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A Year of Change: A Message from the Chairman - YBA Kanoo

April 11, 2019

Justover a year of being the Group Chairman of Yusuf bin Ahmed Kanoo Group, I am often asked about the new direction the group is taking and its strategy from members of the media and the business community, and I wanted to take this opportunity to inform you about the new organisation that we have created and how it is benefiting our business for the very first time.

Over the last 4 years we had appointed a non-Family Group CEO to manage the various operations of the group. He had implemented a centralised ‘head-office’ structure without any family members in the business operations. Family members were only involved on the Board level.

However, under this structure the Company did not perform as planned. As a board we were particularly concerned with the shifting economic tides in the region specially with oil prices at the time and we were increasing our overhead costs.

After much deliberation and consultation with members of the family, two special board meetings were held, and the board agreed to accept my outline proposals for a new structure that included Family members in the business.

I worked with Deputy Chairman Fawzi Ahmed Kanoo and a select team over the course of 3 and a half months to design the details of the new structure and wrote new operating procedures, this included a new delegation of authority matrix. This new structure with all the details was brought to the board in June 2018 and was approved.

In the new structure the Board has appointed Executive Committees to oversee each of the Business Divisions. The Presidents and Vice Presidents of these committees are Family Members, while the rest come from the Senior Group Management with a Divisional CEO to run each of the operations. we also set out a longer-term goal, to become “IPO ready” and transition to an investment-based company rather than a direct operator. For our customers, our business lines will be the same, however with improving our internal workings we aim to surpass expectations and become better partners.

The Presidents and Vice Presidents are directed to increased shareholder value by working with the Divisional CEOs to improve both the Balance Sheet and P&L of each Division.

The Board also appointed a new Group CEO to oversee the Group portfolio of companies and build a bridge between the Family and the Management.

I do not like putting all the control the hands of one person, I need to have checks and balances. Therefore, the Group CFO and the Group General Counsel report to the Board although they still work closely with the Group CEO. The Head of Audit reports to the Board via the Audit Committee, which is headed by a non-Family member.

We issued a document describing the delegation of authority from the Board of Directors to the Executive Committees. It empowers the Presidents, Vice Presidents and the Management, although I have emphasised that the delegation is to the Executive Committee and not to an individual. This is an important aspect of risk management and control.

I think I know what the Company needs due to over 40 years in leadership roles within the organisation, but I am always happy to get feedback from other experiences especially as the new structure was a major change for the organisation. Therefore, after we had made a final draft of our structure, I sent it to a specialist family business consultant to give me their observations and comments. We incorporated many of their comments and this helped us to make the needed improvements.

Once the structure was approved by the Board, I worked on selecting individuals for positions to which they would be suited and for which they had both the skills and the interest. I wanted to appoint family members to positions where they could demonstrate their skills and be productive. This way they would also help the Company grow. Working Family members receive a salary and bonuses which are linked to the performance of the business in which they are working in. This is a fair reward for their success and hard work, and it is encouraging them to be committed to the success of the Company.

We have now implemented the structure and I have given everybody three months to get the new structure in order. During this period everything has gone very well. I can see that Family members are happy and really committed to their work. They are actively working with the management to operate the business. We have just passed this point and I feel we have made a very good start.

Over the next 3 months we will be looking again more closely to how efficiently our business is operating. I want to see if we have missed anything out or if there is something we could do better. I will combine my observations with the comments from everyone working in the business and if required, I will make changes to the structure and the operating procedures to improve the way we work.

After nine months I will be looking to see what new developments have been started and I expect to see the beginnings of new businesses that have been introduced and improvements in the existing activities.

Finally, after 12 months we will look at the performance of individual Family Members in the positions to which we have appointed them. I may need to make changes and if necessary, redirect them to other positions where they are able to be more productive and work better.

I am now happy to see, that in 130 years of the group’s history, we are witnessing the most collaborative effort where everyone in the company is working together cooperatively as one unit. For such a large family owned organisation with seven operating divisions in more than five countries it is not usual to see work flowing in this way. I am not aware of any others who have structured themselves and have achieved the results that we are seeing in our organisation.

After so many years and many family generations I’m very pleased to see that all our family members are engaged positively in the business and happy. This is the new recipe for our success over the coming years and I hope future results will position us as a role model and a good case study for future development in family businesses.

Khalid Mohamed Kanoo
Group Chairman – Yusuf bin Ahmed Kanoo Group