Decision-Making

More Nonsense: Women and Corporate #Leadership

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.

 

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5 replies »

  1. Could there be another reason? My impression is that many boards want to avoid risk like the measles. They don’t sign up to rock the boat or challenge management. Could it be that women don’t play with boys club rules and are more willing to speak up and challenge their fellow board members and organizational leaders? Is that what we mean by “risk?” Just wonder.

  2. It’s good to see that the feminist view hasn’t changed even from the top looking down.
    If performance is poor, well it’s simple, it is the fault of the men who came before. Sounds like the one, “If a woman hits a man in anger it’s the man’s fault because he did something to cause her to strike him.”
    When things don’t go the way one person thinks they should they always have a card to pull – gender, race, religion, political party, sexual orientation, age and G(g)od knows how many more.
    Truth be told, nowadays I simply turn my hearing off when I am faced with this “Let’s create drama!” attitude. I don’t have time for slanted stats, excuses or “somebody done me wrong songs”, I’m too busy succeeding or failing on my own. I (key word in life) take responsibility for what I do or fail to do.
    I believe that “Risk” should be based on the number of cards you’re willing to pull when you fail to accomplish what you set out to do. If it’s even one card, then the risk is too high as you’ve learned how to blame. Responsibility and accountability are not part of your makeup and that should scare the hell out of any board of directors.
    If your reaction is because of reported statistics then you need to understand something about statistics. At one time while volunteering for a women’s shelter I was tasked to collect statistics on the number of reported cases of spousal abuse for a five year period. This Ontario county was large and it took some time in convincing the authorities to give up the information. No area wanted to be designated as the abuse capital of the county. When all stats were in they showed i) Number of reported spousal abuse cases were down over 5 years; ii) 52% of reported spousal abuse had the male charged; iii) 25% of reported spousal abuse had the female charged; iv) 23% of reported spousal abuse had both spouses charged. In every reported spousal abuse case a charge was laid. When the women’s shelter made there report using these stats this is how it came out: i) More women are afraid of reporting spousal abuse because the old boy’s club in the justice system are letting men off who then take reprisal actions against their spouses. ii) More women are beginning to fight back and are being incarcerated for defending themselves. iii) More men are falsely accusing their spouse of abusing them putting the mother and children in jeopardy of becoming system statistics.
    I tendered my resignation after the report was published. Bs is bs is bs!
    And, yes! I am a white-anglo-saxon-male. However, my attitude comes from being Russian, Jewish, Gypsy. My family has only survived the genocide of approximately 30 million souls in the last century.

  3. Skotia, It would be great if you got your own blog. You’ve obviously got a bunch of important experiences to share. On the topic of Women and corporate leadership, this seems to be one of those dualing statistics stand-offs which are the bane of social science. Case studies anyone?

    Thanks Colleen for keeping it interesting.

    Roy

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