Why the European HQ should have a “caretaker” / International Coordinator
- Identify difficulties of the Indian subsidiary in a timely manner with Management Oversight.
Our many years of corporate experience in India have shown us time and again,
- that the reports of Indian subsidiaries or joint ventures (JV) often differ from reality and
- that a “caretaker” is needed at the European headquarters to ensure the company’s long-term success in India, i.e. a responsible person who closely supports the Indian subsidiary/JV.
What qualities and qualifications should a “caretaker” have?
He/she/they should:
- be well networked at the European headquarters;
- be able to devote sufficient time to the subsidiary or JV; contact with the Indian branch should preferably take place on a daily or bi-daily basis;
- be familiar with the customs in India;
- have the ability to lead people and be empathetic – despite the professional level on which they operate, Indians are often also interested in the personal level. For sustainable success, it is therefore important that the “caretaker” acts as a door opener and establishes a position of trust with the employees of the Indian subsidiary;
- be able to filter clearly and quickly between important and unimportant matters, between gossip and serious information. It is not uncommon for rumors to be deliberately used to pursue particular interests;
- Identify and enforce “guard rails“. In India in particular, it is immensely important not only to introduce clear and binding regulations on paper, but also to fill them with life and monitor them;
- know the operational structure and process organization along the entire value chain (purchasing, logistics, production, HR, finance, administration, IT, etc.);
What happens if you don’t have a “caretaker” for India?
At the latest when India reports that “everything is running smoothly”, but the Indian subsidiary has (only) been in the black or making losses for years, you should prick up your ears and take a closer look (keyword: audit).
This is often an indication of “inner consumptions“, “bypasses” or other compliance and performance-relevant issues.
Other conspicuous features are e.g.
- significant deviations in balance reconciliations (banks, customers or suppliers),
- high employee turnover,
- sluggish or incorrect monthly reporting,
- Slow communication with the parent company
In such a situation, a health check is a good idea, which we regularly carry out with our prospective and existing customers.
A “caretaker” ensures the necessary “managerial oversight” at your Indian subsidiary and should quickly recognize the above-mentioned typical risks and act accordingly (keyword “Internal Control Framework“).
Conclusion
There is often a gap between what is reported from India and what actually happens. A “caretaker” closes this gap through systematic observation, clear communication and an understanding of operational contexts – the basis of any sound management.
Take the opportunity to realistically assess your commitment to India with the help of a non-binding health check. We look forward to hearing from you.
