisor
Partners4growth.in