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Daughters of Distribution

Women are heading more family businesses across the country, including the industrial distribution market

By Kate Sullivan, Contributing Editor -- Industrial Distribution, 11/1/2003

Klein, who started at C.H. Briggs in a sales capacity and then managed a branch in a remote location, bought the company from her father in 1991.

As CEO, Klein encourages women at C.H. Briggs to advance, and believes that while "any industry that is male-dominated presents its own challenges, [it] does not make it more difficult."

Klein sits on the Distribution Research & Education Foundation board for the National Assn. of Wholesaler-Distributors, and is a member of The Committee of 200, a professional women's organization.

Recently, Klein says, the C200 did a study on high school and college women's views on business, and found that many young women were uninterested in business because they did not see it as a way of making a difference (something women have historically listed as a reason for a career choice). Klein hopes to change that view and show the next generation how important supplying jobs and providing a service can be.

"I've come to believe the best way to make a difference and…the biggest force for positive change, can be business," she says.

Getting women and distribution to consider each other as options is important for both. Distribution businesses have it tough.

"[There are problems with] the profitability squeeze, finding talent and finding growth in uncertain times. There is no business in the world that can afford to ignore half the talent. Industrial distribution can't ignore the daughters," said Klein.

Ignoring daughters is something Business Week columnist Lisa Bergson believes happens too often in male-dominated industries.

"I really think it could be a book, and I'd call it Stolen Legacies," says Bergson, who also is CEO of her family business, MEECO, a company that manufactures trace analyzers for chemical and semiconductor industries, and of start-up Tiger-Optics, which does likewise with different technology. "So many women, without even realizing it, have given up their rights to the family business because they were not raised to consider themselves."

Bergson acquired her position through default; the male cousin set to take over received another job offer. Concerned that her father, ill with cancer, would not be taken care of if someone else took over the business, Bergson took the position.

Her succession ended up being a success. A more outgoing Bergson approached business differently from her reclusive inventor father, and the woman who in the beginning of her presidency would cry about the lack of respect and credibility she received, brought this bankrupt business back to life within three years.

Paula Bass was working for an art organization that ran clay working classes out of a barn, when her father called and complained that his company, KBC Tools, had gone through four managers at its Mississauga, Ontario location. The location was doing good business, but had problems with shipping and office organization. Bass had received her bachelor's degree in painting and printmaking.

Bass' father used to tell her to marry an engineer who could go into his business; but when faced with his call, she thought, "Hey, I can handle that." Days later, Bass joined the ranks of KBC, home of hand tools and cutting tools, as the Mississauga manager. By age 30, she was president of the company.

The American Family Business Survey, sponsored by the MassMutual Financial Group and the George and Robin Raymond Family Business Institute, shows the number of women CEOs in family businesses increasing. In the nationwide study of family businesses conducted last year, 30 percent of the respondents indicated they would consider a female successor, up from 12 percent in 2000.

One study breeds other studies, and Babson College, one of three schools involved in the American Family Business Survey, and home of the Center for Women's Leadership, decided to do further research on gender.

The Women in Family-Owned Business Report released August 26, took the 15 percent of family businesses that the previous study indicated were already owned by women, and compared them to the male-owned family businesses involved in the study. What they found strongly supported the continual rise and success of women in family businesses.

"The number of women-owned businesses has increased in the last five years, in general 14 percent, but in family-owned businesses, it's increased by 37 percent," says Dr. Nan Langowitz, faculty director of the Center for Women's Leadership.

And these women-owned businesses are most successful in the same top five fields as male-owned businesses — manufacturing, wholesale, services, retail and construction.

"Increasingly, women are taking over manufacturing and distribution businesses…businesses very typically part of the 'Old Boys' network," says Paul Karofsky, president of the Northeastern Center for Family Business, who also said that while some family businesses are still ruled by the law of the primogenitor, more and more they are looking to women and non-first-born children, who better match the needs of the business. "Whoever is most qualified, whoever has the greatest skill, belongs in that black leather chair," says Karofsky.

But Bass spends little time sitting in a black leather chair while presiding over nine locations, worth $32 million in 2000. Nowadays, Bass knows more about tools, and has used her artistic background to design a strong catalog.

In a meeting with her father present, Bass was discussing the catalog and what should be in it. Her father was shocked. "He said, 'Oh, I didn't know you knew so much about tools.' And I was upset. What did he think I had been doing all that time?" asks Bass.

Peoples' remarks about the business' family roots early on also offended Bass. "Initially, every time someone said, 'Oh, it's your father's business,' it felt like they were saying, 'You are not capable.' I took it as an insult. But after joining the Industrial Distribution Assn., I learned that so many businesses were third- and fourth-generation. So when people were saying that, they were just saying [the business had history], it wasn't meant [as an insult]," says Bass.

In the beginning though, there were customers who questioned her abilities, and some that would not even talk to her on the phone. Bass' attitude, that no matter who they talked to, KBC would make a profit, helped her cope with that, but she still wished that the customer had given her a chance — especially since the male they talked to instead often had less tooling knowledge than she.

"But when it comes down to it, I prefer to go to a female physician; so if they need a man to talk about tools, fine," Bass added. When Bass travels to trade shows, she sometimes takes an older, male employee to help.

Some people have waited to talk to him for 20 minutes, refusing Bass' repeated offer of help. Often, when they reached him, "they would say they wanted to sell us a line and he would say, 'Talk to her.' And by that point, they had already insulted me by refusing to even tell me what their inquiry was about," says Bass.

Under Bass, KBC Tools has put out their best catalogs, centralized more and used technology to connect its many branches.

Under Klein, C.H. Briggs has been listed on the Working Women's 500, has profits in the industry's upper quarter and has excelled in doing business over the Web, cutting transaction costs and allowing 24-hour access to product information.

"Succession in a family firm is a very difficult thing. Statistics tell us that. Most succession intents don't work very well, whether they are male or female," says Landes.

Karofsky, of Northeastern's Center, puts things further in perspective. "Often times, [women] have to prove themselves in male-dominated industries. But family members have something more to prove, compared with non-family managers…They have to prove that they are more than their last name," he says.

In the end, struggles and stereotypes aside, what is most remarkable is not that these owners and company presidents are women, or even that they are involved in a male-dominated industry; it is that they are a successful later generation of company leaders who have beaten the odds and taken their family businesses to new heights.

 

Facts on female-owned family business

  • Women-owned businesses have a more gender-balanced Board of Directors with an average of 4 members (2 males/2 females) as compared with male-owned businesses (3 males/1 female).
  • Women CEOs are 9 percent more likely to have chosen a successor.
  • That successor is four times more likely to be a woman than the successor of a male-owned business.
  • Though smaller, women-owned businesses give an equal amount, $50,000, to charity.
  • Women owners of family businesses are more likely to look to their husbands as potential CEOs than male owners are to look to their wives.
  • Women-owned family businesses have a lower attrition rate, meaning they lose fewer employees, than male-owned family business.
  • Women-owned family businesses average $26.9 million a year in revenues, while their male-owned counterparts average at $30.4 million—but the women-owned businesses are 1.7 times percent more productive, having more revenues per employee.

Source: MassMutual/Raymond Institute American Family Business Survey (2003)

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