The Economic Consequence Of Employing Professional Managers In The Family Enterprises

Family enterprises have been playing a decisive role in the global economy.Fotile,Midea,Wal-Mart,Carrefour,Lee Kum Kee,IKEA of Sweden,Porsche of Germany,Samsung of South Korea,Toyota of Japan,etc.appear in our daily life frequently.For consumers,they are just products,representing brand and reputation.However,for a family enterprise,apart from the ordinary operation and management of the company,what's more important is to sustain and hand down the family business.In case of a family enterprise,it usually involves the founder starting from scratch and making achievement after spending half of his/her life working hard.What entrepreneurs have made is not just fortune but also achievement.They shall not just focus on here and now,instead they shall look to the future.Although most of the family enterprises in our country are in the stage of duty shift,most of entrepreneurs are not ready for passing down the leadership with a plan.In the opinion of most entrepreneurs,i.e.the founders of the enterprises,the best candidate for succession must be a family member.However,because of the one-child policy of our country,the current situation is that there may be only one or several children that can be taken as the candidates,yet most of the children of these entrepreneurs have received higher education or studied abroad.They have their own propositions and beliefs.There must be some of them showing no interest in the business of their father generations at all.They may refuse or be reluctant to take the leadership.All the hardship that entrepreneurs take in their entire lives is targeted at creating more fortune for their offspring,and developing the enterprises they built larger and stronger,hoping that the enterprises may turn to be century-old companies with everlasting business.But some of them neglect the succession plan,resulting in falling out between family members,team members being not of one mind,the company being burdened with law suits,and some even have no choice but to sell the company or get out of the business.We have seen such cases everywhere.In addition,the inheritance tax may be collected in the near future,and this will be another adverse factor influencing the succession within the family.Therefore,for the entrepreneurs whose offspring are impotent or inappropriate to adopt the mode of “transferring the leadership from fathers to sons”,they must break through the traditional pattern,employ qualified professional managers to operate.In this case,the ownership is still possessed by the family.The interests of each party shall be balanced as far as possible to protect the company from suffering from big losses due to the inappropriate way of succession adopted for the enterprise and family.Midea group is the first private company in our country,which,as a company with assets valued more than 100 billion,handed over the leadership to a professional manager.Such act arouses continuous attention and intense discussion in the circle.In this paper,by taking the case of succession of Midea Group as an example,the financial indexes from the previous three years and the three years after the professional manager took the leadership is compared to analyze the company's capacity in profit making,debt paying,and operation,through which the possibility of introducing the mode of succession by professional managers is elaborated.