First, the advantages of family business:
First, they rely on intangible assets to succeed. These intangible assets, such as family relations, feelings, political and business relations, and the founder's values, are difficult to pass down across the times. The most serious problem in Chinese enterprises is the fault between the old and the new, and it is also common that the children of mainland enterprises are unwilling to take over. The first thing that many generations do when they run their businesses and gain wealth is to destroy their families, and even make their careers and families unsustainable. They lack communication skills with family members, do not know how to resolve ambiguity and share love, and do not know how to transfer intangible assets through formal and informal systems. Usually, Chinese family businesses that have come out of the "three generations of wealth" cycle have good family governance, and they know how to communicate, talk about things and make decisions. Only by doing this well, can the foundation last forever, which is worth a long time for entrepreneurs to practice.
Second, they attach importance to the role of culture, perhaps the discipline of traditional culture or the guidance of religious beliefs. At present, entrepreneurs in China lack faith. We may see them burning incense and worshipping Buddha, but it is not clear whether they share it with their families. My collaborators and I have investigated 3,000 unlisted enterprises in Denmark. The results show that compared with entrepreneurs with weak religious beliefs, entrepreneurs with stronger religious beliefs pay more attention to ensuring the lives of their families and future generations, are more willing to choose family members as business heirs, are more aware of the value of their enterprises, and are more willing to invest in energy conservation and carbon reduction and think they can benefit from it. This result can explain the relationship between enterprise value and entrepreneur value orientation. Although the mechanism is not clear, it is reasonable to think that entrepreneurs should pay attention to the cultivation of cultural value.
Third, they not only look at the three-year and five-year development plans, but also think about the 30-year and 50-year strategies, and can see the values that others can't see. In the past 30 years, Chinese mainland has been in the stage of rapid economic development. Many entrepreneurs can seize some immediate opportunities and succeed quickly, and give some reasons that they don't need to pay attention to the long-term, but this is likely to be the reason for future failure. People in China often want to make their enterprises bigger, but they don't pay attention to the fourth dimension-time. Southeast Asia and even Japan attach great importance to making enterprises solid and long-lasting. Great changes have taken place in China's politics in the past 100 years, but in the places affected by the two world wars, there are still some enterprises that continue to do so. The French Wendell Steel Company was nationalized three times, but it was bought back after each war to continue its operation. Southeast Asia's economic environment is chaotic, and Chinese, as ethnic minorities, have been subjected to many anti-Chinese waves, but their enterprises have managed very successfully. There are some bad factors in the business environment that need to be overcome, but these cannot be used as reasons for not looking far. At present, China has not experienced a real depression. Failure will make proud entrepreneurs learn to be humble and learn to run their own businesses.
If we classify the management according to whether the family holds shares in an enterprise in a controlling position or decentralized position, and whether the management is dominated by family members or professional managers, there may be four types of corporate governance models: family holding and family management; Decentralized shareholding, family management; Family holding, professional manager management; Decentralized shareholding, professional managers operate.
The first three categories can be counted as the category of family business governance, and the third situation is relatively rare in Chinese enterprises, but it is very common in Japan; The fourth is a typical corporate governance model in Britain and America, but this model may not be applicable in most countries in the world. When an enterprise has many special assets that are difficult to trade in the market, such as the founder's ability, political and business relations, etc., it is more advantageous for the enterprise to adopt the family holding method.
In today's China, because the government holds important resources, many private enterprises start from the relationship between politics and business, which is a special asset of many enterprises. As an emerging market, China's managerial talent, especially the founder's talent, is often special; China is a relational society, but compared with Japanese society, which is relatively stable, the relationship in China society is easier to change. These factors determine that the corporate governance mode of private enterprises in China is quite different from the mainstream mode in Britain and America.
According to the traditional western view, family means caring, while enterprises are profit-oriented. In fact, the relationship within the business family is not only caring, but also mixed with money; Successful enterprises should not only focus on money, but also show care: care between entrepreneurs and employees, care between employees. Ideally, family care and ideas should be extended to the enterprise, but family affairs should be handled on the family platform and company affairs should be handled in the modern governance mode, which may become a very successful family enterprise.
At the present stage, private enterprises in Chinese mainland, even listed companies, can hardly achieve modern corporate governance. My observation is that 90% of their boards of directors are not really operating, just meeting the regulatory requirements of the CSRC. China is no exception, and it is difficult for many Southeast Asian companies to introduce the Anglo-American governance model. However, the experience of some enterprises is worth learning, such as some enterprises in Southeast Asia, and Lee Kum Kee in China and Hongkong is also worth learning. Lee Kum Kee, founded in 1888, is not listed, but they have a complete family governance system that can properly solve family affairs so that it will not have a negative impact on the company's operation. If a business can survive the first 20 years, the governance of family and enterprise is a very important issue. In the process of giving lectures in mainland China, I have always encouraged private entrepreneurs in China to move in this direction, but many entrepreneurs are still young and have no serious thinking and long-term planning for the future.
Second, the six disadvantages of family business
First, xenophobia
Xenophobia is mainly for new employees with strong ability. Family members in the enterprise may not be convinced of the existence of these "outsiders" from the bottom of their hearts, so they look for reasons to create obstacles everywhere, making it difficult for new employees to gain trust in their ability or even the most basic respect, and finally have to choose to leave. Without attracting new personnel to join, enterprises will not get fresh blood supplement, and they will not get due development and miss the opportunity.
Second, cronyism.
Family-owned enterprises focus on cronyism in the promotion and reuse of personnel, and it is difficult to achieve "those who are capable are superior, those who are equal are inferior, and those who are mediocre are inferior". The mechanism of employing people is chaotic and there is no articles of association, which leads to the lack of opportunities for those who want to do things. Family insiders have a clear sense of superiority over external employees, which leads to poor internal coordination of enterprises and a decline in employees' sense of belonging. This disadvantage is not obvious when the scale of the enterprise is small. With the gradual expansion of the scale, the problem of employees' sense of belonging will be infinitely magnified.
Third, human management
The common drawback of family-owned enterprises is that they value human feelings over human feelings. The result of this system will make the employee relationship within the family of enterprises very harmonious and bring harmonious benefits to the enterprises. However, the negative effects are that the work is untraceable, difficult to implement, rewarded and unpunished. System is the principle that every enterprise employee should abide by. If only external employees abide by it instead of all employees, it will lead to the emergence of interest groups.
Fourth, abuse of rights
Although family members get certain rights in the enterprise, these rights are used to manage the company's business, not to punish individuals. To manage the enterprise, we should treat things rather than people, and we should not "kill" those who dare to speak out and neglect. What kind of development will enterprises have if they leave behind some sycophants who are only Nuo Nuo?
Fifth, improper incentives
If an enterprise wants to achieve sustainable development, the key is to attract and retain more talents needed by the enterprise, and the most fundamental feature of human capital is effective incentives. However, in family businesses, the common problem is that most family businesses rely too much on the management system that lacks fairness and rationality in the organization to restrain employees' work, and even have blind incentives.
Sixth, lack of corporate culture.
The family culture of family business embodies the outstanding features of traditional culture in China, and is the core of family business in China, which also has a great influence on the formation of family business culture. Corporate culture is an organization's unique cultural image composed of its values, beliefs, rituals, symbols and ways of doing things. Its main contents are enterprise system, enterprise spirit and enterprise management concept. Family culture can hardly keep up with the development of modern enterprises in enterprise system construction and enterprise spirit construction, and the lag of enterprise culture will seriously weaken the core competitiveness of enterprises.