6 Ways to Tell if You Work For a “Lala Company”

India has several so called Lala companies that have been hugely successful and are now multi-billion dollar corporations. There is a common misconception that family businesses are Lala companies. However, there are many prominent family run businesses that are professionally run and operating with a culture, management style and outlook that are world class.

In this post, I will attempt to lay out the common characteristics that differentiate a Lala Company from a professionally managed organization. Before that, let’s understand the term Lala and its origin.

Definition of the term “Lala”

Indian (northern states): from Hindi lala, a term of respect or title, used during the Mughal period for addressing educated and experienced vaisya and kshatriya sect who are mainly involved in administrative services instead of military services. These were typically bankers, merchants, tradesmen, schoolmasters, and clerks. 

Top-down approach of management and organization

Lala companies traditionally work with a strict top-down approach where senior executives and decision makers make a decision. The advantage is that responsibility and thus failure / success are easily identified with the relevant office holder. In the short term, it could lead to more effective indoctrination and adoption of ideas across the organization. However it might be demotivating for employees in the longer term. Empowerment at the lower levels is discouraged, and innovative ideas from these levels might be unwelcome. 

Tight-fisted

There is a reason why the big Lala companies of India are wildly successful. They are tight-fisted to the core and believe in value maximization sometimes at the expense of employee centricity and convenience. Lala companies are experts in squeezing value out of their suppliers and service providers and leave little to no room for negotiation. The approach is more of a master-slave relationship and less of partnership and collaboration. Company discretionary spend is heavily regulated and controlled.

Shareholder approach to social responsibility

Lala companies’ approach to business fits well with the controversial stand of the Friedman Doctrine which argues that a company should have no "social responsibility" to the public or society because its only concern is to increase profits for itself and for its shareholders and that the shareholders in their private capacity are the ones with the social responsibility. Notwithstanding the recent regulations around CSR in India, Lala companies have a simplified and direct view of engaging in activities that maximize their profits.

Friedman Doctrine

Minimal regard for employee satisfaction

Is everyone except senior management (read CxO level and above) mandated to travel in cattle class? Is the culture brash, direct and often disrespectful? Is there a clear sense of hierarchy on display? Are you expected to address older / senior colleagues using formal titles like Sir, Madam or Ji? Does failure or under-performance lead to a firing without warning or counseling? There is a good chance you are working for a Lala company.

Questionable business practices

Lala companies push the envelope when it comes to ethical and fair business practices. They are street savvy, operate under a veil of secrecy and could care less about branding and reputation. Generally, they have tremendous political clout and flourish in corrupt / heavily regulated regimes.

 The buck starts and stops with the promoter

Lala companies are disinclined toward promoting / hiring professionals at the senior levels. People at the top are mostly filled with family members, sycophants, and longtime loyalists. Decision making is centralized and fully controlled in a select group of individual/s. In general, the company is run with an iron fist.

 In my second post of this series, I will attempt to lay down key guiding principles / best practices to utilize if you find yourself facing the wonderful challenge of partnering with or providing services to a Lala company.

Read the second part to this series - How to Make Friends and Influence the Lala

*Disclaimer: This post reflects my own personal opinion and experiences, and bears no connection with any of my past or present employers.