Why female leaders boost a business' bottom line

Written by
Shaheena Jivraj

08 Mar 2017

08 Mar 2017 • by Shaheena Jivraj

Global debate around women on boards and in senior executive leadership positions has focused almost exclusively on listed companies. With recognition of the benefits to the bottom line, attention has been channelled into interventions to achieve greater gender diversity.

Progress has been slow, but numbers are moving in the right direction. However, the situation is different in family businesses – which have a history of female leadership.

Collectivist culture

In the Middle East, a strong collectivist culture, based on extended family networks and kinship ties, creates interconnected relationships that blur boundaries between family and business. The traditional model of handing down control of family businesses has favoured male succession, as does legislation around inheritance.

Daughters have been overlooked for formal leadership succession, largely for cultural reasons, embedded in assumptions around the role of daughters once married – in many cases, they are no longer part of their ‘blood family’. There is a general lack of acceptance of women leading large businesses.

Despite the invisibility of women in formal leadership positions, research shows they are pivotal, taking on a buffer role in managing the relationship between the generations, but their value is rarely acknowledged.

Deeply ingrained succession patterns often mean male heirs have an expectation of taking over the business on graduation, while daughters expect to look for a job or create a business. Where daughters do join the family business, it is often to build a charitable arm or lead on limited projects. However, over the past decade, family businesses have undergone a radical shift in attitudes towards succession as population changes, and the number of female graduates, has influenced the succession pool.

The push to improve governance has brought in specialist family business consultants who look for talent and potential. Research by McKinsey in 2015 found companies with gender diversity in their leadership improved financial performance by 15%. Family businesses are therefore paying greater attention to female family members.

The entry of daughters into family businesses alters the dynamics and even the culture of the business, introducing different challenges. The younger generation has to overcome bias in how they are viewed by their parents, older family members, employees and other significant stakeholders.

For daughters, expectations around their roles in the family business extend to maintaining family roles – often described as “kinship roles” – aligned to the feminine qualities of nurturing and caring. This creates a tension for daughters and reinforces expectations around their involvement.

With family businesses, there is an implicit assumption that girls will be ‘good’ team players and endorse decisions made by their elders. When daughters do not conform, they are often sidelined or displaced by male siblings. Their credibility quickly erodes and their exit affects both the business and their relationship with their parents.

However, where family businesses have integrated daughters into the business, building strong working relationships, the impact has been huge. Creating a diverse and inclusive culture in family businesses powerfully challenges norms and behaviours established 20, 30 or even 50 years ago.

We have seen the impact in updated governance structures that no longer restrict succession to male heirs. Challenging the norm and bringing more women into leadership roles raises their visibility in the media. Power lists of family businesses identify 31 women in the Middle East.

The future for women

The introduction and integration of younger female members into family businesses requires established leaders to provide a more inclusive working environment and question long-held assumptions. One successful mechanism is creating a family council where members can iron out differences and align strategies before board meetings.

Ultimately, family businesses will bring in more female family members because it is good for their bottom line, growth and innovation.