Dr. Josiane Fahed -Sreih Associate Professor of Management

1. Women in Family BusinessesChamber of Commerce- Eastern Province- Saudi Arabia- October 19-20, 2011 Dr. Josiane Fahed-Sreih Associate Professor of Management Director, Institute of Family and Entrepreneurial Business Lebanese American University Middle East Coordinator for the Family Firm Institute, USA Fellow Status- Family Firm Institute- USA

2. Outline • Women in Business in general- The Diversity Issue • Women on Boards of Directors • Women as owners in their Family Businesses • Challenges of Family Businesses- Inheritance Issues/- Gender Issues • Values • Ownership/Management/Family • Recommendations

3. Women in Business in General Women are a minority in the workplace. In the US, Europe and the ME. More and more women are entering the workplace Statistically, the number is increasing year after year, However, the number of women in Leadership position, although increasing is still very limited.

4. Statistically the % of Females in the Workplace (Men 54%vs. Women46%)

5. Women Median Earnings (Men 30132 vs. Women18996)

6. Study at LAU • In a study I conducted at LAU, the average earnings of Males is higher than that of Females, however, as Females get higher educational levels, this difference gets smaller. Which basically shows that the more females get competitive, the lower the earning gap. • This study was published in the International Journal of Business and Emerging markets- Inderscience publishers.

7. Women on Boards of Directors • Women are under represented on Boards of Directors, they currently hold only 12% of Standard & Poor’s board seats. • Women either control or influence nearly all consumer purchases, so it is important to have their perspective represented on boards

8. Research suggests… • Women executives outperform their male colleagues on skills such as: • being able to motivate others, • promoting good communication, • turning out high quality work, • and being a good listener

9. Research (Cont.) • The Hagberg Group performed in depth evaluations of 425 top executives in a variety of industries and each executive was rated by approximately 25 people. • Of the 52 skills assessed, women received higher ratings than men on 42 skills, though at times the differences were small. • All in all, studies such as these make one wonder why the glass ceiling continues to hamper the progress of women in business.

10. Women as Entrepreneurs • Studies have shown that women entrepreneurs are more reliable than their male counterparts, and the UN has decided to allocate more funds to them.

11. Challenges Facing Family Businesses As related to Women

12. Family Businesses • Family Businesses are considered pillars of economic growth and of all businesses. • In the US. 80% to 90% of the businesses are family businesses • In the Middle East, this percentage gets to 98% of businesses in general • Family Businesses in general employ 78% of all new job opportunities, and 65% of all paid salaries and 60% of all job opportunities, and 50% of GDP.

13. Women in Family Businesses • More and more women play roles in family businesses • A recent study showed that more than 25% of family businesses are waiting for a women in the top management positions. • The same study conducted after 7 years showed that this percentage has gone up to 34%

14. Women in Family Businesses (Cont.) • The number of women in family businesses has doubled • Family businesses headed by women are twice as productive as those headed by men. • Those studies have also shown that women have different leadership and management styles, which shows the success of family businesses lead and owned by women.

15. Inheritance Issues According to “Shari’a” the male gets two times the share of the female. In Oriental cultures, the females are alienated from the family firm In many families, the female gets only minor assets especially in very wealthy families and they influence females to sign off on their inheritance rights In poor families , the male is the money provider and hence should inherit

16. Gender Issues in Family Businesses • The problem of the In-laws • They are alienated from the family firm, they get other assets • They are in managerial positions only in the absence of males in the family or depending on their birth order. • They are always encouraged to chose social work

17. How can Families Work Together more Effectively ?

18. Stresses Predictable Unpredictable Patterns from previous generations Communication Factors Results • Empathy • Trust • Belongingness • Shared Values • Openness • Respect • Conflict Management Skills • Problem Solving Skills FB • Family Cohesiveness • Successor Development • Estate Planning • Operational Policies • Improved Survival Probability of Business Governance Structures Family Family Family Shareholder Board of Management Meetings Councils Retreats Meetings Directors Team

19. Family Business System Ownership Family Business

20. Family Business System • Roles & Expectations • Rules • Goals • Issues • Governance Structures Ownership Family Business

21. Values

22. Values Definition and Purpose • Basic Concepts and Beliefs • Guide Decisions and Behavior • Determine Right from Wrong • Determine What Should be Done • Determine How it Should be Done • Determine Why Things are Done We take for granted that we share the same values, but do we?

23. To Transmit Values We Should • Name It: Make Explicit • Define It: Through Behavior • Tell It: Through Stories • Live It: By Daily Example

24. Reciprocal Power of Values inFamily and in Business Business Realm • Family Realm A Durable Value System that Benefits Both Realms Sincerity and Genuineness in Manifesting Values Improved Family Behavior Important and Practical Values Exercised in the Business Family Pride Strength to Business Founder(s) Beliefs Source: Family Business Values: How to Assure a Legacy of Continuity and Success, vol. 12 in the Family Business Leadership Series.

25. Accountability Adding value Collective good Valuing input and interaction (give and take Education and development Ethical conduct Focus on values and values education Fun Justice Meritocracy Some Values Often Found inSuccessful Family Businesses • Openness • Practical Realism • Risk-taking • Self-reliance • Servant leadership • Social purpose • Entrepreneurial spirit • Stewardship • Trust • Valuing stakeholders

26. Answers found by Long-lasting Family Firms to typical Challenges Family: Keeping Family Cohesion Ownership: Maintaining Committed Shareholders Business: Selecting Family Managers and Board Members

27. Answers found by Long-lasting Family Firms to typical Challenges Family: Keeping Family Cohesion Ownership: Maintaining Committed Shareholders Business: Selecting Family Managers and Board Members

28. Selecting Family Managers and Board Members • A difficult issue, which if not properly addressed will lead to conflicts • Within the family • Why her and not me? • Why their branch and not ours?… • Within the business - Risk of demotivation of non-family managers - Risk of lower business performance

29. Answers found by Families • No family in management, only on board (Haniel from Germany has been here for 100 years) • Only one family member: the CEO • A few selected family managers, not necessarily in the top jobs • All family members can work in the business in appropriate jobs (even in small jobs).

30. Practices used for the Selection of Family Managers and Board Members • Family elders search for them and ask them to join • A committee advises family members on their careers and evaluates those who wish to join the business (for example: an HR specialist, a family member, a non-family manager) • Internships are encouraged

31. Selection of Family Members: Examples of Pre-requisites • Graduate Studies • Outside Experience • Outside promotion for certain jobs

32. Practices used for Careers of Family Members • Same criteria as non-family members. • Have a Good Mentor (boss). • Evaluation by non-family members on the board. • Career committee • And of course a retirement age.

33. Answers found by Long-Lasting Family Firms to Typical Challenges Family: Keeping Family Cohesion Ownership: Maintaining Committed Shareholders Business: Selecting Family Managers and Board Members

34. How to Maintain Committed Shareholders • Unhappy shareholders can sell their shares to a third party, ultimately leading to the sale of the family business • Keeping shareholders happy is an important task for any business leader, and of course for family business leaders

35. Practices Used to Maintain Committed Shareholders • Information • Through holding general assemblies • Through providing a constant flow of information • Financial Care • Paying out dividends regularly • Offering liquidity mechanisms (market for shares) • When shareholders cannot get out, they are looking for ways to get out • So it is better to find a mechanism to sell shares • Diversification of Wealth through a family office (also brings services to shareholders)

36. More Practices to maintain Committed Shareholders • Training • Finance • Governance • Family Business Dynamics • Plant Visits, meeting with key managers • Introductory weekend for future shareholders • Family Retreats and Family Events

37. Answers found by Long-lasting family firms to typical Challenges Family: Keeping Family Cohesion Business: Selecting Family Managers and Board Members Ownership: Maintaining Committed Shareholders

38. Keeping Family Cohesion • The family element brings an element of over performance to businesses (several studies outlined this over performance to stock market companies) • However, when families are not well organized, or when cohesion is lost, they stop bringing value to the business

39. Practices used to keep Family Cohesion • Organizing Family Meetings • 2 days including a plant visit, a party, a business update, presentations by younger family members on their own businesses • A week-end mixing work in plenary sessions, in small groups, and team-building games • A memorable trip every three years • Formalizing the “Rules of the Game” or building Family Policies • Develop rules for ownership, management, governance • Develop code of conduct for family members • Develop conflict resolution procedures for handling conflict in the family

40. Creating Family Cohesion • Reflecting on the Family Values and History • Setting up a philanthropic foundation • Redefining the relationship between the family and the Business • Using a FairProcess in all decision making

41. Go Through the Process • Let the Process be fair- The Process is important in solving family business issues • Let them know the rule of the game ahead of time • Manage their expectations • Create enlightened owners • Inform Family Members permanently • Separate between ownership and management • Establish an exit policy

42. Recommendation • Nothing is given, it should be earned • You can work as a pioneer in your family and your family business • The sky is the limit!!

43. Thank you for your attention Contact Details: • Dr. Josiane Fahed-Sreih jsreih@lau.edu.lb cpi@cyberia.net.lb; • Mobile: 00 961 3 411 811