MB Executive Partners conducted a study on CFO leadership in family owned conglomerates in the GCC. The document discusses the unique role of CFOs in FOCs, who often report directly to owners in the absence of a CEO. It notes that CFOs have had to adapt to changing business needs during the economic crisis. The study examines challenges CFOs face, such as a lack of commercial experience needed for retail businesses. It also finds that CFOs with multi-region experience navigate multi-industry FOCs more easily. However, career progression for CFOs is difficult within FOCs where strong owner ties exist.

1. CFO Leadership Study
in Family Owned Conglomerates
in the GCC
Prepared by Mustapha Bouterid
Managing Director
MB Executive Partners
Mob+971502259936
Email mb@mbexecutivepartners.com

2. About MB Executive Partners
MB Executive Partners is a premier Executive Search firm with a particular focus
on the GCC and North Africa. MB Executive Partners differentiates itself through
delivering high quality research, systematically studying target markets – and
sharing strategic information with its clients, accessing talent pools in geographic
areas that are not explored by its competitors, and a turn around time of 4-5
weeks that has become a market example.
This document is strictly for the intent of its recipient. Copy or circulation is not
allowed without prior authorization of MB Executive Partners. © MB Executive
Partners 2012.
For more information on MB Executive Partners, please visit
www.mbexecutivepartners.com
© MB Executive Partners 2

3. Executive Summary
In GCC countries, Chief Financial Officers occupy a very unique place on the
organizational chart of Family Owned Conglomerates. In most FOC we have
studied, CFO's enjoy a direct reporting line to the owners. The absence of a Chief
Executive Officer in a great number of those Family Groups have created an
opportunity for CFO's to develop new skill sets making their job description
overlap significantly the one of a full fledged Chief Executive Officer.
With new strategic and operational challenges arising with the global economic
crisis, CFO's have been expected to rapidly adapt to dramatically evolving
business agendas. With a GDP Growth of about 3.9%* in 2012, GCC based
Family Owned Conglomerates are still pursuing an aggressive portfolio
rationalization which focuses on selling non strategic assets accumulated during
the 2004-2008 boom, aligning their growth strategies back with their historic
businesses, and hiring managers with a proven industry track record.
© MB Executive Partners 3

4. The Retail situation
Looking at experience in the eye
Main challenges under the current business climate
Leveraging on multi-region experience
Career CFO versus Family Owned Conglomerate
Conclusion
Table of Contents
© MB Executive Partners 4

5. In the last ten years, Family Owned Conglomerates have been active on widening
their industrial footprint. Developing from mid sized Construction & Engineering
companies, into Retail, Property Development, and other trading activities. This
expansion and diversification has caused for aggressive investments, purchasing
of expensive franchise rights, and binding into long term lease agreements with
commercial realtors. On a different note, the confidence crisis that has hit Real
Estate Development did not affect the hospitality sector, which has proven to be
particularly healthy with occupancy rates reaching a stellar 86%* in early 2012.
With retail pockets becoming full fledged networks, complex strategic and
operational requirements need to be addressed and supported. From the early
days, Family Owned Conglomerates did not see fit to have Managers with a Retail
background, capable of turning around a network, but rather have Finance
Directors with solid accounting experience who would be capable of interacting
with external auditors as well as financing institutions. Since 2008, Owners have
found themselves with distressed retail businesses who could not get the support
from CFO's who lacked a commercial acumen.
The Retail Situation
© MB Executive Partners 5

6. The Retail situation
Looking at experience in the eye
Main challenges under the current business climate
Leveraging on multi-region experience
Career CFO versus Family Owned Conglomerate
Conclusion
© MB Executive Partners 6

7. The vast majority of the CFO's from our sample come from a Financial Services
Background. This demonstrates the prevalence of personality and gravitas over
pure technical knowledge when a hiring decision is made. Out of the 20+ CFO's
we have spoken to, only 1/3 have been in a business orientated role e.g. General
Manager, or Managing Director etc. When asked whether or not an experience in
a Leadership position with a commercial orientation had better helped them
capture the business, the totality of the participants answered by the positive.
Looking at experience in the eye
Financial
Services 31%
Hospitality 22%
Oil & Gas 10%
Construction
13%
Retail 6%
Various 18%
Experience in a
Business Capacity 33%
Solely Accounting and/or
Finance Experience 67%
© MB Executive Partners 7

8. The Retail situation
Looking at experience in the eye
Main challenges under the current business climate
Leveraging on multi-region experience
Career CFO versus Family Owned Conglomerate
Conclusion
© MB Executive Partners 8

9. When asked about how much their finance strategy
translated into a holistic model participating in the
increase of shareholders value, answers we received
were utterly different from one interviewee to the other.
When producing the annual road map for the finance
function, CFO's include elements of strategy that go
beyond the traditional scope of their function. Given that
most of our sample family owned conglomerates do not
include a CEO on their organizational chart, CFO's have
to create value in areas that are not only financial but
also operational.
This allows many CFO's to broaden their experience to
be de facto acting CEO's but also puts them in a
situation where the frontier of their role to the one of a
CEO is so thin, that this makes it virtually impossible for
them to justify to their board why they should be
appointed actual CEO.
“CFO's have to
create value in
areas that are not
only financial but
also operational.”
Main challenges under the
current business climate
© MB Executive Partners 9

10. The Retail situation
Looking at experience in the eye
Main challenges under the current business climate
Leveraging on multi-region experience
Career CFO versus Family Owned Conglomerate
Conclusion
© MB Executive Partners 10

11. When asked about how much their finance strategy
translated into a holistic model participating in the
increase of shareholders value, answers we received
were utterly different from one interviewee to the other.
When producing the annual road map for the finance
function, CFO's include elements of strategy that go
beyond the traditional scope of their function. Given that
most of our sample family owned conglomerates do not
include a CEO on their organizational chart, CFO's have
to create value in areas that are not only financial but
also operational.
This allows many CFO's to broaden their experience to
be de facto acting CEO's but also puts them in a
situation where the frontier of their role to the one of a
CEO is so thin, that this makes it virtually impossible for
them to justify to their board why they should be
appointed actual CEO.
“CFO's who have
acquired multi-
region experience
through working
with multinational
companies, find it
much easier to
navigate across
businesses.”
Leveraging on multi-region experience
© MB Executive Partners 11

12. Leveraging on multi-region experience
CFO's who have acquired multi region experience through working with
multinational companies, find it much easier to navigate across businesses within
the same family group and therefore, to make an upward move to a CEO position.
We spoke with one of our interviewees, a CFO currently serving a UAE Family
Owned Conglomerate with interests in Construction, Financial Services, and
Automotive. He admitted that during the first three years of his five years tenure,
his work was mostly focused on designing and executing a transformation plan of
the Finance function across the entire group.
From the fourth year onwards, he allocated time mostly in reviewing potential
acquisitions that were submitted to him by the owners, demonstrating a gap
between the company's priorities and a financial rational that he was energetically
advocating to the board.
The interviewee recognized that the presence of a professional CEO could have
facilitated his ideas to be translated into actionable items for the benefit of the
Family Group.
© MB Executive Partners 12

13. The Retail situation
Looking at experience in the eye
Main challenges under the current business climate
Leveraging on multi-region experience
Career CFO versus Family Owned Conglomerate
Conclusion
© MB Executive Partners 13

14. Career CFO versus Family
Owned Conglomerates
Has clear understanding of promotion prospects
Followed a course or curicular training in the last 36 months
Input translates into decisions made by the Owners
Promoted in the last 36 months
0 10 20 30 40 50 60 70 80 90 100
58%
45%
14%
39%
© MB Executive Partners 14

15. Career CFO versus Family
Owned Conglomerates
At MB Executive Partners, we consider it critical to understand how our
interviewees perceive the potential to progress from a career standpoint with their
current employer. The last chart has brought a number of interesting facts to our
attention:
Only 14% of the CFO's in our interviewee pool have been promoted in the last 36
months. This demonstrates the strong ties owners have with their finance leaders
– and also the difficulty for these to make an upward move where matters of
money and the leadership of the finance function need to be transferred to a
different person.
45% of our interviewees have followed a course or a curricular training in the last
three years. This percentage is relatively important as it reflects the attachment of
family groups to their finance leaders, and the need for them to regularly widen
their knowledge base.
© MB Executive Partners 15

16. Out of the 20+ interviewees from our pool, only 58%
have a clear understanding of their promotion
prospects. Our interviewees have admitted that
promotion prospects are not discussed as often as they
wish, which encourages them to be tempted by a lateral
move mostly for the need to change “habits” e.g.
moving to a different industry.
Interviewees find it challenging to see their input
translate into actionable business items on the Owners
agenda. A collegial decision power, mostly centralized in
the hands of the Owners led to a 39% response from
our pool of CFO's to recognize their input being taken
into account when a major decision is to be taken by the
Owners.
“Interviewees find it
challenging to see
their input translate
into actionable
business items on
the Owners
agenda.”
Career CFO versus Family
Owned Conglomerates
© MB Executive Partners 16

17. All the previously mentioned items have led us to
understand that:
Seeing a potential CEO in a CFO candidate is a major
advantage to any Family Owned Conglomerate which is
looking at grooming a talent who can be ready to take
on the top job in the future.
The most balanced CFO's from our panel have found a
significant higher degree of comfort working in Family
Owned Conglomerate when having themselves worked
for one or several of the industries present in the FOG's
current portfolio.
Career prospects should be discussed during the first
interviews, especially at senior level – this allows for a
fair assessment of the mid to long term partnership
between the future employee and its potential employer.
“Career prospects
should be
discussed during
the first interviews,
especially at senior
level.”
Career CFO versus Family
Owned Conglomerates
© MB Executive Partners 17

18. The Retail situation
Looking at experience in the eye
Main challenges under the current business climate
Leveraging on multi-region experience
Career CFO versus Family Owned Conglomerate
Conclusion
© MB Executive Partners 18

19. The rich discussions we have had with our pool of interviewees, will lead the
reader to understand how importantly CFO's working for a diversified Family
Owned Conglomerate need to have gathered experience across industries, in
order to navigate through various verticals with a certain degree of comfort. This is
emphasized by a need for industry knowledge that can be rapidly rolled out upon
joining a Family Group with distressed assets.
We also advise both our Clients and Talents to gauge the career path that is
offered to a CFO, and assess its acceptance by both parties. Also, this study has
demonstrated the prevalence of industry experience which allows Family Owned
Conglomerates to hire Finance Leaders who can rapidly be immersed in turn
around situations and apply best practices on an industry-to-industry basis.
In a region where economy remains exceptionally vibrant, hiring the right talent
will not only contribute to a prosperous development of the Family Owned
Conglomerates, but also ensure that businesses are in line with modern best
practices, which will in turn protect the legacy to be transmitted to future
generations.
Conclusion
© MB Executive Partners 19

20. Mustapha Bouterid
Managing Director
MB Executive Partners
Sheikh Zayed Road
P.O. Box 121206
Dubai
United Arab Emirates
t +97144424955
f +97144424955
m +971502259936
e mb@mbexecutivepartners.com
w www.mbexecutivepartners.com