Danilo Pereira fires Al Ittihad into King's Cup final with dramatic stoppage-time double    Visitors welcomed with Eid initiative at Thee Ain Heritage Village in Al-Baha    Over 1 million pilgrims benefit from golf cart service at Grand Mosque during Ramadan    Saudi Arabia considers rent cap as part of major real estate reforms    Tebuk emir reviews rain response in Tayma    Messi's bodyguard banned from touchline at Inter Miami games    Screen time in bed linked to insomnia, study finds    Death toll from Myanmar earthquake rises to 2,719 as rescue efforts continue    Russia, Ukraine trade blame over new energy strikes    Putin orders Russia's largest military call-up in over a decade    Le Pen vows to appeal political ban, calls verdict a 'denial of democracy'    Haramain High-Speed Railway transports over 1.2 million passengers during Ramadan    Albania hosts MWL chief for Eid sermon at largest mosque in the Balkans    Ministry of Education forms 425 community partnerships with SR653 million impact    Saudi Transport Authority says passengers can ride for free if taxi meters are off    Mexico bans junk food in schools to fight childhood obesity epidemic    Sweet sales surge ahead of Eid as Saudi chocolate imports top 123 million kg in 2024    Saudi creatives shine at Jeddah's Fawanees Nights with art, fashion, and storytelling    T1 CEO confirms Gumayusi's return for LCK Spring after lineup shakeup    100 Thieves claim Marvel Rivals Invitational NA crown as 2025 scene heats up    Bollywood actress vindicated over boyfriend's death after media hounding    Grand Mufti rules against posting prayers and preaching in mosques on social media    King Salman prays for peace and stability for Palestinians in Ramadan message King reaffirms Saudi Arabia's commitment to serving the Two Holy Mosques and pilgrims    Bollywood star Saif Ali Khan 'out of danger' after attack at home in Mumbai    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Applying solid corporate governance practices key to beating challenges in family-owned enterprises
Published in The Saudi Gazette on 07 - 06 - 2016

Diversified family-owned companies face many challenges which threaten their transition in the future from one generation to another. Companies implement sound corporate governance policies, a system that governs the relationship between an organization's key players and its diverse spectrum of operating companies, to minimize this risk. Corporate governance practices enable companies to achieve transparency, fairness and accountability. It also plays a pivotal role in ensuring that a company's strategic goals are met.
Diversified family-owned companies have increased their business opportunities to adapt to the market's fluctuations unlike other companies. Even with these new opportunities, however, according to Anees Moumina, CEO of SEDCO Holding Group, companies continue to face challenges due to poor application of sound corporate governance practices, which can then prevent some family-owned companies from applying their transition to the next generation. Moumina further explained that diversified family-owned companies which operate in various locations around the globe are restricted by each country's laws and regulations, which also affect their overall makeup, division of ownership and legal status.
At the forefront of the challenges facing diversified family-owned companies is the development of a unified vision and a communication platform, taking into account each operating company's independency, as well as the legal structures which regulate the entry and exit of partners.
Furthermore, Moumina indicates that diversified family-owned companies require specialized administrative expertise reflecting the different sectors and locations they operate in, while abiding by the local and international laws. This creates challenges for a majority of these companies. Successful communication and synergy with some degree of flexibility between a Group and its operating companies fall within these challenges, in addition to finding a suitable framework for cooperation without imposing decisions on its operating companies or the duplication of resources. There are other challenges that exist, namely that operating companies could find themselves competing with other companies within the same Group, which can potentially harm both companies and create a negative impression about the Group.
According to Moumina, there are challenges that can't be overlooked, such as the non-optimal investment of operating companies' liquidity, and the increased risk family-owned companies face in a variety of sectors, as well as the cost associated with administering risk management for operating companies. Other challenges may raise internal questions, such as what is more important, the interests of the Group or the operating company? Is it better to utilize an operating company within the Group or to outsource an external company?
Moumina believes that family-owned companies can overcome many of these challenges if they apply solid corporate governance practices, as evidenced by SEDCO Holding Group's experience. The Group currently manages a number of operating companies with a local and global outreach. They operate in a variety of sectors, including real estate development, health care, commercial centers, technology, travel, tourism and hospitality, restaurants, education and financial investments.
Moumina further drew attention to the application of a suitable organizational structure that will ensure business sustainability for diversified companies, contingent with the operating companies given independence in addition to an effective corporate governance framework.
This can be achieved by assigning independent board members and activating a variety of committees, such as compensation and nomination committee, audit and risk committee and an investment committee. It is also essential to define the powers of the executive committee.
Focusing on auditing programs is important, Moumina intimates, in order to ensure sound processes in these companies. It is also necessary that these programs include the diversification of assets distributions according to the different geographical sectors and to sectors that are resistant to economic turbulence. With regards to resource management, the Holding company must provide support services (such as human resources, information technology, auditing, risk management, legal and finance services) and the utilization of administrative and financial experiences in the different companies/sectors. In addition, cross-selling opportunities should be created within an appropriate framework for cooperation, without imposing decisions on the operating companies. That can be activated through vertical and horizontal integration through periodic meetings, forums, and effective service agreements.
* The writer is the CEO of SEDCO Holding Group


Clic here to read the story from its source.