Saturday, October 2, 2010

Keeping it all in the family

Khalaf Al Habtoor, the founder and chairman of the Al Habtoor empire, had a well delineated succession plan in place for the family business to make a smooth transition into its second generation and ready to face up to the challenges thrown up by increasing competition and unforeseen economic forces in a rapidly globa lising world.
By making a clear separation between ownership and management, Khalaf put in place structures and rules that allocated rights and responsibilities among the children who stayed with him to continue the family business.
It is uncommon in the region to have succession plans in place before it is too late and conflicts emerge, fracturing familial relationships. Managing succession is a major challenge for the region’s private businesses, more so in the aftermath of the recent global slowdown, which is forcing changes upon them, according to the experts.
“Family businesses don’t survive that long for some inherent structural issues,” says, Mohammad Al Habtoor, son of Al Habtoor Group founder and chairman Khalaf Al Habtoor. “There is a general perception that as family size increases, the pie sometimes does not grow commensurately and different members have different views and objectives.”
He acknowledges the difficulty of keeping a family business alive beyond the second and third generations, but that can’t be a rule, he says.
Khalaf Al Habtoor, the patriarch, says he is less anxious when it comes to his family.
“Thank God my children are on the right track, and I taught them how to manage their business. But still you can’t see yourself in this modern generation and guarantee anything,” he says. “However, with prudent business planning this can be mitigated,” he adds.
Khalaf, 60, is worried how the new generations will take over the family business and stand amid the strong competition and challenges in the market, keeping the business as strong and efficient as it is now.
After working for three years with his father, the eldest, Rashid Al Habtoor, branched out on his own in 1993 to set up Al Habtoor Trading Enterprises. Today he runs his own diversified business in the Middle East and former states of the Soviet Union.
Mohammad and Ahmad, both educated in the US, and Amna, one of his three daughters, manage different segments of the group. Mohammad, 41, is CEO of the Al Habtoor Group, which is one of the biggest diversified business consortiums in the UAE — dominant in construction, hospitality and care sales — with interests in the UAE and UK. Ahmad, 32, is the chief of Habtoor Motors. Amna, who has a degree in law, looks after the education sector. But all three have had to earn it.

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