Dubai – MENA Herald: The Family Business Council-Gulf (FBCG), the regional association of Family Business Network International (FBN), launched the first-ever GCC Family Business Governance Code which will serve as voluntary guide on how to organise the family and business together.
The code will help family businesses set governance structures in the form of rules, policies, and procedures, which is one of the key solutions to managing the growing complexity of family and business dynamics in the GCC. This document is also the region’s first bilingual governance guide for family businesses providing a set of best-practices in family business governance delivered in a concise and easy-to-read style.
Chairman of FBCG, His Excellency Abdulaziz Abdullah Al Ghurair, said: “Governance within family businesses is increasingly becoming a necessity as organisations evolve and grow. Setting family business governance structures, in the form of rules, policies, and procedures is the key solution to managing the growing complex dynamics of GCC family businesses.”
The guide is also expected to serve family businesses in the area of succession planning which is proving to be a focal point of discussion in many family business meetings. The guide has a focus on established large businesses that are going through either first, second or third generation transition – a critical segment with major risks accompanying succession.
“Succession planning is critical to family businesses in the region and without strong family and corporate governance procedures in place the future of businesses in the region will be at risk,” continued Al Ghurair. “Our research shows that only two-thirds of large family businesses in the GCC have initiated building blocks for effective Family Business Governance Structure, and only one-thirds of those participants have fully implemented the structures effectively.”
For example, the FBCG Family Business study conducted late last year in collaboration with Mckinsey showed low adoption of governance policies to support next generation development integration; it stated that only 44 per cent of businesses had an employment policy in place, while 32 per cent had clarity on roles and responsibilities. Around 22 per cent had effective training programs while 17 per cent had effective assessment methods for next generation succession.
While many governments around the world have developed and issued governance principles and codes focused on corporate governance, only a small number of countries around the world, mainly in the Americas and Europe and to less extent in the MENA, have established governance codes specific for family businesses.
The code addresses a wide range of family business governance areas, it covers five governance areas: Family Governance, Ownership Governance, Corporate Governance, Wealth Governance, and Public Engagement. The code provides practical advice on relevant areas such as developing the next generation and succession planning. It also includes a checklist, which can be used as a simple framework to assess and guide the family governance development journey. The Code is a comprehensive guide and reference for GCC families.
The code was collaboratively developed with 10 leading regional and international governance experts, with the write up commissioned by Al Tamimi & Co. Other partners included Al Futtaim Group, International Finance Corporation (IFC), KPMG Germany, Hawakmah, Pearl Initiative, Coutts& Co, , BNY Mellon, Hadef and Partners, FBN, and Okeili & Co.
“We have taken best practices from across the world and applied our local GCC wisdom to create a governance code specific for our region. While each family may have different visions and goals, the GCC Family Business Governance Code, just like the astrolabe, can serve as a common compass to help family businesses navigate through their own process and reach their true north,” concluded Al Ghurair.