Suc­ces­sion plan­ning ex­pert says sus­tain­able de­vel­op­ment is a con­cern

China Daily (Hong Kong) - - BUSINESS - By OUYANG SHIJIA ouyang­shi­jia@ chi­nadaily.com.cn

Chi­nese fam­ily busi­nesses are look­ing for lead­ers for sus­tain­able de­vel­op­ment and in­ter­na­tional com­pet­i­tive­ness now that the decades of eco­nomic boom that co­in­cided with China’s re­form and open­ing-up have ended, ac­cord­ing to a se­nior ex­ec­u­tive of global ex­ec­u­tive search and assess­ment firm Rus­sell Reynolds As­so­ciates Inc.

“Now we are in an era of glob­al­iza­tion and in­for­ma­tion,” said Clarke Mur­phy, CEO of Rus­sell Reynolds As­so­ciates. “These are mo­ments of change, where fam­ily busi­nesses need ei­ther a tech­ni­cal skill or a cul­tural un­der­stand­ing of the out­side world. The more quickly com­pa­nies ex­pand, the more lead­er­ship and man­age­ment they will need.”

Rus­sel Reynolds As­so­ciates spe­cial­izes in assess­ment, re­cruit­ment and suc­ces­sion plan­ning for CEOs, boards of di­rec­tors and key roles within ex­ec­u­tive suites.

The com­pany has been op­er­at­ing in China for more than 20 years. It sees a big in­crease in the num­ber of pri­vately owned or tra­di­tional fam­ily busi­nesses in the countr y. It is help­ing them, es­pe­cially those plan­ning to ex­pand, to adapt to the chang­ing en­vi­ron­ment.

The com­pany said it has worked with Chi­nese fam­ily busi­nesses that faced the chal­lenges of con­ti­nu­ity, as the next gen­er­a­tion of fam­ily mem­bers did not want to take over the reins; or, as the busi­nesses ex­panded, they were not able to work with non­fam­ily mem­bers.

These gaps called for suc­ces­sion plan­ning and map­ping sus­tain­able lead­er­ship re­la­tions as well as man­ag­ing and work­ing with non-fam­ily ex­ec­u­tives to boost growth and ex­pan­sion, said the New York­based Mur­phy.

Ac­cord­ing to him, with the world chang­ing ever faster, it is be­com­ing in­creas­ingly im­por­tant for lead­ers to be ag­ile to deal with uncertainty and am­bi­gu­ity.

“Com­pa­nies al­ways deal with l arge uncertainty. So, top ex­ec­u­tives should be ag­ile to make de­ci­sions based on dif­fer­ent facts, have peo­ple fol­low­ing them with good com­mu­ni­ca­tions skills and be able to move ahead with­out hav­ing all the in­for­ma­tion.”

A global sur­vey of fam­ily firms re­leased in late 2016 by ac­count­ing firm Price­wa­ter­house­Coop­ers found the eco­nomic cli­mate had hurt their busi­nesses and many of them pre­ferred to seek growth steadily rather than ag­gres­sively.

It found that only 73 per­cent of the sur­veyed fam­ily busi­nesses in China ex­pe­ri­enced sales growth in 2016, com­pared with 84 per­cent in 2014.

The sur­vey also showed that al­most 80 per­cent of fam­ily busi­nesses in China ex­ported goods or ser­vices in 2016, up from 66 per­cent in 2014. And it pre­dicted that in the next five years, the proportion of in­ter­na­tional sales was ex­pected to in­crease to 88 per­cent.

Mur­phy said as busi­nesses ex­pand more over­seas, they would need to find a bal­ance be­tween lo­cal man­age­ment and cor­po­rate cul­ture.

“Over time, they need to in­te­grate lo­cal man­age­ment in the new coun­tries into how they do busi­ness in their home coun­try,” he said. “As work­ing habits vary in dif­fer­ent coun­tries, it is es­sen­tial to un­der­stand lo­cal pol­i­tics, sup­pli­ers and cul­ture (in or­der to suc­ceed).”

PwC China As­sur­ance Part­ner Jean Sun said im­prov­ing prof­itabil­ity and en­sur­ing long-term de­vel­op­ment were the key goals for fam­ily busi­nesses.

“Fam­ily busi­nesses in China should put their fo­cus on busi­ness trans­for­ma­tion and in­no­va­tion, proac­tively mon­i­tor the gen­eral eco­nomic sit­u­a­tion, in­vest more on peo­ple and tal­ent re­ten­tion, and even en­gage pro­fes­sional ad­vi­sors to sup­port their de­vel­op­ment,” Sun said.

of fam­ily busi­nesses in China ex­ported goods or ser­vices in 2016, up from 66 per­cent in 2014

PRO­VIDED TO CHINA DAILY

Liu Yong­hao (left), chair­man of New Hope Group, with his daugh­ter Liu Chang at an award cer­e­mony for top en­trepreneurs of the year.

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