The Family Business Council – Gulf (FBCG) and Alfahim Group hosted a Majlis Reception in Abu Dhabi, gathering family businesses from around the GCC to discuss the importance of creating a professional family governance structure that can protect an organization and ensure the smooth transition of the business to the next generation.
The Majlis was the first of its kind to be hosted in Abu Dhabi, and is the latest in a series organized by the FBCG, that has held similar events across the Gulf region, including meetings in Dammam, Dubai, Jeddah, Kuwait City, and Muscat. While conversations at each Majlis might differ in focus, the purpose is the same: to create a safe space where participants can openly engage in dialogue about their shared experiences as family business owners in the region, exchange knowledge and best practices, and find common solutions to effective governance where possible.
FBCG also hosted two flagship events in addition to the Majlis series – the Legal Roundtable and the Annual Summit in Dubai. Both events were designed to encourage peer learning and exchange among family business owners, both young and senior generation, in a safe private space.
The Abu Dhabi Majlis was attended by many senior members of GCC family business groups and government entities, including Mohammed Helal Al Muhairi, Director General of Abu Dhabi Chamber; Abdulla Ghurair Al Qubaisi, Deputy Director General of Abu Dhabi Chamber; and Talal A. Al Ajlani, Chief Executive Officer of the National Centre for Family Businesses in Saudi Arabia.
At the Majlis, Al Fahim family business representatives presented their family governance structure. The Alfahim Group structure is guided by a Family Protocol, which outlines important aspects of an established family business, from family employment policies to a succession process.
HE Mohammad A. J. Al Fahim, Chairman of Al Fahim Family Council, discussed the importance of family-owned conglomerates in the region’s economic landscape, and emphasized how family businesses of the GCC should now turn their focus to involving next generation family members. He highlighted the relevance of his comments for families across the Gulf as a whole, commenting: “Family firms are vital in the Gulf region, as they form much of the basis for our economy. Moreover, family ties and values are fundamental principles to us intrinsically linked to our heritage and tradition. Hence, the sustainability of family conglomerates and ensuring there is a proper governance structure in place is pivotal for our advancement and continuity in this day and age. Every family-owned organization will face challenges while transitioning to the next generation, which is why this annual knowledge-sharing platform is instrumental in helping us grow and overcome socio-economic obstacles.”
In the latest research on “Family Business Health Index,” conducted by McKinsey & Company and FBCG, studies on a sample of large family businesses have showed that while 60% of respondents have the core building blocks of family governance in place, less than 30% claim it works effectively, and only 32% state that their governance clearly defines roles and responsibilities. The results indicate that there is still significant room for family governance to more fully develop across GCC family-conglomerates. The second edition of this study is currently underway, as FBCG continues to examine how governance in these large businesses continues to develop.
Chairman of Family Business Council – Gulf, Mr. Omar K. Alghanim commented on the conclusions of this recent Majlis, emphasizing FBCG’s role in creating a community for family-owned businesses in the GCC, one that can share successes and challenges alike.
He said “So many of our family-owned businesses in the Gulf are at that point in their lifetime when thoughts are turning to the next generation, as younger family members are brought up to take on the family business legacy. Reflecting on the nature of the organization also brings up so many other essential questions about the business’ structure and protocol as it relates to family members. These questions are hard to ask, and sometimes harder to answer, but we are happy that the FBCG plays a key role in facilitating these conversations, which will ultimately help families resolve any potential conflict, create alignment, and potentially greater harmony between family members, all of which helps the business as a whole.”
He added: “I am grateful to the Al Fahim Group for spearheading this latest conversation, and for setting in motion a discussion in Abu Dhabi on where family-owned businesses can assemble strong family governance that enables a business to thrive and succeed with each new generation.”
Family governance consists of structure and processes to define, organize, and guide the interaction of the families with their family business and members. The structures and processes of family governance can include a family protocol or constitution, family forums and assemblies, and family council along with special purpose committees.
A well-designed, structured and implemented family governance can help define the boundaries of ownership and management and create clarity on key issues such as succession, dividends and shareholder exit. This can result in effective decision-making in the business and preparation for a smooth generational transfer.
FBCG is committed to producing research on family business within the GCC that supports the design and implementation of strong family governance in its regional context. To this end, the Council has developed a Governance Code publicly available to any family business committed to their continuity and encourages families to have conversations – and take action – on establishing their vision for family governance.
