Britain’s biggest family businesses are stymied in entrepreneurialism by their older and less diverse boards of directors compared to their public company rivals.
The average female representation on a UK family board was as low as 12%, much lower compared to all FTSE 100 companies at 23%, according to a new report out this week on the corporate governance arrangements of the country’s largest family firms by turnover.
The Institute for Family Business Research Foundation found 108 out of the 201 major family owned firms analysed had no female directors at all. Among the remaining firms, only 11 had boards which were more than 50% female. The average board size was 5.8 members, more than smaller private family and non-family firms.
The report said gender was “a key dimension of board diversity” and continued to attract much attention in the UK business world.
“Existing studies indicate that gender diversity has a positive effect on organisational outcomes, including, for example, boosting family firms’ entrepreneurial orientation or reducing their bankruptcy risk,” the report said.
“Increasing gender diversity should be an important priority for large family firms in the UK, and the topic deserves further research attention as well.”
The lack of diversity in family boardrooms extended to age as well as gender. The average age of board members in the largest 201 family firms in the UK was about 54 years—higher than that reported for all private family and non-family firms in the UK, the report said.
Only six family firms were found to have an average board members’ age below 45 years, whereas the average age was greater than 60 years in 31 family firms.
“The largest family firms vary in their choices concerning board members’ tenure: the majority change board members less than every seven years, but a proportion of them appears to keep the same directors for very long periods of time,” the report said.
A total of 20% of the largest UK companies were family-owned—22 of which were first generation family firms.
The majority of C-suite positions in the world’s family offices were also occupied by men, according to The Global Family Office Report 2018 by Campden Wealth with UBS. Women held just 9.1% of the top chief executive roles and 8.6% of chief investment officer positions. Just over one-third (39%) of family chief operations officers were female and 38% were chief financial officers.
Sir Michael Bibby (pictured), chairman of the IFB Research Foundation, said increasing gender diversity around the boardroom table was one of the ways family firms can raise their governance standards.
Campden’s report revealed 14% of global family offices had diversity targets in place however, 78% did not.