Monday, 25 February 2013

Can more senior women spearhead growth?

It is often said that we need more women on Boards because women's leadership skills are precisely what is needed to help the economy back to growth.  Not much has been written about precisely why women can make a specific contribution to recovery.  Is it just that we are all so disappointed with the reality of post bubble lifestyles that we'll try anything to restore some confidence? That sense that it can't get any worse, surely if more women were in charge things might improve and anyway what have we got to lose? 

I figured there might be something to this and there might be something in the idea that women and men have some clearly differentiated leadership characteristics and that more of the female and less of the male might be just what we need to dig us out of this flat lining era.

There is certainly good data that companies with more women on boards perform better financially.  This is the main genesis of the Davies Report which looks at the UK and is also commented on by US  women's coach Lynne Morton.  In her blog here she points out that Fortune 500 companies with a higher percentage of women officers experienced, on average, 35.1% higher return on equity and 34% higher return to shareholders;  Fortune 500 companies with more women board directors outperformed others by 53%  (Catalyst, The Bottom Line, 2002 and 2007). 

On the face of it, it seems hard to understand why companies aren't rushing towards talented women begging them to take senior roles. Or why two years after launching his report, Lord Davies is still saying that he thinks the UK will be doing very well to hit 25 per cent of women on Boards by 2015. It's currently at 17 per cent after a year of high profile campaigning. The situation is very similar across Europe with around 11 per cent of Board seats going to women - a position which has been fairly static for some years.

Perhaps people don't believe the data because they don't understand how it happens.  There isn't a great deal written on this but Mckinsey have done a fascinating series of reports trying to understand why an increase of women on boards seems to have such a dramatic increase on business performance. They asked men and women around the world which leadership traits were most important after the crisis. The ability to inspire by providing leadership and vision came top followed by setting expectations and connecting these clearly to rewards.  In both cases their modelling shows that women outperform men in these areas.

Despite this and much other similar data, men remain to be convinced.  In a global McKinsey study just over half of men surveyed said they didn't believe more women on boards led to greater returns.  And just as surprsingly perhaps only three quarters of the women believed the data. It is hard to think of other areas where beliefs and behaviour consistently fly in the face of the data and evidence, particularly when driving better peformance has never been harder.