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  • CFO Asia

Meet the Family

Asia's family enterprises are recruiting professional CFOs. Here's what you should know.

When Eu Yan Sang hired Tan as a group controller (he became CFO a year later), it was looking for a finance executive who could work well with operations and eventually participate in strategic discussions. Tan was a logical choice: after beginning his career in finance, he had served as general manager for NatSteel Chemicals in Singapore, and as managing director for Nextec, a US fabric company.

Life at this company closely resembles the multinationals where Tan worked previously. “This is a very professionally managed company,” he says. “Corporate decisions are made by consensus. Richard doesn’t come and say ‘Hey, KF, I want this to be done.’ We freely share our views and come to an agreement.”

Ricky TF Tsang reports a similar experience. Tsang is the Oxford-educated CFO of Hysan Development, a Hong Kong property company controlled by the Lee family. Hysan is another business with a colourful past: like the founders of Jardine Matheson, Hysan Lee got his start in the opium trade before buying a big plot of land in Hong Kong’s Causeway Bay neighbourhood in 1923. (Lee died five years later, the victim of an assassin’s bullet.)

Today Hysan — which is listed on the Hong Kong Stock Exchange — is positioning itself as shareholder-friendly and socially responsible. Like Eu Yan Sang, most of Hysan’s managers are non-family members. Only the executive chairman is from the Lee family. Tsang says that the firm sees changes ahead, driven by quarterly reporting for Hong Kong-listed companies, rising investor scrutiny and growing competition.

Tsang views his hiring in 2004 as part of that change. He has speeded the management reporting process, improved the finance function’s ability to analyse trends and provide advice, and established an internal audit function. Tsang has also clarified the system of financial limits and authorities, which allows managers to make some decisions without top management (or family) approval. “We are moving from having a handful of senior decision-makers to a more systematic, objectives-driven decision-making process.”

Hard to See

For every such experience, however, there are others that don’t turn out so well. One European finance executive says that when he was recruited by a Chinese family firm from a multinational, he assumed that it was one of the reforming companies — “An ideal blend of East and West in terms of management style,” was how the recruiter had put it. In fact, while the business has the trappings of being shareholder-focused — including independent directors and split roles for chairman and CEO — it remains insular. Family members, not professional managers, make the decisions. The board has little authority. The family rarely consults the finance function. But having an outside CFO serves a purpose: “They wheel me out whenever they need credibility in front of investors and bankers,” he says.

Within the company, lines of authority are submerged. A junior manager from the same village as the patriarch may feel entitled to undermine his direct superior by communicating directly with the family boss. And since everyone defers to the family, it’s unclear whether senior managers’ opinions are really their own or those of the patriarch. “There’s no clarity of structure,” complains the finance executive. “Trying to figure out who’s responsible for what decision is almost impossible — it’s like Jello.”

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