Can Women Solve the Economic Crisis?
We’ve all seen the studies that show there is a stark gender gap in the workforce. Recent statistics show that “women comprise 46.5% of the U.S. workforce, 49% of all managers, 16% of upper managers, and 2% of the Fortune 500 CEO’s.” The US is several decades past the feminist revolution of the 1960’s and 1970’s, yet the glass ceiling is still firmly in place.
The global economy is in a precarious state. The blame for the mess needs to be placed squarely on the shoulders of the male CEO’s, bankers, and stock brokers who made the bad decisions that precipitated the global economic crisis. That being said, what would the economy look like if there were more women in charge?
According to an article from the Boston Globe:
Several studies have linked greater gender diversity in senior posts with financial success. European firms with the highest proportion of women in power saw their stock value climb by 64 percent over two years, compared with an average of 47 percent, according to a 2007 study by the consulting firm McKinsey and Company. Measured as a percent of revenues, profits at Fortune 500 firms that most aggressively promoted women were 34 percent higher than industry medians, a 2001 Pepperdine University study showed. And, just recently, a French business professor found that the share prices of companies with more female managers declined less than average on the French stock market in 2008.
This mounting body of evidence represents an important twist in the debate over women in business. For decades, women’s advancement has been seen as an issue of fairness and equality. Now some researchers are saying it should also be seen in another way: as a smart way to make money.
These studies reveal the profitability of promoting gender diversity throughout the workforce. But would cracking the glass ceiling inherently lead to better decision making in the corporate boardroom?
And if the high-level women do directly cause better performance, it is not entirely clear why. One possibility is that women enjoy an edge in understanding the consumer market: by some estimates they make 80 percent of consumer purchases. Another theory is that gender diversity stimulates more vigorous discussions, resulting in smarter decisions. More controversially, women may on average exhibit a different, and fruitful, leadership style.
Some analysts even suggest that women might have been able to temper the excesses that led to the current financial crisis. The culprits, one can’t help but notice, were overwhelmingly male. More women at the table, some speculate, might have served as a prudent counterweight to reckless, testosterone-addled men. In fact, Iceland has dispatched a team composed largely of women to clean up after its collapse.
“There’s evidence that women tend to be more risk-averse than men,” says Daniel Ferreira, who teaches at the London School of Economics. Based on his own research, he says, “Women on boards would have been more vigilant and more worried about what the executives were doing. I suspect that it would have attenuated the crisis we are living now.”
I’m not one to stereotype behavior based on gender. I definitely think that gender is learned, rather than biologically coded into our DNA. However, I tend to agree that less risky decision making models would be a welcome change to the status quo, and that basing decisions on values other than profits is going to be the key to getting us out of the economic crisis. We’ve tried patriarchy, which has failed – miserably. It’s about time that we give something else a try.
What do you think? Is the elimination of the glass ceiling the key to economic recovery? Can women solve the economic crisis?
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