Women and Daughters Taking Control of the Family Business

It's as if the owners of family businesses recently woke up, and discovered the fact that women can run a business as well as a man! In the past, only the male children would have been considered for a transfer of ownership (succession) of the family firm. Now, women are increasingly taking control.

There has been an almost five-fold increase in the number of women leaders in family business since 1997, and almost a third of surveyed firms indicate they may choose a female successor. (Mass Mutual 2007 American Family Business Survey). This is seen as an excellent way to increase the dismal family succession statistics. According to the Family Firm Institute (FFI), only 30% of family firms have a successful inter-generational transfer from the first generation (entrepreneur/founder) to the second generation. Approximately 12% transfer to the third generation, and only about 3-4% survive to the fourth generation of family ownership. Most founders want the business to stay in the family, and as times have changed, families and businesses have also changed.

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Junior may not be interested in the family company for a variety of reasons; spoiled by success, better opportunities elsewhere, boredom, or he may be looking for his own challenges, but Sally grew up in the business as a little girl. She knows the ins and outs of the business. Sally has a university education, and a few years of business experience. This scenario is playing out all over the world as daughters and mothers are increasingly taking over the reigns of family owned businesses.

A few scholarly studies have been conducted concerning women owned family firms, and have shown a better financial return than male owned family businesses. However, their growth is slower, and they are more financially conservative than their male counterparts. Women have been shown to borrow from the bank less than men. Part of the reason is believed to be discrimination, and part can be explained by the reduced risk preference of women.

When considering the dynamics of varieties of roles within families, it is often easier for a daughter to succeed her father, than for the son. Most often, father and son have a conflictual relationship where the son is trying to show his father he can be like him and run the company. The father is concerned with being "put out to pasture" and being made irrelevant. Research has shown that opposite gender successions are easier to manage, such as a daughter succeeding her father, or son succeeding his mother.

Women are entering the family firm in record numbers, they are performing well, and they are winning the respect of their customers, their suppliers, their employees, and most of all, their fathers.

Women and Daughters Taking Control of the Family Business