In a world of economic flux, with slowing growth, supply-chain disruption and the lingering impact of inflation on consumer confidence, the Gulf Cooperation Council (GCC) represents an oasis of growth. With GDP growth set to exceed 5.5% in 2025 three member nations—the United Arab Emirates, Saudi Arabia and Qatar—making up the top six positions in the Kearney FDI Confidence Index and a raft of national economic diversification programs in full effect, the region is bucking global trends with a wealth of opportunity across sectors.
The ability of organisations to fully exploit these trends, however, is being undermined by a well-known but often disregarded enemy of success: corporate culture. According to a recent survey by the GCC Board Development Institute and Nasdaq Governance Solutions, published in collaboration with APCO, the failure to develop robust, flexible and future-facing corporate cultures is preventing companies and countries from fulfilling their potential. In reality, we are accepting a low return on change even as we secure higher financial returns.
Weak or negative culture creates core impediments to growth. It can mean a lack of agility to identify and pursue new market opportunities; an absence of “intrapreneurship” to rapidly develop new offerings or an inability to maximize the talents of the workforce. Day-to-day, tensions between key functions and across teams, particularly following an acquisition or merger, throw roadblocks to operational excellence. Culture, as the cliché goes, is eating strategy for breakfast. And not in a good way.
The survey, which was conducted over two months, garnered results from C-Suite executives, partners, presidents, directors, board members and senior HR managers from entities in Saudi Arabia, UAE, Bahrain, Kuwait and Qatar. Together, the respondents reveal that the region’s corporate culture is characterized by three prevailing trends: high conventionality, conflicting practices and inconsistent perspectives.
In practice, it means the region’s businesses are laboring under a range of value-destroying burdens: highly centralized decision-making—where “this is how we’ve always done it” is the guiding principle—internal divisions, cliques and silos—in which a company’s people, departments and functions operate either in isolation or in conflict—and the failure to live up to a coherent vision that is shared throughout all layers of a company.
Ultimately, the region’s culture issues come down to the lack of the glue of positive values, attitudes and practices to unify the workplace. For example, while the survey indicates that most organizations positively claim that their cultures are founded on teamwork and collaboration, in reality, most respondents reported strong hierarchical structures. This is particularly evident in oil and gas firms and family-owned enterprises.
Looking more closely at the data points, we can identify multiple “say-do” gaps in the region’s corporate cultures:
- More than 50% were critical of their organizational culture;
- Half of respondents indicated their boards do not regularly review their corporate culture;
- 235 of organizations covered by the survey are considered to be authoritarian and compliance-driven; and
- One in five respondents is unsure who is responsible for corporate culture.
Perhaps the most damning statistic of all, however, is that fewer than one in 10 define their organization’s leadership style as transformative and inspirational.
Many companies are performing today but they’re not prepared for the opportunities of tomorrow.
The Culture Challenge
Defining corporate culture can be difficult and not always applicable across every business or institution. A good place to start is accepting that an organization is a social entity—basically, the sum of its people. A good corporate culture, then, can be explained as a human-centric approach in which every employee is motivated to excel, empowered to develop and engaged to follow through as companies pivot and embark on new strategies.
It’s clear, however, that the mindset of “my way or the highway” lingers on in GCC boardrooms. According to the survey, only 8% of respondents reported that their organizations allow junior staff employees to question the decisions of senior management.
So, how do companies create a culture that can maximize the contribution of its people? Leaders can begin by recognizing three key factors: the first is that cultural transformation requires a unique skillset distinct from those needed to achieve operational or financial results—and governance and leadership teams need to reflect this reality.
The second is that cultivating a positive culture takes time and that sustaining it requires consistency. Culture-building requires a long-term view. It can’t be a reactive quick fixes triggered by the ups and downs of the business cycle or the quarterly P&L statement.
The third, and perhaps the most pertinent, is that corporate culture isn’t something that can be imposed from the top down. While it is essential that a company’s culture aligns with an organization’s vision, purpose, mission, values, strategy and governance, it isn’t something that is owned by the leadership—it is the aggregate of employees’ beliefs, perceptions and behaviors. Leaders need to both set the right tone and establish frameworks that enable positive culture to be developed from the bottom-up and the middle-out.
As we come to the end of the 21st century’s first quarter, we only have to look back a generation to see the price of failure. In the late 1990s, when the new millennium dawned with the dot-com boom and the sudden accessibility of new global markets, boardrooms were enticed by the possibilities of the mega-merger. Sadly, many companies didn’t merge as much as collide, quickly descending into acrimony and value destruction.
Today, many of the same challenges remain. New technologies, new markets and new sources of competitive advantage all present opportunities to grow. Only organizations with clear, robust corporate cultures will possess the soft power to properly embrace them.
