Why family businesses have a higher percentage of women leaders

Family businesses do not have great representation of women among leaders, but at least they’re doing better than non-family businesses.
Family businesses do not have great representation of women among leaders, but at least they’re doing better than non-family businesses.
Image: REUTERS/Adrees Latif
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While women make up at least 40% of the workforce in 80 countries, they remain greatly underrepresented in leadership roles. The number of women who are currently CEOs of Fortune 500 companies—a record high—is only 32, and as of 2015, women made up just 13.8% of top management and 14.7% of board members at these companies.

Clearly, much work remains before the playing field is leveled in the business world generally. But there’s one place where the problem, if nowhere near solved, is not as bad as elsewhere: The world’s largest, longest-lasting family businesses are advancing women, including non-family members, further and faster than their non-family counterparts. In our recently released annual survey of 589 of the largest family businesses from top global markets, we found that top management is 22% women, and board membership is 16% women. In addition, there was a 20% increase in the number of women in the C-suite since our 2014 survey on this topic.

So what do family businesses do differently?

Long-term thinking

To fully understand what’s behind the relatively better numbers of women in leadership at family firms, we must consider what differentiates these companies from their non-family peers, and how these differences benefit women.

One key difference is that family businesses, which seek to preserve a legacy for future generations, prioritize long-term sustainability and growth over short-term gains to a far greater extent than non-family businesses. Consistent with this focus, the average tenure of a family business CEO is 20 years, compared to six years for the CEO of a public company.

Car rental giant Enterprise Holdings, a family business and EY client, exemplifies this approach. Founded in 1957, the company has had just three CEOs. Current CEO Pamela Nicholson, who is not a family member, was promoted to the job in 2013 after 36 years with the company. She succeeded Andy Taylor, the son of the company’s founder. In a statement about Nicholson’s promotion Taylor said, “This step is a natural evolution of Pam’s strong leadership of our business—leadership that has won her the loyalty and respect of our management team, of the Taylor family and of the larger Enterprise family.”

Taylor, who had served as CEO for more than 20 years, had perspective. This long-term view works to women’s advantage. For example, the longer CEO tenure may serve to break down conscious and unconscious biases against women, giving company leaders more time and opportunity to witness women’s contributions and accomplishments.

There is also evidence that the long-term view aligns with the management style of women in leadership roles at family businesses. Studies indicate that women approach succession in a way that places company longevity over individual interests and that they excel at transmitting values to the next generation of leaders.

“As a family-owned business, we’re uncommonly in tune with the need to operate with the next generation in mind,” Nicholson told career website Glassdoor.

Inclusive environments

In addition to taking a long-term approach to management, family businesses are also characterized by their focus on people and relationships in addition to profits.

Research indicates that family businesses differ from their non-family counterparts in both the number and type of goals they set. For example, family business goals may reflect notions of socio-economic wealth, family identity, and reputation, as well as relationships among family members. In short, the business is more than a business. “It is a way of life,” said family business expert Dr. Joseph Astrachan, Professor Emeritus, Kennesaw State University.

The broader purposes of the family business help keep family members and employees engage with each other and the company. As a result, relationships and inclusivity are highly valued.

Finally, family businesses, by definition, blur the boundaries between work and family. As a result, they are more favorably disposed to policies that support a balance between work and family obligations. While men now share the need and desire to balance these responsibilities, the issue has, historically, been viewed as a concern for women, and family firms have been more accommodating.

Valuable Lessons

With greater numbers of women in leadership roles, the world’s largest, most profitable family businesses are thriving. They and their employees benefit from their long-term approach to management, more inclusive environments, and broader purposes. These market leaders offer exceptional professional opportunities to both men and women, and to family members and non-family members. But at a time when gender parity remains elusive at all levels of business management, family firms are especially compelling options for women who aspire to lead. In addition, they set an example for all businesses that want to succeed—and advance women.

Carrie G. Hall is the EY Americas Family Business Leader.

This story is part of How We’ll Win, a project exploring the fight for gender equality at work. Read more stories here.