Family Matters: Governance at the Zamil Group

This case focuses on a large Saudi Arabian industrial conglomerate and family business Zamil Group’s corporate and family governance journey. The 12 sons of the founder led and grew the group successfully after taking over from their father in 1961. The secret to their success was to arrive at all decisions with a consensus, although each had their own approach to dealing with issues. In the mid-1990s, they hired world-class consultants and created manuals and guidelines for governing the business and continuing the growth of the Group’s assets. They were the model for running a family business in Saudi Arabia. However, the increasing number of family members in the group—84 third-generation and 162 fourth-generation members and the upcoming fifth generation—created challenges going forward. They wanted to ensure that the governance principles they had created would evolve and develop in line with the changing dynamics. The upcoming generations did not have jobs waiting for them in the family business simply because they were members of the Zamil family, and not all of them were motivated to remain invested in the businesses. The second-generation and senior members of the third-generation wanted to make sure that they balanced the needs of the business and those of individual family members. They sought to put mechanisms in place that would keep the shares of the business in the family so as to avoid diluting the family’s ownership as they diversified the asset portfolio, addressed diverse risks, and catered to the consumption goals of the next generation. This might mean that the Group would eventually move from being operators to becoming financial investors.