“Because on a like for like basis, males of my generation have been given more opportunity and more preference. I have better skills and better work experience in higher education than some males of my generation. Probably some of the males in my generation see it as a given that it is their right to succeed, like the first born male.”
We’re marking International Women’s Day with a special edit of our upcoming survey of the Next Generation of family business leaders. We’ve been running an international survey of family firms for over ten years. In our last survey in 2014 we included our first-ever survey of leaders-in-waiting. We asked them about their plans for the future, and the unique challenges of being the ‘boss’s child’.
Reading through the responses, we were struck by how differently women answered some of the questions compared to their male counterparts. To take just one example, male respondents often told us that they were involved in professionalising the firm, in areas like systems, processes, and skills. Women, on the other hand, were more likely to be involved with professionalising the family, by helping to set up governance measures like family councils. Both roles are vital, but this striking gender division between ‘hard’ and ‘soft’ skills is nonetheless an outdated stereotype, and one that all companies need to challenge if they are to maximise their talent pool. Family firms are not exempt, but their issues are undoubtedly more complex, thanks to deep-seated cultural assumptions about inheritance and the ‘male line’, which are still prevalent in many economies. It’s another, but very telling, example of just how inextricable ‘family’ and ‘firm’ still are.
 The Next Generation of family business leaders 2016 survey will launch on 12 April 2016
For this year’s Next Gen Survey, we decided to look specifically at the women working in family businesses, and hoping – many of them – to take it over one day. What is their experience? What issues do they face? Do they have the ambition and support they need to succeed, and if not, what factors are holding them back?
The gender gap in all forms of businesses continues to make headlines, whether that’s a gap in pay, a gap in participation, or a gap in the numbers of women on boards.
Some of these stats make depressing reading. According to PwC’s latest Women in Work Index for 2016, a woman still earns only $83 for every $100 earned by a man doing the same job. Likewise, while 40% of Norwegian companies may have women on their boards, the Scandinavian countries are way ahead of the rest of the world, with France (26%), Australia (23%), the UK (22%), and Germany (20%) lagging behind. At 16%, the US is actually below the OECD average of 17%, and the figure is as low as 2% for Japan.
And all this is despite the fact that study after study has proved that companies with female leadership actually outperform those run by men. Research by crowd-sourced hedge fund Quantopian in 2015, for example, showed that female CEOs of Fortune 1000 companies deliver returns three times higher than those of S&P 500 businesses which are run predominantly by men. And as for what might be driving this, one credible theory is that it’s down to the sheer hard work and ambition women need to get that far, which then results in stellar business performance.
So where do family firms fit in? What’s the representation of women in these businesses, and how do the female next gen feel about the prospect of leadership? The good news here is that 30% of the women we interviewed have a seat on the board, which is noticeably higher than the global average for public companies, albeit still significantly lower than the 55% of male next gens in the same positions. Likewise, over half the women we spoke to disagreed that their gender would be a barrier to them running the family business, compared to other types of companies, and nearly the same number said that their firm recognises the value of having women in key positions.
What this adds up to is an intriguing possibility. While the family firm is sometimes considered old-fashioned and reluctant to change, our survey suggests that in this respect it could be quite the opposite. The family firm could actually be one of the most supportive and conducive environments for ambitious and talented women to develop their careers.
There are exceptions, of course, especially in some cultures and some sectors, and there’s still a long way to go to achieve genuine parity. But it could just be that family firms are ahead of the curve in looking to the female line for the talent, energy, and creativity they need to succeed in a fast-changing world. And the returns could be very significant: a report last year estimated that the financial cost to public companies of having no female directors could be as high as $655 billion.
Women in family businesses clearly have a lot to play for; the irony is that the one thing standing between them and success is the (lack of ?) confidence that they can achieve it. And it’s not so much their family’s confidence that’s at stake here; it’s their own.
There is a widespread perception among our female survey respondents that their brothers and male cousins are ‘expected’ to take over. Forty-five percent of women agreed that the next generation of men is more likely to run the business, and only 21% of women say that it’s been agreed that they will manage the company one day, compared with 31% of men. Just as tellingly, only 77% of women believe the current generation has confidence in their ability, compared with 93% of men. But the important word in that sentence is ‘believe’. Are women right to be so diffident, or are today’s young women still tricked by the sort of self-doubt that can undermine everything they could otherwise achieve? Forty-four percent of our female respondents hope/expect to manage the company one day compared to 67% of male respondents.
Our previous Next Gen Survey highlighted the ‘perception challenges’ all Next Gens face as they come into the family firm – both men and women. They feel they’re under much greater scrutiny, and can struggle to gain the respect of their more experienced colleagues, especially if there’s any suggestion that their position hasn’t been earned. This can be an even bigger challenge for women, who can face all the usual issues of sexism in the workplace, as well as the added burden of a point to prove. There can also be deeply engrained (and often unconscious) assumptions about family roles in family firms, which can ‘leak out’ into how the business is run, and jobs are assigned.
So what’s the answer? Mentoring and leadership development training can help, and it’s useful to have solid experience outside the family firm, to enhance credibility. Caroline Lubbers, a third generation currently working in the family business, demonstrates how creating and joining networks that focus on empowering women is, and has always been, the best way to achieve real, positive change – read her story here.
Our upcoming Family Business Survey and the Next Gen Survey launching on 12 April 2016 will be looking in detail at the impact of digital disruption on the family firm. This is another area where family firms – and private companies in general – can sometimes been seen as slow to change, and concerned about the levels of investment required to transform their business. But there’s no longer a choice, at least in terms of digital: it’s a case of adopt or die.
Given the perception that ‘gadgets are for guys’, it was intriguing to find that the female next gens we interviewed were more preoccupied with the challenges of new technology than the men. They’re particularly attuned to the risk of not embracing digital - 37% feel that their business is vulnerable to the threat of digital disruption, compared with only 24% of men, and 44% say they struggle to get the firm to understand the importance of having a clear digital strategy, as against 34% of the men. There seems to be a degree of frustration, too, in the fact that 36% agree that family firms tend to be slow to take up new technology, with only 27% of men saying that.
The challenge, it seems to us, is to turn these very real concerns from the negative to the positive. Instead of warning about the risks, start talking about the opportunities, and exploring what these might mean in practice. It’s worth observing, in this context, that only 68% of women say they have lots of ideas about how to take the business forward, compared with 84% of men. There’s clearly a lot more women could do to get on the front foot here.
Those who advocate having more women on boards say that this gives a business a richer and more balanced understanding of the company’s customers and that, in turn, can enhance its competitive advantage. Women need to have the courage of their convictions, and turn their digital disquiet into digital drive.
 Launching October 2016
The female next gens we spoke to have ambition and talent, and they’re prepared to work hard to prove they deserve their seats on the family board. But as in so many other companies, women are still an under-used asset in the typical family firm.
So we’re going to end on a practical note, with four important things family businesses can do to ensure that they get the most out of the women in their workforce - both their own next gens, and the other female talent that may well be drawn to the special qualities of this distinctive business model.
Here they are:
Network Middle Market Leader
Tel: +46 (0) 10 2133097
Global Leader - Entrepreneurial & Private Business, Partner, PwC Australia
Tel: +61 3 8603 3183
Tel: +1 416 869 2387