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Women poorly represented on family business boards in Europe

Women make up only 16% of family business boards in Continental Europe’s four largest economies, and only 10% of boards in Germany, new research has revealed.

The 2014 Survey of Corporate Governance Practices in European Family Businesses examined board composition, board efficiency, succession planning and chief executive/chairman demographics.

Supervised by IESE’s family-owned business chair Josep Tapies, the report surveyed some of the largest family businesses in France, Germany, Italy and Spain.

According to the survey, gender diversity was low within family-controlled boards: 25% in France, 17% in Spain, 15% in Italy and just 10% in Germany. The same is true for foreign diversity: in France no family businesses surveyed had foreigners on their board, while the average was 8% across the four countries.

This year, Women Corporate Directors, the world’s largest organisation for female board members, established a family business council to explore how family firms could improve corporate governance.

According to Egon Zehnder’s 2014 diversity report, the average European board has female representation of 20%.

The IESE report found the presence of family members noticeably varies, with Spain having the highest representation of family members at 62%, while in Germany this figure was 25%.

The boards surveyed were fairly consistent in their agenda content, with virtually all boards reviewing the existing economic and financial climate, as well as their capital expenditures and sales performances, and, to a lesser degree, competition, industry and client trends.

Most boards in Spain, Germany and Italy described “decision making” as their main role, but French boards were more like to perceive their role as “consultative”.

When it came to preparing for board meetings, half of European boards surveyed receive the agenda a week ahead of time, while 22% have fewer than three days to prepare.

Succession is of course a delicate subject in family-controlled businesses, and only 49% of the boards questioned had identified possible future chief executives from internal candidates, while only a third have a plan to fill the position in the event of an emergency. Italian boards were the least prepared for a sudden departure, with only 18% having a plan in place.

Board member experience dealing with succession planning varied greatly between the countries surveyed. At least one director had such experience on 95% of the German boards surveyed, but this was only 28% on Italian boards.

On average, 49% had identified internal candidates for the succession plans, and ultimately, more than two-thirds of family business chief executives in Europe are promoted internally. Spain had the strongest trend of internal promotion with 85% coming from the same company.

The study was led by Russell Reynolds Associates, an executive leadership and search firm, and was based on responses from 106 participants. 

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