QUOTABLE QUOTES

Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.
– John Welch

Effective leadership is not about making speeches or being liked; leadership is defined by results not attributes.
– Peter Drucker

Difficulties mastered are opportunities won.
– Winston Churchill

Leadership: The art of getting someone else to do something you want done because he wants to do it.
– Dwight D. Eisenhower

Innovation distinguishes between a leader and a follower.
– Steve Jobs

A leader is one who knows the way, goes the way, and shows the way.
– John Maxwell

The key to successful leadership today is influence, not authority.
– Ken Blanchard

Leadership in times of turbulence

By Sunil Fernandes, Mayank Singh and Visvas Paul D Karra

It is only when the tide goes away, that you know who is swimming naked,” is a proverb that has been often quoted by captains of industry in the last few years. And, perhaps rightly so, as the tide of the last couple of years, has seen behemoths collapse, companies being taken over, bailed out, or simply restructured. Such has been the global debacle after the Lehman Brothers collapse, that when the economy history of the 21st century is written it would be well segregated as pre and post Lehmann eras.

Of course, during the heydays, many sins were hidden, that have now come to light. Over exposure, bonus excesses, exorbitant salaries etc., were some of the cardinal sins that are not pardonable anymore.

In all the economic mayhem, what may have come to the fore, are leaderships that have managed to tide over the crisis, and successfully weather the storm. So why has effective corporate leadership assumed such significance in the last few years? It is simply because corporate captains have had to deal with crisis in several areas, at one go. Crisis of consumer confidence, sagging employee morale, demanding customers, tough bankers et al. The recession or the global economic downturn, as the case maybe, has separated the good leaders from the mediocre ones. Effective leaders may have been the ones that were able to motivate employees; ensure nimble-footedness; remain astute while negotiating with bankers; and last but not the least ones that were able to boost demand. In fact, the present recession has bought about the best in some leaders, who were able to deliver extraordinary reactions to a crisis. In Oman, it was a case of business downturn, more thawn a recession. The Oman Economic Review spoke to several corporate chieftains here in Oman on the role of a leader and how they managed to overcome the crisis. We got some thought provoking and interesting insight into how some of them responded to the crisis.

Take for example the case of boosting employee morale. Ali Mohammed Juma, Chief Executive of Vision Investment Services SAOC, dealt with employee morale by ensuring transparency with employees on the company’s performance, creating a fun environment, and helping employees focus on opportunities that had arisen because of the crisis. At the Al Sulaimi Group, it was a contrarian call of hiring. “During the crisis, employees all around the world were concerned about job security. At the Al-Sulaimi Group we assured all our employees that we won’t lay off anyone and we explained to them the reasons for the decision. In fact, we went about hiring people, as quality talent was available,” says Haitham Al Fannah, COO of the Al Sulaimi Group.

These are just a few examples of corporate czars managing the crisis. We got examples where visionary leadership, astute business acumen paid rich dividends in boosting demand, employee morale and overall business conditions.

Clearly, the crisis had found effective leaders, who were separated from the ordinary ones; just like wheat is separated from the chaff.

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“Planned action needed”

Effective leaders need to be calm in times of crisis and never panic, says Bhaskar Datta, CEO, Al Jazeera Steel Products Company

What are the essential qualities of a leader that come to the fore during a crisis like the global financial crisis?

Never Panic. Immediately plan actions that need to be taken for survival of the organisation. Ensure that you collect all outstandings, even if you have to make certain concessions. Open-up all avenues to dilute your stocks and have a management meeting with the work-force, to explore all avenues of cost cutting that do not lead to more damages in the future. Essential capital goods expenditure can’t be just put on abeyance. These choices are of prime importance during a crisis.

Is it right to say that leaders are catalysts and facilitators who make effective use of talents and resources during a crisis?

Yes, but they can’t do it alone. They have to build-up confidence in the management and the work-force with positive action and seek their assisstance in the goal and objectives set out to tide over the crisis.

How did you manage your manpower effectively without hurting employee morale during the past two years?

A joint decision with the management and work-force was taken for a salary cut and all incentive schemes temporarily suspended. Furthermore, other steps included a judicious use of overtime work and reduction of contract labourers to a minimum.

How should a leader manage customer expectations during a crisis as everything seems to be unknown and fuzzy?

We definitely need to support our customers and must also understand that they are in the same shoes as us. Therefore, we gave some concessions on prices and also extended the time for outstanding repayments. We can now boast that despite all these facilities provided to our customers, we did not have a single bad debt during the crisis and till date.

How did you manage customer, employee and shareholders expectations at Al Jazeera Steel in 2009?

I must appreciate the full support that I got from all concerned, namely: customer, employee and shareholders. Everyone understood the gravity of the situation and supported the management in full. It was difficult to convince banks to lend during this period. The board took personal pains to approach bank, who having the goodwill for Jazeera Steel also supported us with rescheduling of loans. We are proud to say that we met all the committments with the bank before the promised dates.

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“Passion to apply vision needed”

A good leader should be a visionary, who has the passion to apply his vision to steer the company forward, says Haitham Al Fannah, Chief Operating Officer, Al Sulaimi Group

What attributes of a leader have come to light, due to the global financial crisis?

The financial crisis was not something that anyone anticipated; that’s precisely why leadership qualities played a major role in the survival of organisations, during turbulent times. We have seen large corporate behemoths collapsing during the financial crisis and of course that can be attributed to many factors. I believe the most important quality a leader should have is his vision; a good vision that will determine how you tackle a crises. It is always easy to say let’s cut cost and lay off employees but what are the consequences of that? You might end up losing good employees that contributed a lot to the organisation during the good times and would have contributed more in the future. Any organisation’s strength lies in its employees and once you start laying-off employees, a crisis could precipitate.

Therefore, a good leader should be a visionary, who has the passion to apply his vision and steer the company forward. Leadership qualities are best known and best used during tough times, and as the saying goes “tough times requires tough decisions.”

Does a good leader make effective use of talents and resources?

Most certainly. Leaders are catalysts and facilitators who make effective use of talents and resources at all times, not only during a crisis. During a crisis we could say that a leader can effectively maintain good productivity as supply is more than the demand.

How did you manage your manpower effectively without hurting employee morale during the past two years?

This is a very interesting question. At the Al-Sulaimi Group, we did not layoff any employees. When the financial crisis erupted, we had a group board meeting to discuss our strategy for dealing with the financial crises and chalked out plans to tackle the crisis.

After careful analysis of all financial implications, the board took a decision not to layoff, in fact we started hiring. You must be wondering “why hire?” Well, it was the right time to pick and choose as there was abundance of talent. We thought this was an investment for the future, and we now have an immensely talented crop of employees. Our employees have always felt confident and secure and we have always received optimum performance, despite the financial crisis. Now that the markets have recovered, we are very well equipped to handle a bigger share of the market, with a talented pool of employees.

How should a leader manage customer expectations during a crisis as everything seems to be unknown and fuzzy?

During the crisis supply was more than the demand, (i.e. buyer’s market) competition was at its peak and customer expectations increased drastically. As you said everything was unknown, it was a time when you had to work with several scenarios (Plan “A” and Plan “B” simply weren’t enough). At the Al-Sulaimi Group our goal has not only been to meet customer’s expectations but rather to exceed it. Therefore, we had a real challenge as expectations were very high. We have been determined to meet and exceed customer expectations and that is something we will not compromise on.
 
How did you manage customer, employee and shareholders expectations at the Al Sulaimi Group in 2009, which was largely a difficult year?

For us, the customer comes above the rest. Our endeavour has always been to meet customer’s expectations simply by offering them high quality service. At the Al-Sulaimi Group customers are share holders, they are the owners of our business, without them we would not have existed.

For us, employees are the soul of our organisation, and we work like a family. During the crisis, employees all around the world were concerned about job security. At the Al-Sulaimi Group we assured all our employees that we won’t lay off anyone and we explained to them the reasons why we had taken that decision. As for our shareholders, I would like to note that our shareholders believe that a successful business entails a good vision supported by satisfied customers and employees. That’s why by formulating a vision for the future; satisfying our customers and employees we have created a recipe for a successful business, which in turn has met our shareholders’ expectations.

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"When the going gets tough… the tough get going"

Ali Mohammed Juma, Chief Executive of Vision Investment Services outlines the attributes of a good leader that come to light, especially during challenging times

What are the attributes that a good leader should have during challenging times?

I believe that preparedness is the key and a leader’s role starts way before challenging times hit. In this context I am reminded of the phrase, “If you fail to plan, you plan to fail.” It is the role of the leader to ensure that macro risk related factors are well thought of in advance and contingency plans are formulated. More importantly the leader should proactively inculcate the habit of being vigilant and realistic in all the team members. By setting a blue print in place the leader is well-equipped with the required armour to deal with risks arising from macro events.

As far as the soft issues are concerned; during challenging times employees tend to go into a state of confusion, panic and sometimes even depression. In such circumstances the primary responsibility of a leader is to boost the morale of the employees while channelising their energy towards managing risks and identifying opportunities that may arise therein.

How would an effective leader manage employees during a crisis?

Communication is the mantra during challenging times. One cannot over emphasise the importance of being close to the team and keeping an open and interactive channel of communication with the employees. A leader must be transparent about the challenges the company is facing and should promote a participative environment. This will enhance the sense of ownership in the employees and as a result retain talented people who will work efficiently and effectively during such times.

On a personal note, I strongly believe that nothing works better than creating an ambiance of fun; and during challenging times it becomes even more important that the leader lead by example. He should maintain an upbeat attitude with frequent sessions of fun and laughter.

That brings forth one of the most important challenges a leader faces during such times: managing oneself. If the leader fails to properly manage his state of mind and have clarity of direction in which he wants to lead the organisation; it will obviously limit his ability to lead and may have a negative impact on the company.

What about seizing opportunities that may come during lean times?

This is a very interesting question. Usually during challenging times organisations are busy managing the consequences and ramifications or exercising a ‘wait and see’ approach. However, I believe a good leader must have the ability to distance himself and have a birds’ eye view of the whole situation to identify and seize opportunities.

For example, during the current global financial crises, we launched our 3rd Fund, Vision Real Economy GCC Fund. Initially we were reluctant and it required strong conviction to swim against the tide. This is where while building our team and company, the preparations we had taken to keep focus and spirit during tough times, held us in good stead and resulted in a very successful launch.

How does a good leader manage customer expectation during times of crisis?

In our industry managing customer expectation is one of the real challenges. We are an investment company and here it’s all about customer’s money. As I often mention “For human beings ‘Money Matters’ matter the most”.On a serious note, the leader has to ensure that there is no lax in the services provided. It is his responsibility to reinforce the need to add value to the customers to manage their risk and be sympathetic.

As far as our industry is concerned, we operate in a highly regulated structure and therefore, there is little scope for us to adjust on the pricing front. Professional ethics and excellence in service are the two binding factors that help retain customers. We capitalised on the current financial crisis by utilising this time to build on our customer base. Our service model, research information, and infrastructure support have always found to offer impeccable standards and we have used this opportunity, to meet, listen and strengthen customer requirements, wherever there was a need for one.

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“Put innovation first”

Open communication with employees and a customer focus on addressing global changes will help to overcome challenging times, says KS Cheema, Executive Director, (Legal & Projects), Omzest


Hardly anyone would think that a one and a half litre water bottle would contribute to a 60 per cent reduction in expenses. But that was what the Omzest group of companies was able to achieve – merely by replacing the half litre water bottle with a one and a half litre one. What’s more, this gem of an idea came, not from a top management executive, but from the lower rungs of the organisation when the management invited all its employees to share ideas during the turbulent times of the past year.

“Most of the ideas which are needed to steer a company during a crisis come from within the organisation and a resourceful leadership should be able to create brainstorming sessions to look for inputs from different people at different levels,” says KS Cheema, executive director (Legal & Projects) of Omzest. “A leader has to be resourceful at all times but this ability comes into focus during a crisis,” he adds.
“Sometimes you tend to ignore important inputs just because the person is not at the right position. So I think you need to be open while communicating with your employees, your customers, as well as with your peers and get whatever best ideas you can. Getting an idea is one part but putting it to use is the more important part of it,” Cheema says.

Focus areas

Basically having open communication which motivates your employees and adopting changes in management policy like in terms of newer ways of doing business and addressing changes which take place at a global level are areas which leaders of organisations need to focus on.

According to Cheema, some of the biggest concerns confronting businesses are the reduced demand for products, pressure on prices, longer sales cycles and uncertainty over raw material prices, longer receivables and cash conversion cycles and lower employee morale and job security. In order to address these concerns, an organisation needs to focus on developing new markets, on cost competitiveness, on higher employee productivity, speeder inventory management and on collection and receivables management.

Talent management

It is said that leaders are facilitators and catalysts who make effective use of talent during a crisis. In this regard, managing human resources without affecting their morale becomes critical. As a highly diversifiedgroup with companies in various sectors like manufacturing and automobiles, Omzest also had its ups and downs.

“In such a scenario, organisational restructuring is often a very painful exercise when non-value adding processes and sometimes personnel associated with those activities come under the axe. We were very sensitive to this. We did cut off some of the activities which were not value additions but fortunately did not cut off our employees who are our most important resources. And even when we had to change people from one profile to another we ensured that they had the right activity within the organisation and that kept both the organisation’s and employees’ morale up,” explains Cheema.

“Once you take care of your employee morale, they almost vow to pay back in some form or other and that clearly boosts the organisation,” he added.The group also made effective use of lean management theories which, however, did not mean retrenchment but utilisation of same people in multiple activities. So if an employee was contributing only three hours to a particular activity, the company tried to understand where his balance six or seven hours could be utilised. This helped to reduce costs.

“Earlier we used to have a separate receptionist and telephone operator. We realised that both of them were not only sitting idle but wasting each other’s time. Now we have moved one of them to another department and we have realised that both have become more productive and one of them can multi-task. So it is as simple as looking for such ideas,” Cheema stated.

Crisis of sentiment

Quite often it is negative sentiment that creates a crisis. The best way to deal with this is to have open communication with the people, assure them that as long you do your best, the organisation will look after your needs. That does not mean just paying salaries at the end of the month. In fact, it also means treating employees with honour and respect as before. And once employees are treated in such a way, I think you win them over psychologically and if employees are psychologically with the company, then their productivity goes up four times higher than normal, says Cheema.

He also advises that sometimes when you do tend to lose your temper you should know the art of putting your arm around your employee and treating them like friends and family. Just like for example when you shout at your wife, you kiss and make up.
Another aspect of an effective communication is to lay the company’s objectives on the table and notify what the company is doing. Says Cheema, “A good leadership quality is in being able to communicate to your team members about your strategies to tackle a crisis and how you intend to steer into the future. So communication and open discussion are the keys to a successful leadership.”

It’s all about money

Ultimately, cash management becomes an overriding factor during difficult situations. Manage your cash flows and you will have managed the crisis, declares Cheema. And there are various ways of doing it: Whether by reducing your input costs or whether by increasing your turnover; whether by reducing the cycle of your receivables or whether by incentivising people to move inventories faster (promotion sales). Whichever way, it applies across all sectors.

Giving examples, Cheema says that in the manufacturing sector, companies are now trying to identify sources of cheap raw materials and also scouting for new markets to sell their produced goods in bulk. And then you can also put more people in receivables. If your turnover is one $1mn and you improve your receivables by five days it adds to almost $50,000. Once you take care of these costings, it has a multiple cascading effect. Because, if you reduce your debt costs, your procurement will become cheaper as you are buying in cash and you don’t have to pay interest.

Again, manufacturing companies dependent upon procurement from open markets, must become innovative in procurement procedures and philosophies. Like for instance, breaking long term contracts for listed commodities which were based on certain formulas and going to the open market to buy. Accept the realities, clean your books and move forward. That’s
the way forward.

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“A long term vision necessary”

Dr Rashid Ali Al Balushi, Managing Director, Iskan Oman Investment Company believes that a good leader must have a vision and ability to assess a crisis with an open mind. He outlines other characteristics of a good leader, while talking to OER


What are the essential qualities of a leader that come to the fore during a crisis, like the global financial crisis?

What’s important for a leader during difficult times is to have a clear long-term vision for the business. A good leader would know his strength and would need to believe in it. An important attribute of a leader would be to discuss, and get on board participation from all stakeholders including employees and shareholders, even while motivating and opening all communication channels. Communication with shareholders would ensure that transparency is maintained and that they are kept in the loop about all developments – whether adverse or favourable. So clearly, a good leader is one that is able to communicate, motivate and have a clear long term vision about the company.

So, how did you as the Managing Director of Iskan Oman Investment Company lead the company during the precarious times of 2009?

We commenced our activities in 2008 and have had a very strong set of shareholders. It was a conscious decision to gradually grow the business and hence our exposure to the real estate sector was minimal. Also, from our core business which has been real estate, we gradually diversified to other areas. As a leader one of the important attributes is to make prudent decisions after taking into confidence stakeholders interests.

In what areas did you actually diversify?

We have moved into the education sector, as we believe that we can cater to the growing needs of imparting quality education. We have taken over one school and are planning to expand with more campuses. We have also diversified into the Food and Beverage industry and gradually will consider other services sector like healthcare.

How does a good leader meet customer expectations?

A good leader would always ensure timely delivery of the customers’ promises and expectations. For example, for our real estate project at Salalah, the approach we adopted was not to rush into selling theproject. Instead, we have first appointed leading international consultants to design a quality product that is affordable and now we are focusing on project development and construction. The construction on the project site has already commenced, before we begin to sell the project, thus ensuring that we have put in place what it takes to ensure that customers know what they are buying.

We are certain to deliver what we promise and they can see the construction on site before they pledge a single Rial to the project. In short, we are building the trust and confidence of our customers for the very long term and this is what effective leadership means.

Were you compelled to take tough decisions in 2009, say for example salary cuts?

As mentioned earlier, Iskan Oman commenced operation only in 2008 and began a gradual process of building the organisation. Since then, we have been a nimble footed and a lean company. So obviously, there was no question of cost cutting and other demoralising decisions to take.

A good leader would make use of opportunities. Did you see any opportunities that came by in 2009?

Bad times always bring with it opportunities. Our Salalah project is once again a good example. With the downturn in the real estate sector, we did not shelve or postpone our project instead we seized the opportunity and took advantage of low construction prices and invested our resources in project development. This will ensure our project is on schedule as planned and we are benefitted by the low prices and the benefits will be shared with our customers with very affordable pricing – a win-win situation for all.

How would you summarise the qualities of a good leader?

I believe that there are five measures that a good leader must look into, particularly during times of crisis. The first is to assess the situation and do so with an open mind. The second step would be to work on a worst case scenario; thus preparing staff, shareholders and other partners would be important. The next step would be to look at cash flows and not solely profits. The fourth would be to involve your people in all decision making. And finally, a leader must lead the company to be aggressive and innovative during difficult times, something that we have done here at
Iskan Oman.

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““Offer value””

Michael Hansen, Managing Director, Oman Marketing and Services Company feels that while long term strategic vision remains constant, short term goals change according to the exigencies of the situation


How important is it for people to see that the leader has the right vision that they can follow him?

I think it is extremely important and the reason for that is because part of my work is like a coach, I have to get my team to understand the vision that we are trying to pursue. I need to communicate with them asking for ideas to develop strategies that will take us to market areas that we wish to compete in and to develop strategies for doing so. As a company we want to differentiate ourselves and get financial returns. If we deploy resources into a certain set of objectives, we need to analyse whether they will meet our shareholder expectations.

The leadership aspect is important as I need to be aware of what my team expects from me. Overall, they want to see behaviour that is passionate, committed, that they feel comfortable, energetic and want to share in. This in turn helps me to shape their behaviour towards the objectives that we have set and then helps us to steer the business using our team skills. What the team expects from me are integrity, good values, honesty so that they can say, “I like this leader and want to be a part of this vision that the team is trying to achieve and want to be involved and committed to making these business strategies a reality.” Leaders should provide leadership that is critical in its sustainability and commitment to achieving goals.

Do leadership styles change according to the exigencies of the situation?

Leadership styles do change according to the situation, but it operates at two levels – one, there is a strategic perspective that does not change too much. This is a long term vision about where we want to compete, how we want to run our business and how we behave in our values and these remain constant. But in the short term, it changes quite a lot.

During challenging times, objectives that one may have wanted to reach in a period of time might require an extension. In a crisis the team focuses on core profit streams and core behaviours. The team starts listening to what the market is saying, changed customer expectations and trying to meet those needs. What we noticed during 2009 was that in the first six months of the year, the market was affected emotionally by what was happening globally and regionally (in Dubai) and it made us prudent. The underlying fundamentals of this country, its people, the wise government leadership, the sustained spending on infrastructure projects all meant that there was an underlying business need that would continue. In summary, plans need to be developed for the long term, but tactically some decisions have to change rapidly in the short term.

Did you change your leadership style at OMASCO last year?

Yes of course. If you take OMASCO we have a three year development strategy, that is updated annually and for the last eight years the vision has been the same to be the No. 1 in customer experience and that has not changed. In a difficult year, it is important to develop strategies to meet this vision. We require the continued deployment of resources, we need to find people that have the right skill set and attitudes to help this business to become great and that continues apace. On the other hand, some of the expenditure that we would have liked to make on new buildings, a bigger network had to be delayed as we wanted to see as to how the market developed. For us the key success factor is keeping the team motivated by providing them an environment of learning and involvement. As a team we can discuss strategies for business continuity and growth. This process is not entirely directed by me as a leader but is based on an involved sharing approach in which everyone has a say.

Does meeting customer expectations become more difficult in a tough year?

Yes it does; in a tough year the customer sees opportunity. In Oman, some players offered discounts to get rid of excess stock, and the customer quickly linked value to price. In our opinion, offering a better price is a short term gain. Instead, once we saw the market deteriorating, we tried to match our stock levels to the demand curve and thus protected longer term values such as resale value and an ability to bring in new models. OMASCO has moved away from price to an emotional relationship with the customer that is linked to confidence in the brand, receiving the right advice and protecting the inherent value of the product. We have seen wholesale discounting by some of our competitors which over the ensuing months will significantly destroy the resale value of these vehicles. In fact, it takes away real value from customers and we have kept away from such an approach.

How difficult is it to control inventory as forecasting for vehicles is done in advance?

We look at a yearly target but it is tested and adjusted on a monthly basis against market conditions and the prevailing outlook. Right now we feel that we are starting to see a growth phase, so we are looking at increasing inventory levels slightly. This is being done on our core volume models but we are not taking a risk on sports cars or highly accessorised vehicles. As the market improves we look at real value, real advice and real customer needs.

How did the year 2009 work out from a business point of view?

The year 2009 was like a hockey stick, the first three months saw a definite slowdown in customer activity, but from April, particularly from August onwards there was an increase in sales volume. Overall, the actual impact was not so huge, but it provided a good opportunity for customers to bargain for better prices. In the beginning of 2009, there was an element of fear, certainly concern for the future. On a global basis none of us had foreseen the situation that we saw in late 2008 or early 2009. But having a great team, good brands, courage and taking swift action to reposition the business by reinterpreting consumer needs and moving ahead with a lot of hard work helped us to come across 2009 in a most satisfactory manner. A combination of clear directives and a sense of humour aided the process.

What are the leadership essentials that you use at your company?

A lot of my role entails being visible, listening and having the courage to take swift actions to achieve business continuity and growth. The year 2009 was an opportunity to revisit certain parts of the business, to study them and to see how to do the business better.
 

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“Take care of conflicting interests”

Every leader has a vision and foresight, but the challenge is to convert this into a successful strategy, says Aftab Patel, CEO, Al Omaniya Financial Services


The business model followed by Al Omaniya Financial Services (AOFS) has stood it in good stead over the years. Can you share some details about the model with us?
 
At AOFS we have a number of advantages like having an opportunity to build this business brick-by-brick since its inception. Being here since the beginning has helped me to create every aspect of this business model and this has proved to be a big advantage as we did not have to deal with legacy issues. Our effort has been to create a business model that is a win-win for every stakeholder – our shareholders, directors, employees, the government (as we pay taxes) and customers. If anyone in this loop feels that he is not getting value he will not be in the business. Employees want better salaries, job satisfaction and avenues of self-actualisation. Customers want the best service, consistency and low prices; the government wants higher taxes. These are all conflicting objectives. So you need to create a business model that balances all these conflicting objectives and delivers value in terms of higher earnings and dividends for stakeholders.

Do you believe that leadership styles change according to the exigencies of the situation?

Everyone has a vision and foresight, but the challenge is to convert this into a strategy and to create something. At AOFS we have been fortunate in having the right ideas and putting a step-by-step game plan to meet these expectations. I do not feel that there is anything called situational leadership. Leaders have multi-layered personality traits and based upon the situation one of those personality traits emerges to address that specific situation or threat at a critical point of time. We know that business cycles go up and down, so our strategy is to reward our shareholders well during good times and to reward them reasonably well during bad times. The idea being to build long term sustainability in the business plan. Once you come to execute this you need to have a clear idea of the products that you are selling so that you can create a value proposition for that product. It is easy to launch a product but very difficult to sustain it.

We have changed with the times. When we started we were seen as a car finance company and our corporate slogan was, ‘The first name in car loans.’ When we moved into the second phase, our slogan changed to, ‘We understand finance better,’ and we started machinery and heavy equipment financing.Today, we call ourselves, ‘Corporate finance specialists’ as we cater to a large number of companies on a variety of products, just like mainstream banks. When you change, it has to be genuine and substantial rather than merely cosmetic. As management theories will tell you, the external environment is a given and one cannot change it; a business leader has to adapt to this and still create value. If the external environment was to your liking, then you would not require business managers as anyone can buy and sell.
 
How did you go about negotiating the downturn in late 2008 and 2009?

We could see the crisis coming before it actually hit in 2008. The role of a leader is to provide direction and as we were prepared for the problems, the impact was minimal. We put in place various measures to negotiate the slowdown. One, we realigned our maturities. Second, we did a lot of stress testing, with all the institutions that we deal with. Third, the company started to maintain a much larger cash position and triggered it’s contingency planning. For example more focus started being given to housekeeping. The corporate marketing and retail marketing teams started to focus on remedial credit and managing debt rather than adding new business. The first thing that I did at AOFS was to call our staff and tell them in no uncertain terms that no one would be terminated from this company. This gave people the confidence and they pooled in their efforts. These measures helped us to tide over the problems. In 2009 we made more money and profits than in 2008 and paid a 25 per cent dividend to our shareholders.

What are the values that a leader needs to have in today’s business environment?

In business you have to be pragmatic, as one is sitting on other people’s money. The two hallmarks of my leadership philosophy is that we do not compromise on honesty and transparency. The customers know that this company will not take them for a ride. We follow all laws and regulations to the T. These principles come from a belief that in business you work with the community and not against it. My objective is not just to maximise profits as that would be a short term objective. Instead, our aim is to see whether we can provide valuable service to the community that we work in. By creating value for the community we create value for ourselves. This guiding principle enables us to maintain the asset quality that we have. AOFS has one of the best capital structures. This has allowed us to have low capital servicing, higher leverage capabilities, better lending prowess and a solid capital base. That sums up why Al Omaniya has been a forerunner and a consistent success.
 
How do you go about managing employee morale and expectations in a downturn?

One can have the best strategy but you still require a team to execute it. This in turn requires people who believe in what the company stands for. Employees also require an environment where they can grow and meet their own goals. We have successfully created a company where there is no conflict between the goals of the organisation and individuals. By advancing the goals of everyone we ensure that everyone is pulling in the same direction. AOFS has created what in modern parlance is known as an ‘engaged employee.’ For example, when someone rings up our company, the person says, ‘How can I help you.’

If there is a query related to accounts and the call has come to marketing, the executive will ring up the accounts department, get the information and pass it onto the customer. There are certain prerequisites for creating such an environment. The company has few departmental or functional barriers, enabling people to look at a situation in a holistic way. Departmental barriers create power centres and ego centre’s. When you manage to do away with this and have a seamless organisation it creates an engaged employee. It is a difficult process and happens over a period of time. The command structure at AOFS is almost flat, and though functionality is maintained, the doors are open for everyone to come and speak to others. Overall, barriers to communication are minimal and problems do not develop into a crisis, as things get communicated quickly and resolved.

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“CreatE a winning strategy”

Excellence in what you do is an advantage during difficult times says Peter Hall, CEO of Al Hassan Engineering


Some companies by virtue of the nature of their business are better placed than others to tide over difficult periods. During the turbulent period of mid-2008 and 2009, most companies in Oman, like their counterparts around the world, went through challenging times. While many managed to sustain their businesses with their opening order book backlog, companies like Al Hassan Engineering Co (AHEC) faired better. In such situations, it’s important to remain focussed in order to stay ahead of the rest.

Says Peter Hall, CEO, AHEC, “If we were to review our operations in 2009, we opened the year with a strong order book. So in terms of revenue growth we had a good platform on which to start. We also had a number of upcoming target projects on which we based our order winning strategies. These projects provided us with revenue for 2009 and a backlog for 2010 and beyond. All this enabled the company to achieve a good performance in 2009, giving greater value for the shareholders. The turnover increased by over 20 per cent and net profit increased by 30 per cent on 2008.”

Hall is obviously very happy with the results but admits that it was a challenging year. But since the company had put in place a number of strategies and initiatives to both win the targetted projects and to ensure their commercial performance through the execution phase, the desired results were achieved.

Significant orders

Among others, the major new projects that AHEC won in 2009 included the 260 MW Amal Power Plant project from PDO. It was also a particularly significant milestone as AHEC became the first Omani contractor to take a full EPC contract for a power plant in the country. This project is scheduled for completion by mid-2011. Hall is quick to point out that over the years AHEC has been involved in over 40 per cent of power plants in the Sultanate including the 1000MW power plant constructed for Sohar Aluminium by Alstom of France for whom AHEC was a major subcontractor.

The second major project in 2009 was the Gas Depletion Compression project at Kauther for PDO. This was another significant milestone for AHEC as it gave an opportunity to develop our business relationship with a new customer, the internationally renowned main contractor Petrofac who awarded AHEC a sub-contract for civil, mechanical, electrical and instrumentation installation. Work on this project is due to be completed in early 2012.

Streamlining systems

Elaborating on the strategies and initiatives implemented, Hall says that in terms of business performance there are a number of activities that were examined including internal costs, efficiency andbusiness process re-engineering in order to optimise the effectiveness and overall efficiency of the organisation. One specific area was that of materials management; many improvements were made in the supply chain management cycle which have resulted in significant improvements in the operational performance of the business. We also made many improvements in our financial/accounting reporting systems giving us greater transparency and timely reporting of information on which we base our business decisions.

“The company went in for a major revamp of its website keeping in mind its global audience of potential partners, job seekers, customers, journalists and investors. Google analytics reports have shown a 200 per cent increase in the number of unique website visitors,” says Hall. The company’s website www.al-hassan.com also won the First Prize in Corporate Category at the prestigious Pan Arab web Awards in June 2010.

Hall did not fully support the view that the industry was in crisis management mode, more than that the dynamics of the market had changed albeit significantly as a result of the prevailing economic climate. Oman, however, was perhaps less significantly affected as elsewhere in the region. “By that I mean that very few, if any of the projects that we were working on were cancelled or shelved. It may have taken them longer to move through to the contract commitment stage but they did not actually stop. In this regard, I would say that Oman has demonstrated more stability than other parts of the region thanks to the policies put in place by His Majesty’s Government. So those projects that we had targeted went ahead as planned and our winning strategy worked well,” Hall informs.

Excellence in what you do is an advantage during difficult times as it provides customers with confidence in your delivery capabilities. And that was what AHEC did. “We wanted to maintain our position in power generation where we have a market share of 40 per cent. This consistency allowed us to move up the value chain by undertaking the full EPC for PDO’s power plant,” Hall points out.

Similarly, in winning the Kauther project, where AHEC is a subcontractor to Petrofac, AHEC’s strong reputation in successfully completing a number of gas projects was a key factor. In particular, the more recent Burhan/Harmal Gas pipeline project where AHEC in very close and open collaboration with PDO were able to bring in the project completion some four months ahead of schedule clearly helped demonstrate their capabilities and gave tremendous support in securing this work with Petrofac as a new customer.

HR management

An essential leadership quality is ability to build a good team. A team that is able to carry on the good work with the necessary help and support and with the right level of autonomy to do their job. Staff retention is an area AHEC paid attention to bringing in new people with essential skills to grow the business.

The company appointed in early 2009 a professional and experienced HR manager who has undertaken a number of initiatives including structured staff development programmes and a management development centre to formalise and control how it trains and develops staff. “Since we carried over good order books in 2008 and 2009, if anything, we are increasing the numbers of our people as opposed to cutting down because of our growth. In addition, we had to refocus ourselves and rearrange ourselves and our processes to optimise the efficiency of our organisation in order to maximise our productivity,” says Hall.

Opportunities in Oman are good but clearly there is increased competition which has challenged AHEC to implement its strategies and initiatives to take advantage of the situation and build on its reputation of safely delivering quality projects on time.

“We’ve got a reputation of delivering projects on time and most importantly safely without lost time injury (LTI). We have a total of more than 35 million man-hours without LTI since 2007. We are a flexible organisation and we understand the needs of our customers and we always strive to fulfil their requirements. At the same time with our management systems we ensure that we complete projects within budget which is a significant consideration for us,” Hall says. As they say, leaders do some situational changes, AHEC improved its communication process so that everyone knew about the challenges the company was facing.

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