Family Business – a Blessing or a Curse?

By: Mariam Salah

@maryamfsalah

The period between graduation and employment is a difficult one as fresh graduates have difficult career choices to make, with some having to weigh the pros and cons of working for a family-owned business.

To shed light on how to assess the viability of family employment, AUC’s School of Business organized a lecture hosted by Nabil Diab, adjunct faculty and chief operations officer of PricewaterhouseCoopers (PwC), at the Campus Center.

Titled “Building a Sustainable Family Business,” the lecture explored the future of family-owned business because these play a significant role in Middle East markets.

“Eighty percent of the workforce in the Middle East is employed by family-owned businesses (FOBs),” said Diab quoting PwC survey data. However, most of the family businesses do not even survive to the second generation.

“Only 30 percent of family businesses continue to the second generation,” added Diab.

He also pointed out that only one percent of said businesses manages to survive to the fifth generation, according to the Family Business Institute’s data.

One of the main challenges family owned businesses face is the generational transformation which occurs in the absence of set formal plans and structure.

This in turn leads to familial conflict.

“Succession is a pressing topic and a challenge now. Who’s going to be running the business after the current management [is a pertinent question],” said Diab.

He also added that the issue of succession has to be tackled very early on in order to avoid internal conflict which could adversely affect the business as a whole.

Assistant Professor of Business and event organizer Ashraf Sheta agreed that FOBs can face so many challenges that most of them don’t manage to make it to the third and fourth generations.

“It is very difficult to fix the problems of family businesses, which is why the percentage of family businesses that last until the fourth generation are only four percent,” added Sheta.

“One of the problems is that the reception of non-family members or potential talents toward family business is usually negative because it is difficult for them to reach top management,” Sheta said.

Recent AUC graduates have told The Caravan that they are discouraged from pursuing FOB employment because of issues of succession, family values and internal conflicts in the business.

“I am not passionate about my family’s business or what it does. I am also afraid of being under qualified and running it into bankruptcy,” said Ahmed Tolba, 25, an AUC Mechanical Engineering graduate.

“I will have to work there eventually and take over, since I don’t want my father’s hard work to go to waste,” he added.

But Sheta says that a FOB career path can have some advantages, and many of the upcoming graduates should at least consider a career in their family business for different reasons.

“It depends on the business. If the family business is mainly institutional, has some sort of governance, has a clear career ladder and you can someday make it as a CEO or General Manager, then go ahead,” Sheta says.

Some students, like Business senior Zeina El Kawass, think an FOB could offer the bet opportuning for a rewarding career.

“I have to do my part and my role in sustaining this business as it has been sustaining me. It’s very promising, and I will be recognized,” she said.

Non-family members who are thinking of a career in an FOB, however, should consider a different set of factors.

“If it isn’t clear and there isn’t a clear system, I would recommend a normal corporate business or a start-up.”