A recent report by Arabian Business on family-owned businesses in the Middle East underlined the impact of family businesses on the Gulf economy. The report positioned culture as the driver behind the traditional commercial success of the region’s family-owned businesses, with the authors noting that familial relationships and trust provide a solid foundation for the growth and continuity of family-owned companies.
While these values remain fundamental to corporate strategies, the operating environment has shifted in unprecedented ways in recent years. Only a proper succession plan can guarantee a smooth transition to the next generation and avoid the “third generation curse”, where only a few family businesses survive into the third generation.
Succession planning is not a sprint, it’s a marathon. It is a continuous process that begins well before the new generation takes the helm. For instance, I first started working in our family business, GMG, in 2010, I spent the first six years immersing myself in every aspect of the business.
This helped me immensely when I took over the reins from my father, Abdul Aziz Baker.
Second, succession planning must be aligned with the company’s vision and values, which should be clearly defined and communicated.
Family business owners should articulate their goals and expectations for the future of the business, as well as their personal aspirations and legacy. My father was tenacious and ambitious; he never took ‘no’ for an answer and taught me very early on that GMG would grow through its partners’ success. These values remain an intrinsic part of our DNA even today.
Third, succession planning should be based on a realistic assessment of the capabilities and readiness of the potential successors, as well as of the current state and needs of the business. Owners should evaluate their heirs’ skills, experience, personality, and motivation and identify any gaps or areas for improvement.
Sometimes, this involves looking beyond the family toward professional advisors, such as managers’ lawyers, accountants, or consultants, to provide objective and impartial guidance from experts who understand their specific context and challenges. They should also leverage best practices and benchmarks from other successful family businesses in the region or globally.
Finally, owners should develop a clear strategic plan and execute it. Succession planning should result in a clear and detailed strategy that outlines the roles and responsibilities of the successors, as well as the timeline and milestones for the transition. They should also monitor and evaluate the progress and performance of the successors, providing feedback and support along the way.
The good news is that the new generation of Gulf business leaders are even more attuned to the evolving business landscape. For instance, in the Middle East, the younger generation of family business leaders are among the most involved, knowledgeable, and motivated when it comes to discussing environmental, social, and governance (ESG) concerns, a national priority for many GCC countries, including the UAE.
UAE family businesses have a unique opportunity to capitalise on their cultural heritage and create lasting value for themselves and their communities. By adopting proper succession planning practices, they can ensure that their businesses remain relevant and resilient for generations to come.