How Does The Family Business Go To The Next Generation?

The happening of the "real kung fu" power grab once again reminded me of the dispute over the control of family businesses.

Family businesses and family business management, especially the replacement of family businesses and management of professional managers, always seem to be "entropy".

In response to last year's "Chen Huang war", I wrote two articles on the issue of professional managers in family businesses and shareholders and professional managers in the courtyard of Qiao family.

Seeing that "real Kungfu" was so hot, I could not help living under something else.

It coincides with the study of Morten Bennedsen, Xiaowei Rose Luo, Morten Bennedsen, Ludo Van der Heyden and other scholars held in 2010 at the school of business at the conference on the theme of "Conference on", "so," and so on.

No matter how the academic circles define, family businesses have a long history and are the most extensive form of organization in the world.

"Even the most conservative estimate is that family owned or operated businesses account for between 65% and 80% of the world's enterprises.

Of the top 500 enterprises in the world, 40% are owned or run by families "(Colin Gaierxike).

However, according to the research conducted by a family business school in the United States, about 70% of the family businesses fail to pass on to the next generation. In China, the data show that the average life expectancy of family businesses is 24 years, which is exactly the same as the average working life of the founders, but only 30% of the family businesses can reach the second generation.

This is the reason why this article is about to be discussed.

That is, how can family businesses pfer control to the next generation smoothly and successfully?

A key factor that can not be pferred smoothly to the next generation of family enterprises' control rights is from the obstacles of entrepreneurs themselves.

We have to admit that the characteristics and quality of entrepreneurs themselves have created the brilliance of family businesses, and they have made great contributions to the success of enterprises.

All these are understandable.

However, some characteristics of the entrepreneur themselves also impede the progress of the pfer of rights.

Among them, there are two kinds of characteristics that are prevalent in entrepreneurial entrepreneurs. Sometimes they will have a fatal blow to the pfer of family enterprises' control rights. First, entrepreneurs want their enterprises to remain the original business models and leadership styles in the future operation; two, the exclusion of Morten (Bennedsen) by entrepreneurs.

In these two points, the first point obviously violates the principles of situational management and contingency management, and the second point is not in line with the development trend of modern enterprises.

Enterprises (whether family businesses or non family businesses), if they want to achieve permanent development, must keep pace with the times, abandon the traditional mode and adopt a governance structure that is consistent with time and place.

Once a breakthrough is made, it is bound to arouse dissatisfaction among the "overlord" entrepreneurs.

Their intervention and intervention inevitably impede the smooth pfer of control.

The word "rich two generation", which has no color in itself, has been dubbed "derogatory" in most of the time.

Objectively speaking, there is no lack of "knowledge successful" young talents in this group.

But according to the media reports, there seems to be more "dandy", "letting nature take its course" and "father and son decline" in this group.

From the survey of "Zhejiang businessmen cultivating successors", 37% of the "two generation" hope to create their own business, and 45% think they do not have the qualities of succession now, and are unwilling to accept the career of their parents.

This indicates that in family businesses, the lack of succession plan is still a common phenomenon.

The lack of succession planning is also an important factor in the failure of family business to control the pfer of power, and the failure of family control alternatively. (Xiaowei Rose Luo).

If a family business does not have a clear succession plan, it will not be able to cultivate new people in time.

When family businesses are short of succession plans, even the children of entrepreneurial entrepreneurs will not be clear about what they are going to do (Xiaowei Rose Luo).

For family businesses who do not want to introduce new people from the professional manager market, they will create "fault".

This will inevitably lead to the smooth pfer of family enterprises' control rights.

The brilliance shown by family businesses can easily lead to the lack of creativity of the next generation, and lack of spirit of initiative and adventure.

In modern society, an enterprise that is willing to face the present situation has no vitality.

Especially for the "rich two generation" who came from prosperity, most of them lacked the spirit of struggling to die.

The spirit of entrepreneurial entrepreneurs is lacking in the second generation of successors. It may well be successful for such handover, but it is also absolutely unsuccessful.

This phenomenon is very common in the family businesses of "Shun Qi natural type" and "father and son declining type".

When I went home to chat with my friends last year, I talked about a company engaged in logistics services in coal mines.

This logistics company (or so called it), the boss walked over to Shanxi more than 20 years ago, and has accumulated tens of millions of assets.

However, his only child seemed to have no interest in his career and lived a life full of lights.

Just imagine, in such a family business, how can we inherit our father's business?

On the contrary, a nephew of his nephew had made the same achievement as he did many years later.

According to friends, his nephew is just as poor as he is.

However, I do not think that if we can control the business, we must be poor.

Look at some of the top executives in our state-owned enterprises or monopoly industries.

Once the family business is improving, the first thing that entrepreneurs should consider is how to train the next generation, not how to further develop the enterprise.

If entrepreneurs in our family business can understand the ancient emperors' election of Prince Edward, it is not difficult to understand the succession plan within the family business.

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If family businesses want to achieve smooth and successful pfer of control rights, they must choose to pfer them in time.

According to most studies, the time for successful and successful control of family businesses is achieved at Ludo Van der Heyden, when entrepreneurs are about 50 years old.

However, for most of the first generation entrepreneurs around the age of 50, careers seem to be in the ascendant and unwilling to hand over control at this time.

To put it another way, even if they can hand over control, they will not completely withdraw from the management of family businesses.

We discovered this phenomenon when we were doing research in Henan in 2006.

There is a small machinery factory in the area. The old factory director is nearly 70 years old. But he still comes to the workshop everyday and personally directing the work.

The power of the new director (the son of the old factory director) is limited to planning, organizing and executing, and the decision-making power is still controlled by the old factory director.

According to a director of the factory, they have been doing this for many years. The most difficult thing in the factory is to get orders.

From the investigation and study, this is the reason why the factory has not made progress for many years, and the gap between a similar enterprise that has been listed on the next side and a listed company in the market is getting farther and farther away.

This example also reflects the following question, that is, the pfer of rights must be genuine.

Sincerity, whether family business or non family business, is a crucial factor in the pfer of power.

This involves two aspects: first, the pfer of rights is genuine; secondly, the right to take over is also true (Morten Bennedsen).

When an error occurs, it will result in the failure of the pfer of rights.

A few years ago, news about the acquisition of Huiyuan by several enterprises was continuously reported, and the "war of words" on the "national brand" was very hot.

From an interview with Zhu Xinli at that time, we could find that Lao Zhu was very hardworking.

Like other family businesses in China, Huiyuan does not have a very clear "successor plan".

Although Zhu Xinli has children, his children do not want to inherit his career.

Zhu Xinli also said that he had worked very hard for Huiyuan and did not want his children to work harder.

Let's not talk about the current situation inside Huiyuan. From the situation at that time, the rights can not be pferred when both sides are lacking in sincerity.

Facts also prove that Huiyuan's helmsman is still Zhu Xinli.

That is to say, if family businesses try to pfer control, both sides must be sincere.

"Laozi" wants to let go, and "son" really wants to take over.

Otherwise, it is better to maintain the status quo.

In this way, even if we bury some hidden danger for the future, it will not cause the present crisis.

The relevant research also shows that if an enterprise's successor can obtain the necessary experience from the outside, it will be more conducive to the pfer of corporate rights.

From this, it is not difficult to understand why many "rich two generation" have been sent to foreign business schools to study.

However, obtaining the necessary experience from outside is not necessarily necessary to go abroad to study business schools.

If the successor of an enterprise has the experience of working outside the family business, it will also be of great help to take over the family business.

In our research, we also know that a company like this: the father, as an entrepreneur, starts from a family workshop, and until now, the company's orders are too busy (it is said that production orders have been signed after many years).

For such a family and company, it can be said to have achieved a stage success. The children born in such a family are also called "the two generation".

But the son of the company's boss didn't go directly to his own company after graduating from university. Instead, he found a job and worked outside.

After having accumulated some experience, his son went back to his home and worked in the market.

In addition, his father is 50 years old.

To a certain extent, this is not only in implementing a successor plan, but also in the soft landing of its family business control.

(author Han Xueliang)