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70% Middle East businesses family-owned

|By TAP Staff| About 60-70% of the Middle East businesses are owned by family businesses and 88% of them are present in five or more sectors, most common being real estate, construction, retail, manufacturing, and travel and leisure, according to the findings of a study on GCC family businesses undertaken on behalf of the Gulf Family Business Council (GFBC), the regional association of Family Business Network International (FBN), and McKinsey & Company.

The study revealed that 44 percent of family businesses have an employment policy in place for next generation from the family, nonetheless only 17 percent of businesses have an effective assessment method in place to identify roles and responsibility for the next generation. A development plan for the next generation and a clear business integration policy would ease the transition of leadership and set a reference to manage conflict. The study recommends that the ‘rules of the game’ should be clearly stated to the next generation as early as possible to allow for effective succession planning and transition of leadership.

Two other key findings of the study were related to corporate governance and the businesses’ philanthropic efforts.

While family businesses have made significant progress in putting corporate governance systems in place, few have been successful in completing end-to-end effective implementation. Of the businesses researched, over 66 percent of participants reported that they have started to put the building blocks in place. However, only around 33 percent reported that the practices are fully adopted and are working effectively.

The study also finds that ensuring successful implementation requires the engagement of the broader family, not just those who are in positions of authority or involved in the business. This is required to ensure wide buy-in and commitment amongst family members.