Family Business Impact Essay

This essay discusses the impact of family businesses, focusing on ownership and management succession. The author reflects on concepts learned in class, emphasizing the importance of fairness in family business structures. The essay proposes an ownership structure where shares are equally divided among the next generation, with board member selection based on familiarity with the company, not just shareholding. It also suggests a management succession plan where family members are evaluated based on their passion, capability, and performance, with equal opportunities for promotion compared to non-family employees. The author concludes that the class provided valuable insights into designing fair structures for family businesses.

Please describe how family businesses may affect your company. (2
pages)
During this class, I have learned several useful concepts which allowing us to
better organize a family business structure in the future. We have saw that
several shortcomings of Chinese family business. However, in the class, we
also saw several successful cases of Asia family business. Among these
successful cases, I saw one crucial common factor, fairness.
In the last assignment, we were actually trying to set up a business
structural which took into considered both ownership succession plan and
management structure for a family business. For
ownership structure, I think in the ownership should be equally divided to the
next generation, which includes female as well. Equally divide the shares to
the children will generate a sense of fairness among the family, resulting a
harmony family. Besides, considering the shares among each family member
will eventually be different, I think only the family member who work in the
family business can elect and be elected to the business board member as
family representative. This is also considering to be fair to all the family
member. The one who join the business board should not be the one who
has the most shares among the company, but the person who is most
familiar with the company, so to make better decision for the company. Also,
in the board, we should maintain 30-40% of independent board member, to
give professional suggestions to the company. The independent board
member should be acquired by 50% of votes from the shareholders,
preventing people from controlling the board. Also, in any case that a family
member want to sell their shares, they can only offer to sell to other family
members. For such mechanism, it provides a protection for the family
business from being taken from outsiders.
For the management succession of the family business, we suggest that all
family members should be evaluated by their will and capability. The most
important issue is a person’s goal and passion, since that will motivate a
person to keep improving. Therefore, we should put the family member to
the department which they are interested in. For example, if a family
member is passionate about marketing, we should arrange him to start from
entry level of marketing department, and evaluating their performance and
capability. Then, we should track each family member’s performance,
evaluating their ability and attitude, so to decide which family member are
qualified to promote to a higher level of the management team. Also, in the
management succession plan, we think the family member should be
compared with normal employees in the company. In other words, family
members should be evaluated with outsiders. This measure will be a strong
incentive

for talented people to stay within the family business since they will have an
equal chance of promotion.
In conclusion, I see many successful cases in this 8 class. It’s a priceless
experience to learn that how other great family business design their
structure and solve the problem. At the same time, I learned many concepts
and skills about family business, and have rough ideas of how to design a fair
structure for ownership succession and management succession. I wish one
day the knowledge will benefits me and the company.