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In the MENA, family businesses are the building blocks of most economies. They create jobs, contribute to national growth, and give back to the community. In family businesses, family member involvement influences several dimensions of strategy including industry focus, organizational design, company culture, and resource allocation. We were asked by a large family-owned business to align stakeholder goals, develop a strategy to achieve long-term objectives, and explore business diversification to strengthen long-term sustainability.
Family structure was having a strong impact on the level of communication across the various divisions of the company - lack of clarity concerning responsibilities and poor communication were creating organizational silos. As an initial step, we identified the goals of each business unit and articulated the internal impact of silo behaviors on the business. This enabled the leadership team to recognize the long-term harm inflicted by informal communication channels and established impetus to take action.
Long-standing family businesses frequently face a significant challenge in adapting to rapidly changing markets. To nurture innovation typically found in younger companies, we put in place a plan to transition second-generation family members into new business and governance roles with the guidance of the older generation. We also implemented a performance-based evaluation and compensation system to encourage collaboration among second-generation family members by matching the individual strengths to the core skills needed to fulfill key business and governance roles.
As part of its succession planning, the family business also wanted to strengthen its focus on corporate social responsibility. We worked with the family to articulate their impact objectives and put in place a strategy to transition their previously unfocused and sporadic charitable giving towards a sustainable, long-term strategic philanthropic institutional framework.
The succession plan we developed is currently enabling the next generation to gradually take on more responsibility for day-to-day operations with the integral support of the founding family members. By adding the new perspectives, the framework is also starting to address reluctance by the younger generation to work in the family business and addressing organizational silos and lack of clarity concerning responsibilities. Finally, increased corporate responsibility activity is supporting the transition towards a more cooperative organizational culture by tangibly demonstrating how the business can positively impact local communities.