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Fingers pointing in all directions, the financial crisis has been much about identifying who is most to blame, resulting in a lot of the negative vibes directed towards decision-makers. Leadership that was not so long ago quite rather unquestioned now finds itself exposed to the severe scrutiny of a so-called ‘post-crisis world’. In the midst of all the emotional reactions, it will not do to deny that the reproaches are sometimes justified. Yet are the changes that need to be undertaken to overcome reasonable doubt.

The new economic environment confronts businesses with new challenges but also with a myriad of opportunities, and many claim that this is a crucial moment for firms to create value. Thus, in this post-recession confusion, once more all eyes turn to the top, awaiting direction, and seeking inspiration and confidence that seems long lost. Today’s business leaders thus face a sort of identity crisis, being torn between having to act fast and at the same time being extremely wary of not repeating past mistakes. Burdened with additional responsibilities, family business leaders are no exception in this situation – though less affected by the crisis, the changed business dynamics and competition influences their decision-making.

To start off, we could legitimately ask whether business leadership should change at all. Experts say that after seeing countless regional and a few global downturns, though finding similarities, we still fail to identify repetitive patterns. So will it make a difference at all if we change our behaviour? We have to ask ourselves, whether the fact that we cannot anticipate the shape or form of the next downturn will make analysing our behaviour and learning from our mistakes redundant.

Considering the facts that are uncovered daily, the general opinion seems to be that corporate business leaders really do have some soul searching to do. However, many family businesses in the Arab world, have been spared the worst of the financial crisis. It is claimed that the explanation for this phenomenon is that family business leaders tend to adopt a long-term orientation and therefore have a more cautious investment strategy. So, considering that they have emerged relatively well from the crisis, why should family business leaders change at all?

The answer is clear: Even though we may not be able to predict when the next symmetric shock will hit the global economy, family business leaders are still confronted with the present – a post-crisis world, which presents them with a rather changed competitive landscape, bearing new challenges and opportunities. While business leaders shape our economic environment, they themselves are influenced by many factors and responsibilities, which they need to take into consideration in their daily decisions. We may even venture to claim that indeed the demands upon family business leaders might be greater than the ones upon corporate business leaders.

To show the complexity, challenges, and also the opportunities for family business leaders, here are the dimensions and responsibilities that affect leaders and should consider:

Multiple roles

Leaders in family businesses often hold triple roles of responsibility; they are not only in charge of management, but also own at least part of the company, and, not least of all, may hold an important position in the family if they are not even the head of the family all together. Experience has shown that in spite of all best efforts to perfection separation of these areas of life is near to impossible. Though through good governance systems a lot can be achieved, which is an area of responsibility that needs to take great priority in business management.

Human resources

Leadership within the family business implies an honest look at human resources. In order to face the complex global economy, it is of the essence to build the strongest possible team of experts around business leaders. The question of recruitment is a difficult one in spite of the now great availability of skilled employees made redundant by the crisis. In addition, family business leaders need to manage the expectations and education of incoming family members. New generations coming into the family business, may have other ideas on technology and progress, and may envision the future of the business differently. It is the family business leader’s task to assess new input as objectively as possible, and to encourage new initiative while still maintaining core family values.

Managing the image

Relying solely on the family name has become difficult with increasing globalisation and international competition moving in on regional advantages. Leadership should be directed towards maintaining but also enhancing the family business’s image towards the outside world. It is important to value what has been gained in reputation throughout history, yet in order to compete with international players, it is imperative to have a structured approach to external communication and avoid disinformation in the media and business community.

Strengthening communication

External communication is but one aspect that needs constant consideration from family business leaders. Internal communication is just as important. The quality of communication is an essential factor in family business continuity. The fast growth of technology has increased the gaps between generations. Family business leaders need to take into the account these differences as they hold great risk for misunderstandings, yet, if managed well, hold even greater potential.

Maintaining values while innovating

For family business leaders, it is one of the greatest challenges to be innovative whilst maintaining core family values. The loss of family values implies the loss of reputation value, which affects business on all levels. But more importantly, family values are a sort of inner glue and implicit guideline for family members and eventually also for non-family employees. Maintaining these values means reinforcing corporate identity.


Really, the question of leadership is generally one of consistency. No one expects a leader to be infallible, none of us are. But a leadership role automatically implies an imperative to guide and inspire. Consistency is important, as respect is granted to people who can stand straight for their decisions. Consistency is shown not only through words but mostly through actions: Who will defend those that followed them? Who will cut their bonuses when everybody else is losing their jobs? It is a question of consistency between what is said and what is done and therefore returns to the integrity of the single person at the top. Even though we would like to think that companies are nothing but money making machines, in which we have to cut costs on a regular basis, we all know that running a company means dealing with human beings with different attitudes and visions, even if within the same family. Remaining focused on long-term goals, in an environment that is moving extremely fast, has become increasingly difficult.

Whilst it certainly is a case-by-case decision whether to revisit one’s leadership strategy, it is a fact that the current climate needs strong business leaders with much insight and the ability and openness to widen their horizons. The complexity of the global economy no longer permits the on-decision-maker approach. The knowledge needed for insightful leadership, which cannot be expected to be absorbed by one person only, should be assembled as a team effort and directed towards longevity companies. So really the new era of leadership dictates that business leaders, whether in a family business or not, will only be as good as the team surrounding them.

Tharawat Magazine, Issue 5, 2010