Leading in the Middle East

STRATEGY
corporate governance
corporate governance
Leading in
the Middle East
Focusing on best practices and smart growth, Alghanim Industries
leads growth in the region with its progressive approach to business
With a respected commercial history dating
back to the late 19th century, the innovative
strategies and practices of three generations
of the Alghanim family have built Alghanim
Industries into the diversified, multi-national
conglomerate that it is today.
As early as the 1890s, the Alghanim family
was actively involved in the country’s shipping and trading sectors, playing a key part
in Kuwait’s commercial development. This
leadership role was evident when the Emir
of Kuwait appointed Ahmed M. Alghanim,
and later his son Sir Yusuf A. Alghanim, to
officially represent Kuwait in its successful efforts to bring the Anglo-Persian Oil Company
(later British Petroleum) to the country in the
1920s and 1930s.
The family’s commercial pursuits continued to grow and diversify with its expansion
into construction, automobiles, packaged
foods, and other local support services. A key
step in the company’s evolution was its role in
introducing American-made vehicles into Kuwait in the late 1940s through its association
with General Motors (GM). From these beginnings, Alghanim Industries has grown into
one of the largest, privately-owned companies
in the Gulf region. The company now operates across a broad spectrum of industries,
including advertising, automotive, consumer
credit, engineering, fast-moving consumer
goods, insurance, manufacturing of insulation
and pre-engineered building structures, office automation, electronics and home-related
retailing, shipping services, talent development and travel.
Employing over 12,000 employees worldwide, Alghanim Industries is committed to
maintaining world-class standards. A multinational business with operations in forty
countries, it is a multi-billion dollar conglomerate with more than thirty businesses. The
company has a strong presence in the Middle
East, India and Turkey, with operations also
extending into Eastern Europe, Africa, East
and Southeast Asia. Keeping an eye on everevolving market trends, Alghanim Industries
continually seeks smart growth opportunities
in its core businesses as well as in new and
complementary business sectors.
as General Electric, General Motors, Tyco International and Goodyear. The next level of
senior management hails from over fifty different countries, bringing impressive levels of
expertise and diversity to the company.
This talented group of leaders has fostered
a modern business culture and management
philosophy within the company. This culture
is based on a set of core values, including
straight-talking, customer-centricity, employees as core assets, diversity and respect, empowerment, meritocracy and teamwork.
These values are embraced by the company’s owners, the management team and
its employees at all levels. With this culture
in place, it is no surprise that Alghanim Industries has been recognised as one of Hewitt
Associates’ Best Employers in the Middle East
and an Asia’s Best Employer Brand.
framework to ensure the integrity and consistency of financial reporting, in full compliance
with International Financial Reporting Standards (IFRS). Concurrently, the company voluntarily increased its disclosure and reporting
to its lenders, which was publicly recognised
by key bankers in the region. This provided
yet another clear signal to the market that
Alghanim Industries was a regional leader in
adopting best practices.
In 2009, a strategic initiative was launched
to significantly strengthen the company’s internal controls. Over the past two years, over
700 key control processes have been identified,
documented and successfully tested. To support this effort, Alghanim Industries was one
of the first companies in the region to imple-
DOING THE RIGHT THING
An X-cite by Alghanim Electronics store. X-cite is the largest consumer electronics retailer in Kuwait and the Middle East
A CULTURE BUILT TO LAST
Alghanim Industries’ progressive attitude
and performance-driven culture have long
been among its defining characteristics. In the
1970s, Yusuf’s son, Sir Kutayba Y. Alghanim,
envisioned and implemented a modern, international-style management structure, decentralising the company’s decision-making processes to managers closest to the customers, a
unique and fairly radical approach in the region at the time. The company’s modern management practices and unique culture made
it the business partner of choice for many of
the world’s leading brands, including Xerox,
Whirlpool, Frigidaire, Hitachi, Haier, Philips,
British Airways, American Express and
Saint Gobain.
Alghanim Industries’ current senior management team continues this progressive tradition, bringing an impressive mix of worldclass experience and cultures to the table.
The company is led by Omar K. Alghanim,
the company’s Harvard-educated chief executive officer, who worked in Morgan Stanley’s
banking division in London prior to joining
Alghanim Industries. He is supported by an
experienced executive team, all of whom have
held senior positions with global leaders such
In a region not subject to many of the regulatory requirements typical of Western economies,
Alghanim Industries is one of the few privately
held companies to proactively implement a
whole host of corporate governance best practices. Seeing it as the right thing to do for the
health and sustainability of the business, Omar
Alghanim made the establishment of a robust
corporate governance framework a top priority when becoming CEO in 2006.
“Privately owned companies have a choice
as to how seriously they approach corporate
governance. For us, the decision was easy, given the company’s values and culture. We have
worked extremely hard to create an environment that is transparent and fair for all our
stakeholders. Our investment in strong corporate governance practices is already producing
results, from improved banking relationships
and stronger internal controls to a more informed and engaged workforce,” says Omar.
The achievements of the past five years
have been the result of the teamwork and
dedication exhibited by the company’s business
and functional leaders. This teamwork is
encouraged by an organisational structure
that gives the managers of key governance
functions, such as controllership and treasury,
dual reporting responsibilities to business
and functional heads. The functional heads
are responsible for maintaining consistency
and compliance to the standards set out by
the company.
To establish this consistency, policies were
developed that clearly outlined the company’s
expectations for employees’ conduct with vendors, customers and other employees. In addition, an independent compliance department
was created, reporting directly to Sir Kutayba
Alghanim, the company’s chairman. As a result,
employees can now report suspected ethical
violations, fraud, or other inappropriate behavior, directly and confidentially to compliance
officers, without fear of retribution.
In addition, the finance organisation prepared the first-ever financial policies and procedures manual, providing a comprehensive
of attracting, assessing, developing and retaining leadership talent. Its talent strategy is defined by a number of key components:
Leadership development: Alghanim Industries believes in preparing its people for future
top-level positions, supporting the retention
of top talent while also building a leadership
pipeline. Based on international best practice,
the company’s programmes offer an integrated learning experience that includes classroom-based workshops, business simulations,
experiential and e-learning components, and
executive coaching.
Succession management: The company’s
succession management strategy enables it to
identify qualified internal candidates who are
ready to move into key leadership positions. It
includes the development of talent profiles, the
identification of high potential employees, talent calibration and semi-annual talent review
meetings. As a result, 79 percent of senior management positions in 2011 were filled internally, compared to less than 20 percent in 2005.
Performance management: Alghanim Industries believes that effective performance
management is an ongoing process that should
be implemented continuously throughout the
year, building clarity, alignment and engagement with employees. Key elements of the
Alghanim approach include goal setting and
alignment, performance monitoring and support, as well as career development planning.
BUILDING ON SUCCESS
Glasswool production at KIMMCO, part of the Alghanim
Insulation Group’s network of nine plants, located in
Kuwait, Saudi Arabia, India and Turkey
Alghanim Industries is
one of the few privately
held companies to
proactively implement a
whole host of corporate
governance best practices
ment the best-in-class BWise governance, risk
and compliance software, enabling the efficient
monitoring and administration of the program.
The company is now in the process of obtaining an attestation from its external auditors
confirming that its internal control framework
meets COSO III standards, a designation that
will set it apart from its peers in the region.
WINNING THE WAR FOR TALENT
Alghanim Industries’ early adoption of progressive management practices is not limited
to corporate governance alone. In fact, the
company is recognised as a leader in the region for its integrated and systematic process
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world finance | may - june 2012
world finance | may - june 2012
As the company implemented these progressive corporate governance and talent-focused
strategies, it also continued to invest in key
development projects to strengthen and grow
its portfolio. Some of these projects include
the company’s 2007 acquisition, together
with Saint-Gobain, of 95 percent interest
in Izocam, the leading insulation company
in Turkey.
In 2008, Alghanim Industries opened the
largest GM service centre in the world to serve
the Kuwait market and expanded into South
East Asia with the opening of Kirby Building
Systems’ pre-engineered building manufacturing facility in Vietnam. In addition, over the
past five years, the company has solidified
its leadership position in the Kuwait retail
market by opening 12 new X-cite consumer
electronics stores, as well as recently launching the multi-category xcite.com e-commerce
website. Looking to the future, the company
will continue to implement its smart growth
agenda, both within the region and beyond,
examining new market sectors and identifying
business opportunities that will complement
and expand its existing diverse portfolio.
Alghanim Industries has a long heritage
as a successful commercial enterprise, with
a proven track record of capitalising on economic and market changes. As a result, this
diversified multi-national corporation has
built a reputation for market leadership and
is committed to becoming the most successful
and admired company in the region.