Family businesses operating in the UAE are being urged to implement fixed and clear management strategies within their organisations, as experts predict they will increasingly be called on to drive growth in the private sector, as governments take a less active role in supporting commercial development.
Research has shown that over 90 percent of all commercial activity in the GCC is controlled by family businesses, compared with rates of 65 to 80 percent in other parts of the world. However, internal family conflicts and feuds, and a patriarchal control structure, is hampering efficiency of some conglomerates.
“In order to be sustainable and effective, family businesses must ensure there are clear policies in place to handle any internal difficulties that may arise among family members,” said Mohammed A.J. Al Fahim, honorary chairman of the UAE’s Al Fahim Group. “Increasingly, family businesses will have the opportunity to take a larger share of commercial business, and we need to be prepared to react quickly and effectively.”
Issues that often confront family businesses include sibling rivalry, and the roles played by each family member. The question of succession is often a key stumbling block for many family operated enterprises, and can prove divisive, leading to long-running disagreements. International statistics have also shown that only 30 percent of family businesses survive into the second generation.
“Family business ventures have the ability to be profitable and successful, provided that they are managed with care,” added Al Fahim, who will deliver the keynote address at the upcoming Middle East Family Business conference in Dubai December 7 to 8. “They have to be treated like private commercial operations, but consideration also has to be paid to their heritage. It is a fine balancing act.”
Planning to pass the business on from one generation to another is vital in helping to ensure a smooth transition process. A clear succession strategy can often subdue internal family politics. Also, recruiting experienced independent outsiders to take up senior management positions, while the family retains overall control and direction, has shown to be effective.
“Running a family business can often be far more complex and problematic than running a public company,” said Edmund O’Sullivan, editorial director and conference chairman, MEED, organisers of the second Middle East Family Business conference. “There are many more issues involved, both on a professional and personal level. This conference will highlight what they are and how they can be dealt with.”
The second Middle East Family Business conference takes place at the Mina A’Salam in Dubai from December 7 to 8.