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Meet the Family

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

Alarmed, the chairman sacked the CEO and returned to management. For his part, Zhong tried to make sense of what had happened. “Whose fault was this?” he asks. “It was the manager’s. But it was also partly finance’s — we didn’t foresee this outcome quickly enough.” Accounts receivable had soared, cash flow had fallen and goods returned had spiked. “If you see this pattern, you should know there’s a problem.”

The Practice of Management

The crisis had exposed the weakness of an organisation whose processes and systems hadn’t kept pace with rapid growth. Now Zhong and the founder are working together to turn things around. They’ve instituted monthly meetings with all of the business heads to review performance. Management reports have been redesigned to present a clearer, more consistent picture of performance, so that it’s easier to compare businesses.

Within finance, Zhong is retraining his staff. “The boss wants us to help him forecast and think through the implication of any decision,” he says. “I’m teaching my controllers that they have to understand the business thoroughly. We can’t just be accountants who report the figures. We have to pay attention to the story behind the numbers.”

Will a stint in a family business turn out to be a rewarding (albeit turbulent) experience like Alan Zhong’s? Or will it end up like those of the unhappy CFOs who find themselves in a dysfunctional business and excluded from important decisions? Certainly, taking a close look at the family making the job offer can help. (See “Look Before You Leap” at the end of this article.)

There’s a good deal of doubt that the average family business in Asia will ever change. But Yeung of the University of Singapore is optimistic. He recently completed a study that involved 100 interviews with leaders of Asian businesses, half of which are family-owned, and sees evidence that the pressures for change are yielding results.

But don’t expect families to relinquish control of their businesses anytime soon. The likely outcome, says Yeung and other observers of these businesses, is a hybrid model: more professional management and improved decision-making processes, but with the ultimate authority remaining with the family. And as long as that’s true, professional managers joining such companies should keep in mind this advice from Korn Ferry’s David Hui: “Don’t go in expecting to change the world.”

Don Durfee is managing editor at CFO Asia.

Look Before You Leap

For a professional CFO, joining a family business isn’t a decision to take lightly. According to Guy Day, a finance recruiter with Ambition, it is easier to enter a family operation than to leave one. That’s particularly true for small outfits. “There’s a perception that once you’ve spent time in a small company environment, you won’t be able to readjust,” he says. “I get a lot of approaches from CFOs who want to go from private to public companies, but it’s hard to find them jobs.”

Headhunters advocate careful due diligence. Learn about the business. Read about the family’s history. Understand the dynamics between the generation currently in charge and the one poised to take over.

Alan Zhong was aware of the risk before signing up with Joincare, a Shenzhen-based pharmaceuticals firm 65% owned by the founder. “My friends were surprised when I left Deloitte to join this relatively unknown company,” he says. “But I had studied their filings.” Zhong saw that Merrill Lynch had made a $20m (€13.7m) investment in the company.

Make the right choice, and life in a family company can be rewarding. One benefit: a refreshing willingness to focus on the long term. This makes sense, considering that family owners are deeply vested in the enterprise’s long-term performance. Family businesses also offer a more stable career. In most public companies, a new CEO — who may change every three or four years — typically means a new management team. Senior managers at family enterprises usually stay together for longer. Prove your loyalty to the family, says David Hui of Korn Ferry, and you could have a job that lasts a lifetime.

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