managers

More Women Are Leaders in Family Businesses Globally: A Magic Formula for Creating Gender Parity

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I grew up in a family business started by my grandparents and continued by my father, his six siblings, and their spouses. The business was a chain of clothing stores in small towns in the Midwest. While each sibling owned their own store or two, a number were jointly owned by all the family members, and these were run by my father as the corporate CEO. I began working in the business, as did most of my siblings and cousins, around the age of eight. Because I was the oldest of my three siblings and showed interest and business acumen, I understood from an early age that I was being groomed to take over for my father some day to run both our individual store and the jointly owned businesses. I was exposed to and mentored in every aspect of the business, and the fact that I was female never came up as an issue with anyone in the extended family. It was a great disappointment to all when I discovered during college that my path in life lay elsewhere and I declared that I would not be joining the business after college—but that is a story for another day. It was with both pride and recognition that I read about recent research, conducted in 2014 by Ernst & Young (EY) and Kennesaw State University, which found significantly higher rates of women in senior leadership roles in family businesses globally. When I thought about my own experience, this finding made sense, and the implications suggested by the authors seem exciting and important. Why are these findings important? This research gathered data from 525 of the world’s largest family businesses. The responses are from twenty-five of the largest family businesses in each of twenty-one countries with global markets. The authors note that family businesses are not insignificant players in the global marketplace. In fact, they are anchors of the world economy, and as a whole they create 70–90 percent of the global GDP and 50–80 percent of jobs in the majority of countries worldwide. The research found that the 525 participating family businesses average about five women in the C suite, 55 percent have at least one woman on their board, and 70 percent are considering a woman for their next CEO. These statistics are considerably higher than overall global business statistics, even though a great deal of research exists that shows having women in leadership roles makes economic sense for businesses:

  • Companies with more women in leadership increase focus on corporate governance, corporate responsibility, talent dynamics, and market acuity.
  • Publicly listed companies with women on the board tend to outperform those without in key metrics such as share price, return on equity, net income growth, and price-to-book value.
  • A gender-balanced board is also associated with better corporate social performance in community, customers, environment, and supply chain. These activities improve business outcomes in areas such as risk management, corporate and brand reputation, and recruitment and retention.
The authors suggest that “family business may offer a path forward for all businesses seeking to achieve gender parity.”

A Magic Formula for Creating Gender Parity

The study authors summarize the family business formula for success for bringing women into leadership roles as the following: Role Models + Long-Term Thinking + Inclusive Environment = Women in Leadership
  • Role models: Women are inspired to be leaders when they see women in positions of power. When I was growing up, I was surrounded by capable women business leaders who were my mother, aunts, and cousins. Consequently, I never doubted that I could be a leader in our business if I wanted to.
  • Long-term versus short-term thinking: Family businesses are focused on long-term sustainability because they are focused on the business as a legacy to be preserved for future generations. Other types of business entities tend to be focused on delivering short-term results to respond to investor expectations. Also, the average tenure of a family business CEO is twenty years compared to six years for the CEO of a public company.
  • Inclusive environment: Family businesses are built on relationships and on balancing a focus on both family and the business. The relationship focus includes activities that keep both family members and employees more cohesive and engaged with each other and the business. The authors also note that “diversity in leadership, including gender diversity, is positively correlated to employee engagement and satisfaction—factors that drive retention and increase cohesion.”
In other words, family businesses have shown that having more women in leadership is good for business, and they have found a formula for how to make that happen!   Image courtesy of Ambro at FreeDigitalPhotos.net]]>

Women in the Military: Cracking the “Brass Ceiling”—Winning a Battle, but Not the War

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The announcement by the Obama administration at the end of 2015 that all combat roles in the military will be open to women is indeed a victory for women. This opens 220,000 jobs previously closed to women. While I wish we lived in a world without war where we did not need a military, that is not the world we are in, and I am happy that the women who want combat roles and military careers are now able to have access to them. Women in the military have long felt that the official restrictions on them having combat roles were unfair. While they have been allowed to serve in combat zones, until now they were not allowed to officially hold the combat positions required for career advancement. This change is part of a long march to inclusion by the military, starting in 1948 with racial integration and continuing in 2011 with lifting the ban on gays in the military. Why do I say that this change wins a battle but not the war? Mariette Kalinowski, a former Marine, writes in the New York Times that while the “brass ceiling” is cracked, it is not gone because the military culture of hypermasculinity has not yet changed. She notes that the system is still stacked against women because of attitudes and beliefs by the older male leaders in charge. Dave Philipps of the New York Times cites Lt. Col. Kate Germano who agrees that the Marines, who are still 93 percent male, in particular “have a climate of non-inclusivity and justify it by talking about combat effectiveness, but a lot of it is based on emotion and not fact.” Elliot Ackerman further supports this position by noting that “the focus by the Marine Corps on physical fitness avoids the real barrier to integration—the hypermasculine culture at its heart.”

What Are the Benefits of Integrating Women in the Military?

  • Dave Philipps points out that not only did a recent Marine Corps study find that there is no detriment to the morale in mixed-gender combat groups, but gender-integrated groups excelled at complex decision making.
  • Philipps also reports the same study found that while women scored lower on many physical tasks, they scored higher on mental resilience and had fewer mental health problems.
  • Kalinowski suggests that a benefit of gender integration in the military, which must include a change in the culture, could be a reduced risk of sexual harassment and assault. She posits that because discrimination and rape are tools of dominance and control, removing the source of the control by changing from a hypermasculine to a gender-inclusive culture will cause the source of the motivation to keep the status quo in place to disappear. In addition, she suggests this change could result in a lower incidence of sexual violence in the larger society.
Kalinsky notes, “We’re up against a quiet, strong prejudice that has everything to do with our biological ability to create life, and nothing to do with our willingness and ability as soldiers.” The decision by the Pentagon to open all combat roles to women is an important next step, but this war is not yet won. Let’s keep looking for ways to support women in the military.   “FET: Female Marines Build Relationships in Helmand” by DVIDSHUB is licensed under CC BY 2.0]]>

Melinda Gates: The First Woman of Women

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I found it inspiring to read in Forbes magazine that Melinda Gates, of the Bill and Melinda Gates Foundation, has decided to put women and girls at the center of her focus to end poverty in the world. Other philanthropists and bankers (such as Muhammad Yunus, who won a Nobel Peace Prize for microloan practices that target women) have shown that investing in women results in significant improvement in the standard of living for families and communities. Caroline Howard writes in Forbes that Melinda Gates, who has $41.3 billion in foundation assets to invest, “has become the most powerful person on the planet whose singular focus is women and girls.” Gates explains that in looking for a woman who would champion issues of poverty for girls and women for the Gates Foundation, she eventually realized that she herself was the best person to do it. Her passion comes from knowing that

  • Women account for six out of ten of the world’s poorest people.
  • Women account for two-thirds of the illiterate population.
  • 58 percent of all primary school dropouts are girls. One year or more of primary school boosts a girl’s future wages by 10–20 percent.
  • The International Monetary Fund calculates that 3.9 million women and girls are “missing” annually: about two-fifths are never born; one-sixth die in early childhood; more than one-third die during their reproductive years.
  • 289,000 women died during pregnancy and childbirth in 2013.
  • Closing the employment and wage gap between men and women would increase women’s income by $17 trillion globally.
Gates sponsors a range of initiatives to alleviate poverty for women and girls that are all connected, such as
  • Family planning
  • Maternal and prenatal health
  • Infant health
  • Education
  • Microentrepreneurship
What can you do? The Gates Foundation is well funded, but there are many smaller foundations that are focused on alleviating poverty for girls and women in the developing world. These foundations need donations and volunteers to support their work. My favorite foundation is VGIF (Virginia Gildersleeve International Fund), and I encourage you to go to the Fund’s website and read about its work at www.vgif.org. A lot needs to be done for girls and women. Do you know of any foundations doing similar work? Let me know in the comments section.   Photo courtesy of Russell Watkins/Department for International Development (CC BY-SA 2.0)]]>

CFO: One Role Where Women Make More Than Men

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The recent focus on the gender-wage gap has raised awareness for several young women in my life who are clear that they do not want to be paid less than men for doing the same work. Do you know a young woman who is looking for a career where women make more than men? According to Sarah Skidmore Sell of the Orange County Register there is one: CFO (chief financial officer). The high pay for women CFOs is not due to women outnumbering men in the position—a recent survey found only 60 female CFOs at S&P 500 companies compared to 437 men. Sell reports that “the median pay for female CFOs last year rose 11 percent to $3.32 million. Male CFO pay rose 7 percent to $3.3 million.” Sell also acknowledges that the high median pay for female CFOs is partly a result of their small number and tendency to work for the largest companies, where compensation is higher than at smaller companies. Nonetheless, with all the emphasis these days on encouraging girls and women to consider training for STEM (science, technology, engineering, and math) careers, focusing on a finance career is another good option—and why aim for the top as a CFO? The CFO role has risen in importance since the financial crisis, when companies became aware of the need for a high-level role focused on both day-to-day operations and the long-term strategic view as the right-hand person to the CEO and the board. The CFO role is also now considered an excellent training ground for advancement to CEO.

Tips for Becoming a CFO

Carol Lippert Gray of the Journal of Accountancy notes that “there is no clear-cut path to the CFO suite,” but you can acquire skills and experiences to become CFO-qualified. Robert Half, of Robert Half Finance and Accounting, recommends the following steps to prepare yourself for a CFO role:
  1. Become a CPA (certified public accountant) or earn an MBA—or do both. A CPA license will give you training in a wide range of skills, including forensic accounting and compliance. An MBA will increase your understanding of business operations.
  2. Widen your customer service experience.
  3. Broaden your understanding of technology.
  4. Position yourself as a team builder and consensus seeker, which will encourage people to trust your judgment.
  5. Consider comptroller and treasurer positions, both of which can increase your experience with funding and strategy execution in preparation for CFO duties.
CFOs report high levels of satisfaction with their role. The journey to get there is long, but CFO could be a great career goal.   Photo courtesy of Financial Times (CC BY-SA 2.0)]]>

Why It Matters That Boards Are Not Diverse

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I just read some surprising statistics about the lack of diversity on corporate boards and why this matters. Stick with me on this topic. This information explains a lot, and I promise it will give you new perspective on why the glass ceiling stays in place for women and minorities—and what needs to change.

The Big Picture

I live in Massachusetts where a combination of universities, foundations, and local news organizations have come together to put a spotlight on the lack of diversity on the boards of publicly traded Massachusetts companies. Research reported by the Boston Fund and the Boston Globe in late 2015 showed the following:
  • 80 percent of directors of publicly traded companies in Massachusetts are white men, while white men make up only 36 percent of of the state’s population.
  • Minorities make up 7 percent of directors and are 26 percent of the population.
  • Women make up 16 percent of the directors (and some of these are also women of color), yet make up 50 percent of the population.
These figures compare to national surveys showing that women and minorities make up 26.7 percent of board seats at Fortune 500 companies, while the boards of small and midsize are firms generally much less diverse. Boards play a critical role in guiding organizations and are not just rubber stamps. They are in charge of hiring and firing CEOs, ratifying key decisions and setting long-term direction and policies. Yet when boards are not diverse, they are not providing the best possible leadership for organizations. A recent study of 2,000 companies by Wake Forest University found that companies with more diverse boards pay higher dividends and enjoy more stable stock prices. So why are boards so slow to diversify? The answers may surprise you.

Turnover Is Low on Boards

One of the answers to the question of why boards are slow to diversify is that turnover is very slow. In fact Shirley Leung of the Boston Globe explains:
  • Turnover of corporate board seats in Massachusetts is only 7 percent per year because there are no term or age limits for most board seats. This is also true nationally, and many directors stay in their seats for decades.
  • The incumbent white men do not want to give up their seats. Why would they? The median pay for corporate directors was $258,000 per year in 2014 for fewer than five hours of work per week. In addition, the pay for directors has risen faster than the wages for average workers.

Why the Impact on the Glass Ceiling Is High

The impact of boards that are not diverse on the glass ceiling for women and minorities is high: only 3–4 percent of corporate CEOs nationally are women, and only five Fortune 500 CEOs are black. Making this link between the lack of diversity on boards and the glass ceiling was an eye-opener for me, but think about it. Boards are responsible for hiring CEOs and they may well be overlooking talented women and minorities for CEO roles. Studies show that people tend to hire people who look like them and with whom they feel most comfortable. It’s a vicious cycle. Boards need to become more diverse in order to be more open to hiring women and minorities in CEO roles, yet you must be a current or past CEO to be considered qualified for most director seats. Because there are so few women and minority CEOs to draw from, boards continue to lack diversity, and the glass ceiling stays in place. One author recently proposed that the solution is term limits for directors so that seats can open and be filled by more women and minorities. Boards will also need to expand their criteria for eligibility to talented individuals who may not yet be CEOs to fill these seats as they open. As is happening now in Massachusetts, these changes are only going to occur if there is a lot of public pressure. What can you do? Here are some suggestions:
  • Write to your local newspaper and explain why diversifying corporate boards is important.
  • Write to your legislator and demand that laws be passed to require boards to diversify.
  • Educate your friends and neighbors about the need for boards to diversify.
  • If you are an investor, exercise your vote or write about your concerns to the companies you have invested in.
Let’s make our voices heard!   Image courtesy of stockimages at FreeDigitalPhotos.net]]>

Women Are Better Managers Than Men

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A recent Gallup study reports that while only one in three (33 percent) working Americans report that they currently have a female boss, female managers outscore male managers on eleven out of twelve measures of engagement. The study found that the employees of female managers are more engaged, as are the female managers themselves. These results hold true for female managers of every working-age generation, regardless of whether the female managers have children in their households. Why is engagement important? Employee engagement is now widely recognized as a significant contributor to company performance. Ryan Fuller writes in the Harvard Business Review that there is general agreement that increased engagement drives results. However, Gallup reports that only 30 percent of American workers and 13 percent of global workers are engaged in their jobs. These findings have important implications for organizational success, and given the higher engagement scores for female managers, one would think that organizations would be eager to promote more women. Here are some of the dimensions of engagement where employees report higher engagement scores for female managers:

  • Encourages employee development by cultivating potential
  • Checks in frequently on employee progress and gives regular feedback
  • Gives recognition and praise for doing good work, which provides positive feedback and helps employees feel valued
  • Sets clear expectations, builds relationships, and encourages a positive team environment

Four Tips for Successful Promotions

It would be good for US companies to increase the number of women managers in order to improve their productivity. At the same time, companies need to position both women and men for success when they promote them. Here are four suggestions from the Education Advisory Board to keep in mind for successful managerial promotions:
  1. Promote based on talent. This means that individuals who have demonstrated skills and results rather than simple longevity, should be chosen for promotion.
  2. Make sure that the person fits the role. Too often, individuals are promoted in organizations as a reward for performance in a different role without preparation for a managerial role.
  3. Do not tie salaries to position titles. People who are high performers in a role or function should have higher pay. Too often, the only way for high performers to receive a higher salary is to apply for a management role that may not be the best fit for them.
  4. Keep developing managers. Managing people is challenging, and companies should continuously invest in the development of their managers.
These findings are more good news about the value that women can add to organizations as managers and leaders!   Image courtesy of stockimages at FreeDigitalPhotos.net]]>