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 rather unquestioned now finds itself exposed to the severe scrutiny of a so-called “post-crisis world’. In midst of all the emotional reactions, one cannot deny that the reproaches are sometimes justified.
The new economic environment confronts businesses with challenges and a myriad of opportunities. Many claim that this is a crucial moment for firms to create value. Thus, in this post-recession confusion, once again all eyes turn to the top for direction, 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. Even though family businesses are assumed to be less affected by the crisis, the changed business dynamics and competition influences their decision-making.
Family businesses, particularly many in the Arab world, have been spared the worst of the financial crisis. It is claimed that the explanation for this phenomenon results from the fact 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 on family business leaders are greater than on corporate executives.
To show the complexity and challenges, but also the opportunities for family business leaders, here are dimensions and responsibilities that affect leaders and should be considered when thinking about change:
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. Experience has shown that in spite of all best efforts, perfect separation of these areas of life is near to impossible. However, through good governance much can be achieved, which is an area 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 essential 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 globalization and international competition moving in on regional advantages.
Leadership should be directed towards maintaining but also enhancing the family business’ 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 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 also implicit guideline for family members and eventually also for non-family employees. Maintaining these values means reinforcing corporate identity.
Consistency
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, running a firm 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 companies’ longevity. 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.
Dr. Hischam El-Agamy is an Executive Director at IMD (www.imd.ch). He is responsible for IMD’s activities in southeast Europe, Africa, the Middle East and Southeast Asia. He is the Founder and Executive Director of the Tharawat Family Business Forum - the network for Arab family businesses.
| 
|
|
|
|
|
|
|