Family businesses – still a man’s world

Are family businesses employing more women in senior positions? No, at least not in Germany, where non-family listed businesses have a better women-to-men ratio on their boards than the big family businesses. Evidence is patchy in other countries, but anecdotal observations suggests women still have a long way to go to reach the level of their male colleagues in senior roles.

A recent survey by the Handelsblatt Research Institute and the business services group KPMG showed how far family businesses are slipping behind their listed counterparts when it comes to gender equality. The research found that out of the 250 largest family-owned businesses surveyed in Germany, not a single woman is represented in senior management at 211 of these companies, and only 59 women have seats on their supervisory boards.

And further research from the business services group Warth & Klein Grant Thornton in Germany found that women only occupy 17% of supervisory board positions at family owned businesses, compared with 27% at Germany’s 30 DAX-listed companies.  A new law in Germany will require the country’s Mittelstand businesses to set their own non-binding quotas by June of 2017. But commentators say that given there’s no sanctions on failure to fulfil these quotas, most family businesses are likely to ignore the law, or at least make only half-hearted commitments.

Nadine Kammerlander, a professor of family business at the Otto Beisheim School of Management, says that the lack of gender inequality among family businesses in Germany can partly be explained by cultural issues. “In accordance with the German love for accuracy, many female professionals perceive a pressure to be perfect at home and in the job,” she says. “This leaves many females to consciously decided to leave their career path and work part-time instead of pursing a top management career.”

But Nadine also says that gender quotas have affected listed firms more. “Listed firms have long experienced political pressure to work towards more gender equality, whereas smaller family firms are less on the radar screen of political regulations, society and the media. As such, they had less conformity pressures and probably did not see the need to adapt.”

But is it as bad in other parts of the world? A recent report by the business services group EY and Kennesaw State University entitled Women in Leaderships: The Family Business Advantage found that the world’s biggest family businesses are more receptive to employing women in senior roles than non-family businesses. Among its main findings were that out of the 525 businesses surveyed, 55% had at least one woman on the board and 70% are considering a women for their next CEO. Altogether, the study found that 16% of board members globally were women, meaning that the average board had 1.4 women. So, family businesses might not be as bad across the board and are at least willing to improve gender equality. But it’s one thing contemplating appointing a female CEO, but an altogether different thing actually doing so.

In fact, when it comes to the top 100 family businesses in the world in terms of revenue, as measured by the Centre for Family Business at St Gallen University, only one has a woman CEO – Pamela Nicholson at the US car rental group Enterprise Holdings. There were a few powerful chairwoman, including Sophie Bellon at Sodexo, Margarita Louis-Dreyfus at Louis-Dreyfus Holdings, and Esther Alcocer Koplowitz at Samede Inversiones, but not many. And a brief look at the boards of the top 100 reveals the huge predominance of middle-aged white males, suggesting the big family businesses need to not only address gender inequality, but the whole issue of greater diversity at the top.

Quotas should help to improve the situation, at least among the western economies. Nevertheless, there are usually very few sanctions on firms that don’t enforce them. Also, most of these quotas are for listed businesses, not privately-controlled family businesses.

Clearly, despite some notable exceptions, family businesses still need to do more to improve their efforts at employing women in top positions. Of course, it will never be a perfect world, and governance correctness, just like political correctness, isn’t always the right policy to follow for all businesses. But when it comes to gender equality, the evidence suggests family businesses need to do a lot more.