Managing Family owned business/corporation

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
February 13, 2017


From IFC - Family Business Governance Handdbook

Corporate Governance in Family Business

This coming Wednesday, I will be meeting a Board regarding questions on propriety correct way of investment by family members.  I and a lawyer will be consulted on the fairness on investment and dividends of family members on the business.

The laws of the land, the civil code, the family code, the Corporation code cant answer the query;  even management  and MBA stuff cant answer that.

Managing a family owned business is a challenge;  managing family relations and managing the business

They say that the first generation builds and grows the business, the 2nd generation enjoys it, the third generation, the nephews and grand children ruins it.

A/  There should be three governing bodies of  a family owned business each with varying compositions:

1.  Family council  -  to create and enforce Family constitution which contains

           1.  Family constitution  -   enlarging perpetuating the vision mission
                         1.  family members employment
                         2.  share holding

          2.  Family corporation institution

                        1. family assembly
                        2.  family council
                        3.  family office

2.  The statutory board  - to do the regular board meeting responsibility

3   The strategic board plan the future or the company to keep up with the times, and fend off competition


B.  FAT principle and corporate governance

     Fairness
     Accountability
     Transparency

C.  Succession Planning

Lawyers, judges cant solve the problems of family owned corporation although they are so many may be up to 80% of the total business in the country.  Many of them fall by the wayseide because solutions to their problems, mostly about family relations can be solved by the family members  themselves.  That is why Nene Soriano, Ricky Mercado (under the new Dept at Loyola on Family business) are having a great day consulting family owned business. So too Dr. Ed Morato who bills $2,000 per day





       

Usec Panlillio on industry (strategic) planning and effectuation planning

Ampitheater, APS building, Rockwell Center Makati PHL | March 13, 2013

                                   Picture of the prime mover driving the industries

"You can put up a memorial park in ARMM and it is going to be tax exempt"

Former Usec (he said he was undesxd during  his tenure) and BOI head Cristino Panlillo said that governnment prime overs aims to develop and revive manufacturing prowess in the PHL in order to cover the % growth rate of the population.  While PHL economy is 66% in the service sector, still he maintains that more value added/wealth will be created for PHL per capita growth (also noticed by Dr. Usui  -   low labor productivity) and only $2,300 per capita GDP (we could not keep up with rest of Asian countries.)

He said that there are four stages in the investment model he developed while Usec (two years ago)

1.  prime movers   --> 2. jobs, salaries profits --->3  increased purchasing power/investment  -->absorptive capacity.   (this is vs. the social nature of feeding the people with loans as in Greece, Italy, Spain and even in US.

2.  government policy:

      l. socio political :  peace and order,  industrial peace, CCIT, govt revenues, infrastructures.

      2.  macro economic:  exchange rate, peace and order, incentive,  supply chain avalaiblity.

      3.  micro  - smes programs  - CITEM garments. electronics, equipment sharing as in coir extrusion and vacuum packing which are expensive.

On the question of industry planning raised by a UP Economics participant, he obliquely answered (also in response to the trickle down effect), by giving an example:

l.  Philippines which became number in contact center worldwide  (was not planned);  it happenned because of the opportunity and the facilities, English speaking graduates.  The govt did not plan it that way (so that is effectuation/result of algorithm)

2. PHL is No 4 in shipbuilding.  Why because 80% of shipbuilding is welding.  Japanese senior welders get $4,000 per month.  Hanjin senior welders in Subic get P20,000 per month.  Just any high school grad or even elementary grads can be taught how to weld.

3. Tourism too allows unskilled, non college grads to do many things:   scuba diving instructor, boatman, hotel keepers,

This happen, not because of govt planning but because these are the available skills and resourcdes in the PHL

4.  PHL may soon be the world center for manfacture of printers.  Most printer manufacturers are here:  Toshiba, Canon, HP. Lexmark, Brother.  Why?  Because most the workers, and the suppliers of parts are here in the PHL

                                    We will be center of printer manufacturing in the world

                                 PHL is now the 4th largest shipbuilding country in the world

DTI Annual Report of 2011 

Is HR as job category vanishing?

From Smartblog by Michael Morell

The author sees declining number of job titles named HR;  he sees more titles like people, culture.  And at the same time is it a transactional job:  payroll, hiring, training, transfer, pay, leaves, benefits.

Or does the job cover more strategic topics like motivation, human capital, intellectual capital.

I would suppose the changing titles merely involves change in job branding.  Each company would have its own way of configuring the traditional HR job.

What do you think of the HR function?