He Led, She Led: Gender in the Family Biz

A new study points out the differences between how men and women lead their small businesses. How can the sexes learn from each other?

If you run a family business, the results of a recent study might change the way you think about your leadership style. The study by Kathryn Stafford of Ohio State University and Sharon Danes and Johnben Teik-Cheok Loy of the University of Minnesota shows that women and men tend to take quite different approaches to leading family enterprises. It also shows women-owned (BusinessWeek.com, 10/5/07) family businesses tend to earn less revenue than those owned by men.

While those two findings are perhaps not so surprising, what might be is how the different leadership approaches can affect the bottom line.

Take the matter of unpaid family employees and their effect on the business. Standard family business practice says to treat family employees much like other employees regarding compensation and other important aspects of employment. Few non-family members, of course, will work for free. Family members, motivated by either altruistic or selfish concerns, are much more likely to donate time to help.

The Trouble with Working for Free

It may seem equally obvious that it wouldn't make any difference whether the company a family member helps is run by a woman or by a man. The study found family-owned businesses that were run by women were likely to do well and report higher revenue when family members donated unpaid work. So far, so good. Free employees sounds like a benefit under almost any circumstances.

But when the researchers looked at male-led family concerns, they found that companies with unpaid family workers tended to have lower revenue. The explanation for this curious finding is a striking variation in the attitudes of men and women toward family employees.

What the researchers found was that men tended to bring in unpaid family members when the business was already struggling. Thus, the enterprises using family volunteers had lower revenue than other male-led companies. Women, on the other hand, were more likely to take advantage of family volunteers regardless of whether the business was doing well.

Are Sleep-Deprived Women More Productive?

Men, the researchers suspected, felt that having unpaid family on staff was not a desirable situation. Women, they guessed, liked mixing family and work life, and encouraged unpaid family workers to come on board. The researchers noted that this finding is supported by other studies showing that the opportunity to spend more time with family was a more common motivation for women who started family businesses than men who became family entrepreneurs.

It's not entirely clear how this information should steer a family business, or affect the way any company should manage interactions with male- or female-led family enterprises. What is clear is that the effect of gender on the management style of a family business is probably more subtle and complex than many of us thought.

In another example from the study, researchers found that women who reported sleeping less had higher revenue, while men who slept less recorded lower revenue. The study also showed that women saw a greater increase in revenue than men did as a result of time they spent on personnel management.

For family business leaders, these findings could spark some changes in leadership styles and practices. Men would do well to ask themselves whether they are missing out on valuable opportunities to change how they're leading their ventures. Women should consider increasing or incorporating practices shown to be beneficial. Regardless of what steps you take, making a few simple changes in how you lead could strengthen your business.

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