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The Family Business Leadership Challenge
 

The UAE has many examples of well-run and extremely successful family businesses. The nation’s economy, particularly its non-oil sector, is driven by these companies and by the close-knit family groups that lead them. What makes these businesses successful is the way that they have negotiated a particularly tricky trail between accentuating the advantages and mitigating the downsides that comes with operating a family business.

 

One of the great benefits of these businesses is the much longer-term mind-set they can adopt; a consequence of planning for the benefit of its own future generations. While the concept of corporate social responsibility is still being taken on board by many corporations, family businesses are consummate old hands. This is because they have always had to strike a balance between hard business concerns and the family’s long-term interests, making them distinctly conscious of concerns such as the environment or the wider society it operates in. While most companies with a CSR agenda will contemplate such concepts, the fact that a family business is focusing on its own prospective offspring makes their long-term CSR goals particularly personal.

 

This long-term mind-set also means that a family business can afford to build and maintain extremely close, strong bonds with its suppliers, its employees, and its customers. This by turns means that they can benefit from a consistently reliable supply chain; a workforce of motivated, committed workers; and a customer base that sticks with their brand and their products.

 

There is also the matter of the family name being tied so closely to the company’s brand. Having your name in lights above the door – at least in a metaphorical sense – is a powerful motivator to maintain consistent standards of excellence. This can become a real driver to constantly improve, with successive generations keen to add to the family name’s prestige and to avoid any actions or decisions that might negatively affect it. This is a level of allegiance that multinationals can only imagine.

 

That’s not to say there aren’t challenges. The leadership succession from an ageing generation to the next is a subject of regular attention, due to the potential for fraught and difficult internal politics and power struggles. The weight of history can also be a barrier to future development, with family traditions and ‘the way it’s always been done’ often allowed to trump the ideas and creativity of a younger generation.

 

Talent gaps can also be difficult to fill, either requiring that family members develop in areas they possibly have no interest in, or demanding the introduction of external expertise, with all the expense and integration difficulties that that might create. Non-family members can struggle to assert themselves fully as they must attempt to negotiate complex and un-written family dynamics. Even within the family, there can be difficulties in accommodating the different skills and interests of family members, requiring a real focus on ensuring every employee gains the experience and training they need before they assume positions of influence.

 

There may also be challenges in ramping up the scale of a family business’ operation – such as when the decision is made to expand and take the company overseas. This can raise issues related to the need to meet corporate governance standards that push against the often looser organisation of the family business. Such businesses must then seek a new balance between one of the great advantages of family businesses – that of their greater flexibility – and the need to confine this flexibility in the face of expectations from other markets.

 

For the one in charge, the family business presents many similar challenges to those facing any other organisational leader. What they figuratively lose in needing to bear the weight of family expectations, they gain through being able to chart a slower, long-term course. What they lose through having a smaller executive talent pool, they gain through the kind of support and dedication that only family members can provide. Ultimately, a strong family unit with the right direction and support will always be a market force to be reckoned with. Through integrating the best of modern business thinking with the traditions their business was founded on, they can ensure family businesses continue to play a prominent role in the UAE’s future.

 
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