KfW Research: Women occupy one fourth of all management positions in SMEs

• 26% of all management positions in SMEs are occupied by women

• The situation is different in female-led businesses: The share of women managers there is five times higher than in male-led businesses

• Number of female-led SMEs has dropped sharply again

One fourth of all management positions in SMEs (26%) are currently occupied by women. This is the finding of a recent special analysis conducted by the KfW SME Panel on the occasion of International Women’s Day. It means women are underrepresented in management positions compared with their total share in the workforce (47%). Furthermore, there is a close link between a woman at the helm of a business and the quota of female managers within the company. The share of female managers in businesses headed by a woman is five times higher than in male-led businesses (77% versus 16% on average).

At the same time, the number of women at the helm of small and medium-sized enterprises fell again significantly last year. The quota of female managers in SMEs dropped to 15.8% (-3.9 percentage points). In 2023, 602,000 small and medium-sized enterprises in Germany were managed by a woman, around 155,000 fewer than the year before. The excessively low entrepreneurial activity of women, which has recently fallen again, continues to be a factor for the low share of women in management roles. However, the disproportionately low share of women in management positions below the executive level also plays a role. This is particularly true in male-led businesses, and hence in 84% of all SMEs. A conscious decision must be made to fill such roles with more women so that diversity on all management levels increases.

“In order to have more women on executive floors, we need to have more female entrepreneurs and consciously manage the leadership pipeline with a view to diversity”,

said Fritzi Köhler-Geib, Chief Economist of KfW.

“In order to attract more female business founders, in particular, we also need to change societal attitudes. That calls for perseverance!”

Köhler-Geib continued:

“If we want to see more women in management positions and as bosses, we must break up gender stereotypes and traditional role models in areas such as upbringing, education and domestic division of labour. This provides a crucial mechanism for increasing women’s entrepreneurial appetite and their participation in SME management teams. For Germany and the SME sector, there are plenty of reasons to make better use of the potential of women, for example as managers of businesses. But the generally shrinking workforce as well as looming skills shortages already provide sufficient incentives as well.”

Women are represented in management positions or self-employed primarily in SME services segments. Nine in ten female bosses manage a small or medium-sized services business (90% or around 533,000 SMEs), where hospitality, retail and personal services are among the most prominent sectors. Female-led businesses are therefore smaller on average (7.8 employees) compared with male-led SMEs (10.1 employees). Overall, SMEs that have a woman at the helm employed around 3.2 million workers, generated EUR 482 billion in turnover and invested EUR 14.8 billion in 2022.

The development of businesses led by women hardly differs from that of the SME sector as a whole. Female-led SMEs achieved a turnover growth of +8.5% on average in 2022, and their workforce grew by +1.7%. Businesses managed by women were highly profitable, achieving a profit margin of 9.1%, and their equity base averaged 28.2%.

The current study can be downloaded from www.kfw.de/fokus