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".
3. Sustainability is about creating long-term gains, company boards on average
spend 20% of their time discussing their social/environmental impact
2
Background
Source: The Economist Doing Good: Business and the sustainability challenge
4. 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
3
Background
44
65
50
Cultural Dimensions Hofstede
2014
Percentage
41
60
33
29
5
71
31
75
60
45
30
15
0
Uncertainty
Avoidance
Power Distance Individualism Masculinity
World
Sweden
Long-term Orientation
Source: Hofstede Centre 2014
5. 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
4
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
6. 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
5
Background
Should companies just hire more female leaders?
7. Several studies have shown that there are differences in total corporate risk
depending on the gender diversity in board and top management
6
Background
Differences Exist
“… 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
8. However, other studies have showed that the risk level will not differ because of
the companies’ gender ratios
7
Background
No Differences Exist
“… 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
9. In summary, there is no clear evidence that the risks would have been any
different if Lehman brothers instead were Lehman sisters
8
Background
No Differences Exist
“… 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
10. Companies recognized for their sustainable work however show to have a higher
ratio of women in the top
9
Background
- Female Board Members: 27%
- Female Executives: 26%
- Female Board Members: 23%
- Female Executives: 19%
12. A glass ceiling stops leadership minorities from getting the same possibilities to
reach the top
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
11
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
13. To create change we have to let systematic approaches lead the way where
biases, halo effects and stereotypes are removed
12
Women in Leadership positions
What?
Recruiting processes needs to be standardized with criteria and characteristics predefined what the
company actually is looking for
14. The human brain is influenced by millions of factors affecting the decisions we
make
13
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
15. Easy standardized methods will help companies make more accurate decisions
and allow the best people reaching the top
14
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
16. Organizations and individuals have to get aware of the characteristics and
experiences that will create successful leadership
15
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
17. Stop spin the wheel of roulette, and diversity will bring more sustainable
organizations
16
Women in Leadership positions
Thank you for your time!
Hinweis der Redaktion
Ten Swedish companies stood out last year in their sustainable approach,2 and therefore got selected to sustainable indices such as Corporate Knights Sustainable Ranking3, The Dow Jones Sustainability World Index4 and the FTSE4Good Index Series.
69% of Norweigan CEOs were against quotas and the main issue is that it’s not as easy finding women with the same experience as men
What can be heard from people interviewing candidates for a position is that: “I usually know within 30 seconds if I will hire the person or not”. This behaviour was discussed in a Forbes article in 2012 where the author claimed that “Employers Hire Potential Drinking Buddies Ahead Of Top Candidates” (Adams 2012). Backed from research from Kellogg School of Management, you hire people that could be their friends and have similar leisure pursuits, experiences, and self-presentation styles
individuals, ex.
Graduate position most companies have standardized systems in the first
individuals, ex.
Graduate position most companies have standardized systems in the first
evaluation reports of qualifications should be as standardized as feedback forms or a company’s annual reports, every one should know what is needed to get a successful profit as well as a successful leader
no one could possibly win at roulette “unless he steals money from the table while the croupier isn’t looking.” Albert Einstein