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Fam­ily busi­nesses in the re­gion, many still be­ing run by the found­ing gen­er­a­tion, are be­gin­ning to un­der­stand that with­out proper gov­er­nance and suc­ces­sion struc­tures in place, their wealth might dis­ap­pear be­fore it reaches their grand­chil­dren.

Qatar Today - - BUSINESS > TAG THIS - BY AYSWARYA MURTHY

You don't need to go to a B- School to dis­cern the im­por­tance of lead­er­ship in business. It's the most ba­sic and im­pact­ful cog in the ma­chin­ery of en­ter­prise. To stretch the metaphor, for many of Mid­dle East's busi­nesses it's time to crank up the speed; they are at the brink of stag­na­tion and mak­ing the gi­ant leap to­wards glob­al­i­sa­tion. Now more than ever, business houses here need vi­sion­ary lead­ers and of­ten fam­i­lies have to find this qual­ity in a small pool limited to their blood­line.

In Qatar, if there is one thing we know about fam­ily-owned busi­nesses (FOBs), it is that we don't know any­thing about them at all. The re­gion it­self is not big on trans­parency and this, cou­pled with typ­i­cal FOBs' char­ac­ter­is­tics of be­ing no­to­ri­ously pri­vate and ex­tremely skit­tish about out­side eyes on their in­ner work­ings, means that they are ef­fec­tively in­for­ma­tion black holes. But with grow­ing global as­pi­ra­tions, this is chang­ing and for the first time we are able to peek into the ma­jlis and wit­ness Arab en­ter­prise at its best, par­tic­u­larly how it's cus­tomis­ing and adapt­ing prac­tices like suc­ces­sion plan­ning to suit their tem­per­a­ment.

In its most ba­sic form, suc­ces­sion plan­ning is a prepa­ra­tion to fill the lead­er­ship vac­uum cre­ated by re­tire­ment or death and en­sure business con­ti­nu­ity. “At first glance, this lack of plan­ning seems in­com­pre­hen­si­ble,” says Mark Nier­ada, Part­ner

Con­tin­ued from Page 63 nur­tur­ing Arab lead­er­ship.” But Ech­hade ad­mits that few fam­i­lies go down this route. “The blood­line for the fam­ily business is still of pri­mary im­por­tance and in limited cases, in-laws are ap­pointed as lead­ers or key ex­ec­u­tives,” he says. Lo­mas ac­cepts that in his ex­pe­ri­ence busi­nesses weren't very re­cep­tive to the idea at all un­til he spelt out the con­se­quences. “Some fam­i­lies con­sider this a big risk but the big­ger risk is the col­lapse of business.” FOBs in the re­gion are, for the most part, still young, only just mak­ing their way down to the sec­ond and third gen­er­a­tions. So best prac­tice cases are quite limited and skill in the area of suc­ces­sion plan­ning spe­cific to the re­gion is also lack­ing. And in the Arab cul­ture, where the word of mouth from a re­spected elder counts far more than vol­umes of man­age­ment school the­ses, it'll take a while . “We are try­ing to build a rep­u­ta­tion,” Lo­mas says “We speak at con­fer­ences and help peo­ple un­der­stand the con­cept. Right now it's rare for us to be in­vited be­fore some­thing needs to be cor­rected.”

Watts says there are chal­lenges around the “soft is­sues” i.e. the re­la­tion­ship be­tween fam­ily mem­bers and am­bi­tions of the sec­ond gen­er­a­tion. This is ex­actly why Lo­mas be­lieves it's im­por­tant to get a di­a­logue go­ing be­tween the dif­fer­ent gen­er­a­tions; and it is of­ten not easy. “There is a huge re­spect for the pa­tri­arch in the Ara­bic cul­ture and the younger gen­er­a­tion is of­ten re­luc­tant to speak their ideas and go against an ap­proach that might no longer be work­ing. So there is no dis­cus­sion, a big de­te­ri­o­ra­tion in business and a loss of rev­enue.” In many cases, the sec­ond gen­er­a­tion is al­ready in their 40-50s and might have lit­tle in­ter­est in the business, hav­ing been used to a dif­fer­ent life­style, Lo­mas says. “The next gen­er­a­tion - Gen Y - have a dif­fer­ent way of look­ing at the business al­to­gether, with their in­ter­net-age ideas and so­cial me­dia savvy, which is of­ten at clash with the pa­tri­ar­chal gen­er­a­tion. So if the lead­er­ship is to skip a gen­er­a­tion (and there are pro­vi­sions for this within Sharia) there is a huge dif­fer­ence in un­der­stand­ing what has to be bridged. The very first thing we do is try to get a con­ver­sa­tion go­ing be­tween the two.”

Groomed to lead

Lo­mas says that recog­nis­ing a nat­u­ral leader is of­ten a gut feel­ing; un­like the West, psy­cho­me­t­ric tests are not very preva­lent here although some busi­nesses are start­ing to open up to the idea. “You look at some and see an in­nate abil­ity. They are charis­matic. Peo­ple lis­ten to them out of in­ter­est. They are pas­sion­ate. Th­ese are im­por­tant qual­i­ties be­cause lead­ers need to be loved. This is a dif­fi­cult con­cept in the Ara­bic cul­ture where the majority still be­lieves in power, fear and con­trol. They lead by right.” Th­ese are the qual­i­ties he tries to ex­or­cise out of the suc­ces­sors he is of­ten charged with nur­tur­ing. “We tell them that it might be hard but they have to earn their em­ployee's re­spect. We of­ten take them out­side Qatar; teach them to follow be­fore they can lead. We go to places like South Africa where they would have to do jobs that they would con­sider me­nial. But it helps them bet­ter un­der­stand the peo­ple they are go­ing to be ask­ing things of in the fu­ture. We have to help them build an ex­pe­ri­ence of 20 years, of peo­ple who have come up in the or­gan­i­sa­tion, within a few months.”

GARY WATTS Part­ner and Re­gional Head of Cor­po­rate Com­mer­cial and Re­gional Head of Fam­ily Business Al Tamimi and Company. “If le­gal ad­vi­sors are in­volved when the founder is con­sid­er­ing the rel­e­vant struc­ture with the fam­ily mem­bers, it al­lows for them to in­form the fam­ily on the le­gal im­pli­ca­tions and le­gal pro­cesses in­volved as well as iden­ti­fy­ing key is­sues which the fam­ily must dis­cuss and agree be­fore mov­ing for­ward.”

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