Corporate governance a must for family run businesses in the Middle East, says Vice-chairman of family-owned Nuqul Group

At a seminar held recently in Dubai, Ghassan Nuqul, Vice-chairman of the family-owned Nuqul Group shared his company's transition experience from a small family-managed business to a professionally-run conglomerate with the help of sound corporate governance principles.

Corporate governance can be defined as the relationship between corporate managers, directors and investors. Corporate governance requires businesses to separate ownership from management, and gives managers the freedom to effectively manage the business and realize corporate objectives, protect shareholder rights, meet legal requirements and ensure transparency.

Elaborating on the known benefits of corporate governance, Nuqul commented, "Global studies have shown that corporate governance can not only help businesses streamline operations and achieve greater profitability, they can also attract investment." Investors in emerging markets, including the Middle East are willing to pay as much as 30 percent more for shares in companies with good corporate governance, according to a recent report published by McKinsey and Company, the leading management consulting firm. The report further stated that companies incorporating even a single element of governance can expect a 10 to 12 percent boost to their market valuation.

The Nuqul Group, which was established in 1952, is a clear example of the benefits that family businesses can reap from corporate governance. The Group's strategy to outsource talent by hiring the best professionals in the business and delegating responsibility has paid off. Today, the Nuqul Group is an industry leader in several sectors, bringing together 27 regional and global companies. The company employs over 5,500 people across the Arab World, and North America.

"We, at the Nuqul Group, have made a conscious decision to delineate ownership from management by incorporating principles of corporate governance. We have adopted a 'Lead by example' model for our managers and employees, by allowing them full autonomy in day-to-day operations. We also encourage fresh ideas by maintaining a vibrant, open relationship between management and staff," he added.

"Corporate governance provides the tools for migrating traditionally run businesses into professionally managed market-driven enterprises, enhancing competitiveness in the global market. While the owners define strategy and monitor performance, we steer clear from intervening in specific matters, leaving that up to trained professionals in each field," concluded Nuqul.