Chapter 2: The Path to Prominence 50. Corporate Restructuring (Part 2)

After these matters were discussed, we moved on to our usual game of Go. Just a few moves in, my father-in-law suddenly paused as if remembering something, and asked me:

"What are your thoughts on the corporate governance structure of your factory?"

For a moment, I was a bit dazed, failing to grasp what he meant by this question.

"I mean, what are your personal thoughts on it?"

At that, I finally understood. But what personal thoughts could I possibly have? After all, I had been the deputy secretary of the Party committee and the head of the trade union for less than two years. My consistent view had simply been that since the State-owned Assets Supervision and Administration Commission had already decided this was merely a formal rebranding exercise, I would simply continue serving in my current roles after the restructuring.

I shared this view with my father-in-law. He thought for a moment and said, "What a pity, what a pity."

"What is a pity?" I was slightly baffled again.

"It's a pity that your years in office fall short. Otherwise, this would have been quite an opportunity."

"An opportunity? What kind of opportunity?"

"According to the requirements for a sound corporate governance structure, once restructured, your factory must establish a board of directors, a board of supervisors, and an executive management team. Director Shi will undoubtedly take the position of board chairman. If your tenure had been long enough, you could have seized this opportunity to contend for the position of general manager. Once you took that step, succeeding Shi Guangsheng later would have been virtually assured. But now you are tripped up right at this threshold—it truly is a pity."

The chance to become general manager—that was something I had genuinely never considered. Hearing my father-in-law put it this way, it really did seem a bit regrettable.

After pondering for a moment, my father-in-law asked again: "Among the members of your factory's leadership team, who has experience in operational management and considerable seniority?"

I briefed my father-in-law on the backgrounds of the various factory leaders. He specifically inquired about their ages and work experience, then mulled it over and analyzed it for me: "Who is suited to be this general manager? Let us use the method of elimination. Although the administrative deputy director and the chief financial officer meet the qualification requirements, neither has any operational management experience, so their competitiveness seems weak. Song Dagang is in charge of production and does have operational experience, but he is less than two years away from retirement age, so the possibility of promoting him is also slim."

"It appears only Ruan Changqing has the qualifications. He still has seven or eight years before retirement, so his age meets the criteria. Furthermore, he has work experience across multiple positions, including operational management, giving him a strong competitive edge."

He paused to think further, and then continued: "If Ruan Changqing indeed becomes the general manager, you will be in trouble. He is a year or two younger than Director Shi. By the time Director Shi retires, Ruan will not have retired yet. Although he will also be nearing retirement age and advanced in years then, making his succession as board chairman unlikely, the fact that you lack experience in the general manager's position would introduce variables into your succession. Even if there are no strong internal competitors, we cannot rule out the possibility of the State-owned Assets Supervision and Administration Commission transferring someone in from elsewhere. Moreover, the longer time drags on, the greater those variables become."

Listening to my father-in-law's analysis, I too felt that the situation was unfavorable to me. Yet what could be done? Over the past few years, I had been promoted fast enough; I had been standing out far too prominently in the factory, and some people were already starting to harbor resentment.

"Now, there is actually a way. We can first have Director Shi concurrently hold the position of general manager while serving as board chairman. Once your tenure length meets the requirement, we can find a way to promote you to general manager." My father-in-law finally came up with a solution.

"Can the roles of chairman and general manager be held concurrently?" I asked.

"There are no explicit restrictive regulations stating it cannot be done. Generally speaking, from the perspective of sound corporate governance in state-owned enterprises, it is best to keep them separate. However, even among corporatized state-owned enterprises today, although it is a minority, there are cases where the chairman simultaneously serves as the general manager. What is more, since your batch of enterprises has just undergone transformation, having a transitional period is entirely justifiable."

"From Director Shi's perspective, he probably hopes to see this arrangement as well. After all, whoever holds that position is unwilling to let anyone else carve up a portion of their authority. This makes the matter actionable, especially since Shi Guangsheng's opinion carries significant weight."

"Then what do I need to do?"

"Just keep it clear in your mind. You still need to secure a seat on the board of directors. After all, following the corporate reform, from the perspective of standardized governance, the board of directors is the primary decision-making body, and having a voice on the board in the future will be crucial."

After discussing these matters, I felt a great deal more at ease. Consequently, I peacefully resumed playing Go with my father-in-law.