Women in Family

BusinessesChamber of Commerce-

Eastern Province- Saudi Arabia- October 19-20, 2011

Dr. Josiane Fahed-SreihAssociate Professor of Management

Director, Institute of Family and Entrepreneurial Business

Lebanese American UniversityMiddle East Coordinator for the Family Firm

Institute, USAFellow Status- Family Firm Institute- USA

Outline

Women in Business in general- The Diversity Issue

Women on Boards of Directors Women as owners in their Family

Businesses Challenges of Family Businesses- Inheritance

Issues/- Gender Issues Values Ownership/Management/Family Recommendations

Women in Business in General

Women are a minority in the workplace. In the US, Europe and the ME.

More and more women are entering the workplace

Statistically, the number is increasing year after year, However, the number of women in Leadership position, although increasing is still very limited.

Statistically the % of Females in the Workplace (Men 54%vs. Women46%)

42%

44%

46%

48%

50%

52%

54%

%M/W

Men 54%Wom 46%

Women Median Earnings

(Men 30132 vs. Women18996)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Men30132Wom18996

Study at LAU

In a study I conducted at LAU, the average earnings of Males is higher than that of Females, however, as Females get higher educational levels, this difference gets smaller. Which basically shows that the more females get competitive, the lower the earning gap.

This study was published in the International Journal of Business and Emerging markets- Inderscience

publishers.

Women on Boards of Directors

Women are under represented on Boards of Directors, they currently hold only 12% of Standard & Poor’s board seats.

Women either control or influence nearly all consumer purchases, so it is important to have their perspective represented on boards

Research suggests…

Women executives outperform their male colleagues on skills such as:

being able to motivate others, promoting good communication, turning out high quality work, and being a good listener

Research (Cont.)

The Hagberg Group performed in depth evaluations of 425 top executives in a variety of industries and each executive was rated by approximately 25 people.

Of the 52 skills assessed, women received higher ratings than men on 42 skills, though at times the differences were small.

All in all, studies such as these make one wonder why the glass ceiling continues to hamper the progress of women in business.

Women as Entrepreneurs

Studies have shown that women entrepreneurs are more reliable than their male counterparts, and the UN has decided to allocate more funds to them.

Challenges Facing Family Businesses

As related to Women

Family Businesses

Family Businesses are considered pillars of economic growth and of all businesses.

In the US. 80% to 90% of the businesses are family businesses

In the Middle East, this percentage gets to 98% of businesses in general

Family Businesses in general employ 78% of all new job opportunities, and 65% of all paid salaries and 60% of all job opportunities, and 50% of GDP.

Women in Family Businesses

More and more women play roles in family businesses

A recent study showed that more than 25% of family businesses are waiting for a women in the top management positions.

The same study conducted after 7 years showed that this percentage has gone up to 34%

Women in Family Businesses (Cont.)

The number of women in family businesses has doubled

Family businesses headed by women are twice as productive as those headed by men.

Those studies have also shown that women have different leadership and management styles, which shows the success of family businesses lead and owned by women.

Inheritance Issues

According to “Shari’a” the male gets two times the share of the female.

In Oriental cultures, the females are alienated from the family firm

In many families, the female gets only minor assets especially in very wealthy families and they influence females to sign off on their inheritance rights

In poor families , the male is the money provider and hence should inherit

Gender Issues in Family Businesses

The problem of the In-lawsThey are alienated from the family firm, they get other assetsThey are in managerial positions only in the absence of males in the family or depending on their birth order.They are always encouraged to chose social work

How can Families Work Together more Effectively ?

StressesPredictable Unpredictable Patterns from previous generations

Governance Structures

Family Family Family Shareholder Board of Management Meetings Councils Retreats Meetings Directors Team

Empathy Trust Belongingness Shared Values Openness Respect Conflict Management

Skills Problem Solving Skills

Communication Factors

Family Cohesiveness

Successor Development

Estate Planning Operational Policies Improved Survival

Probability of Business

Results

FB

Family Business System

Ownership

Family Business

Family Business System

Roles & Expectations

Rules Goals Issues Governance

Structures

Ownership

Family Business

Values

Values

Definition and Purpose Basic Concepts and Beliefs Guide Decisions and Behavior Determine Right from Wrong Determine What Should be Done Determine How it Should be Done Determine Why Things are Done

We take for granted that we share the same values, but do we?

To Transmit Values We Should

Name It: Make Explicit

Define It: Through Behavior

Tell It: Through Stories

Live It: By Daily Example

Reciprocal Power of Values inFamily and in Business

Family Realm Business Realm

A Durable Value System that Benefits Both Realms

Improved Family Behavior

Family Pride

Founder(s) Beliefs

Sincerity and Genuineness in

Manifesting Values

Important and Practical Values

Exercised in the Business

Strength to Business

Source: Family Business Values: How to Assure a Legacy of Continuity and Success,

vol. 12 in the Family Business Leadership Series.

Some Values Often Found inSuccessful Family Businesses

1. Accountability2. Adding value3. Collective good4. Valuing input and interaction (give and take5. Education and development6. Ethical conduct7. Focus on values and values education8. Fun9. Justice10. Meritocracy

11. Openness12. Practical Realism13. Risk-taking14. Self-reliance15. Servant leadership16. Social purpose17. Entrepreneurial spirit18. Stewardship19. Trust20. Valuing stakeholders

Answers found by Long-lasting Family Firms to typical Challenges

Family: Keeping Family Cohesion

Ownership:Maintaining Committed

Shareholders

Business: Selecting Family

Managersand Board

Members

Answers found by Long-lasting Family Firms to typical Challenges

Family: Keeping Family Cohesion

Ownership:Maintaining Committed

Shareholders

Business: Selecting Family

Managersand Board Members

Selecting Family Managers and Board Members

A difficult issue, which if not properly addressed will lead to conflicts

Within the family

› Why her and not me?› Why their branch and not ours?…

Within the business - Risk of demotivation of non-family managers

- Risk of lower business performance

Answers found by Families

No family in management, only on board (Haniel from Germany has been here for 100 years)

Only one family member: the CEO A few selected family managers, not

necessarily in the top jobs All family members can work in the

business in appropriate jobs (even in small jobs).

Practices used for the Selection of Family Managers and Board Members

Family elders search for them and ask them to join

A committee advises family members on their careers and evaluates those who wish to join the business (for example: an HR specialist, a family member, a non-family manager)

Internships are encouraged

Selection of Family Members: Examples of Pre-requisites

Graduate Studies

Outside Experience

Outside promotion for certain jobs

Practices used for Careers of Family Members

Same criteria as non-family members. Have a Good Mentor (boss). Evaluation by non-family members on

the board. Career committee And of course a retirement age.

Answers found by Long-Lasting Family Firms to Typical Challenges

Family: Keeping Family Cohesion

Ownership:Maintaining Committed

Shareholders

Business: Selecting Family

Managersand Board Members

How to Maintain Committed Shareholders

Unhappy shareholders can sell their shares to a third party, ultimately leading to the sale of the family business

Keeping shareholders happy is an important task for any business leader, and of course for family business leaders

Practices Used to Maintain Committed Shareholders

Information› Through holding general assemblies› Through providing a constant flow of

information Financial Care

› Paying out dividends regularly› Offering liquidity mechanisms (market for

shares)› When shareholders cannot get out, they are

looking for ways to get out› So it is better to find a mechanism to sell

shares› Diversification of Wealth through a family

office (also brings services to shareholders)

More Practices to maintain Committed Shareholders

Training› Finance› Governance› Family Business Dynamics

Plant Visits, meeting with key managers Introductory weekend for future

shareholders Family Retreats and Family Events

Answers found by Long-lasting family firms to typical Challenges

Family: Keeping Family Cohesion

Business: Selecting Family

Managersand Board Members

Ownership:Maintaining Committed

Shareholders

Keeping Family Cohesion

The family element brings an element of over performance to businesses (several studies outlined this over performance to stock market companies)

However, when families are not well organized, or when cohesion is lost, they stop bringing value to the business

Practices used to keep Family Cohesion

Organizing Family Meetings› 2 days including a plant visit, a party, a

business update, presentations by younger family members on their own businesses

› A week-end mixing work in plenary sessions, in small groups, and team-building games

› A memorable trip every three years Formalizing the “Rules of the Game” or

building Family Policies› Develop rules for ownership, management,

governance› Develop code of conduct for family members› Develop conflict resolution procedures for

handling conflict in the family

Creating Family Cohesion

Reflecting on the Family Values and History

Setting up a philanthropic foundation Redefining the relationship between

the family and the Business Using a Fair Process in all decision

making

Go Through the Process

Let the Process be fair- The Process is important in solving family business issues

Let them know the rule of the game ahead of time

Manage their expectations Create enlightened owners Inform Family Members permanently Separate between ownership and

management Establish an exit policy

Recommendation

Nothing is given, it should be earned

You can work as a pioneer in your family and your family business

The sky is the limit!!

Thank you for your attention

Contact Details: Dr. Josiane Fahed-Sreihjsreih@lau.edu.lbcpi@cyberia.net.lb; Mobile: 00 961 3 411 811