Skirting the issue

With anecdotal reports showing that companies with women at the helm are on average 30 to 40 percent more profitable, Stacey Sheppard asks whether corporate America could benefit from a more feminine touch?

“When you go back 10, 15, or 20 years when women were aspiring to the board there was a very strong expectation that in order to be successful you had to be like a man, but I’m not so sure that expectation is still there”
-Samantha Collins

The past decade or so has been pretty significant in terms of game changing events and the sheer magnitude of many of these episodes has rocked the very foundations of corporate America. Enron, WorldCom and Lehman Brothers now take pride of place in the financial hall of shame and as the world still reels from the effects of the worst financial meltdownl of shame and as the world isinancial hall of shame and as the world is still reeling from the effects of the worst financial since the Great Depression, business has been forced to take a long hard look in the mirror and re-evaluate the way that it operates. One thing that's for sure is that the economic crisis has put traditional leadership qualities under far greater scrutiny as people start to reconsider what it means to be a good leader.

A recent leadership report - entitled Tearing Up The Rule Book, A New Generation of Leaders For 2010 - by Aspire, a leader in executive coaching, leadership development, consultancy and research, includes a list of the top 12 least admired leaders. The result is a list made up predominantly of male leaders, and whilst this is understandable given the fact that most leadership roles are currently filled by men, the list of the 12 most admired leaders in Aspire's report tells a very different story: six of the top 12 are women.

And Aspire are not alone in suggesting that perhaps the leadership qualities that women can offer are being grossly underestimated and overlooked. Numerous studies and reports are coming to the same conclusion and based on the research that is being carried out on the matter, it would be a grave mistake not to ask the question: Do women make better business leaders?

At a first glance it would be easy to assume that they do not make better leaders due to the fact that so few women actually make it up to the heady heights of the c-suite or the boardroom. However, the action currently taking place in Europe to rectify this situation, would seem to suggest that there must be some advantage to having women in leadership roles over and above the diversity aspects of corporate responsibility.

In 2002, Norway enacted a law requiring that 40 percent of all board members at state-owned and publicly listed companies be women by 2008. Since then political pressure has grown across Europe for companies to increase women's representation among their leadership ranks and as a result both Spain and the Netherlands have passed similar laws. In January this year, the lower house of France's parliament approved a new law forcing companies to lift the proportion of women on their boards to 40 percent by 2016. Following these examples Belgium, Britain, Germany and Sweden are now all considering legislative measures involving female quotas. In fact, only recently, German company Deutsche Telekom, Europe's largest telecommunications company, announced that it would voluntarily introduce a quota aiming to fill 30 percent of upper and middle management jobs with women by the end of 2015.

Whilst the proportion of female leaders is particularly low in Europe - on average 11 percent of board seats in European companies are held by women ­- the situation in the US is marginally better - roughly 15 percent of the board members of the Fortune 500 companies are women. However, for many critics these statistics are far from acceptable and calls are being made to increase the number of women on boards and in executive roles. There may not be the same debate here in the US about legal quotas, but concerns are still being voiced loud and clear.

Betty Spence is President of the National Association for Female Executives and part of her role is to collect data on the top companies that female executives can work for. NAFE run an annual awards that recognizes the top 50 companies and the work that they do in promoting the advancement of women through the ranks. Spence is clearly perturbed by the distinct lack of women in senior-level management positions, but she is particularly troubled by the disappointing numbers of women who are in roles where they are actually running the business.

"Women are currently only in about 11 percent of profit and loss jobs," says Spence. "As evidence emerges that companies with women at the top are more profitable than companies without women at the top, the fact that women should still only be in 11 percent of these positions is clearly an error on the part of companies. To let that talent be within your walls and not be using it for profit makes absolutely no sense," says Spence decisively.

And the figures do seem to support her point. Some of the companies in her top 50 list do indeed have women at the helm and a few of them certainly appear to have outperformed companies with male CEOs. According to NAFE, even Wall Street backs this concept: Stocks of the 12 Fortune 500 companies with women CEOs rose an average of 50 percent in 2009, compared to the benchmark for US stocks, the S&P 500, which rose an average of 25 percent.

Spence goes on to explain how a recent report released by Hedge Fund Research Inc found that between January 2000 and May 2009 hedge funds run by women returned nine percent gains compared to 5.8 percent for those run by men. "This is clearly a dreadful misuse of talent," she says. "If you've got the women within your organization that can do then, put them to work and have them do it."

She cites figures from McKinsey & Company that suggest companies run by women are 40 percent more profitable, and similar figures from Catalyst, non-profit group working to expand opportunities for women in business, that suggest that companies run by women are 30 percent more profitable. "If companies are that much more profitable when they do this, then only a fool wouldn't follow that advice," says Spence.

Clearly, with figures like these being thrown around, the issue merits investigation, particularly as many companies are still struggling with the legacy of the economic crisis. Like Spence says, who wouldn't want to run a more profitable company? Employing women in senior-level positions would appear to make sound business sense and if this is indeed the case it's worth examining what it is exactly that women can bring to the table that men perhaps can't.

Joanna Barsch is a director at McKinsey & Company, a global management consulting firm, and the leader of The Centered Leadership Project. She has also recently co-authored a book entitled How Remarkable Women lead: The Breakthrough Model for Work and Life. As far as she is concerned there are a number of important distinctions between the attributes of women and men as well as differences in their leadership style. The main differences that she alludes to relate to the five core principles of Centered Leadership.

"There are a couple of things that women do on average that would be good for men to do as leaders. The most important one is anchoring what the company does in meaning, in other words, providing a sense of purpose that is shared within the company," says Barsh. "Research shows that this tends to be more important to women than pay and status, which are generally more important to men."

The second thing that Barsh notes is that women recognize positive emotions in the company and use it to mitigate the fears that employees have and that reduces their will to work. "The positive emotions of joy, happiness and love are very strong and can actually be great strengths for a company. So a woman leader, recognizing the power of emotion in the workplace, is more able to lead effectively."

Barsch goes on to explain the third advantage that women have: instinct. She refers to a theory by psychologist Shelley Taylor called 'Tend and Befriend' which states that women tend to build and nurture community and that makes the company stronger. "I have interviewed a fair number of women at the top, and they talk about their role as a leader very much thinking about the organization as a family. Anne Mulcahy was a great example of that when she was leading Xerox. You have to pay attention to all the people and value everybody," says Barsch.

"Brenda Barnes who leads Sara Lee is another person who talks about it that way," she says. "Andrea Jung who leads Avon, a third person who thinks about family all the time, and recognizes that the individual facing her across the worktable is a person who has a family, who is not just a work unit, but a human being. And that notion, that humanistic notion is one that I think women who are moms and family leaders in essence can bring  to the workplace."

The fourth aspect that Barsh highlights is that fact that women tend to lead in a more collaborative manner than men do. "I've seen ample evidence of women being far more collaborative, gaining far more input from the company, and being able to make decisions that are based on taking a lot more in. It's not that women are worse at decision-making.  They just make decisions more collaboratively, which is a different form of decision-making, and maybe more effective in times when it's really uncertain and you don't have all the answers yourself," she explains.

Spence agrees with Barsh on this matter and cites another study published by Catalyst in October 2005 entitled Women "Take Care", Men "Take Charge": Stereotyping of US Business Leaders Exposed. Spence says that there has always been a certain perception that men are much better at making decisions and moving forward, but that this isn't necessarily true.

"Studies are now finding that men may make decisions based on a single strategy whereas women have a bigger overall strategy when they're making their decisions, and they also pull in more view points. So what Catalyst concluded in the study is that there were no real differences in skills, only differences in styles of management," explains Spence.

Then the final characteristic that Barsh identifies is that women tend to be more risk averse. She believes that perhaps as women leaders have this sense of meaning and a strong sense of community and responsibility for everyone in the company, they may act more cautiously.

However, this appears to be a very contentious issue, predominantly due to the wording of "risk averse". Spence certainly thinks that this is a misconception. She refers back to her earlier comment regarding the Hedge Fund Research. "It's not that women aren't risk takers, it's that they seem to be managing risk a whole heck of a lot better than many men are managing risk," she says.

Samantha Collins, the founder of Aspire also doesn't believe that women take less risks, she thinks they have a different approach to risk, which is more closely related to ethics. "I think women take a more calculated risk and when it comes to something that goes against strong value or ethics, they're not going to do it. So when you think about the whistle blowers in the last ten years, like for Enron or WorldCom, they've all been women.  Now to be a whistle blower, that's a huge risk.  But they're doing it because it went against their values," she says.

"So am I saying that women are more ethical than men?  I'm not saying that, but I am saying that when it comes to risk and an attitude towards risk, I think men and women approach it differently and I think that's a good thing," says Collins.

So whilst men and women would appear to have very different ways of doing things and contrasting leadership styles, there is nothing really to suggest that one style is overtly or definitively better than the other. And if this is the case, why are women struggling to break through the so-called glass ceiling - if indeed one actually exists?

Clearly the fact that women are the child bearers cannot be ignored here, taking time out to raise a family would obviously impact the career of any woman, or man for that matter. Electing to work part-time or take time off for children means that women often find that they're not hitting the milestones at the same rate as the men are hitting them. But Barsch also puts it down to women having a different understanding of leadership.

"We define leadership in our book not as being at the top of the company, but as making your mark in whatever you choose. And because of the importance of meaning to women, they have a much richer and broader definition of what it means to make a difference," says Barsh.

She believes that men view pay and status as the goal and therefore getting to the top is important to them. However, women look much more for what is going to make them happy and make their lives worthwhile, she says.

Collins agrees and when asked why there are so few women in senior-level positions she says: "Because a lot of women don't really want to do it. I don't think it's because women can't do it. I believe that a lot of women, from Generation X and Generation Y, look at the senior levels and say 'You know what, I'm not really sure whether I want to make those sacrifices and I'm not really sure whether that's the style or the atmosphere of somewhere that I want to work'".  Combine this with work-life balance issue and a style of work that is perceived to be quite aggressive and Collins says that it's not surprising that many women decide not to go down this route.

When we take a look at successful female leaders from the baby boomer generation, many of them succeeded in the only way they could - by imitating men. Authoritarian, direct and controlling leadership was the hallmark of the 1970s businessman, and women were not exactly welcomed into the ranks of management.

"Those women who have adopted a more masculine style in order to compete with their male peers probably had to work three times to 10 times as hard to reach that senior level position," says Collins. "One of the dangers is that the women at that level think that they have to be a super woman and portray this perfect image of somebody who is a brilliant banker or a brilliant lawyer, a super model, a wonder woman at home, and a sex siren. You know, the perfect outfit," she continues.

Now that these women have made it to the top Collins believes that they have the opportunity to uncover some of theses layers and start to show a more human, more authentic side to themselves. Particularly in terms of role models, Collins points out that younger women working their way up the ranks want to be able to look up to female role models who are human and who have strengths and weaknesses. "When you go back 10, 15, or 20 years when women were aspiring to the board there was a very strong expectation that in order to be successful you had to be like a man, but I'm not so sure that expectation is still there," says Collins.

"Some of the skills that have been more akin to women have consistently been underrated as soft, fluffy and girly, and I think that's had its day now. What we're realizing is that those skills are absolutely needed in order to get the best out of people and to really encourage people to want to enjoy their time at work," she explains.

So perhaps we are skirting the issue with all this talk of whether corporate America needs more women at the top. Maybe it's part of a far greater discussion on leadership. This time last year, the New York Times columnist Nicholas Kristof reported that some of the most interesting discussions at the World Economic Forum in Davos, Switzerland revolved around whether we would be in the same mess today if Lehman Brothers had been Lehman Sisters. The consensus, he wrote, was that the optimal bank would have been Lehman Brothers and Sisters.

Men and women bring vastly different perspectives, skills, mentalities and communication styles to business and a company that can capitalize on what both have to offer will inevitably benefit in the long run. After all, a board or executive team that can draw on the different styles of men and women will undoubtedly profit - perhaps even in monetary terms - from better decision-making.

Whether more women make it to the top or not, what is undeniable is that a more feminine approach is needed to leadership. The new generation of leaders take jobs in companies they believe in and want make a difference and be challenged. They are frustrated by hierarchies, work-life balance, and a lack of opportunities to do what they came for.

"Once companies start realizing that this is the case and a whole generation of women, and a lot of men, want something different from senior-level positions, then there is a chance for them to start changing the way they do things. And I think that might be the wake-up call that's needed," says Collins.

Going back to Aspire's report, Tearing Up The Rule Book, A New Generation of Leaders For 2010, in the foreword Collins writes: "This new century needs a new generation of leaders who are more transformational and embrace their feminine qualities. The old school style of many politicians and corporate CEOs is on the way out and transformational leadership behaviors are on the way in. The time for a new rulebook is here and women and men who operate with the highest integrity, think beyond short-term profit, have a vision for the future and are not afraid to prioritize their family and personal life will not only survive but thrive in a new decade. This is a new era for women as leaders."

I for one would certainly like to believe her.