Benefits and Drawbacks of a Family Owned Business


Table of Content

Scenario A………………………………………………………………………….. 2-5

Scenario B………………………………………………………………………….. 5-6

Scenario C………………………………………………………………………….. 6

Scenario D………………………………………………………………………….. 6-8

Scenario E………………………………………………………………………….. 8-10

References………………………………………………………………………….. 10-12

Scenario A

Benefit of Family-Owned Business

The congenital advantage of family enterprises and internal defects

Family enterprises in all enterprise organization form, has its particularity. This particularity lies in the ownership of family enterprises in the hands of the blood, kinship ties to family members, but it does not follow that family business is a kind of low efficiency enterprise form. On the contrary, as an institutional arrangement, its own existence explains the rationality of its existence and the family enterprise vitality is that compared with other forms of enterprises has its good side. Of course, advantages and disadvantages and shortcomings, but also can hardly be avoided, this particularity also led to the inherent defects of family enterprise many fundamental. Here we have the congenital advantage of family enterprises and internal defects analysis:

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In the Chelmsford Hotel business, family ownership and control of the two rights, family members are involved in business management and participate in the distribution of the residual claim, so the Chelmsford Hotel in the members of the family power management enterprise, which faces the possibility of adverse selection and moral risk is greatly reduced. At the same time, formed a small group between family members in family enterprises, groups inside often-together communication, and the coordination cost members and between members of information asymmetry is reduced.

Drawbacks of Family-Owned Business

And these congenital advantages are associated with the particularity of the family business to also lead to the many internal defects. These internal defects are determined by the particularity of the family business, attached to this particularity. When the family enterprise need to further develop and expand, these defects will become the imprisoned for enterprise development, obstacles to the sustainable development of the enterprise.

Below we fundamental of family enterprises of internal defects were analyzed, and the first is the talent bottleneck. Enterprise development has a process of growing up. Family business start-up stage, enterprise scale is small, its core members are mostly based on blood, kinship ties of members of the family, parents creator as the core has a natural authority, rely on parents' authority of family management can guarantee the family business running, and even can be "a board meeting at the dinner table. At the same time, at the beginning of the development of family enterprises, and can provide the amount of residual claims and residual control is relatively small, is the enterprise power supply due to less. Family enterprise internal parties for this kind of situations, that is, to share the achievements of interests deserve rights conflicts will not be too sharp, emphasis on parental authority, the principle of affection of family ethics can effectively coordinate the interests of the members of the family. This stage is relatively scarce currency capital rather than the human capital; the requirement of management is not high also. And with the development of the enterprise, on the one hand, the rapid expansion of enterprise scale lead to the large increase in the quantity demand of human capital, and members of the family group supply speed under the influence of the natural population growth rate, usually much lower than the speed of the enterprise demand for human capital; On the other hand, due to the expansion of enterprise scale, management of complications, leads to increased demand for senior human capital, and for the members of the family groups, advanced elements of human capital owners should be talented person growth probability, the influence of such factors as the members of the family within this small group, this kind of talent to produce probability is extremely low, so from the qualitative point of view, the family members of the group is difficult to guarantee the supply of human capital. Can be seen from the above analysis, the process of the development of family enterprises will inevitably encounter talent bottleneck.

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Organization Capitalise Benefit and Minimise the Drawbacks

Family enterprises want to survive in a constantly changing market environment and development, will eventually evolved into the public company, it is not determined by the entrepreneurs or its successor individual will. Will tell from the subjective intention, they are less willing to become a public company, because they don't want to lose control of the enterprise. The objective environment of family businesses survive decides this development. In the increasingly open economy and the increasingly fierce market competition environment, the inadequacy of family enterprises gradually become the fetters of enterprise expansion, restricted the enterprise's survival and development. The survival of the fittest, is unwell is eliminated, must want to survival and development to change itself, becomes the only way to comply with the environment. Public company is a model of modern enterprise system, family business transition to a public company can effectively improve its governance structure, family management of career management, strengthening the system construction and to strengthen the system of the utility, effectively overcome the family business talent and cultural bottlenecks inherent defects, to adapt to the change of economic environment, to avoid being eliminated by the market and be able to continue.

Scenario B

Employee Behaviour Policies

The construction of the Chelmsford Hotel sustainable development path is essentially to provide family enterprises with a good development environment. In addition, family enterprise internal change is also very important. Perspective of new institutional economics, the family business institutional change is a process of praetor equilibrium, not all of the members of the family in the earnings of all for positive change. In this process, Chelmsford Hotel to share and non-core people outside the family enterprise's property rights and residual claims and management control, part of the low quality of core staff will be retired from important management positions, handed power to the professional management personnel.

It is painful for members of the family, a part of the family members from their own interests, to be up in arms. For entrepreneurs and the core personnel, this process was a fierce self-denial and transcends us. Especially for entrepreneurs, give enterprise management ability than the strong to hold yourself, overcome family members far more difficult than overcoming human feelings. The process is full of risks and uncertain factors, the requirement as the main change of entrepreneurs must have a strong sense of change and the business-as-usual, possess strong "entrepreneurial spirit". Entrepreneurs need to speed up the update their knowledge, form suitable for the modern enterprise management concept; make the enterprise operation is suitable to the market economy rules and norms.

Implemented and Communicated to Employees

Chelmsford Hotel establish perfect professional manager market and credit evaluation system to introduce professional managers is an important means of enterprise talent bottleneck breakthrough family, and is the inevitable requirement of perfecting corporate governance structure. Chelmsford Hotel must establish open and transparent perfect manager market and credit evaluation system, through the market for the managers to invisible sclerosis constraint. Chelmsford Hotel establish perfect manager market and credit evaluation system can make the managers in each phase behavior information comprehensive, transparent, managers of any behavior will affect their future market transaction, which greatly increase the cost of managers "behavior, make it from the perspective of protecting their own human capital effectively of self-discipline. At the same time, improve the professional manager market and credit evaluation system, Chelmsford Hotel will reduce the family business entrepreneurs and professional managers to sign the search cost and entrepreneurs to identify the cost of managers, so that the family business institutional change of transaction cost greatly reduced.

Scenario C

From the reality, especially in western developed market economy countries worldwide family type business development showed the following tendency: first, the separation of ownership and operators. With the expansion of the enterprise, the enterprise competition, change of family and the family concept, and the rise of the manager class family type management is difficult to adapt to the development of industrial society after the relics. Those shares a larger family can only indirectly affect the enterprise decision-making, enterprise's management into the hands of management experts, enterprises of the two rights separation fundamentally shaken the foundation of family type management.

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West of the old family companies such as IBM and Motorola are because of the initiative to adapt to this trend to continue development. Secondly, paternalism management will disappear in family businesses, but businesses household color is still maintain and carry forward. Western advocates of a color family, team spirit, in the east of Japan, the feudal family of loyalty and kindness, paternalism is replaced by fate community egalitarian doing business, as employees and their managers are equal members of the enterprise in the family. Finally, family businesses through issuing stocks and bonds to the society, to internal staff, transfer of shares to the social public welfare investment, the enterprise further socialization of ownership, socialization on the management aim of enterprise is more emphasis on corporate social responsibility.

Scenario D

Elements include in a Performance Management Plan

In the face of fierce market competition, the hotel to give an accurate positioning, target consumer groups, changing ideas and increase marketing efforts. Marketing plan according to different season, pay attention to stability and old customers, develop new customers and new integrated marketing team, set up is given priority to with professional marketing personnel, to mobilize all the staff in the marketing of big marketing network, the rich are up and down, everyone is a waiter, everyone is a marketer, with services in marketing, service marketing, and set up corresponding reward mechanism, maximum limit arouse the enthusiasm of each person's work, and dig potential inside, outside customers. Hotel will continue to economic benefits as the center, strengthen management, hotel will target with each department, the benefit of the hotel and your interests closely linked together, the greater the contribution, the more benefit, on the other hand, the gap to be finished by department index according to the prescribed proportion wage garnishment, work more, distribution according to work, organize regular staff holidays.

Chelmsford Hotel for outstanding performance, good staff for a great contribution to the hotel, we will be in the hotel year-end summary meeting commended, honorary certificate and bonuses. Increase the intensity of training, assessment, inspection and improve the quality of service: all departments make training plan feasibility and more efforts to learn the rules and regulations, aiming at training regularly test, Chelmsford Hotel should follow the quality inspection system, ensure high quality service, set positions pacesetter in competitions. Further on the general staff on-the-job training, at the same time, various departments to hold a post practice, and to examine the monthly, consolidate the business skills, improve the quality of service. All-round increase the intensity of management, in accordance with the standards of star hotel, we will continue to improve various rules and regulations, work process, gradually establish a system of pipe mechanism as the main content of the rewards and punishment incentive management mechanism.

Scenario E

How Can Problems be Resolved?

The Chelmsford Hotel should pay attention to start employee performance management, but on the understanding of performance management is just at the initial stage, most of the hotel has not formed a complete performance management system, some even have no regular performance appraisal regulations, just make a simple rewards and punishment regulations, examination and rewards and punishments according to the time of he refers to employees' work attitude, service skills, service quality and behavior, but also made clear the punishment level and method for disciplinary action, the citation behavior only lists the citation behavior should be, but there is no corresponding improving measures. Perfect performance management system can effectively improve the effect of incentive.

Chelmsford Hotel design of employee performance management system of the hotel should be based on hotel performance management, which requires not only the high performance of old employee benefit, and to continue to introduce new talent, and through the work of staff performance management effective, accurate evaluation of the performance of individual employees as an incentive basis, increase the accuracy and efficiency of incentive the staff performance appraisal system. Chelmsford Hotel establish the hierarchical classification, the appraisal content according to different people, different evaluation methods, to understand the inherent potential employees and shortcomings, and strive to achieve the personalized evaluation of staff, to maximize the effectiveness of performance appraisal, improve employee job performance continuously, so as to achieve common development with the hotel staff.

Policies and Procedures

Chelmsford Hotel the new strength of new employees is the hotel business activities. Chelmsford Hotel enhances their own quality, skilled jobs skills; let them as soon as possible with the rapid development of hotel synchronous improve. According to the principle in a planned way step by step to implement progressive on-the-job training for new employees. The Chelmsford Hotel employee handbook, safety knowledge and service skills should know should be as the basic training content, after qualifying on the dress is one of the conditions.

In some stores post to execute the minions of different kinds of skills training, to strengthen the personnel flow, solve the problem of emergency cases of vacancies, as well as the worker with comprehensive service skills and strive for mastering many skills while specializing in intelligent worker conditions can provide the necessary element. Chelmsford Hotel Employees will do check the leadership of the work; will not do for the leadership of the work. This is the insufficiency of a hotel; this also suggests that some employees do not take the initiative and the rules and regulations, team consciousness and low execution necessary conditions. So, the hotel should be combined with training and examination way of working to improve and gradually solve some problems at present.


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