The low representation of women on public company boards has recently received a lot of media coverage, with some calls for a mandatory level of female board membership.
But what is the situation in the private sector? Here we could expect that female leadership to be more prominent, particularly in family business, where there is likely to be more flexibility in terms of non-standard hours and child support.
However the recently released MGI Australian Family and Private Business Survey 2010 conducted by RMIT University found that women accounted for only around 11% of owners and managers of the surveyed businesses. Furthermore, sons were 5 times more likely to be involved in the family business than daughters and 5 times more likely to succeed the current CEO than daughters.
Perhaps more surprising is that this position seems to have hardly changed over the past decade, as reflected in the results of the same survey conducted in 2003 and 2006.
This seems counter-intuitive. Women appear to be increasingly prominent in new business ventures. Indeed in the US it has been reported that women consistently have been launching new enterprises at twice the rate of men.
The issue there seems to be not the number of businesses operated by women but the size of businesses operated by women. The article by Sharon Hadary in the Wall Street Journal reported that in 2008 the average revenues of majority women-owned businesses were still only 27% of the average of majority men-owned businesses.
This is also likely to be the position in Australia. According to the Australian Bureau of Statistics 32% of small business operators in June 2006 were female (‘small businesses’ being those employing less than 20 people), whereas the RMIT survey focussed on businesses with turnovers greater than $2m. This indicates that the proportion of female operators is larger in the small business category than for medium businesses.
We could assume from this that women are starting businesses but not growing them to the extent that men are, and are not taking the reins of established family businesses to the extent their brothers are.
While it is most unlikely that there is a simple explanation for this, it is tempting to put up a few hypotheses.
Most obviously, women’s careers are interrupted by child-bearing and child- rearing more than men’s are. While female employees have the benefits of maternity leave and the certainty of a job on their return it is quite another thing for a female business owner to be able to find someone able and trusted to operate the business in their absence.
Further, a business generally needs a full-time CEO. It requires energy and 100% commitment which is a big ask of someone with small children who often have the same demands. Usually something has to give and, not surprisingly, often it’s the business. When it comes to family business succession, pre baby-boomer CEOs have generally looked to their male offspring as their natural successors on the basis that a woman’s domain is elsewhere than in business. Perhaps part of this has been a reluctance to expose their daughters to the cut-and-thrust of the business world.
Could it be that women in general do not have the same objectives in business as men – not being as hungry for growth and market dominance? (Perhaps biochemistry is a factor.) Sharon Hadary’ discussed the different goals of male and female entrepreneurs, with men tending to start businesses to be the ‘boss’ with the objective of growing the business to be as large as possible. On the other hand, she stated that ‘women start businesses to be personally challenged and to integrate work and family, and they want to stay at a size where they personally can oversee all aspects of the business’.
She also contends that women are more debt-averse than men, preferring to limit growth by what can be funded from reinvested profits. Indeed she sees that women do not tend to focus on building relationships with bankers and are likely to believe that they will not be given credit if they apply for it.
All of these explanations are plausible and it is probably the combination of factors that results in the lack of progress in the level of female owner/managers of medium sized businesses that is evident from the longitudinal RMIT survey.
With a compound of causes, there is no easy fix.
More access to child care may help women get back to business from maternity leave, but this continues to be a vexed issue.
The current generation of family business owners are gradually making way for successor owners/CEOs who have grown up in an environment where women have equal opportunity, which means they may be more likely to give equal consideration to daughters and sons as their successors.
Changing the mind-set of women, as advocated by Sharon Hadary, to ‘think big’ through training and coaching is also a long term proposition, especially when it counteracts basic instincts.
But perhaps there is nothing wrong with those instincts for nurturing the business, keeping it close and avoiding risk. Perhaps for now a better idea for women in business is just to ‘think bigger’ rather than ‘think big’.