Eleven Lecture Hall: The Way To Inherit Family Businesses In The Future

In the past 28 years of reform and opening up, hundreds of thousands of Chinese have sprung up. family firm 。 The entrepreneurs of these enterprises are already middle-aged. Quite a few of them are in their sixties. In the next ten to fifteen years, there will be a climax of handover in Chinese family businesses. In order to change the owner of hundreds of millions of wealth, and for the sake of the long-term inheritance of Chinese family businesses, we need to explore the way of future succession of Chinese family businesses.

In those enterprises that have completed the shift, " Inherited his fathers The Chinese tradition is still deep-rooted, such as Lu Weiding taking over his father Lu Guanqiu as CEO of Wanxiang Group, Xu Guanju taking over his father Xu Chuanhua as the chairman of the group. There are two other important ways for family businesses to inherit in the world. Internal succession and external succession are hard to find in China. So what kind of family business succession system do we need in today's Chinese social environment?

Under the current family succession mode, the scope of family business selecting successors is too narrow. China's family planning policy makes many successors facing difficult choices.

Even if the second generation successors receive good education, their interest and expertise are not necessarily in the area of business management. In this way, family businesses may be in crisis because of internal succession. For example, Wang An, the founder of Wang An computer company in America, has become a legend in American business because he can compete with IBM in the fiercely competitive American computer world. In November 1986, Wang An's eldest son, Frederic, 35, took over the position of general manager of Wang An. Though painstakingly nurtured by Wang An, his achievements were mediocre. As Wang's son inherited his father's career, the result was that many backbone members who had been following Wang for years resigned angrily, and the management was badly hurt. Finally, the enterprise ended up being bought and sold by other enterprises.

In Chinese family businesses, the founders of family businesses often lead and maintain family businesses with their unique management style, and the management level of enterprises has long adapted to the "parents" style. A successor with different styles or lack of Chafford is often unable to convince and control the whole situation, and some family members who are full of wings or dissatisfied with the current situation often reveal the tendency of centrifugal. With the intensification of various contradictions within family businesses, the collapse of family businesses is not far away.

Many family businesses Entrepreneur We also considered the succession of enterprises and the succession of external personnel, but most of them failed to do such an attempt. The reason is that the non family talents in the enterprise are unable to convince the public, especially the entrepreneurs who are not able to manage the family. The integrity of the external professional managers is not high enough, and there is a certain risk of inheritance. Yin Mingshan, chairman of Lifan Group, said: "it is dangerous for an outsider to master the technical core secrets of your company. He can take them away at any time and cause instability. China's laws do not expressly stipulate that commercial secrets are normal. It is not normal to take them out. I can only rely on the family to be stable, the possibility of family betrayal is small, and the cost of stability is low.

We believe that all these reasons are untenable. The fundamental reason is that the Chinese family business is still dominated by man and does not form a set of system management system. Most family businesses are paternalistic management. Parents usually have a high degree of centralization. There is no corresponding restriction mechanism. Basically, it is an experiential management. It is easy to breed arbitrary behavior. After the enterprise is transferred, this management mode will still be used instead of changing. We all know that in the absence of constraints, capable people (if they are left to dictatorship) may cause greater harm to enterprises. In fact, similar problems exist in state-owned enterprises. Due to the absence of shareholders and inadequate monitoring, insider control has been formed and the loss of state-owned assets has been greatly reduced. If family business is transferred to non family talents, whether inside or outside the enterprise, the risk of forming family type insider control is very large.

The internal succession of Chinese enterprises is actually an irrational allocation of resources. Although there are talents for the enterprise, they are not chosen for safety or loyalty. Therefore, this way of succession usually fails to create optimal performance. Because the second generation of family heirs usually do not have the ability as the first generation of founders, so under pressure, he often adopts two ways of management: one form several factions within the enterprise, manipulate them, make them fight each other, and control themselves, so as to maintain their control over the enterprise; the other is only those who are less capable than the others. These two practices will damage the performance of enterprises. Therefore, after the second generation of succession, the operation of enterprises has declined rapidly.

In addition, the internal succession of Chinese family may lead to division of enterprises. China advocates equal ownership of property. When it comes to having a number of successors (sometimes even family members from generation to generation), it is often divided into enterprises. Sometimes divorce between husband and wife can also lead to division of enterprises. A typical example is. Separation often leads to destructive impact on enterprises. In Japan, the tradition is to separate businesses from each other. That is to say, although every successor has certain assets, it only keeps the integrity of the enterprise in the form of equity. Another effective way is to set up a trust investment company. In order to prevent future generations from wasting property created by their predecessors, the common practice of foreign family businesses is to establish a trust investment company and then control listed companies, so that future generations can only enjoy investment income. So as to realize the evergreen family. If a future generation wants to start a business, it can stipulate that each generation can only take 10% of the principal part of the trust investment company, so that the family business can transmit at least ten generations.

For the time being, I think the future direction of family business succession is internal succession (similar to Japan's "foster son"), that is, selecting elite talents in the enterprise to inherit the management rights of enterprises, and usually do not choose family members.

It has been analyzed before that the way of family succession is not conducive to the development of enterprises: the children of founders may not have the ability to manage and manage a large enterprise (loyal enough, insufficient ability), or their children's interests are not in the management of enterprises at all. If they are forced to inherit their fathers' business and take on heavy responsibilities, they may lead to the future development of enterprises to decline and threaten their survival. The choice of professional managers from within the company is different. Professional managers usually master professional knowledge in a certain field and have rich management experience. Therefore, they can manage and manage an enterprise well and be able to withstand the test of enterprise risk. In this sense, professional managers should be more qualified to take up the successors of enterprises.

Therefore, for the time being, family succession is reasonable and is also a realistic choice. However, there are inherent defects in "taking care of one's father". We believe that, with the improvement of the market environment, Chinese enterprises should break through the limitations of family businesses and do not pass on the outsiders. In the efforts to train family successors, we should give due consideration to the talents outside the family, so that non family talents will stand out under the conditions of fair competition.

In order to better carry out internal succession, family businesses can do the following:

In the process of enterprise development, we need to introduce professional managers besides the two departments of Finance and personnel, so as to lay a solid foundation for the future.

Family businesses must consider themselves to be shareholders or entrepreneurs when they feel that they are not accustomed to it. If we are shareholders, the only choice is to introduce professional managers. At the same time, we must appropriately decentralization. We should also pay attention to external constraints and certain institutional arrangements, such as the gold share system of entrepreneurs, that is, although they do not occupy a controlling position, they can veto a major decision. If we are entrepreneurs, we should slow down the pace of enterprise development and introduce professional managers steadily. We should start from the periphery and do not rush to introduce large numbers of professional managers.

Short term incentives and long-term incentives are effectively combined. Many private business owners only focus on short-term incentives, such as reaching high salaries, hundreds of thousands or even millions. However, the risk of such a practice is very great. For example, it may cause professional managers to choose high risk and high yield projects. Once they fail, managers can leave, and family bosses can only suffer losses. Therefore, we should choose a balance between short-term incentives and long-term incentives. For non listed family businesses, managerial ownership is an effective long-term incentive. Equity incentive can better solve the conflict of interests between managers and shareholders of a company, so that the interests of managers and the interests of the company will increase simultaneously, so as to achieve long-term incentives for managers.