Analysis on the Road of Family Business Reform in China
First, the inevitability of the emergence and development of family businesses
1. The inevitable development of economics
Family business is a form of enterprise and a concrete manifestation of economic relations. His birth, development, transformation and extinction are independent of human will. By studying Engels' masterpiece The Origin of Family, Private Ownership and State, we can find that the emergence of private ownership and state is based on the emergence of family. When "surplus products" appeared in the labor of prehistoric tribes, private possession of labor results became possible. When private ownership appeared, the problem of inheritance of private property appeared. If it is in the patriarchal society, the relationship between father and son or father and daughter of blood relatives must be clear, otherwise it cannot be inherited. At this time, group marriage will inevitably give way to polygamy or monogamy to ensure that the inheritance of private property conforms to the principle of blood inheritance. It can be seen that the consanguinity and private ownership of the family came into being almost at the same time, and have continued to this day as the carrier of private ownership. Therefore, if the relationship between family and clan is decoupled from ownership and gradually withdraws from the historical stage of production relations, perhaps private ownership and the state will die out. In the past, people always thought that building socialism and implementing a modern enterprise system would definitely exclude family businesses, and there could be no "mom-and-pop shops" or "brother companies". It seems that this idea is unrealistic.
In China, which is currently in the "primary stage of socialism", public ownership characterized by ownership by the whole people and collective ownership is withdrawing from some economic fields, giving way to the non-public economy to fill the gap. China is a country with a long history of small-scale peasant economy, and the family economy is more deeply rooted than other countries. China's national conditions determine that family businesses in China will exist and develop for a long time, especially in the historical process of urbanization and industrialization in the vast rural areas, family economy and family businesses will appear in large numbers.
2. Inevitability of market competition efficiency
In the organizational form of enterprises, under the specific market environment and cultural environment, the organizational form that can better integrate resources and improve the efficiency of resource allocation should be efficient. After China entered the market economy, due to the serious bureaucracy of state-owned enterprises, long organization, heavy social burden, serious administrative intervention, too many heads of institutions and too little work, market information could not be transmitted in time, and decision-making and implementation could not be carried out in time. According to the requirements of market competition, state-owned enterprises are inefficient. However, foreign companies have not entered the China market for a long time, have not taken root in China, and do not understand the cultural background of the China market, so they cannot be the main force in allocating market resources in China. Family business, with its small and flexible characteristics, not only adapts to the changing national conditions of policies, but also adapts to the market-oriented resource allocation model. In the market competition, the consistency of interests makes family members naturally sensitive to changes in the external environment, and information about external changes, especially market changes, can be quickly transmitted to every member of the enterprise. At the same time, paternalistic authoritative leadership can make the company's decision-making fastest. Therefore, in the early stage of reform and opening up, the property right system and management mode of state-owned enterprises gradually disintegrated, while the modern enterprise system and management mode have not yet been established, so the family system naturally assumed the responsibility of integrating social resources.
3. The inevitability of management-paternalistic humanistic (emotional) management has the advantage of being suitable for China's national conditions.
1. Cohesion within the family enables family members to work tirelessly for free, which plays an important role in the initial stage of starting a business.
2. Centralized organization mode. The founders or successors of family businesses often play the role of parents in family businesses by virtue of their larger shares, higher qualifications or unique personal charm. Parents rely on the blood relationship of the family to concentrate the decision-making power of the enterprise in their own hands or within the family, thus establishing a centralized, stable and powerful leading entity.
4. The cost of psychological contract is low. Theoretically speaking, the expansion of enterprise scale will inevitably lead to the separation of ownership and management rights, resulting in the principal-agent system. However, in many cases, the goals of asset owners and agents are often inconsistent, and there are objectively problems of "adverse selection" and "moral hazard" of agents, and asset owners may face the danger of asset loss. Family management helps enterprises to reduce the cost of monitoring, so the general agency cost of family enterprises is lower than other types of enterprises. The degree of trust and understanding between family members is much higher than that of other non-family enterprises, and family enterprises may bear lower psychological contract costs. Therefore, in the entrepreneurial stage with small scale, limited market scope and low management technology requirements, the family governance structure operated by private entrepreneurs is reasonable, and the family management model conforms to the management principle of minimum agency cost.
Second, the challenges faced by family businesses
The arrival of new economic wave, the challenge of WTO, the squeeze of high technology and the rationality of consumers have all brought China family business into a brand-new competitive space. How to win the domestic market? How to occupy the international market? How to realize the sustainable development of family business? Regardless of success or failure, the family business will answer.
(A) macro factors restricting the development of family businesses
1. Unequal treatment is a historical prejudice. It can be said that the family business in China has been living in people's prejudice. Since the founding of the People's Republic of China, family business, as a dual model of capitalism and feudalism, has been criticized and destroyed. At that time, it was "counterintuitive" to keep a chicken at home. B With the deepening of reform, the situation that family businesses can't be treated equally has improved, but it still exists, such as excessive tax burden of family businesses, excessive apportionment outside taxes, and arbitrary charges and fines in some places. Family businesses are subject to many controls in entering the land and power industries. After China's entry into WTO, some local development zones in China pay attention to attracting investment and provide a series of preferential conditions for wholly foreign-owned, joint ventures and cooperative enterprises. In a sense, this has created an unequal competitive environment.
2. The operating environment of the market economy is not standardized, and the national laws and regulations are not perfect and cannot be really implemented. For example, China does not have a civil code to systematically define and protect property rights. At the same time, the immature market of professional managers in China makes enterprises face great risks. Many times, it's not that enterprises don't want to introduce professional managers, but that they lack the legal protection of employing people and dare not or can't introduce professional managers.
3. Financing restrictions. In the past, financial institutions always tended to borrow from state-owned enterprises, which imposed many restrictions on family businesses. At the same time, due to the imperfection of corporate governance structure and shareholding system, it is difficult for family businesses to enter the capital market, and the "congenital deficiency" of blood relationship between shareholders of enterprises is even more difficult to implement the alliance between capitals. China's family business has two remarkable characteristics: a strong desire to control and the goal of increasing and consolidating family fortune. If the family business wants to raise funds in the stock market, the owner of the business will only invest less than 50% of its assets in the stock market to ensure the control of the family business. If the financing is insufficient, the business will face a serious shortage of funds, which will also have a great negative impact on the establishment of a strong stock market in China.
4. The market access mechanism is unfair. Some local governments practice resource monopoly. In fact, China should have a market access standard, under what circumstances and according to what industry norms. Just because it is a family business, it cannot enter this field. Such as medicine, airplane manufacturing, automobile manufacturing, heavy industry, biochemical industry with high R&D level and high cost, are all industries that China family enterprises rarely set foot in.
(B) the family business in the development process of its own inherent shortcomings.
1. The employment mechanism of family enterprises is backward. Family business has long been difficult to get rid of the concept of "family first, enterprise later". Many enterprises first consider how to arrange family members, without seriously considering whether this arrangement is beneficial to the enterprise and whether it can mobilize the enthusiasm of all employees. This rigid feature of the employment mechanism is shown in the following points: a. Employing people pays more attention to loyalty than talents. This employment standard is unscientific. Loyalty is an excellent quality, which is necessary for enterprises, but if a person has nothing but loyalty, no enthusiasm and no ability to do things well, then using such a person can only do more harm than good. B. Family business has no long-term employment plan. The most concentrated reflection is that there is no talent training plan, and it is impossible to train and organize employees to visit, study and inspect, which leads to the shortage of talents in enterprises and the low quality of employees, which is difficult to meet the requirements of enterprise development.
2. Enterprises lack strict organizational structure. In the concrete operation practice, the family business has exposed some weaknesses, such as chaotic organizational structure, unclear division of power boundaries and work functions, and overlapping work contents. In these enterprises, the chairman is often in charge of the general manager, and the general manager is in charge of the chairman's affairs. On the one hand, it causes confusion in work, on the other hand, it also makes the decision-making system of enterprises lack scientific standardization.
3. The marketing concept of family business is weak. First, the family business in China developed from small workshops and factories, and its initial marketing was based on a fixed network of relationships. Therefore, family businesses pay special attention to establishing stable relations with old customers and consolidating the old market, ignoring the development of new markets or market demand as the marketing starting point, and often rely on subjective experience in product design, channel expansion and price strategy, lacking professional ideas. More importantly, after China's entry into WTO, the new competitive environment requires the marketing concept of family business operators to be more global and strategic. This is something that the family business has never encountered. Second, there is a lack of professional marketing team. Under the new economic situation, family businesses need to establish a marketing team with global vision and understanding of internationalization strategy.
4. Corporate bondage of family business. China's traditional culture has penetrated into all levels of society, and the corporate culture of family enterprises generally takes family as the core and family ethics as the moral norm. Emphasize the rule of man, ignore the rule of law, and lose the ability of organizational innovation. After he ascended the throne, the leaders of the family business were self-expanding, self-righteous and headstrong. Regardless of major issues, individuals have the final say, often ignoring the opinions of the board of directors and subordinates and making hasty decisions, leading to the near collapse of family businesses.
Third, the family business reform measures
I. Changes in macro-environmental factors
The government should take active measures to establish an open, fair and just market competition environment. Through legislation, we will formulate laws to protect the property rights of family businesses and improve various economic laws and regulations such as the contract law. Strengthen law enforcement to ensure the implementation of laws and regulations. At the same time, standardize China's talent market, especially the professional manager market, and establish and improve the personal credit system. Create the same national treatment for family businesses as state-owned enterprises and Sino-foreign joint ventures. It is strictly forbidden to levy various forms of apportionment fees on family businesses to ensure the fairness of competition. Break industry restrictions and give family businesses the same access conditions as state-owned enterprises. In fact, China's entry into WTO has given new financing opportunities to family businesses. Family businesses can raise funds from foreign banks through their own credit guarantees.
Second, the family business itself has changed.
Management change
In order to develop and overcome the inherent disadvantages, enterprises must realize the specialization and standardization of management, especially family enterprises. Attracting a large number of professionals into the core layer of the company and establishing a reasonable management system for the company is the only way to specialization and standardization.
1. Management specialization-reform of personnel mechanism
The specialization of management is to realize that only people with professional management knowledge can manage the enterprise management market. Specific practices are as follows:
First, establish a leadership team and professionalize management talents.
An important sign of management specialization is that non-family members can also be qualified for senior positions in the company and gain certain trust. The introduction of professional managers should be said to be only a gradual trend. Family enterprises should introduce talents according to their own business practices. The basic ways can be: introducing professional managers from outside, and appointing them according to the management positions and the confidentiality of information. "No doubt about employing people" does not mean that any team is "no doubt", but advocates "knowledge" before "use". According to the confidentiality of resources and information, different management positions can be sorted, and foreign managers can be placed in positions with higher confidentiality, and they can be observed, evaluated and trained, and further reused if appropriate. The key is to establish a complete incentive and restraint mechanism within the enterprise to supervise and restrain professional managers. In this way, we can not only enjoy the improvement of enterprise efficiency brought by emphasizing ability, but also avoid the losses brought by managers' short-term behavior and immoral behavior to enterprise owners. Internal training, on the one hand, has a certain understanding of the trained employees, the loyalty of employees is guaranteed, and the risk of employing people is reduced. At the same time, giving employees such opportunities will stimulate the enthusiasm of other employees. The key to promoting relatives is to see whether it meets the strategic needs of the company's development and whether it meets the employment standards of enterprises. Guo Fansheng, president of HC Company, has three principles: 1, taking ability and political integrity as the benchmark; 2. Everyone is equal before the company system; 3, the world is fair, and HC is regarded as a "close relative".
Second, give external managers the necessary support and guidance.
External managers are generally of high quality, but they also need time to adapt to the new organizational environment and handle the relationship between family managers and entrepreneurs. We can hold some small casual tea parties to increase the emotional communication between external managers and family managers, which is emotional support. At the same time, by concluding some agreements with family managers and entrepreneurs before or after starting a business, their rights and responsibilities are clearly defined. The same applies to external managers. This is institutional support.
Third, establish an internal talent competition mechanism.
The arrival of "airborne troops" often hinders the promotion of some people in the original management echelon. Let other employees be dissatisfied and affect their normal work. At this time, it is necessary to set up a job description, specifying the rights and responsibilities of each position, and the position and salary should be linked to the work performance of external talents. Implement probation system or demotion system, so that the dissatisfaction of other employees can be transformed into emotional hormones that supervise and motivate external talents. At the same time, enterprises should broaden their thinking in encouraging talents, not only by promoting their positions, but also by providing opportunities for talents to study or further their studies, or by making up for the shortcomings of other employees through incentive options.
Fourth, encourage external managers.
Short-term incentive mechanism, family business can motivate talents materially, such as salary, treatment and red envelopes. Long-term incentives, such as stock option plans. Because the salary of managers is usually related to the financial indicators of the company in that year. Therefore, some top managers may give up those plans that are beneficial to the long-term development of the company and pay more attention to short-term interests. Leading to the lack of foresight in the decision-making of enterprises. Option incentive combines the interests of operators with the long-term profits of enterprises, and at the same time makes senior management personnel bear certain risks and increase their sense of urgency. In addition, spiritual motivation is also very important. By providing opportunities and a stage for external managers, they will always strive to make progress. If enterprises can't become bigger, real talents will have no chance to develop. "Just like the water in a teacup, you can add water when it is not full, and it will overflow when it is full, so you must pour the water into the bucket. When the bucket is full, it must be poured into the water tank. "
2. Management standardization (institutionalization)-the change of organizational system
The most difficult thing about family business is institutionalization. All brothers, but which system is not? Family members sometimes not only make the system unenforceable, but also destroy it. They often have this mentality: "I'm here to help you. Since I'm here to help you, my job can't be measured only by salary. No amount of money you give me can make up for my psychological effort. Although you gave me more money to work elsewhere, I am still here to help you. " If you fire him, he will feel that there is one thing that can never be compensated by money, and that is affection. In the face of feelings, the system is just a dead letter.
First, properly resettle family members and entrepreneurs. To get rid of the cognitive situation of China family business, the first consideration is not the system construction, but how to arrange family members and entrepreneurs. This is the premise of the smooth implementation of standardized management. First of all, we must find ways to prevent incompetent family members from entering the enterprise. If mediocre and lazy family members occupy a position in the enterprise, then the whole staff will soon lose respect for the enterprise, and those who have the ability will not stay long, and those who stay will soon become flatterers. Secondly, for those family members and entrepreneurial elders who have insufficient knowledge and ability to develop new business, they should be properly diverted. For the entrepreneurial elders who are unable to succeed, they can consider being the supervisor and give higher treatment; Encourage young family members to continue their studies. For those with strong ability, another fund can be set up to let them develop themselves. For example, Mao arranged for her daughter to start her own business.
Second, the "rule of law" construction. For family businesses, the key to improving the organizational system is to replace "rule by man" with "rule by law". This should start from the following aspects:
First of all, to change the concept of family entrepreneurs, family entrepreneurs must first recognize the power of "rule of law". Secondly, we should change our views on wealth and power, and integrate the pursuit of ourselves and enterprises into the whole society, as Kōnosuke Matsushita said: Panasonic is the Panasonic of the whole society. Secondly, the "rule of law" construction of enterprises. In addition to making employees aware of the importance of "rule of law", China family businesses should also improve the enterprise system in all aspects: 1. Set business goals. Second, formulate the basic standards of enterprises. Third, improve the rules and regulations. Third, strictly implement the "legal system." The promoter of "rule of law" in family business is the entrepreneur himself. Therefore, in addition to indoctrinating employees and strengthening training, entrepreneurs should also take responsibility for themselves, and at the same time resolutely implement "laws must be strictly enforced."
Third, establish an authorization system. Family business does not need authorization at the beginning, because the necessary conditions for authorization are not yet mature. On the one hand, enterprises in the early stage of entrepreneurship need the flexibility of centralization. On the other hand, most decisions of enterprises at this stage are non-procedural. When the control system has not been established, authorization may mean decentralization, which means that entrepreneurs may lose control of the enterprise. But when the enterprise develops to a certain scale, authorization becomes necessary. That is, authorization is feasible when the administrative system of the enterprise is initially complete, the working procedures have begun to take shape and the decision-making is on the right track. Enterprise leaders implement standardized management through the clear authorization and division of labor and cooperation of management team members.
(B) changes in corporate governance structure
In recent years, in the organizational form of family business. The proportion of limited liability companies is increasing year by year and occupies a dominant position. The development of enterprises all over the world and the practice in China have proved that it is the only way for small-scale family enterprises to realize the principal-agent system and move towards the modern enterprise system. The so-called corporate governance structure means that the owners (shareholders) of the company try their best to solve the principal-agent problem between the owners and the operators by constructing an incentive and supervision mechanism for the operators, and form a set of institutional arrangements based on a relatively perfect market operation mechanism.
1. Property right reform
The property right of family business is obviously patriarchal, that is, the so-called "trilateral"-consanguinity, kinship and geography. Under the condition that the "trilateral" property rights subject remains unchanged, it is difficult for family enterprises to truly form the corporate governance structure of modern enterprises, and it is also difficult to form an effective principal-agent system. The focus of the reform is to gradually replace the paternalistic property right system with the modern enterprise property right system. The specific way is to open property rights, that is, to those who are willing to invest. The result of property rights opening is to realize the diversification of capital subjects of private enterprises, such as employee stock ownership plan. To a great extent, this is conducive to eliminating the phenomenon of "trilateral" patriarchal property rights. It not only broadens the financing scope of family enterprises, which is beneficial to technological progress, but also leads to the change of enterprise property right structure, which is conducive to the formation of a reasonable corporate governance structure and makes enterprise decision-making more reasonable and effective.
2. Adjustment of governance structure
Family enterprises should form a governance structure model characterized by * * * and coordinated with checks and balances and efficiency. First of all, it is necessary to scientifically divide the checks and balances between shareholders' (general) meeting, board of directors, board of supervisors and general manager. Secondly, the introduction of external independent directors, independent directors play an expert advisory role. Thirdly, in the case of separation of the two rights, in order to form a competitive mechanism in the external market and reduce the agency cost, it is necessary for government departments to establish and improve the external market system of family enterprises as soon as possible. At the same time, it is necessary to strengthen the supervision role of creditors on enterprises.
(C) changes in family business culture
1. Family culture
Many families in the west have their own family precepts to inspire their offspring. These maxims are reflected in their daily words and deeds. Kōnosuke Matsushita's "Honesty-oriented" and Wal-Mart's "Forever Simplicity" not only impress the family, but also soak the whole enterprise. Therefore, what really affects the business operation is culture, and it is the family business culture! It is this intangible excellent family culture that truly guarantees the eternal prosperity of family businesses. In order to break the infighting among internal members, China's family business will inevitably enter the strange circle of "partnership-prosperity-dissolution". We should learn from the west and pay attention to the establishment of family culture. One of the manifestations of family culture is family cohesion. The methods to enhance family cohesion include: establishing family committees within families to handle internal family affairs, separating family decision-making from enterprise decision-making, holding regular family meetings, training programs to improve the next generation of entrepreneurship, and family-wide charity. This kind of charity is of great benefit to the discovery, establishment and consolidation of family core values, has a positive impact on social values, and is also the source of family honor.