NEXT IN LINE
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.
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.”