There is a phenomenon that will start to rear its ugly head in the near future that will have a great impact on the region’s economy. The problem is that it is so invisible to most people that it, like a vicious cancer, only becomes evident in the last throws of the patients life when it is practically too late to treat. The issue is that of bad leadership within family businesses.

Before I elaborate more on the subject at hand, let me start of by explaining a few issues that any family business leader must pay attention to. The first and probably the most important of them all is governance. The second is that of succession. The third is that of conflict management. While the fourth is that of estate planning. Some people might argue that estate planning is part of succession planning. True. There are elements of that there but this is a subject matter in and of its own. All of these elements must be properly addressed by a family business leader to avoid destroying the company because they all play an important role in completing the circle.

To give you a visual reference, imagine a wheel with four spokes. Each spoke is one of the factors I mentioned above. But all these spokes would still not be enough to allow the wheel to function without one key missing factor from the picture I have drawn. That missing factor is that of leadership because it acts as the hub that connects with the spokes to allow the wheel to spin. Its job is to take the pressure from one spoke and transfer it to another depending on which one is needed the most when the wheel comes in contact with the ground.

Ok! “So what?” you might ask. Well this is where it becomes tricky.

All the research, as limited as it is in the area, indicates that over 90% of the non-oil GDP of the region comes from family businesses. Either directly through their private companies or indirectly via publicly listed companies that are basically a whose who of family businesses when you look at the make up of their ownerships. What most research would also show you is that the leadership or patriarch of these families are usually men in their 60s, 70s or even in their 80s. There are some rare exceptions in their 40s and 50s,
but they are the exception not the rule. Research would also show you that these leaders, on the whole, fall under the school of leadership whose motto is till death do us part. In addition to this, they also don’t believe that they should give up power. What some clever patriarchs do do is put up the illusion of retirement but still call the shots from behind the façade. For such leaders, the issue of succession planning within the business or even for the family is a given conclusion—the eldest SON—so why worry about this? As for governance, well that’s an even sillier notion in his head. After all, he’s the man who created the business, so why should anyone else but he be allowed to make the company’s rules? On the issue of conflict management, the solution is even more simple. What he says is it. After all, isn’t he the one who made this all?

At this point you must be wondering what has this all have to do with the problem that will occur in the future that I mentioned in the beginning of this article. Take a few minutes to think about this. If you consider that most family companies in the region have not even shifted from the first generation to the second. In addition, try to picture the mentality of most family business patriarchs and consider their age. Moreover, understand the connection between family business and social standing and see how the dynamics of the two go hand in hand and a grim pictures starts to form.

We will soon start to see these family businesses change leadership from one generation to another. How this change happens is an indication of the heath of the economy. If more companies start to split up, this means that the economy is going to face a problem as family business splits are never a happy affair. The consequence of this will be felt by the employees of the company first, followed by their suppliers and then the general economy. If more family companies smoothly pass the torch, then this will be a great boon for the economy because they will be more able to fixate on generating business and growing their markets instead of bickering within. This, however, can only happen through great leadership and a good education.

The leader must understand that his role is greater than being “just the boss” of his little, and sometimes not so little, empire. He must overcome his short comings and allow others to share the burden with him. Allowing other people to lead under his wing is the greatest gift that he could afford his business and family. He must lead the drive to educate the people around him and allow them to teach him as well. He must also be humble enough to accept advice from his juniors when they are closer to the ground than he is.

Family businesses are the backbone of our economy whether we like it or not. Their prosperity or demise will affect us all in one way or another. My hope is that family businesses will heed the warning signs and overcome their personal pride to ensure that their families and their businesses blossom.