New blood good for the family business

Deciding who will take over an Emirati family business can be troubling if there are no relatives to carry on the work . But all businesses need to innovate to survive and prosper and looking outside the family confines could be the solution.

“Who will take over when I retire?” is the question troubling the leaders of many successful, family owned businesses in the UAE and across the globe. It is natural for Emiratis who have devoted their lives to building a family business to hope that their sons or daughters will want to carry on that work. But what if the next generation shows either no interest or no capability of leading the business?

In many ways this is the price of success. The sons and daughters of successful entrepreneurs have benefited from a privileged lifestyle and have had an education that may have opened up interests and possibilities that cannot be met in a family business. They may not be interested in the commercial world at all and may aspire instead to a career in medicine, science or government. Although this may be a loss to the family business, achievements in these fields should be a source of pride to any Emirati family.

Expecting that the next generation will automatically take over the leadership of the business may be unrealistic, but it is also not always the best direction for the business. A business that limits its leadership to the family risks fishing in a small pool that may not create the breadth of talent required to master the complexities of a modern UAE business.

All businesses need to innovate to survive and prosper. And we know that new ideas and innovations are more likely to come from a diverse leadership with different experiences.

To ensure that the business remains vibrant and responsive to customers, it needs to draw on the skills of outsiders. But recruiting outside professionals to run a family business has its own challenges. Outsiders, particularly if they have grown up in the corporate world outside of the UAE, do not always smoothly transition into an Emirati family business. They often do not understand or even reject the values and practices of these family businesses. Moreover, they can find it difficult to work with family members who are used to an active involvement rather than being passive shareholders.

The best approach is to create opportunities for the employees who already work for the business. I find that I meet employees who have worked for the family and the business for many years. In the GCC region, these employees have often been treated as if they were members of the extended family. Many have been looked after in a way that would never have happened in a corporate environment. I have come across family firms that have paid huge medical bills for employees, flown them halfway across the world to attend family funerals and supported them in many different ways. This has generated in these employees intense loyalties to the family and the business.

Yet in many Emirati family firms these people are overlooked when it comes to selection for leadership roles. Some of the most capable and ambitious employees will, despite their loyalties, conclude that the only way to get on is to move elsewhere. Losing talented people in whom the business has invested and who have demonstrated their capability is a waste when the business could so easily retain them.

Most large organisations now have talent management functions that are responsible for planning and growing talent and ensuring that the organisation has people that it can promote into senior roles. While family companies may not need something so elaborate, they can still adopt some of the practices of talent management such as structured development, career planning and an openness to non-family members in leadership roles.

Despite there being no blood relationship, it is in the interests of UAE family firms to “adopt” talented employees. These employees will have demonstrated their capability, their loyalty to the firm and their commitment to its values. For years they will have been treated as if they were part of the extended family, so why not bring them in? Couples who cannot have children of their own may adopt an orphaned child. Companies that cannot produce family successors could “adopt” orphan managers by treating them as honorary family members.

Stephen Brooks is the director at Oxford Strategic Consulting, which specialises in building human capital across the GCC and in Europe.

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