Oct 20, 2014

    More women bosses needed to keep firms on the right path

    RECENTLY, Senator Kirsten Gillibrand of New York said that if we want to fix the gridlock in the United States Congress, we need more women. Women are more focused on finding common ground and collaborating, she argued.

    But there's another reason that we'd benefit from more women in positions of power, and it's not about playing nicely.

    Neuroscientists have uncovered evidence suggesting that, when the pressure is on, women bring unique strengths to decision-making.

    In one experiment, researchers asked participants to draw cards from multiple decks, some of which were safe, providing frequent small rewards, and others risky, with infrequent, but bigger rewards.

    The most stressed men drew 21 per cent more cards from the risky decks than from the safe decks, compared to the most stressed women, losing more.

    Across a variety of gambles, the findings were the same: Men took more risks when they were stressed. They became more focused on big wins, even when they were costly and less likely.

    Levels of the stress hormone cortisol appear to be a major factor, according to Ruud van den Bos, a neurobiologist at Radboud University in the Netherlands.

    He and his colleagues have found that the tendency to take more risks when under pressure is stronger in men, who experience a larger spike in cortisol.

    But in women, he found that a slight increase in cortisol seemed to improve decision-making performance.

    Of course, just because it works this way in a lab doesn't mean the same thing happens in the messy real world. Do organisations with women in charge actually make less risky and more empathetic decisions in stressful circumstances?

    Some evidence suggests they do. Credit Suisse examined almost 2,400 global corporations from 2005 to 2011 - including the years directly preceding and following the financial crisis - and found that large-cap companies with at least one woman on their boards outperformed comparable companies with all-male boards by 26 per cent.

    Some might assume there was a cost to this improved performance, that boards with women have been excessively cautious before the financial crisis of 2008.

    Not so. From 2005 to 2007, Credit Suisse also found that the stock performance of firms with women on their boards matched the performance of companies with all-male boards. Nothing lost, but much gained.

    If we want organisations to make the best decisions, we need to notice who is deciding and how tightly they're gritting their teeth.

    Unfortunately, what often happens is that women are asked to lead only during periods of intense stress. Think of Marissa Mayer at Yahoo, who was brought in only after things had begun to fall apart.

    If more women were key decision-makers, perhaps organisations could respond effectively to small stresses, rather than letting them escalate into huge ones.

    We can't make the big jobs in government or business any less stressful. But we can ensure that, when the pressure rises, there's a better balance between taking big risks and making real progress.