Essay: You would think having more women in the boardroom would lead to more cautious management, but a new study finds that female financial executives tend to take more risks than men -- sometimes in a troubling attempt to imitate their male counterpart
BERLIN- It is not always a plus to have a woman for a boss -- especially if you're a woman. Some men would say the same about their male boss.
I admit that my first sentence wasn't very nice. I'm entirely in favor of more female bosses, and even a quota system to ensure that. I raise the issue only after a new study about whether women make better leaders than men.
The study, of course, was written by men: Allen N. Berger of the University of South Carolina, Klaus Schaeck of Bangor University, and Thomas Kick, a research associate at the Deutsche Bundesbank– the institution under whose name the study was published, though the German central bank stresses that any opinions expressed are those of the authors, not the bank.
As is often the case with researchers, the way the men phrased the question on which they base their results is not easy to grasp. Obviously they asked nothing as simple as: "Do women make better bosses?" Instead they wondered: "How do the age, gender, and education of board members impact the volatility of a bank's profits?"
They then gathered the results into a discussion paper entitled "Executive board composition and bank risk taking." It is more than 60 pages long, and contains dozens of graphs and footnotes. The bottom line can, however, be summed up in a single sentence: "No, women do not make better bosses."
The researchers focused particularly on whether women in the boardroom lead to banks' investment decisions being more "feminine," which is to say more risk-averse. They studied the track records of German banks between 1994 and 2010, using profit fluctuations as their parameter.
Less caution, more risk
On that politically loaded issue of whether women in the executive suites make banks more cautious -- the answer, researchers found, is no. In fact, the opposite appears to be the case. "Three years after the number of women was increased, so did the willingness to take risks. Economically speaking, the change was marginal."
So, women are generally considered to be risk-averse, but aren't really. Not, at any rate, if they make it onto a bank's board. As a matter of fact the study tells us that: "More women at the top means more risk in the business model."
This comes as a surprise, as it contradicts everyday experience that as a general rule women are more cautious. Whether it's driving a car, investing money, or on the ski slopes, women, "even in these emancipated times', tend to be a bit more reserved, even passive, while men show a greater propensity towards risk-taking.
Because of this, of course, women earn significantly less than men, regardless of age, and regardless of how impressive their educational qualifications are. And there in a nutshell, or so common wisdom has it, is the problem with women: they have too little bite, too little punch. They can't take the heat. They're fearful. These supposedly typically female characteristics disqualify women from leadership positions.
The three researchers have an answer to this apparent contradiction. They suspect that "females in top positions have less experience than their male counterparts." And because of this, they feel compelled to imitate male behavior.
And then, to perform better than the men but also to be accepted by them, women try to outshine their male colleagues. In other words: as men, women just aren't as good.
Breaking the glass ceiling
According to the research paper, if women act like women, they don't get the top positions. If women act like men, they shouldn't get top positions. By the logic of this study, women are only behaving appropriately when they don't go after a position on the board.
Back to real life: it can, as I've said, be terrible to have a female boss. Just as it can be awful to have a male boss. And here, unscientifically put, is the reason: some people are competent and friendly and have an understanding of what motivates others.
People with these characteristics -- men or women -- make good bosses. The problem is that it is often not these people who end up as our bosses.
So the problems banks have in selecting those to occupy top boardroom slots can be solved. Unscientifically put, they should just pick the right people. It's pretty easy. Easier, anyway, than trying to change men. Or women, for that matter.
Read the original article in Die Welt in German