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Risk-taking may be at least part of the explanation why women hold fewer CEO positions than do men. According to the Pathfinder Career System assessment, risk-taking is a discriminating trait for CEOs, setting apart average from high performing CEOs.  Interestingly, risk-taking is not a key behavioural trait or a discriminating trait for VPs and Director/Managers. Pathfinder has been tested for over 35 years on over 80,000 individuals from around the world, and is based on more than 20 rigourously tested measurement tools.

A recent article in the Economic Journal by Alison Booth and Patrick Nolan, suggests that generally women tend to be more risk-averse than do men. However, it appears from their article, that risk-aversion is at least partly associated with culture.

In a controlled experiment the researchers studied high school students, using coeducational schools and all-girl schools, as well as coeducational groups and all girl groups. They asked the students to choose between a sure thing and “high stakes lottery”.  They found that girls in a single sex school or group were experienced higher risk-taking than girls in a coeducational school, and experienced the same level of risk-taking as boys in either coeducational or same-sex schools. Even the composition of the groups mattered, “girls are more likely to select risky outcomes when assigned to all girl groups” (p. F73)

The authors speculate that the all-girls environment reduces the expectations of stereotypical gender norms, so girls more freely approach risk-taking.

Is this a case of solving the risk-taking issue, and we get more women in political and business leadership? I suspect not. There are other key behavioural traits, such as competitiveness and the use of power that distinguish CEOs from VPs and Director/Managers. Women are generally lower on competitiveness and use of power than men. Additionally, lifestyle priorities tend to be career-oriented for CEOs and VPs while family-oriented for Director/Managers. Again, women have a tendency to be more family-oriented. It may well be that all of these differences are driven by cultural norms, and they may change over time. But I’m not holding my breath.

 

Source: Booth, A. L., & Nolen, P. (2012). Gender differences in risk behaviour: does nurture matter? Economic Journal, 122(558), F56–F78. doi:10.1111/j.1468-0297.2011.02480.x

 

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4 thoughts on “Risk-Taking and Organizational #Leadership

  1. These results are not surprising. They are useful for ‘understanding’ but not very useful if the goal is to ‘change’ things. Individual women (and men) can can their situation and behavior but attempting to change ‘group’ behaviors is a lot more difficult.

  2. I have to agree with you, Steve. The only news here is that the data says that this is a more complicated problem than we think. I’m not sure that quotas are a solution.

    Part of the solution is to provide environments where women feel safe enough to practice risk taking. That’s why I teach at a women’s college – even though many feel that the idea of a women’s college is out-dated, there still is a role for them in our society.

    Thanks for sharing.

  3. I don’t actually think that the lack of propensity in regrads to risk taking is the basic reason why women occupy less leading positions when it comes to careers in CEO. There are still plenty of prejudices and the discrimination factore out there to support this tendency.

  4. Agreed. There are plenty of reasons that women are not progressing into senior leadership positions. Researchers call this a “wicked” problem, reinforced by history and culture, the causes of the under-representation of women are inter-related and complex. Merely solving one will not solve the rest.

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