Over the past decade, the number of women participating in family businesses and taking on roles with more responsibility has been on the rise. Every business owner should focus on this growing trend because research shows that 70 percent of today’s family businesses are influenced internally by female directors or plan to have female leadership in their family enterprise in the near future.
The female perspective brings not only better financial performance, but better overall performance, too. Female executives build strong relationships and they bring crisp, strategic thinking to the boardroom. It is essential for company leaders to be aware of the differences between men and women in the boardroom and to adapt and implement a plan to attract the most qualified female members of their family or community. The most significant impact of female leadership is on strategic planning, long-term sustainability, and relationship building.
Research has shown that there’s little correlation between the IQs of individual board members and collective intelligence. However, the collective intelligence of a board rises if the board includes women. The studies have highlighted the performance of women on tasks related to complex problem solving, strategic planning and decision-making.
The findings indicate that a group's collective intelligence gets heightened by the inclusion of women and their enhanced abilities regarding listening, collaborating, and intuitiveness. Take the CIA for example. The organization made a notable transformation of its culture by ensuring greater representation for women in senior positions and they have also explicitly recognized that it was the women on their team who discovered Bin Laden's location.
A wealth of studies demonstrates that having women in the leadership structure makes economic sense for businesses. Research on gender diversity and corporate performance conducted by Credit Suisse Research Institute shows that more women in strategic roles bring not only better financial performance, but also a better all-around performance.
The research highlights four key findings:
Net income growth for companies that have women on board has averaged 14 percent over the past several years as opposed to 10 percent for companies with no female board representation.
Women leaders increase focus on corporate governance and responsibility, talent dynamics, and market acuity. The impact women create is one where the success of a business isn't solely measured by financial capital but also by human capital. Family businesses should strive to create the perfect environment for women to unlock their potential for the benefit of everyone on board. Women ensure the company's actions are impactful for the benefit of the community, in addition to financial benefits, improving quality of life for everyone.
In short – people, not only profits matter. Family businesses must focus on inclusiveness, sustainability, longevity, and growth, keeping the best interest of the family and company in mind at all times, for this is the only way of making sure the business is prosperous for future generations.
There are many reasons why family businesses should invest in ensuring the women in the family are educated to take on executive roles and follow their passion for governance and financial planning. This will bring the necessary skills in leading an enterprise to the board, and it will inspire other women to lead.
A female point of view brings innovation and innovation brings progress.
Contact me for more information and personalized guidance to incorporating gender diversity into your family business.
Elaine King, CFP is an expert on family enterprise consulting, creating strategies for wealth planning, family governance, and financial education programs.