Gulf-based businesses need to be more transparent, open to change and allow staff to grow, forum told

Panelists at the Top CEO 2018 conference said Gulf businesses needed to learn to adapt (Ghazi Mehdi)
Updated 12 April 2018

Gulf-based businesses need to be more transparent, open to change and allow staff to grow, forum told

  • Businesses in the region need to learn to be more transparent, trusting of staff and open to change, forum told
  • Research found that the need of people to be able to be honest with their bosses outweighed their need to be technically capable

JEDDAH: There is a plentiful supply of big businesses and mega projects in the region, but they are often hindered by a lack of accountability and transparency, poor communication and an unwillingness to adapt to change, delegates were told at the Top CEO Conference.

But the problems that often impede business in the region are not just with the management, the conference at the Bay La Sun Hotel in King Abdullah Economic City heard.

There is also a reluctance among individuals lower down the ranks to ask questions, or come forward and say “I don’t know,” or admit to having made a mistake.

Miguel Sousa Lobo, a professor in decision sciences, currently based in Abu Dhabi, said that a recent Google study found that influences over an individual’s performance were not just about their ability.

“They (Google) were surprised to find that psychological safety was more important factor for their performance than the technical skills,” Lobo explained.

Staff need to feel confident, he said, to be able to come forward when they needed support without fearing repercussions.

Having the right people is key

In 2009 Iyad Malas was brought in as the CEO of the Majid Al-Futaim group, which has a number of shopping malls in the Gulf and also holds the franchise for Carrefour, after the financial crisis.

He remained with the company until April 2015. He is now a partner at the equity firm Gateway Partners.

For him the key to success was to think strategically, assess the priorities and admit there are problems.

“A big problem that big companies have,” Malas said, “is that they are in self-denial.”

He said managers needed to look at the grass roots of the company, reassess the team and exploit the opportunities that came with the crisis.

“Execution is about having the right people.” Malas added. 

The key to good management, he said, was enabling staff to own tasks.

“(Managers need to) delegate the responsibilities to the people at a lower level of the company who can make the decision,” Malas explained. “Because if you want to grow, you can’t have everything going up.” 

But when the company that is being expected to make these changes is family owned, then convincing the managers/owners to adapt to change becomes the challenge, Malas explained.

Where the owner is involved, Malas said, there was often a reluctance to accept people from different backgrounds into the organization. They own the business and risk making the job of running the business personal.

“You need to professionalize the business.” He said 

One-size doesn't fit all - local knowledge matters

And with bigger companies, that have multiple branches, there is also a need for the top end management to allow each branch’s managers to take control.

“The larger the organization, the larger is the responsibility and accountability on employees in senior and junior positions,” Malas said, adding: “Each store manager operates as the owner of that store.”

He said the locally-based managers would have a greater understanding of the needs of their customers – adding that “the consumers are different in each city.”

And it was this local knowledge, he said, that placed more responsibility on the people on the ground.

Of course, the success of a business is not based on the people alone. Companies need to be flexible in their approach.

This means that the initial vision for a project, however big or small, is not necessarily what comes into being when the project is complete.

At the Top CEO 2018 conference Fahd Al-Rasheed, CEO and managing director of the King Abdullah Economic City project, admitted that the initial plan for the city had changed dramatically.

Mega projects can only succeed if they adapt

He told delegates during his opening remarks of the day-long conference, that there were critics who had opposed the decision to allocate vast plots of the site to arts, leisure and entertainment.

“Mega projects are based on a master plan,” Al-Rasheed said. “Master plans must be flexible, we changed it (the King Abdullah Economic City project) four times during the last 12 years to adapt to the changes we have seen socially and economically.”

And he added: “For example, since we are in an age of entertainment, we took 10 million square meters out of the masterplan and designed an integrated a theme park-based development.”

The Gulf region has an abundance of mega-projects. But Al-Rasheed said several problems often hindered managing such projects.

He said the costs were often underestimated, while the perceived benefits were oversold and there was often a shortfall in the efforts at the design phase, as well as a lack of organization.

“20 percent of the cost can be saved buy spending more time in the design phase,” he said. 

The discussion concluded that business in the region could be improved if they gave more focus on accountability, managed expectations, were more transparent and learned to listen more.

Davos 2019: Mideast CEOs turn gloomy on global economy, PwC study finds

Political and business leaders are gathering in the mountain resort of Davos in Switzerland this week. (AP)
Updated 22 January 2019

Davos 2019: Mideast CEOs turn gloomy on global economy, PwC study finds

  • The loss of confidence from regional CEOs was the second biggest fall in the world, beaten only by North American bosses, whose optimism fell from 63 percent to 37 percent

DAVOS: Chief executives in the Middle East are much less confident on prospects for the global economy than they were in 2018, according to a report from accounting and consulting group PwC.

The firm’s annual survey of top bosses’ attitudes, traditionally launched on the eve of the World Economic Forum Annual Meeting in Davos, showed a big drop in the number of CEOs from the region who believe global economic growth will improve in the next 12 months.

Only 28 percent of Middle East business leaders now see an improvement in economic prospects, compared with 52 percent this time last year. Bob Moritz, global chairman of PwC, said: “The prevailing sentiment this year is one of caution in the face of increasing uncertainty.”

The loss of confidence from regional CEOs was the second biggest fall in the world, beaten only by North American bosses, whose optimism fell from 63 percent to 37 percent.

PwC said that the Middle East decline was due to “increased regional economic uncertainty,” while the North American fall was “likely due to the fading of fiscal stimulus and emerging trade tensions.”

The results of the PwC poll - conducted among 1,300 business leaders around the world - reflected an overall decline in business confidence in each region surveyed. Last year, only 5 percent of CEOs said that global economic growth would decline. For 2019, this has jumped to nearly 30 percent.

Globally, confidence in CEOs’ own companies to grow revenue this year has also fallen sharply. Moritz said: “With the rise in trade tension and protectionism it stands to reason that confidence is waning.”

The US retains its lead as the top market for growth among international investors, but many CEOs are turning to other markets, or investing at home. The ongoing trade conflict between the US and China has resulted in a sharp decline in the number of Chinese bosses chosing the US as a market for growth, down from 59 percent last year to only 17 percent for 2019.

Globally, CEOs are still more worried about the threat of over-regulation of their businesses - named as the top concern again in 2019 - but uncertainty about policy has become a major issue too.

In the Middle East, the main concern is geopolitical uncertainty, followed by the threat of cyberattack, policy uncertainty and the speed of technological change.