Guest post by Nan Langowitz is Co-Founder and Faculty Director, Center for Women's Leadership; and Associate Professor of Management, Babson College, Wellesley, Mass.
In the last five years, the number of woman-owned businesses has increased by 14% and the number of women owners of family businesses has increased at more than double that rate, by 37%. Not only is the phenomenon of ownership by women worth noting but the outcomes for these woman-owned firms point to new ways of creating value that may be worthy of emulation. Much has been said about the differences in leadership styles among men and women. Recent research by the Babson College Center for Women's Leadership looks at those potential differences among family firms and points to woman-owned family firms as an emerging new model for success.
The Babson College/Mass Mutual report, Women in Family-Owned Businesses, shows that woman-owned family firms are more productive, diverse, and philanthropic than those owned by their male counterparts.
The woman-owned businesses we looked at operated in the same top five industries as their male counterparts-manufacturing, wholesale, retail, service, and construction-- and have relatively the same average revenue size--$26.9 million in 2002-yet the following differences were exhibited in a number of areas critical to firm performance and organizational and
family cohesion. Our research found that woman-owned family firms:
Do more with less. They are nearly twice as productive as firms owned by males. This means that female owners use organizational structures and create company cultures that result in more effective efforts by their workforce.
Give more thought to succession planning. Family firms owned by women are more likely to have chosen a successor chief executive. Overall, 39% of family-owned businesses will experience a leadership transition in the next five years, yet woman-owned firms are more than 20% more likely to have named a successor CEO.
Nurture female leadership. Woman-owned firms have more women CEOs, more women on their boards of advisors, and more women family members employed full-time in the business. They are also more likely to select a woman as their successor CEO.
Have a vested interest in sustaining and growing their family firms. Woman-owned family firms have a 40% lower attrition rate of family member involvement and experience greater pride and loyalty to the business; and agreement with its goals. Female family members also reap
benefits. Woman-owned family firms are nearly three times as likely to employ more than one female family member full-time.
Demonstrate a deeper commitment to philanthropic causes than male-owned firms, with a greater proportionate emphasis on philanthropy, specifically favoring community and educational needs.
Female owners are clearly adding value to their family enterprises, with striking differences in their firms' performance and organizational characteristics. From a competitive standpoint, these women owners may be the new management gurus to watch.
Reprinted with permission from Women's Business November 2003