Policy for Youth

Policy of Youth

Majed Sherbiny represents a new breed of young, educated Saudi citizen driving the family business forward in a new economic era.

We meet Majed Sherbiny in the plush confines of a private club in Bahrain, a popular meeting place for top businessmen from around the region.

Nearby, Majed’s father Mohammed, a highly successful and respected Saudi entrepreneur who has overseen the growth of the family empire over the last 27 years as chairman and chief executive, talks with members of the Group’s senior management team and some of its customers. The atmosphere is business-like, upbeat yet cordial. The perception is one of confidence and control.

Although Sherbiny Holdings is very much a traditional Saudi family business – placing emphasis on the values of personal relationships, integrity and trust – the scene as we meet is also clear evidence of a subtle yet very real generational shift taking place in the corridors of commerce in Saudi Arabia. Young Saudis like Majed Sherbiny – graduated overseas, their business senses sharpened by the experience – now increasingly occupy real decision-making positions in their home country, even if final decision making powers still tend to lie with the elders, in keeping with Saudi tradition.

Sherbiny Holdings has nevertheless demonstrated a reform-minded approach to business for many years. Transparency is promoted and Majed Sherbiny, the chief operating officer, is refreshingly candid and articulate as we speak.

“Succession planning is part and parcel of business life,” he tells The Gulf. “Many family businesses in Saudi Arabia started up in the same era and many of them are now going through the same [succession] process.”

It is, he says, a necessary evolution as Saudi family businesses – particularly those providing engineering services to the energy and mining industries – gear up to grasp a wave of new opportunities in the kingdom and region.

“Competition is getting more fierce,” Majed Sherbiny acknowledges.

It is certainly a very different business landscape to that encountered by Mohammed Sherbiny, who set up the Sherbiny Holdings business in 1986 and who has overseen a quarter of a century of steady progress. Today, there is competition and opportunity in roughly equal measure.

A pivotal moment for local engineering service providers came about five years ago, when state oil giant Aramco and the world’s largest petrochemicals exporter Sabic launched a new initiative to support local businesses.

The GES+ initiative requires that all pre-qualified engineering companies bidding for Aramco and Sabic contracts perform the bulk of their work in Saudi Arabia. This requirement obliges local contractors to offer more services and improve their knowledge base, usually by partnering with foreign firms. As well as enhancing local capabilities by transferring knowledge, the initiative aims to create many more jobs for Saudi nationals in the long-term.

By the end of last August five new, independent consolidated entities had been formed in this way. With the promise of more such arrangements to follow, it is a trend which is already having a positive knock-on effect for Sherbiny Holdings. “The GES+ initiative is already creating jobs, knowhow and technology in Saudi Arabia,” Majed Sherbiny notes. “The entry of large international contractors on mega projects in Saudi Arabia has also raised the bar in terms of local capabilities and expectations,” he explains.

“It has encouraged us to diversify and grow our business to offer more complex, integrated engineering solutions. In 2010 we established a fourth business line, Systems Integration, which complements our Industrial Services, Commerce and Environmental Solutions businesses. For the first time we were able to claim to be a total solutions provider.

“Now, we are identifying new potential joint ventures to give us the world-class scale and experience to take us to the next level,” he states.

The chief operating officer praises Saudi government support for local companies through initiatives like GES+. “They [the government] are giving us a window of opportunity to gain greater market share,” he says.

The winds of change may be blowing strongly through the Saudi business world, but Sherbiny’s vice president points out that as a family business the Group is in fact better able to adapt to external factors than its more structurally rigid counterparts.

He sits on a Board of executive directors, which meets roughly eight times a year to set a clear course for the business, its performance and strategy. Once a year a new annual strategy is agreed, with progress evaluated every month. Non-executive directors are, the Company says, also encouraged to visit its operations and speak to its customers and employees.

The path of tradition with transparency has evidently served Sherbiny Holdings well since it began life, like many of its peers, representing well-known US and European brands in the oil and gas industries of Saudi Arabia and the Gulf Co-opration Council (GCC). Going on to build a Service Centre at its Al Khobar headquarters to provide after sales support (such as installation, commissioning and maintenance), as well as manufacturing facilities in the Eastern Province, the Group has broadened its horizons. In 2002 it opened representative offices in Abu Dhabi and Dubai, and in 2010 in Jebel Ali. Last December Sherbiny also opened a Bahrain office to serve as the Group’s international hub.

The agency business continues to thrive too – today, Sherbiny Holdings says it has more than 40 agency agreements in place, offering a wide range of brands to the oil, gas and other industrial sectors in the region.

While the growth trajectory seems simple, Majed Sherbiny insists such growth is hard won.

“Creating partnerships with clients is not easy. You must continually exceed their expectations, which are rising all the time. We have learned that you only enter a territory if you can serve it properly.”

Sherbiny Holding’s future growth will focus on developing its existing core businesses.

“We have identified areas in which we have expertise and are looking to build all four of our core business units, providing added value and forging stronger partnerships with our customers,” he explains.

“We may not have the largest market share in our field among other Saudi family businesses, but our decision to concentrate on building only on our core capabilities gives us greater control of our expansion and, we believe, distinguishes us,” he adds.

Looking ahead, Majed Sherbiny thinks oil and gas projects will continue to drive growth for the business, but also believes major investments in power infrastructure and mining in the kingdom offer huge potential.

“In terms of resources, we are quite confident that we can overcome entry barriers to these markets,” he says.

“We have been servicing the power sector since our inception. Mining is, on the other hand, a new market for all of us, and we are still researching how to enter this market.”

Overseas, the executive says the Group plans to open offices in the US, Europe and India this year, with a remit to source new technology partners and headhunt much-needed foreign talent.

“We are not the first Saudi family business to have taken such a strategic step [setting up overseas] but for us the time is right as we structure ourselves to capture new opportunities,” says Majed Sherbiny.

“Let’s be realistic: as an industry and a country we still face shortages in terms of expertise and technological knowledge, and we must still import some skills to keep pace with the strong growth rates we are experiencing. We are competing for resources with other companies and other regions of the world. But being part of the competition is certainly better than having no role in it.”

The vice president is, however, optimistic that the issue of manpower recruitment and retention is being addressed by the authorities, as part of a broader plan to support small and medium-sized enterprises (SMEs).

“The government has great ideas to grow the SME sector and has always invested in the education and development of young Saudis, but it takes time for educational programmes to generate a fully qualified, productive and efficient workforce which can help SMEs grow, and the fact remains that an SME needs a lot of resources to get human resources up to speed.”

Majed Sherbiny confirms that the Group - which is at Platinum Level on the government’s ‘Nitaqat’ programme setting ambitious employment targets for Saudis - is currently in negotiations with some international organisations to set up a training centre in the kingdom which will offer skills-specific, accredited modules for Saudi graduates. Even so, he admits that changing mindsets about a career in the private sector – could prove tougher altogether.

“Saudis don’t typically realise the tremendous growth opportunities available to them in the private sector. Regardless of how attractive you believe your sector appears, some people have a different perspective and have different [career] priorities. But we detect a change in attitudes – some young Saudis now recognise the golden opportunities in the private sector.”

Majed is one young Saudi who recognised the golden opportunities, though an immediate career in the family business was not necessarily part of the plan following his 2005 graduation from Virginia Tech in the United States, where he read Chemistry with a Business Minor. He had been part of Saudi Aramco’s Orientation Program for Scholarships in 2000.

“My goal was actually to work in the US and build experience there, but the events of 11 September 2001 made it more difficult for Saudis to do that. I returned home to help grow the family business,” he recalls.

If nothing else, it was an intense learning experience for a graduate whose father thrust him into various areas of the business from the outset. The chairman and chief executive’s trust was rewarded.

“The exposure was tremendous, and I was forced to develop my business credentials quickly. I’m now a decision maker and one of the Company’s growth strategists, and I can now see the fruits of my labour,” he reflects.