However, over time, as a family business becomes more powerful, not everyone in the business is related to the founder. At this time, the business owner will face the problem of management conflicts between family members and non-family members in the company: family members may not care about basic salary and commission, but non-family members will have requirements, and sometimes even require a certain proportion of shares. At this time, the bloodline management method is no longer suitable for this family business, and the leader of the business will face a choice: to retreat, or to step out bravely?
When faced with this choice, there are two situations: first, if the family members are not good enough, but the founder only trusts the family members and refuses to adopt the professional manager system, then the company will never become big; second, if the family members are good enough, even if Without handing over operational control to non-family members, the company will also have bright development prospects. Take the five Liu Yongxing brothers, each of them is very good. When their business reaches tens of billions, the family shares are still close to 100%. Therefore, the prerequisite for refusing to adopt the professional manager system must be that the business owner and his family members are good enough. If not, and if you want to grow bigger, you must introduce a professional manager system. In the process of introducing professional managers, if we want to achieve sustainable development, we must be willing to spend money. By dividing money, non-family members who are not related by blood are forced to become blood relations, that is, "economic blood relations", so as to achieve the continuation of the family business.
Demutualization is a kind of "economic kinship". Through demutualization, family businesses turn a business with only one or two shareholders into a business with multiple shareholders. Such a business is also a family business, because the shareholders also have blood relationships, but this relationship has changed from a pure blood relationship to today's "economic blood relationship", and the company has also changed from a family business to a business family. Many people in China have become members of business families.
If a family business wants to achieve sustainable development, it must establish an advance and retreat mechanism for shareholders after demutualization. With this mechanism, once corporate family members are unable to cope with the fierce market competition and hinder the development of the company, they can use the advance and retreat mechanism of shareholders to introduce new talents and eliminate "inferior" members, including family members and founders.
@lisa, you provide a detailed analysis of the challenges faced by family businesses as they evolve and expand, particularly focusing on the management conflicts that arise between family and non-family members in the company. It isn't clear who the company you are referring to is when you mention the case of the "five Liu Yongxing brothers"- where does this come from?
Your post demonstrates descriptive, normative, and analytical qualities as you discuss the implications of transitioning from a bloodline management method to a professional manager system in family businesses. Additionally, your analysis of the prerequisites for refusing to adopt the professional manager system and the importance of introducing a demutualization process to achieve sustainable development provides valuable insights into effective strategies for managing family businesses.
So, to further enrich your post, it would be beneficial to provide more specific examples or case studies- that you provide some context to, when illustrating how family businesses have successfully navigated the transition from a bloodline management method to a professional manager system or how they have implemented demutualization to achieve sustainable development. Incorporating real-life examples or citing research from credible published, peer-reviewed sources would add depth and credibility to your analysis and provide readers with a deeper understanding of effective strategies for managing family businesses.
Furthermore, while you emphasize the importance of establishing an advance and retreat mechanism for shareholders after demutualization, you could benefit from a more detailed analysis of how this mechanism can be effectively implemented and the potential challenges associated with it.