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Feature

Sharon Danes

Men and women differ in how they manage family businesses and how they are affected by changes in management practices, according to a study led by Sharon Danes.

See how they run

Men and women manage family businesses differently

By Deane Morrison

December 7, 2007

If you're a family business owner, how you run that business may well depend on whether your baby blanket was pink or blue. Men and women differ in how they run family businesses, and understanding those differences is one key to helping both business and family life thrive, says Sharon Danes, a family social science professor and lead author of a recent study on male-female management styles published in the Journal of Business Research. "A lot of people think profit and growth are end-all and be-all of running a business," she says. But while businesses run by women tend to earn less revenue than those run by men, this "underperformance" may reflect a difference in goals, not ability, and studies that look only at business variables like the bottom line will likely miss the reasons for the performance gap. That's why Danes, with Kathryn Stafford of Ohio State University and Johnben Teik-Cheok Loy of the University of Minnesota, zeroed in on the intersection between families and businesses, using data from 301 family businesses in the National Family Business Survey, taken in 1997 and 2000.

Money can't buy me contentment

Their findings supported an idea called the "contentment hypothesis," which states that some business owners seek contentment from their lives as a whole, not just from getting the fastest growth and highest profit from the enterprise. "Women, more than men, are willing, or only want, to grow a business to a level that they can manage with all the other responsibilities they have in their life," says Danes. "They want to balance work and family. As a result, they manage their businesses differently."

"What women would do is to have family members there helping them out, unpaid, if business is hectic. ... But men tend to keep family and business separate. They wouldn't have unpaid family members working unless the business isn't doing well financially and it's absolutely necessary."

The case of a business consultant brought in to help one family business illustrates why it's important to recognize how management practices and changes in them affect men and women differently. The consultant noted that a husband and wife worked side by side, discussing their young children right along with their business. The consultant advised them to move to well-separated offices to discourage them from getting together for any reason besides talking business. Two years later the couple was on the brink of divorce. The business had grown, but both partners were spending less time with the family. It was much harder on the woman, who couldn't talk to her husband about family and children issues during work hours but still had to take care of the children. As bookkeeper for the business, she had to squeeze in that work late at night, after the kids were in bed. "When you have both a male and a female involved, you need to look at the impact of management practices and changes in those practices on both partners," Danes says. A new consultant figured out the problem and had the couple move back into the same office. From there, they rebuilt their relationship.

Pros and cons of free time

In the study, three general findings leapt from the data. First, in a female-owned business, family members tend to donate their time to the business when revenues are booming; but in a male-owned operation, they are more likely to work for free when revenue is down. "What women would do is to have family members there helping them out, unpaid, if business is hectic," says Danes. "It's a way to dovetail work and family and manage both. But men tend to keep family and business separate. They wouldn't have unpaid family members working unless the business isn't doing well financially and it's absolutely necessary."

Counting money, or sheep?

Second, men are more likely to lose sleep when their businesses are hurting, whereas women sleep less when times are good. Part of the reason could be that women are more likely to work in retail, where periodic marketing efforts and seasonal demands for products lead to a flood of orders. "Let's say you got a whole bunch of orders at once in response to a new marketing effort," says Danes. "In that case, women would more likely lose sleep in order to [spend more hours working] to make the business succeed. But men would more likely hire out." If business is brisk, men are better able to put more time into their businesses by taking hours away from time with family, rather than dipping into sleep hours, she adds. Supporting this behavior is the societal expectation that women, not men, are the primary caretaker of children. Men, says Danes, probably sleep less only as a last resort, when the business is in trouble financially.

Managing just fine

In the third finding, female business owners saw a bigger monetary return on extra time spent managing their staffs. Such efforts lead to employees who know what to do with customers, how to make decisions, and which ones they can make themselves without asking the boss, all important to customer satisfaction. "Overall, lots of research shows women are much more relationship-oriented," says Danes. "Perhaps a corollary is that they pay more attention to people relations in business, which would involve personnel management." Another factor may be the tendency of female owners to be in retail, which depends on large numbers of employee-customer interactions going well. In her next project, Danes is investigating the impact of spousal support on business startups to learn whether male or female business owners get more such support and its impact on the survival and success of the fledgling businesses.