Men, Women and The Financial Crisis - Building Gender Balanced Business

Three women professors at leading global business schools sent a letter to the Financial Times on March 10, to express their “dismay” at the quality of the debate on the role of women in the financial crisis. (Professors Herminia Ibarra, Lynda Gratton and Martha Maznevski of Insead, LBS and IMD respectively).

In particular, they questioned the “current speculation” that the “meltdown might have been averted had more women been running the business world”. They were “deeply troubled” by claims that women are “inherently more risk-averse or cautious or prudent than men”. Such claims, they said, have “little or no empirical support in a business context”.

I’d agree that we must avoid simplifications. Who could seriously believe that a woman-dominated banking sector would have been immune from problems? This website exists to push the view that a gender balance of men and women in leadership teams produces better outcomes and improves performance. The authors of the FT letter make the same point about greater inclusiveness and a more diverse leadership leading to improved management of organisations.

What are the gender diversity lessons of the financial crisis?
But what is, perhaps, missing from the message of this letter is that the obvious lack of any meaningful gender balance in the banking sector has to be a basis for discussion when shaping the future of capitalism. Studies are beginning to show a link between the behaviour of male traders in banks and the influence of male hormones on their actions, leading (in some cases) to risk-taking behaviour, which becomes infectious to the group. Cambridge University’s John Coates is beginning to see just such a pattern, and believes that women (and older men) would act as a brake to the more herd-like, testosterone-fuelled younger men who fill the trading floors.

However, that is just about banks and should be something they consider when looking at their future management models. But the theories do suggest there are significant biological differences between the sexes which have an impact on their behaviour in the workplace, which must have implications for all sectors of business. For example, other studies have shown that women tend to be better at long-term investment in banking (a woman-dominated financial sector might then have been too long-termist!). But we can see there are differences between men and women and that the balance of the two can create more effective leadership teams.

Maintaining an urgency around the drive for gender balance
The bigger point is that as organisations build new and better models (we hope) to create sustainable and profitable organisations that take into account their employees, the community and environmental concerns in equal measure to shareholder maximization, they must also maintain an urgency around gender balance.

One senior woman business executive has said to me recently that she is worried that the momentum for change in this area has been greatly reduced in the current economic climate. Leaders have other things to worry about. That is natural enough. But the job of anyone concerned with gender diversity should be to ensure that they change that view very quickly.

This website is packed with quotes from male executives who recognise the value women bring to leadership teams. There is something different and special when there is a critical mass of women. Many do seem to think women are more willing to go out on a limb to defend an issue of governance or ethics. Some do feel, from experience, that women tend to be more risk-averse. Others are hugely impressed by women’s sensitivities to the mood of the workforce. Here is David Loughman, MD, Shell Norske & interim EVP, Exploration & Production, Shell Europe, on the contribution women make to top teams: “I saw the women bring their value systems with them, their ways of communicating, their peripheral vision on sensitive issues, their understanding of the team and their desire to solve problems as a team as opposed to having conversations in the corridor.”

It’s time to move this debate on from “Would Lehman Sisters Have Survived?” to “Why Gender Diversity Is a Critical Business Issue for Our Times”.