70% of family businesses are considering a woman for their next CEO
Family businesses naturally have a focus on inclusiveness, longevity, sustainability and growth, but one area setting these companies apart from other types of business organizations — and arguably helping to drive long-term success — is significant inclusion of women leaders. Family businesses are some of the largest and most durable in the global economy, having managed to remain innovative, flexible, focused and growing for decades, if not centuries. They have a higher percentage of women family and non-family members in the C-suite, in top management and on the board than other types of companies.
This commitment to advancing women was initially identified in an EY and Kennesaw State University report Staying power: how do family businesses create lasting success? It is explored further in a carve-out from the survey, which covers 25 of the largest family businesses in each of the 21 top global markets, called Women in leadership: the family business advantage. Those surveyed represent businesses that average $3.48b in sales and 12,000 employees.
Specifically, some of the significant findings about family businesses that underscore their inclusion of women include:
- They average about five women in the C-suite and four women being groomed for top leadership positions
- Women compose 22% of the average family business top management team
- 55% have at least one woman on their board
- Boards average 16% women — which is more than one woman per board
- 8% of their boards are 50% or more comprised of women
- 70% of family businesses are considering a woman for their next CEO, and 30% are strongly considering a woman for the top spot
When comparing these family businesses with overall global business statistics, the difference is striking. Women’s participation in top management globally was 12.9% at the end of 2013, and the proportion of women CEOs worldwide was 3.9%. Continuing the comparison to the percentage of women on corporate boards, the difference is staggering, with the worldwide average board composition standing at 12.7% women at the end of 2013. It is imperative to note that family businesses are included in almost all of the global statistics about women in business, including these above. If the worldwide family business data were separated from the non-family businesses worldwide, the disparity would likely be even greater.
“Because many of the reasons to not appoint women to the top level positions are based on social stereotypes – which themselves are a defensive reaction providing an overall sense of safety – many multinationals or publicly listed companies may refrain from such decisions that may be considered risky and less conservative to their shareholders. By contrast, family businesses have the freedom to choose the top talent based on the skills and the potential they observe, which is one of the explanations for the higher number of higher placed women in this sector. Given that diversity in leadership is positively correlated with higher levels of engagement and a more sustainable increase in bottom line revenues, I believe businesses like these, that use common sense and pragmatic reasoning in placing top talent, are on for long term success,” explains Andreea Mihnea, HR Director, EY Romania.
Supporting all women, not just family
The research shows that family businesses believe in the value of women in leadership overall, including women non-family members. Companies in the survey averaged just over one woman family member in a leadership position, but also averaged 3.5 women in the C-suite who were not family members. Additionally, these businesses said they were grooming an average of four women for a top leadership position — one family member and three non-family members.
The overall impact of women in management
The survey data also show that having more women being groomed for the C-suite leads to a business having higher growth targets, emphasizing their focus on long-term growth and sustainability of the business, rather than short-term performance goals, such as meeting quarterly numbers.
A formula for success
The study uncovered three catalysts for women in leadership, which many of the surveyed companies had in common:
- Role models. Family businesses that tend to have women in top leadership in the C-suite and on the board offer role models to less-senior women and clearly demonstrate that moving up the ranks and assuming leadership positions are possible.
- Long-term thinking. Family businesses tend to think in very long time horizons. This long-term thinking and longevity contribute to the erosion of conscious and unconscious bias, making space for women at the top.
- Inclusive environment. Family businesses balance the interests of the family with the needs of the business by emphasizing cohesiveness, inclusiveness and commitment to the well-being and wealth of the family and the family enterprise, including non-family employees. People — not just profits — matter. This is the kind of environment in which women thrive.
“Some of the largest, longest-lasting family businesses in the world are moving women farther and faster than their non-family counterparts,” says Alexandru Lupea, Aassurance Partner and Strategic Growth Markets Leader, EY Romania. “These businesses are the giants of the world economy, employing vast numbers of people, dominating industries, and impacting local and global economies. How they operate when it comes to valuing women leaders shows a different, more enduring and sustainable path forward for business and for the world economy as a whole.”
 The CS Gender 3000: Women in Senior Management, Credit Suisse Research Institute, September 2014; Catalyst censuses (Fortune 500 and FTSE 250), 2014