Why do companies with women on their boards get better financial results and have higher stock prices? Credit Suisse recently published a new study, confirming that they do. (Yet, according to Catalyst, women make up only 16.9% of the boards of U.S. companies.)
A recent New York Times opinion suggests an answer. The author reviews studies answering the question, “Are Women Better Decision Makers”? The studies show that women and men handle decision-making similarly when all is calm. In stressful situations, however, there are gender differences, and women perform better. In stressful situations, women take smaller, surer risks and are more able to take another person’s perspective; men take bigger risks for bigger wins and become more self-centered (less able to empathize with another’s position).
I almost never talk about what women or men do better. That requires stereotyping and tends to put one group or the other on the defense. There are different approaches to decision-making. One we can call “masculine,” the other “feminine.” The masculine approach involves being directive and “leading from the front.” The feminine approach involves more process; others are invited to engage in analyzing the situation and developing consensus. Both men and women can and do use both. Enlightened leaders know which works best in a particular situation and value both in members of their team.
The reason companies with gender diversity at the top do better goes beyond gender. The term “decisive” usually describes the more masculine way of reaching decisions. We identify leadership with this form of decision-making. If a board is made up only of people who operate this way, key considerations may be missed. The group may take risks that could have been avoided with more process – more feminine decision style. When there is gender diversity in a group, it is more likely that there will be both kinds of decision process. It is the balance of these approaches to making decisions that explain better outcomes. Having women on boards enables this balance.
Do you agree that having more feminine styles of decision-making in the mix is the answer to this question?