A recent study from the German Central Bank, as noted in the Globe and Mail, suggests that women on corporate boards actually result in riskier decision-making. The study covered the period of 1994 and 2010, evaluating the corporate boards of the banking industry.
The authors suggest that this might be the result of greater diversity, “boosting conflict and holding back decision-making”. They also suggest that women lack the senior management experience to be on boards. Perhaps this so-called lack of senior management experience has to do with the fact that men won’t promote women to senior management?
There might be another explanation. Research from the UK shows that firms that appointed women to the board were statistically more likely to have reported “having experienced bad performance in the preceding five months than boards who appointed men“. Researchers call this the “Glass Cliff”.
Thus, the riskier decision-making reported in the German study might not be related to the appointment, but to the situation of the firm. If the firm was experiencing “bad performance”, the board may have been more likely to take a riskier course to correct the performance issues. It isn’t the women causing the risk taking, but rather the negative performance.
Research also shows that women are more likely to be promoted to leadership positions in corporations (for example, President or CEO), when the firm’s financial performance is in decline, rather than in growth mode.
The Globe and Mail article reporting the German study underscores the risk of putting women on boards, but de-emphasizes the all but non-existent impact on firm performance. The article is entitled “Rushing Women is Risky Business”; however, buried toward the end of the article is the quote, “While risk goes up with more women on the executive board, the impact is “economically marginal,” according to the study.” So adding women to a board increases risk, but the impact of that risk is marginal. So why the hell are we talking about this at all? Clearly the big boys need their Depends, ’cause they are wetting themselves with fear that the girls might take their places at the table. Even the newspapers are creating a false threat of “risk” to having women on banking boards.
This appears to be a rear-guard action to stop regulators from setting quotas for female representation on boards. I’m not certain whether quotas are a good idea or not. What I am sure of is that this recent report represents the desperate actions of men trying to retain privilege.