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Skilled staff recruitment is a significant challenge for the Middle Eastern family businesses with 73 per cent of those saying are interested to hire the right skills and talent in the coming five years, according to a PwC survey released yesterday.
Entitled The Family Factor: Professionalizing the Middle East Family Firm, the survey covered 44 family businesses in the Middle East.
Despite the general level of economic optimism in the region, the number of respondents apprehensive about their ability to recruit skilled staff has gone up significantly since the 2010 survey and will continue to be the biggest internal issue for Middle Eastern family firms over the next year.
The survey showed that 34 per cent of the family businesses in the Middle East cited hiring skilled people as a key concern in 2010. It rose to 45 per cent in 2012, and now it is the highest as 64 per cent. It is expected to rise to 73 per cent by 2020.
''Middle Eastern family businesses are interested in new recruits to help them achieve their growth strategies and implement organizational changes,'' Amin Nasser, Middle East Entrepreneurial and Private Clients Leader, he said. Outside personnel are essential for family businesses, since he says it is not healthy to have family members working in the business. It is good to have them on the board but not engaged in day-to-day business.
The risk these businesses run is conflict and tension, which will inevitably impair business performance and could be serious enough to threaten the long-term future of both family and firm, he said.
Nasser also said that family business in the Middle East need to make their businesses more professional in the way they run their operations if these firms want to remain successful. It is challenging to hire a CEO for a family business in the Middle East, since these families don't delegate executive power to the CEOs as they like to keep the control in the family. It is also because of family members' interference in the business, he said. Forty-eight per cent of the family business agreed that making the business more professional is a key challenge over the next five years.
Making the business more professional is about giving a new modern structure and discipline to the businesses that helps them innovate better, diversify more effectively, export more and grow faster, said Firas Hadad, PcW Partner in the risk assurance and governance service practice at the firm's Abu Dhabi office.
This can be done by automating business operations and increasing their use of information technology (IT) as a way to improve productivity and efficiency, he said.
''We have worked with a number of family firms who are setting up proper corporate centre functions in areas like treasury, strategy risk management and HR,'' Nasser said.
Overall, this year's survey indicated that despite a tough economic environment family firms remain dynamic and resilient. Family businesses in the Middle East have been more successful than their global counterparts with 79 per cent recording growth in sales in the last year, compared to 65 per cent globally, according to the survey.
The survey also showed that succession planning seems more hazardous than ever, with only 14 per cent of family businesses in the region saying they have a discussed and documented succession plan.
Source: Zaher Bitar, Senior Reporter, gulfnews.com