On March 8, 2024, International Women’s Day will be celebrated around the world. I’d like to use this occasion to take a critical look at a controversial topic: women in leadership positions, female investors, and female business succession.
Let’s talk facts!
As a board member of the German Private Equity Association, I’d like to start by noting that women are still underrepresented as investors: According to the Female Investors Network, only 13.8 percent of business angels in Germany are currently women. On a positive note, however, this figure is projected to reach 8% by 2020, indicating that the scene is slowly gaining momentum.
It’s also a fact that only about 22.8% of small and medium-sized enterprises in Germany are led by a woman. This is shown by a study conducted by Creditreform Economic Research on management and leadership structures in the SME sector (2023). This makes it clear that, in addition to female investors, women-led companies—not only in Germany—remain the exception: Only slightly less than one in five companies is led by a female CEO. Furthermore, women generally lead smaller companies than men. According to the DIW (2023), women accounted for only 16% of the board members at the 200 companies with the highest revenue in Germany in 2022.
Although women-led companies can be found in all economic sectors and size categories, they are particularly well-represented in certain industries: Women are most commonly found in leadership positions in the health and social services sector (51%), followed by “other services” (hair salons, opticians, or advocacy groups) (47.3%). These are followed by sectors such as education and instruction (36.7%) and the hospitality industry (30.4%).
When comparing these figures with older data, however, a slight upward trend is noticeable. By way of comparison: In 2011, the proportion of women in top management was still 18.9%. Women in top management positions are thus slightly more common than in previous years. According to KfW (2023), this trend is most recently driven by the increased rate of business start-ups by women.
Let’s take a look at business succession by women: As is well known, the monarchy is a thing of the past in Germany, but when it comes to taking over family businesses, the unwritten rule of the (firstborn) son still applies, as daughters remain the exception in intra-family business succession. According to the Succession Monitor (2023), the proportion of female successors stands at 22%, remaining unchanged from previous years. However, given the rising number of businesses set to be handed over in the coming years, this is an area that requires attention.
And where can we start? Is there “the cure”?
The bad news is that there is no silver bullet for increasing the presence of women as investors, at the top of companies, or as successors. The good news is that there are a variety of approaches to achieving greater gender equality and unlocking this untapped potential—many of which are not only purely business-related but also concern society as a whole.
One initial approach has the potential to transform the entire landscape: female investors are changing the corporate world because they invest differently than their male counterparts. They pay particular attention to investing in companies with diverse leadership teams—a lack of gender equality is often even a deal-breaker for an investment. An important step would therefore be to strengthen existing networks and initiatives for female investors, as these serve as vital sources of information and support for women in the industry. Here, women can network, exchange ideas, and empower one another.
The continuing discrimination against women in the workforce has a significant impact on career planning and interest in leadership positions. Since caregiving responsibilities are still not shared equally between partners on a 50/50 basis, even in Germany, women’s ambitions are often held back by family planning. An important first step toward better work-life balance is therefore the further expansion of child care.
Furthermore, in the future, more consideration should be given to whether leadership roles can only be filled on a full-time basis and whether job sharing might also be a viable model for the executive level. A good balance between career and personal life planning is becoming increasingly important and, alongside diversity, is one of the key factors for future corporate success.
To achieve a higher proportion of women in leadership positions, there must be a sufficiently large pool of qualified women who can fill these roles (bottom-up approach). Specifically, this means that the proportion of women in traditionally male-dominated sectors, such as STEM fields, must be increased through incentives, appropriate training, and the dismantling of stereotypes. This, in turn, would reinforce the trickle-down effect, which describes the role of women in leadership positions as role models for other women.
One very important aspect that I would like to mention here is the so-called confidence gap between women and men. There are plenty of studies showing that women consider themselves less talented than men and generally tend to have lower expectations. We need to address this issue directly, as it is a major reason why women are often denied leadership positions despite being objectively better qualified. We need to start addressing this issue as early as childhood and support girls and boys equally—stereotypes like “boys are better with numbers” must be broken down. In the professional world, it’s all the more important that measurable performance criteria are decisive in the selection of leaders.
Let’s make it happen!
In conclusion, I would like to call on everyone to work together to create more attractive structures that appeal equally to women and men. This would not only be a positive contribution to the economy and society but would also have very concrete positive effects for companies: On average, women in leadership positions have a positive impact on a company’s financial success and significantly contribute to environmental and social sustainability as well as to equal opportunity within companies (AK Women.Management.Report 2022).
