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Economy

Women, Business And Quotas: Is There A 'Female Management Style'?

Norway was the first European country to introduce a quota system for women managers. Results are now in – and they demonstrate that women may, indeed, have a fundamentally different approach to doing business. Wish your boss a happy International Women&a

Laurence Parisot, center, heads France's employers' association (sophiejazz2009)
Laurence Parisot, center, heads France's employers' association (sophiejazz2009)
Ralph Pöhner

ZURICH - Nobody likes to talk about them too much, but there's no denying that quotas are a hot topic across Europe right now: from Spain to France, Germany, Great Britain and Sweden, politicians are renewing efforts to introduce them into the working world.

On Sunday EU Commissioner Viviane Reding announced that she wants legislation that will force businesses across the continent to include more women in management. Switzerland meanwhile – not a European Union member – goes on playing its traditional role, and neither parties nor individual politicians are sticking their necks out to take up the issue.

But are quotas smart public policy? Do they make good business sense? New data has emerged that for the first time shows results about the effects of having more women in management positions. Norway was the first European (albeit non-EU) country to go down that road: since January 2008, all businesses whose stocks are traded on the Oslo exchange have had to have at least 40% women on their corporate board. And now, four years later, there's a report on how things are going.

The report, authored by two American economists, was published this past December. In it, David Matsa and Amalia Miller compare the data concerning the Norwegian companies who hired more women with three other sets of data: how those companies were doing before they hired more women; comparison with Norwegian companies that were not obliged to introduce the quota system; and finally comparison with other publicly quoted Scandinavian companies.

Modest differences, deeper lessons

At first blush, the differences appear modest indeed. Take a closer look, however, and it immediately becomes apparent that having more female managers has real potential to change our economy. For starters, Matsa and Miller were unable to spot any drastic strategic differences in companies with more women executives, but it was found that take-overs, mergers, joint ventures and the creation of subsidiaries continued in the same way, no differences noted. Nor did increasing the number of women on boards of trustees appear to impact turnover or costs.

However two key areas were impacted in the Norwegian companies with the quotas. The first having to do with personnel costs and the second with profits. The companies that had at least 40% of women in top management let fewer people go, had higher staff-related costs – and showed significantly lower profits. More specifically: profitability fell on average by 4.1%. This would seem to reinforce the cliché that women are more reserved about firing people because they are more social – and also more expensive.

But be careful about taking away from the Norwegian results that women are "too nice" for Big Business; or that quotas are good for workers but bad for shareholders. If only it were that simple. Interestingly, since the introduction of the quota, the Oslo Index OBX has done about 10% better than Switzerland's SMI. That's a clear difference, and interesting as an indication since neither Norway nor Switzerland are members of the EU, both came through the financial crisis in similar ways, and both have seen a similar rise in the value of their currency.

But Matsa, a professor at Northwestern University's Kellogg Graduate School of Management, and Miller, a professor at the University of Virginia, see something else in the results: male corporate thinking is short-term and female thinking is long-term. According to the authors, a number of other studies also offer evidence that, as a general rule, women are more oriented to the longer term.

So one deeper lesson of the Norwegian results may be that women board members believe that the more profitable long-term strategy is keeping people employed. Moreover, the authors say, the study shows clearly that a characteristic of female management style is to work hard to keep teams together.

Read the original article in German

Photo - sophiejazz2009

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