Diversity in boardrooms through a greater presence of women is essential for improving the quality of corporate governance in the region, said global industry experts at the ongoing third 'Arab Women Leadership Forum' in Dubai.

These experts also agreed over three panel discussions that women need to be empowered and their contributions recognized in family-owned, public as well as corporate enterprises in order for the next generation to take their rightful places on boards across the region.

Speaking under the topic “Families and Boards – Nurturing the Next Generation of Business Leadership”, in the first session on the second day of the Arab Women Leadership Forum'  today, eminent business personalities felt that trust in the capabilities of women was important for them to be confident enough to make the difference that they are inherently capable of.

The panel comprised Mohi-Din Bin Hendi, the president and chairman of the Board, Bin Hendi Enterprises, Dubai; May Makhzoumi, the president of the Makhzoumi Foundation and director of Future Pipe Industries, Lebanon; Leonardo Peklar, the founder, International Chairmen's Forum, London, UK; and Sarah Al Ayed, the co-founder & partner of TRACCS, Jeddah, Saudi Arabia.

Bin Hendi, who has his daughters on the board of his eponymous family enterprise, said trust was one of the most important aspects of any business relationship and as a businessman it was best reposed in family members.

“However, it is very important that a family member that you put in a vital position, such as on your board, is capable of leading your business forward,” he added. “It is not an emotional decision but based on the talent available in the family while ensuring that a family member is free not to join the business should he or she have some other calling.”

He pointed out that women in the UAE were just as capable as men of leading a business given the high standards of education now available in the country, but it was always advisable to bring in independent experts to advise family boards.  

Makhzoumi said women in business families were mainly simple shareholders, sometime not even registered, and rarely active in management.

"A family office was important, she said, to groom the younger generation and to teach them about both the business and the values of the family, and to identify the leaders among the children, whether boys or girls, so that they could be adequately trained to take over the administration of the business," remarked Makhzoumi.

Peklar affirmed the point by adding that family governance is the precursor of corporate governance in family-owned enterprises and that the values of the family set the values of the board of its business.

Sharing her own experience of starting her public relations firm, Al Ayed said the initial idea was just to have fun while being entrepreneurial. “But we grew fast and soon realized that we were lacking certain things such as succession planning and the answer to the question of what happens next and who does what,” she said, adding that when an outside investor came in and the company grew too large to run as a family enterprise, she stepped down from the managing director’s position while retaining her seat on the board – a transition that more family-owned businesses needed to make.

The panelists agreed that the next generation of leaders in a family-owned business needed to be groomed in their education and training, as well as by providing them experience, regardless of gender. Internal empowerment or internal coaching in the family was also equally important, which was how women could gain confidence and be accepted as equals.

The panelists felt the traditional reluctance of the region to push their daughters into family businesses had largely been overcome through education and UAE women were by and large emancipated while cultural barriers had been overcome.

Peklar concluded the session with a summation of three important paradigms. The first was that it was not enough to be born into a business family; whether male or female, a young person needed to educate and prove themselves to be a responsible business owner.

Secondly, family businesses needed to adopt a corporate and family constitution as early as possible, which would not only govern technical matters as to how profits and dividends were shared but also how to have fun collectively. And the third was to create an atmosphere where the even the women in the family could ask questions freely.

Earlier, the second session of the opening day yesterday saw a panel debating the theme “State of Board Governance and the Imperative for Board Diversity”.

The four-member panel unanimously felt that introducing a diverse composition into organisationsin general and boards in particular, would lead to a variety of skillssets being developed and would give rise to various management styles that would prepare companies for effective change management in a business environment that was constantly in flux.

The panel was moderated by Peklar along with Maryam Al Suwaidi, the deputy CEO for Licensing,Supervision & Enforcement, Securities & Commodities Authority, UAE; Mak Yuen Teen, the associate professor and former founding director of Corporate Governance and Financial Reporting Centre, NUS Business School, Singapore; Nick Nadal, the head of Hawkamah Institute for Corporate Governance & Mudara Institute of Directors, Dubai, UAE; and Latifa Al Bimany, the corporate governance specialist at the Oman Centre for Corporate Governance.-TradeArabia News Service