Pass on the mantle of leadership, says economist
Manama, September 28, 2009
Family-owned businesses in the Gulf are being advised to pass on the mantle of leadership to the more technologically-aware younger generation.
They are better equipped to help their businesses survive during the current difficult economic condition, says leading economist Dr Yousef Mashal.
'If you want to succeed in today's economic climate then you must let the new generation take over the reins of the family business,' he said.
According to the Bahraini economist, there needs to be a change in the management approach over how family businesses are run for decades.
Grandfathers and fathers have educated their children in the best schools and universities, but many still don't trust them enough to put the management of the family business in their hands, said Dr Mashal.
While, some children will work in the family business, they won't be given management responsibilities, he said.
'Some children continue to work in the company and accept the older style of management and blend with it, but others will get frustrated and leave the family business,' Dr Mashal told our sister newspaper Gulf Daily News.
'In the recent past it was fine because there were jobs available, but with the financial crises it has restricted these jobs and so they have come back to the family business.'
Dr Mashal believes that heads of family businesses should see the return of their children as an opportunity, which they should make use of.
'The younger generation needs to take over and look at the future of the business from a different perspective,' he said.
'The older generation has the knowledge and experience but this won't be enough for them to overcome the crisis.
'The crisis needs a new mentality and a new management which is much more open to taking highly-calculated risks.
'The need for the younger generation to take over at this time is a must. I don't think the experience, education and hard work put by the old generation will succeed in the future without the help of the younger generation.'
For family businesses that don't have children or relatives to take over, Dr Mashal recommends they bring in professional managers that can expertly direct the company. The family can then set up a board to watch over the total strategy of the company.
The main benefit of having an expert or highly-educated younger person on the management team, says Dr Mashal, is the technological and communication know-how they bring to the company.
'Every age has its own benefits, we have to evolve and change with the times,' said Dr Mashal.
'Right now we are in the high technology and communication era.
'If family businesses don't know how to use e-mail or Internet they won't survive.
'Now the market isn't so much about who you know as it was before, it is about what you know and information available to you about such a project or services.
'It requires the management of the company to be able to access this information and this is what the younger generation are experts in.'
In addition to changing its management style, family businesses in the Gulf will now need to rethink how they manage their finances, said Dr Mashal.
He said, in the recent past, the trend was for family businesses to borrow money for their company's needs and save their profits.
'In the recent past it was a good thing, borrowing at that time cost less and savings brought in better interest rates,' said Dr Mashal, who is Mashal Group chief executive director.
'But now it is a different scenario, where banks don't have enough liquidity and even if they lend it is at a higher rate and savings are not as much as profits as they did before because we don't have high interest rates.&