Opening Doors for Next Gen Women Leaders in Family Businesses

In the United States, the increasing presence of women in senior professional roles as leaders and business owners is accelerating. According to the National Association of Women Business Owners, 39% of privately held businesses are women-owned. While there’s certainly progress to be celebrated, the story is a bit more complex in substantial family-controlled businesses.

A 2019 EY study found that just 5% of large family businesses had a female CEO (versus 8% of Fortune 500 companies), and 31% of these family firms had women on their boards. Similarly, research conducted by STEP revealed that only 7% of North American family firms surveyed were led by women, and 34% had women on their boards. That same study also found that the oldest child was the CEO’s successor 45% of the time, concluding that “[s]electing the next CEO based on the male primogeniture logic, despite decreasing in popularity, is still a trend … .” Yet there appears to be a strong desire to elevate women in leadership in family businesses: 70% of the 525 largest family businesses polled in a separate EY study said they were considering a woman as their next CEO, with 30% strongly considering it.  

Given that so many family-owned enterprises seem to value the inclusion of women in leadership, we set off to examine what families had done to be successful in elevating women leaders. Based on our experiences working with business-owning families, and interviews with approximately 30 women from those enterprises, we found three key factors that strongly influenced women’s paths to leadership: early (and egalitarian) exposure to the business, communication of inclusion as a family value and strong female role models in the family.

In situations in which not all of these factors were present, however, success still occurred thanks to a “disrupter.” In these cases, an event or individual caused legacy approaches to be abandoned or challenged, which opened the door for women in the family to join development paths and prominent roles in the family enterprise.  

Exposure to the Business

Among the families we spoke with in which women ultimately took on leadership roles, experiences with the business in childhood and adolescence tended to be similar across gender lines. Boys and girls were equally exposed to the business and its inner workings. There was equal inspiration within the family. Both boys and girls invested time with dad (when the father was the owner-operator) at the place of business, resulting in a common understanding and interest in the business. Providing equal inspiration to the next generation without regard to gender appeared to be a precursor to women joining the business and taking on substantive roles within it.

In many family enterprises where early exposure was more divided by gender, boys were offered jobs “in the business” – packing boxes, working on the line, in the field or in the factory. These jobs are often dirty, sometimes dangerous and male dominated. Therefore, they were deemed “inappropriate” for young women. When these barriers existed, boys and young men developed a deeper understanding of the family’s business fundamentals, as these jobs provided opportunities to learn the business of the family enterprise from the ground up. Conversely, for girls and young women in these situations, early work assignments revolved around support functions, answering phones, processing invoices or other types of administrative work.

In the families we spoke with that successfully developed female leaders, girls were given similar opportunities to the boys. We heard stories of girls rolling up their sleeves – whether it be visiting mines or plants as children, moving boxes around the factory or selling cars on the floor of a dealership. Equal opportunity across all members of the next generation communicated the message that anyone could learn – and eventually lead – the family business. Creating different opportunities based on gender sent implicit (and sometimes explicit) messages that the paths and resulting opportunities differed for women and men in the family.

Intentional Inclusivity

Our research found that one of the best ways that elder family members, both employees and nonemployees, raised awareness about potential leadership opportunities among all members of the next generation was through the practice of, and communication about, inclusive values and behaviors.

The women we interviewed described messages and behaviors – exhibited by both parents – that influenced their paths from their early years through young adulthood. In fact, 78% of leaders we interviewed described their families as valuing inclusion, whereas only 22% of our non-leader group said the same. In families in which boys and girls (and young men and women) heard the message “there is opportunity for you in this business,” women were more likely to engage. Attitudes and approaches like these by parents often shaped children’s interests, sources of inspiration and views of what roles were possible. These formative experiences had a building and cumulative effect on the next generation’s outcomes.

These practices and communications of inclusive values were identified as being impactful during both formative years and at pivotal moments. One such moment consistently cited by those interviewed surrounded the choice of college and career paths. In business-owning families, when college-bound kids were counseled differently based on gender, boys were often encouraged to pursue majors that would be additive to the family business, and girls were told to simply find something that makes them happy.

College-age women were generally freer than their male counterparts to pursue whatever might interest them – in many cases, that was art or education – as the assumption was that marriage and homemaking, rather than a business career, might follow.

In a number of cases in which women became leaders, they described their fathers as progressive, feminist or “ahead of their time” in relation to how they viewed women and managed diverse employees.

Hearing the message “you are capable and have potential to be successful in this business” naturally led to more success. Conveying this message – through words, actions or gentle (often unconscious) nudges – to both genders equally creates inclusivity that allows diversity to flourish in the next generation of leaders.

Female Role Models

Having strong women as leaders and role models in a family was the third clear factor that affected women’s leadership in a family business – as well as the attitudes of all genders in successor generations. When women leaders were present, men were open to women’s leadership, and girls and women saw themselves as equal partners or successful leaders in the family enterprise. Of the women we interviewed who took on leader roles, 65% of them had clear strong female role models as mothers or grandmothers. Of the non-leader group, that figure was only 22%.

The mothers and grandmothers who modeled leadership for the next generation either had formal roles in the family business or were treated as equal partners in business decision-making, despite not holding a formal title in the company. Terms to describe them were controlling, strong, working moms and equal partners. Some sat behind big desks on Wall Street, wore power suits to work in the 1980s and had accounting, IT or engineering degrees. They told their daughters: “You walk in there like you own the place.” These women showed their daughters and granddaughters what was possible, which fueled the ambition of the next generation of women.

In other families, mothers and grandmothers didn’t have a formal role in the business, but their ability to make and influence decisions was undeniable.

Given the importance of role models for women, expanding their understanding of what’s possible and inspiring them to be more ambitious is crucial. In family enterprises, familial role models seem to have an outsized impact on women in the next generation. This is consistent with what happens in families more generally, so that a role model with similarities to the individual are most influential. As a result, women from the same family, raised with the same values, religion and culture, can be powerful pathfinders for the next generation of women.

Changing the Path: The Role of Disrupters

While the paths of the next generation are largely set by early adulthood, we discovered it’s never too late for the course to change. In families we spoke that didn’t implement the success factors we’ve outlined , in whole or in part, sometimes “disrupters” – in the form of both people and events – emerged to change the assumed path of leadership development for a company. These disrupters altered the course of the next generation’s development or created an environment for men and women of the next generation to become leaders. There are a number of common ways these disruptions occurred.

In families with women leaders, sometimes individuals in the family enterprise (family and nonfamily leaders) elevated women who were previously not on a leadership trajectory. These leaders invested continuous time and energy into developing the next generation leader’s talents, became advocates for them in the senior generation and helped the next generation navigate complex relationships with the senior generation and, in some cases, the board.

Lessons Learned

Regardless of the approach a family has taken historically to grooming the next generation of business leaders, opportunities exist to increase the representation of women – and diversity generally – in the leadership of family businesses. The most important first step is to be intentional. The cumulative impact of early life often encouraged or dissuaded the next generation of women.

To give everyone the opportunity to develop the interest and skills necessary to be successful in a business-owning family, inclusion must be a priority in the family and in the business. Family leaders must start by saying that they value diverse perspectives in the business and that every member of the next generation has the opportunity to prove that they can be a success. This sentiment might also belong in a family mission statement or guiding principles, or maybe it merits time on the agenda at the next family council meeting. In addition, consider the following:

• Provide opportunities for boys and girls to do a variety of jobs – both administrative, office work, manual labor and field work, as applicable – during adolescence and young adulthood for every member of the next generation. Some family businesses create a set rotation through different departments or types of work for family members.
• Model and value equity in family relationships. While seeing a true partnership in mom and dad’s relationship is clearly an important model for children, sibling and cousin relationships are also important. Instead of always giving leadership responsibility to the oldest, consider younger family members for age-appropriate opportunities, and allow quiet children to speak first.
• Keep the rules consistent, regardless of age and gender. If the owners don’t think family should work in the business or that everyone should work outside the company for a specific amount of time, communicate the same message to everyone – no special treatment for the first born.
• Rethink the family narrative. How do you tell the origin story of your family business? Is grandpa a brilliant entrepreneur who bootstrapped and grew the business without help? Consider how women and others might have contributed. Perhaps there is a more inclusive way to portray the family’s success.
• Elevate the stories and successes of women and other diverse leaders – in the family, in the company and in the community – to demonstrate what’s possible and broaden horizons for everyone.