Saudi firms turn to experience for board hires

August 1, 2023, 11:26 AM

Saudi businesses are looking for high-level experience in their board appointees

Businesses looking for CEO-level appointments
Fresh board members made up just 36% of hires in 2022
Vision 2030 is shifting hiring patterns

When Saudi food major Halwani Bros Company was looking for a new board member, it turned to Jameel Abdullah al-Molhem, who counts CEO of Saudi Telecom Company among a number of his former leadership positions in the kingdom.

The appointment of al-Molhem as a non-executive member of the board last week is an example of a growing trend among listed Saudi companies of seeking out directors with top-level experience.

New research from Heidrick & Struggles, an executive recruitment and advisory agency, shows that with Vision 2030 driving accelerated growth for companies in the country, the composition of Saudi boards is evolving.

Heidrick reported that 50 new board appointments were made in the kingdom in 2022, a slight dip from 53 in 2021.

Last year, the kingdom’s New Companies Law, which governs all forms of entities in the market, removed the board remuneration cap of SAR500,000 ($133,000).

Experts said this should attract greater experience and talent to the boards of Saudi companies.

Overall, there is a growing preference for members with previous board experience. The number of first-time board members dropped from 43 percent in 2021 to 36 percent last year.

According to the report, CEOs dominate boards in the kingdom, with almost half of new hires having prior experience in the role.

In comparison, former or active chief human resources officers, chief financial officers and chief operating officers each contributed to only 4 percent of the appointments.

Chief information officers, chief marketing officers and chief technology officers each secured only 2 percent of the seats filled.

Richard Guest, Heidrick & Struggles partner in Middle East and North Africa, told AGBI that the implementation of Vision 2030 has sparked a period of “rapid growth and potential” for the kingdom.

Consequently, there is an increasing demand for overall talent within the Saudi market, he said.

“The kingdom is making substantial investments in emerging industries. Saudi companies are expanding their reach in the Middle East, while publicly listed companies acknowledge the growing significance of boards in delivering value to stakeholders.

"As a result, there are higher expectations for boards to assume a more proactive and influential role," he said.

Seeking dedication

Ataa Educational Company owns and operates 20 schools in Riyadh with nearly 60,000 students. It also opted for decades of experience when it appointed Khalid bin Nasser al-Muammar to its board as a non-executive member last week.

Al-Muammar is the executive director of the Endowment of King Abdullah and also CEO of the National Creativity Investment Company. He has 28 years of banking experience, with roles including general manager of SME Enterprises at SABB Bank.

“As Saudi Arabia is experiencing rapid diversification and growth, publicly listed companies require experienced and dedicated board members who are strategic, forward-looking and can align with industry needs,” Maliha Jilani, partner in Heidrick & Struggles’ Dubai office, said.

Guest added: “Saudi companies must continue to review their boards’ performance regularly and avoid over-boarding to ensure directors are able to dedicate the time and energy to be truly dialled into the business."

He said that formal succession planning processes are essential to “ensure a steady supply of capable leaders ready to take on new challenges”.

Changing approach

The number of Saudi nationals appointed to boards dipped from 90 percent in 2021 to 84 percent last year, according to the Heidrick report, while female appointments increased slightly from 8 percent to 10 percent.

Guest said the kingdom has made “significant strides" towards promoting gender diversity in board hires. One of the objectives of Vision 2030 is to have Saudi women representing 30 percent of the workforce and to generate 1 million job opportunities for them.

“While there remains further progress to be made in empowering women to reach board-level positions in the Middle East, it is evident that the demand for top-level female talent is present, as demonstrated by frequent client requests for executive search placements focused on women,” Guest added.