GCC Family Firms hold the secret to greater profits

New research from Oxford Strategic Consulting (OSC) finds that GCC family firms demonstrate key behaviours that can boost profits by 30%. According to the research, family firms tend to encourage more loyalty, productivity and “active enthusiasm” from their staff than non-family firms. These factors, classed as Employee Engagement, can result in a 36% increase in overall performance, found recent research.

Focusing on employee engagement will not only improve profits but also better prepare organisations for future challenges. Since GCC family firms represent 75% of the private sector economy, these organisations will be placed at the forefront of economic challenges in 2015. Therefore, Oxford Strategic Consulting (OSC) has recommended three high-impact steps that government and business leaders can take to ensure that these vital organisations maximize their contribution to strategic country goals.

First, Oxford Strategic Consulting recommends that family business leaders should view employee engagement as a key priority. Investing in a more loyal and enthusiastic staff can achieve huge returns for relatively low costs, which can help to create a more stable economic future for the GCC. For example, better employee engagement can result in a 40% increase in customer satisfaction, according to recent research. Moreover, research suggests firms with the highest engagement scores have a revenue stream on average 4.5 times higher than those with the lowest.

Second, GCC governments should support and encourage family firms as strategic assets. Amid a 50% reduction in the price of oil, the region’s human resources appear to be the most viable investment option to create a stable economic future. Like oil and gas, family firms are ubiquitous across the GCC. More importantly, the unique strengths of these family firms represent proven advantages for the region. For example, nearly 50% of these family firms operate in more than 5 sectors, which means that they spread risk, are more resilient to downturns in one sector, and can rapidly move into growth markets.

Third, family firms themselves must ensure that their future generations of leaders are developed to the highest level – which doesn’t necessarily mean adopting US or UK styles of leadership. And both government and business leaders should replicate the success of family firms in non-family businesses across the region – as family firms outperform non-family firms by an average of 15%. In the GCC, one of the reasons for this success relates to a distinctive leadership style that OSC terms the Gulf Arab Leadership Style. OSC research found that this leadership style focuses on relationships and loyalty, which can positively impact employee engagement, productivity and retention.

The leading GCC family firms should be recognized and studied as national models of excellence by governments. Business leaders, on the other hand, must invest internally by creating great leaders, in line with the Gulf Leadership Style, and more engaged employees. Finally, proven successes in family firms must be replicated in non-family firms across the region. The resulting improvements to the bottom line will not only boost business performance but also play a key role in achieving regional growth.