SKOPOS Consulting: Family businesses in the Middle East should prepare for succession to effectively manage change

SKOPOS Consulting Group, a leading provider of customized Organization Development (OD) solutions to companies in the Middle East and Africa, has cited recent research which reveals that more than 90 per cent of all commercial activity in the GCC is controlled by family businesses, compared to 65 to 80 per cent in other parts of world. Almost three-quarters of the region’s family businesses are owned and managed by the second generation, and one-fifth by the third generation. According to SKOPOS, this scenario reaffirms the importance for family businesses in the region to incorporate organisational development mechanisms to ensure long term success and profitability. 

Business continuity is the key for family businesses as research has shown that fewer than 6 per cent of all family businesses worldwide survive to the third generation, especially in regions such as the Middle East. An estimated 75 per cent of the Middle East’s private economy is governed by around 5,000 families whose companies generate 70 per cent of regional employment. 

“Family businesses in the Middle East should prepare for succession to effectively manage change. Developing the next line of leaders is crucial to ensuring longevity and sustained success of the company, especially given the rapidly changing and highly competitive business environment in the region. Incorporating a well-planned organisational development framework that includes leadership development programs will contribute to more effective management, greater long term stability and continued business success,” said Dr. Hussein El Kazzaz, Managing Director, SKOPOS Consulting Group. 

SKOPOS Consulting Group advises family businesses to be aware of the various issues arising from the gradual growth of their organization, and identifies three ownership stages that family businesses need to especially focus on, namely the Founder(s) (Stage1), the Sibling Partnership (Stage 2), and the Cousin Confederation (Stage 3). According to the group, Stage 1 requires a focus on leadership transition, succession, and estate planning. The group points to sustained family ownership, succession, and teamwork and harmony as key issues in Stage 2. For Stage 3, SKOPOS notes the possibility of conflicts in the allocation of corporate capital, shareholder liquidity, mission and vision, member conflicts, business participation and roles, and linkage with the business.