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Presentation by Alexandra Johansen (SSE Alumni) at the Stockholm School of Economics November 10, 2014 at the seminar “Building sustainable organizations: the role of diversity for sustainable decision-making".
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PAUSE – Global VillageIf Lehman Brothers had been Lehman Sisters?
Alexandra Johansen – SSE Alumni, Global Village Scholar 2014
10 November 2014
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Agenda
Agenda
Background
Women in Leadership positions
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Sustainability is about creating long-term gains, company boards on average spend 20% of their time discussing their social/environmental impact
Background
Source: The Economist Doing Good: Business and the sustainability challenge
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Sweden is the world’s most feminine country described as having high focus on quality of life, protection of environment, avoidance of conflicts and equality
Background
44
65
50
41
60
3329
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71
31
0
15
30
45
60
75
Uncertainty Avoidance
Masculinity Individualism Power Distance
Cultural Dimensions Hofstede 2014 Percentage
Long-term Orientation
World
Sweden
Source: Hofstede Centre 2014
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High level of risk is a threat for the sustainability of a company, women are found on average to be less risk loving than men
Background
“… Men are more likely to take on higher risk than women …”Byrnes, Miller & Schafer, 1999
“… Women choose to make smaller investments than men …”Charness and Gneezy , 2007
“… Men perceived they would obtain greater benefits from engaging in risky behaviours. …”Weber et al., 2002
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High level of risk is a threat for the sustainability of a company, women are found on average to be less risk loving than men
Background
Should companies just hire more female leaders?
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Several studies have shown that there are differences in total corporate risk depending on the gender diversity in board and top management
Background
“… among US public firms, having at least one woman among the top five executives decreases the firm’s leverage , and hence the level of risk …”
Masoudie, 2008
“… female CEOs in North American public companies are associated with a lower risk for the company, and should thus be considered if the board is seeking cautious leadership …”
Elsaid and Ursel, 2009
“… female CEOs tend to avoid riskier investment and financing opportunities …”Faccio, Marchica and Mura, 2012
Differences Exist
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However, other studies have showed that the risk level will not differ because of the companies’ gender ratios
Background
“… Swedish female directors, based on a survey of almost 2000 board members and top managers, are in fact more risk loving than their male counterparts …”
Adams and Funk, 2012
“… Studies of the banks showed that those with more female directors did not engage in fewer risk taking activities around the crisis and did not have lower risk than other banks …”
Adams and Raghunathan, 2013
“… women leading companies with less than ten employees either act more as the general female population. When the corporations grow bigger the effect does not appear …”
Nyberg and Johansen, 2014
No Differences Exist
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In summary, there is no clear evidence that the risks would have been any different if Lehman brothers instead were Lehman sisters
Background
“… People who reach influential positions in corporations do so because of their ruthless personality, mind-set and talent needed for the job. It might be easier to find men like that, but this does not mean women appointed to such roles would behave any differently …”
Ally Fogg, 2013
No Differences Exist
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Companies recognized for their sustainable work however show to have a higher ratio of women in the top
Background
- Female Board Members: 27%
- Female Executives: 26%
- Female Board Members: 23%
- Female Executives: 19%
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Agenda
Agenda
Background
Women in Leadership positions
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A glass ceiling stops leadership minorities from getting the same possibilities to reach the top
Women in Leadership positions
“… Easier to dismiss is the still-common objection that quotas are anti-meritocratic: that is more true of the status quo. Oodles of research demonstrates that women are evaluated less positively than identically qualified men when applying for stereotypically male jobs, such as leadership roles …”
The Economist, 2014
36% of companies are working to increase gender diversity as a step to get a more sustainable approach - The Economist 2010
18.5% of positions in executive boards in Swedish public companies are held by women, and only 15 of them are CEOs
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To create change we have to let systematic approaches lead the way where biases, halo effects and stereotypes are removed
Women in Leadership positions
What?
Recruiting processes needs to be standardized with criteria and characteristics predefined what the company actually is looking for
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The human brain is influenced by millions of factors affecting the decisions we make
Women in Leadership positions
Why?
Experts try to be clever, think outside the box, and consider complex combinations of features in making their predictions. Complexity may work in the odd case, but more often than not it reduces validity
Humans in endless studies proved to be inconsistent in their judgments and can be affected by their daily mood, the time of the day and the set up of each specific situation
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Easy standardized methods will help companies make more accurate decisions and allow the best people reaching the top
Women in Leadership positions
How?
Mechanical (formal, algorithmic) methods of data combination outperforms clinical methods, in a large variety of situations
For Companies’ recruitment processes:
- check lists and a scoring system of what traits and experiences that are needed for the specific role
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Organizations and individuals have to get aware of the characteristics and experiences that will create successful leadership
Women in Leadership positions
How?
For Companies’ HR strategies and Talent Management:
- use track record of what traits and experiences that has a proven success record
- create descriptions of the most important qualifications needed for different (leadership) positions
For Individuals:
- understand the traits needed for specific jobs to be able to quantify experiences needed for the job
- be aware of biases and point out characteristics that does not align with these biases
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Stop spin the wheel of roulette, and diversity will bring more sustainable organizations
Women in Leadership positions
Thank you for your time!
