Sector News

Fortune: This is the type of business most likely to promote women leaders

June 19, 2015
Diversity & Inclusion
Who says nepotism is a bad thing? Family businesses have better-than-average numbers of women leaders—and everyone is benefiting.
 
Ever thought about going into business with your family? Maybe you should.
 
While women remain consistently underrepresented in the upper management echelons of major companies, there is one sector where they’re leading in far greater-than-average numbers: family businesses. A new report by business consultancy EY and Georgia’s Kennesaw State University found that, globally, family-owned and family-controlled businesses have higher percentages of women in the c-suite—as well as in top management positions and on the board—than other types of companies.
 
But don’t think these are feel-good mom and pop shops. Those surveyed included 25 of the largest family businesses in each of the 21 top global markets representing an average of $3.48 billion in sales and 12,000 employees. In order to be eligible for the survey, a family had to control at least 50% of shares and voting rights in private companies, or 32% of public companies.
 
Among some of the survey’s specific findings:
 
Family-owned and family-controlled businesses average about five women in the c-suite and four women being groomed for top leadership positions. A whopping 70% were considering a woman as their next CEO. Meanwhile, the Strategy& (formerly Booz & Co.) 2015 Study of CEOs, Governance and Success, found that women held just 5% of the CEO spots at the world’s top 2,500 publicly traded companies in 2014.
 
The surveyed family businesses’ top management teams averaged 22% women. A 2014 report from the Credit Suisse Research Institute, the CS Gender 3000: Women in Senior Management, found that women’s participation in top management was just 12.9% globally at the end of 2013.
 
Fifty-five percent of the companies surveyed have at least one woman on their boards, and, in general, boards of these companies averaged 16% women. Eight percent of boards had at least half women members. That’s mixed news compared to other reports. Comparatively, the 2014 Catalyst Census: Women Board Directors found that women sit in 19.2% of U.S. publicly indexed companies’ board seats, 35.5% of Norway’s (the highest in the Catalyst analysis), but just 3.1% of Japan’s and 9.5% of India’s.
 
More than nepotism
 
These being family businesses, there’s almost certainly some nepotism in play. However, the survey indicated that is not just female family members who benefit. While surveyed companies averaged more than one family member in leadership, the also averaged 3.5 women in the c-suite who were not family members.
 
In leadership succession planning, surveyed companies were training an average of one family member and three non-family members who were women to take on leadership roles in the future. Carrie Hall, EY Americas Family Business Leader, says she was surprised that nepotism didn’t play a more significant role.
 
“I’m certain there were some that had an easier transition into the role because of their family heritage, but there’s three more that came from outside the family,” she says.
 
Three key factors
 
Why do these companies report more inclusion? EY identifies three possible reasons:
 
Long-term thinking. While the median CEO tenure of the 500 largest companies in the U.S. is 4.9 years, Forbes recently reported that the CEOs of the 100 largest family businesses have already served 13 years on average. Ultimately, the goal of a family business is typically longevity, which trumps gender, says Hall.
 
Role models. When women occupy top posts, it shows that advancement is possible. The businesses surveyed tended to have more women in the c-suite, bolstering aspirations and busting gender stereotypes.
 
Environment. People and profits often blend in family businesses, balancing the interests of family with the needs of the business. Hall says that culture often has an impact on how non-family members are treated, including their ability to advance within the organization.
 
“Perhaps they’re not pressured by public shareholders and the need to be conventional in the term of leadership that the board might impose. They’ve really just got the freedom to choose the best person for the role irrespective of gender,” Hall says.
 
By Gwen Moran 
 
Source: Fortune

comments closed

Related News

February 17, 2024

Busting myths about women in the workplace

Diversity & Inclusion

On this episode of The McKinsey Podcast, McKinsey senior partners Alexis Krivkovich and Lareina Yee talk with global editorial director Lucia Rahilly about the 2023 Women in the Workplace report—and specifically, the newest research on where progress is happening, where it’s not, and what leaders need to do differently to accelerate the pace of change.

February 10, 2024

The new Executive Presence: has a difficult decade changed the definition?

Diversity & Inclusion

Everyone agrees that leaders can’t reach the top without executive presence — but pinning down a definition is much more daunting. In fact, the fuzzy nature of the phrase is exactly why it’s often used as a fig leaf to keep women and other marginalized people out of plum roles.

February 4, 2024

6 research-backed inclusive language do’s and don’ts

Diversity & Inclusion

Inclusive language is a way of communicating that avoids expressions and words that may be considered discriminatory or exclusive. It aims to embrace diversity and promote a sense of belonging for all individuals, regardless of their race, gender, sexual orientation, ability or any other characteristic.

How can we help you?

We're easy to reach