A man’s world?

Gender equality in family businesses

by Josiane Fahed-Sreih

As an area of study, family business has progressed from poor beginnings to a considerable conceptual and theoretical body of knowledge around the turn of the twenty-first century. Nonetheless, different definitions of “family business” continue to be used as the foundation for study in this sector. Some definitions emphasize the degree of family ownership, while others emphasize the degree of family involvement in the firm’s management operations. For example, a “family firm” is one in which owner-managers perceive their company to be a “family business” and consciously support this perception by including family benefits as major components of the firm’s performance objectives (such as tax benefits for the family above and beyond simple profit maximization).

 Family businesses has notably contributed to several innovations that are beneficial to humans and societies, and such businesses tend to be longterm in order to give the children and grandchildren of the family a healthy growing business. For instance, the banking and international trade industries and practices have been revolutionized by the Medici family since they had the ability to promote double-entry accounting and credit letters. Family businesses constitute an important component in many countries, to be more precise, in the USA, it contributes to around 80 percent of the 15 million businesses, and globally, family businesses contribute to around “70 percent of the world’s GDP and 60 percent of its employment.” Therefore, although they play a huge part, gender bias is still there and equality is far from being obtained. 

“For any business to thrive and prosper, it needs a balance of men and women. Now’s the time for family firms to seize the opportunity,” says Renate Lange, the board of management and markets leaders in PwC Netherlands. Women, for example, have been reported to be more dependent and concerned about others, whilst men have been described as more independent. In their positions as family business owners and administrators, women have been described as “peacemakers,” “mediators,” and “nurturers.”1 In the past, and still in many countries today, women were also given characteristics that do not go with businesses, such as nurturing, caring and sensitive. And this gave societies and businesses a view that women cannot be part of a business and cannot lead a business. Besides that, in many men-dominated organizations, gender bias occurs in large amounts in many countries around the world, which have been leading women to accept traditional jobs only, rather than taking crucial jobs in businesses. Gender equality in leadership and managerial positions has many implications on the company and on the society as a whole, which is why some European countries have started working on having minimum quotas for female presence in companies and in the board of directors, although equality is still not perfectly reached. The United Nations have classified gender equality in the 2030 Agenda for the Sustainable Development as a priority, and will continuously work on it to reach the intended goal of gender equality in the workplace. 

CULTURAL HANG-UPS 

Going deeper into family businesses, studies show that women are accepted in some family companies, are able to reach managerial positions, and can lead the business. Yet, in other family businesses women do not have this right, and they are prevented from reaching high positions, even though they have the needed competencies. As a matter of fact, in the Netherlands five different companies owned by the same family were handed down to the male heir, leaving his sister without any family business inheritance which created a lot of tension in the family. 

A study in the UK regarding daughter succession in family farm businesses showed that in most cases, the two-generation farm family succession consisted of the father and the mother, who are involved with their adult children. Little was devoted to daughter succession, and literature about this topic suggests that there is gender bias, where men are more valued and women are not seen as potential successors. In addition to that, the study showed that daughters are only considered when sons are absent. Gender has an impact on the process of succession planning in a family business since it is linked to the family’s culture. Gender is a non-genetic distinction between men and women. The differences are not inherent, such as the many jobs, duties, functions, and even the physical location where human activity takes place. 

This shows that the priority remains for the sons and men, and not equally for men and women, sons and daughters. 

In terms of entrepreneurship development, chances can be identified at both the macro and micro levels. At the macro level, China’s recent and ongoing economic reforms have created enormous opportunities for entrepreneurs, resulting in the continued rise of family companies. Despite its downsides, the one-child policy has offered a unique chance for women to defy tradition and become family business leaders. On a micro level, Chinese family business culture favors transgenerational entrepreneurship, with elder family members mentoring and nurturing entrepreneurial behavior in the younger generation. This includes strategic education in areas relevant to the family business, entrepreneurial bridging activities that provide positions and opportunities for the younger generation to apply their education, and strategic familial succession, in which elder leaders protect the business and maintain its integrity during the transition to the designated successor. 


On the bright side, much research is recently being made around this topic, and specifically around gender-balanced workforce and its importance. 

KPMG was one of many companies who started researching more family businesses, and started with The Successful Transgenerational Entrepreneurship Practices (STEP). The STEP 2019 Project Global Family Business report studied more than 1,800 family business leaders around many countries from Europe, the Middle East, Africa, and other parts of the world. This study showed that women leaders in family businesses reached 18 percent globally. The percentages are highest in Europe and Central Asia, and lowest in North America. In addition to that, this study showed that in many cases in many countries women worked behind the scenes, doing basic administrative tasks. Some wives, especially in Russia, of the family businesses’ CEOs were leaders in the family business, however, they did not advertise to any stakeholder that they were the CEOs’ wives, and they used different family names, mainly to remain seen as potential leaders and to remain as leaders who can handle employee and customer issues, and not only be seen as CEO wives. 

On another side, women in family enterprises are sometimes being given new roles and possibilities as a result of changing demographics. External variables such as social prejudice, unconscious gender bias, and family traditions, as well as stereotypes that need to be confronted, are evaluated alongside these opportunities to give a roadmap for future women family business leaders. According to one study, the numbers and percentages of women in family businesses worldwide are relatively small. For instance, in family firms around the world, women only made up 21 percent of board members on average, with 36 percent having no women on their boards. Moreover, women made up only 24 percent of management teams, while 19 percent of companies had no female executives. One in seven companies, which is around 14 percent, had no women on the board of directors and no female managers. 

GENES OVER COMPETENCIES 

Taking a more precise example in Lebanon. Although the number of Lebanese women in senior decision-making positions is increasing, the implication is that these appointments are more often based on heredity than on aptitude. 

Family enterprises are especially important in Lebanon, as they are throughout the Middle East. 

Over 80 percent of the Middle Eastern workforce is employed by such companies, which provide an estimated 60 percent of regional GDP. Nearly 60 percent of business firms in Lebanon are family-owned. Many of these corporations appoint female members of the owning family to the board ing inheritance. As a result, despite their titles, these women rarely have a role in board discussions or decisions. Female board members are also not given the opportunity to demonstrate their expertise, according to survey participants, and they are not respected as they should be respected by their male colleagues. 

In the case of Middle Eastern family businesses, there has been a noticeable increase in the number of gender equality programs in the region: 25 percent of respondents in one survey claimed they have such a program in place. Some nations throughout the world have legislation supporting gender equality and the role of women in business, but in the Middle East, such initiatives are typically left to individual organizations. As a result, firms in the region that conduct equality programs do so on principle rather than necessity, and in acknowledgment of the fact that women represent a tremendous and under-utilized source of talent, passion, and innovative ideas. 

Another study showed that women’s talent is frequently recognized by controlling proprietors, who help them financially and morally in their pursuit of education in Western countries. Women are encouraged to take on leadership roles in the family business, particularly if they are family members. However, women’s ability to actively serve in management teams is still conditional upon their ability to perform their household responsibilities, and upon explicit authorization from powerful male family members. In terms of women’s roles and perceptions, studies have focused on the ceremonial appointment of female family members, who are given limited administrative roles beyond what the male patriarch allows. In this dimension, the spouse’s values, family tradition, and educational and social background can all have a role in how women in family businesses are treated.

ECONOMICS OF EQUALITY 

Many considerations are driving family businesses to care more and to start putting bigger efforts into gender equality. First, not considering women in family businesses jobs removes half of the talent pool and makes it limited, which is counter-productive. Second, women are part of the society, they are related to the outside world, and can develop needed connections. Having a diverse leadership team will lead to many benefits in family businesses such as higher employee retention, greater business development, and better customer relations. Third, women care about family and collaboration which will positively affect the performance in the family business. 

How can families, men and women work to remove stereotypes and promote gender diversity in their businesses? 

According to a study done by KPMG in 2020, all family members can work together to answer the above question. And this can be done through many ways. 

First, men and women should both work together on defining their exact roles and responsibilities. After that, they should communicate them to all stakeholders ranging from employees, customers, and everyone related to the company. 

Second, families should involve both men and women in the business from an early age in order to determine the education and training needs. 

Third, while quotas aren’t the answer to more gender diversity, they can be a good place to start when it comes to developing new female role models. Fourth, gender-equality and fairness practices, laws, and policies are required in the family business to start reducing gender gaps and biases. 

Regardless of the multiple benefits, some will still find reasons to decrease the female presence in their companies for many causes. A main cause is that some men find the industry that they work in as “dirty and manly industry”, where the type of the work does not suit feminine characteristics. For instance, the CEO of a scrap metal family business gave the nature of the industry as a reason for not having females in the company, citing that hiring a female for a finance role is still difficult to him, although he thought that a female for this role can lead to long term benefits. 

Family companies do, in fact, provide a more favorable and encouraging environment for women to exercise their roles. While research shows that family firms with female board members outperform non-family businesses, research also shows that female board members are more valuable to the performance of family enterprises. Nevertheless, gender equality in family businesses is not totally achieved due to many reasons ranging from education, family responsibilities (such as raising children), the priority of succession to men rather than women, characteristics that are assigned and viewed as negative ones to lead a family business. etc.

Support our fight for economic liberty &
the freedom of the entrepreneurial mind
DONATE NOW

Josiane Fahed-Sreih

The director of the Institute of Family and Entrepreneurial Business at the Lebanese American University
--------------------------------------


View all posts by

You may also like