Earlier this year, I found myself admiring a bathroom. It was after midnight, I was at a work-related function in Italy, and the owner wanted to show me round the renovations she was doing on her palazzo. I was dazzled by the bathroom’s bright blue walls, carved from a single piece of onyx.
After I’d admired the bathroom, the hostess ushered me into bathroom number two. And then number three. It turned out she had many bathrooms, each with onyx walls. The lady in question is staggeringly wealthy, owning multiple historic properties, some of which have been famous since the middle ages.
But her life was very different a couple of decades ago, when she and her brother inherited a business near bankruptcy. Facing calamity, the pair got the elbow grease out, made some tough decisions and she hit the road, selling, selling, selling.
Yet if you called her a feminist, she wouldn’t know what you were talking about. A self-made woman, she sees herself as doing what’s proper and necessary for her business. She is, nevertheless, part of a new wave of women who are reshaping the European business landscape – and transforming the role of women in the process.
Are career and family incompatible?
When people in the English speaking world talk about ‘work’ and ‘career’, what they often mean is work in a cubicle, or else a specialist role in government, medicine or academia. Getting to the top is an all-encompassing, family-hostile battle. So brutal is the climb up the greasy pole, that it’s resulted in writers like Ann Marie Slaughter grimly warning that women can’t possibly ‘have it all’, meaning a career and children.
She’s right, in the sense that many women don’t want to sacrifice their families or fertility for a career. And nor, in fact, do many men. The modern corporate career is savage and family-toxic, regardless of whether the worker is male or female. A child who never gets to see daddy because he’s always at the office, is pretty much a fatherless child, regardless of the kid’s economic circumstances.
But there is, it turns out, a way to have a satisfying and lucrative career that keeps the family at the centre of life: the family business. And it’s a type of business that I’ve come to believe we should encourage in the Anglophone economies. For the most part, we ignore the family business, thinking of it as either a mom-and-pop outfit, or as something that belongs in the agricultural sector.
Please note that when I talk about the ‘family business’, I am not discussing hobby businesses where Mum does some craft to sell on Etsy for pocket money. I am talking about serious businesses, in critical sectors of the economy.
The high-value family business is the foundation for some of Europe’s most significant economic areas. Italy’s industrial north is driven by family businesses: think Fiat, Ferrari, Alessi and Lavazza. And Europe’s powerhouse economy, Germany, is almost completely built on the back of the ‘Mittelstand’, the mostly family-owned small- and medium-sized businesses; think of people like the Hahn family, whose glass display cases are the first choice of museums worldwide. Although German companies like BASF, Siemens and BMW are world-famous, the Mittelstand employs 80% of Germany’s working population, and is responsible for 98% of its exports.
The family business at a glance
Regardless of size, family businesses the world over tend to have certain common features. The first is they tend to operate inside a niche, whether it’s making candied fruit or machine tools. They also tend to expand slowly, taking on staff and new locations cautiously.
More importantly, perhaps, are the psychological implications of being a family company. First and foremost, being a ‘family business’ is extremely important to their identity. As well:
1. They think long term. Families are very concerned with sustainability, because they want the business to survive into the future, to be handed down to children, grandchild and great-grandchildren. This means they are typically cautious about decision making, and are primarily concerned with adding value. This is in direct contrast to shareholder-driven corporates, which will often trash intrinsic value (e.g. by cost-cutting, firing employees or offshoring) so they can deliver those all-important short-term returns.
2. Family businesses are typically rooted in their local community. They have neighbours and school mates working for them. Family businesses do not fire employees easily, because employee/employer relationships are often deep, and to disrupt them will have a flow-on effect through the community. This has a dark side, by the way – northern Italy has seen a wave of owner suicides, as failing businesses have been forced to lay off longstanding employees.
3. They are family first. Naturally, all successful enterprises have to exist in the modern world, which means modern hours and work practices. But the first priority of the owners is family, which cascades down to a business-wide ethos of family. This is an ideal situation for women – they can be respected executives and entrepreneurs, but nobody’s going to bitch at the boss for taking maternity leave, or taking time for the kids. But nor can the boss take those benefits for herself without also awarding them to staff. So these businesses are generally more flexible when it comes to family issues.
4. Family businesses are debt averse.
5. Family businesses can be highly innovative within their niches.
Now for the downside:
1. Family businesses can be much too conservative. You can see this at work in Germany, where a significant number of Mittelstand businesses are failing to embrace digital opportunities.
2. Succession planning is a big issue. Often the old guy can’t let go, and keeps interfering with the decisions of the successor. Or the business is handed to an incompetent relative. Most companies that have survived for multiple generations, however, know to hire an outside CEO or managing director.
3. Bad family businesses can be miserable for the same reasons that good ones are great. If the head of the company is a tyrant, or an incompetent, everyone suffers.
4. When family businesses reach a certain size, they start behaving like corporates.
5. Family businesses can overlook the need for professional management.
Big changes on the way
Anybody who thinks Europe is down and out economically hasn’t factored in the radical change that’s coming. As the continent ages, a wave of business handovers is happening, and will accelerate in the next ten years as the boomers retire or die. The generation that’s moving into position are unlike any that’s come before: they’ve worked overseas, they’re fluent in multiple languages, they have experience in different environments and they typically bring MBAs or equivalent to the table. It’s strange that this coming earthquake has been so overlooked by commenters, because it’s going to rearrange the face of the continent.
And one of the changes that’s coming is a new gender balance. While companies like Siemens scramble to retain their female upper management talent, family companies are embracing their female members for the first time. A generation ago, the business would normally pass to the son, but as Europeans have had fewer children, they’re bringing their daughters into the business.
The road ahead for these women remains bumpy. One owner told me she’d had to hire a manager to give orders to her teams, as they literally wouldn’t take orders from a woman. But as women owners becomes normalised, that will change.
Of course, family businesses aren’t infinitely flexible; they still have to operate in the modern business landscape. And, like I said, at a certain size they morph into companies that might as well be corporates. But small to medium size businesses typically have ‘family friendly’ in their DNA, and women at the helm of such a business can dictate their own terms, making it easier for both them and their staff to combine family and career.
I’ve framed this blog post as a feminist one because, well, that’s what this blog is usually about. But there’s a wider point here. The family business is typically a more human business – as noted above, family businesses tend to be rooted much more in their local community. They carry long memories. They’re cautious. They don’t fire employees easily.
It’s time the rest of us thought seriously about how we can encourage the growth of the family business in the Anglosphere, as a riposte to the brutal corporate hell holes that rule the lives of far too many people. Not only that, but where family businesses thrive, you get a diverse retail landscape with wider distributions channels. Walking through London, I’m always struck by how a handful of businesses dominate the streets: Tesco’s, Sainsburys, Zara, M&S, Starbucks. Walk down the street in any retail district in Italy, France or Germany, and you will see these big international brands – but you’ll see lots of local shops offering something different as well.
The first thing is to change the mentality that businesses are started with the sole aim of selling them further down the track. And then start to think about the regulatory environment, and how it can make it easier for family businesses.
Because it turns out, what’s good for the family business is good for women… and everybody else.