Women in business bring diversity — a crucial asset in dealing with today’s complexities

The head of the European Central Bank, Christine Lagarde — one of many noteworthy women in roles at the highest level — recently remarked that women score higher than men in 13 out of the 19 requisite leadership qualities.

The data for this comes from a study by Jack Zenger and Joseph Folkman. They argue that the greater emphasis that women place on empathic leadership, on understanding the difficulties others are facing, and on continuing to encourage development, even during difficult times, are some of the reasons that women receive better feedback scores than men for leadership roles.

« Women make highly competent leaders, according to those who work most closely with them — and what’s holding them back is not a lack of capability but a dearth of opportunity, » write Zenger and Folkman.

Indeed, the merits of female leadership are becoming difficult to dispute. As a result, women are far more visible than they once were, occupying positions of economic and political power rarely seen in the past.

Crucial assets

As Dr Celia de Anca of IE University points out, even Christine Lagarde’s sway over the financial health of the Eurozone, while self-evident in its significance, comes with a caveat. One need only look to the male-dominated team that has been assembled round about her to notice the problem. Pictures from her time as managing director of the IMF are not much better.

In the same article, de Anca draws attention to the colossal importance of having greater numbers of women in top tier financial roles. She uses the context of Tokiko Shimizu, the first woman to be appointed to lead the Central Bank of Japan, to underline the value in such a proposal. Recent controversy surrounding sexism and the Tokyo Olympic Games puts this episode into stark relief.

Among her arguments, de Anca underscores the logic of having women — a group that makes up half the population — equivalently represented in financial services. Female leadership and decision-making result in products and services that better meet the needs of women: avenues that are left untapped without appropriate levels of diversity.

“What the studies show is that women, whether because of their biology or education, can offer different qualities than men, and that the diversity they bring is a crucial asset in dealing with today’s complexities,” de Anca writes.

Crucially, she hints at another dimension of the problem: female leadership alone is not enough. Systemic change requires broad, far-reaching progress to be made at all levels, especially those resting below the core chambers of power.

Pathways to leadership

In her role as director of the Centre for Diversity in Global Management at IE University, Dr Celia de Anca is one of many women trying to change the status quo. She advocates, in particular, for more women in the classroom, seeing this as one way to balance the books in business.

“At IE University we firmly believe that more women in the classroom means more women in future top positions and more women becoming entrepreneurs, investors and decision-makers in the global sphere,” de Anca says.

IE University boasts an array of female-centric initiatives aimed at promoting and developing the unique intellectual identities of its students. The IE Women Initiative aims to highlight the ability of every woman to transform the world through their contributions.

“Diversity is at the core of IE’s culture. We actively support women managers and entrepreneurs through the different stages of their careers, particularly the most critical for their professional success,” writes Santiago Iñiguez, IE University’s executive president.

While this is, of course, a matter of principle, Iñiguez points out that this is also a matter of good business sense. Indeed, Dr Celia de Anca is one of a number of researchers who are studying the link between diversity and innovative capacity in business.

De Anca and her colleague Salvador Aragón together designed the first global index on diversity and innovation, devising the notion of Innodiversity — « the organisational capacity to jointly manage diversity and innovation and improve competitiveness. »

They argue that diversity and innovation are a “binomial of success.”

Supporting this conclusion, researchers at Stanford University have found further evidence that diversity influences the innovative performance of scientific research teams.

“[Diversity] allows scientific organisations to derive an ‘innovation dividend’ that leads to smarter, more creative teams, hence opening the door to new discoveries,” write Mathias Wullum Nielsen and his colleagues.

The same effect is well-documented in research-centric businesses.

“[R]esearch-based firms […] with more foreign and female researchers and researchers with more diverse subjects of studies, are generally more innovative,” according to a study by Dr Julie Schneider of the Free University of Berlin.

Diversity at the top

Despite the evidence outlining its benefits, many organisations still struggle to implement diversity effectively, according to a study by IE University researcher Dr Rocio Bonet.

Bonet and her colleagues discovered disheartening trends regarding the advancement of women in organisations. They noted that despite women progressing professionally more quickly than men do — taking less time to reach C-suite positions through promotions — their rapid ascent can be capricious.

For instance, once a company has one or two women within the boardroom, Bonet and her colleagues found that the rate at which women progress diminishes significantly. After there are four or more women within the top 10 roles, women in the company are promoted more slowly than their male colleagues.

Equally, women do not fill roles throughout structures with anything approximating a balanced distribution. Bonet and her colleagues conclude that the cause of this is the largely symbolic nature of much of the current female promotion practices. The driving force is shareholder appeasement rather than meritocratic selection.

“It is much easier to achieve diversity in a few top spots than throughout the entire organisation,” the researchers write.

Unfortunately, a growing body of literature suggests that this kind of “token” representation is harmful to the individuals who are selected in this way.

Marla Baskerville Watkins, of Northeastern University, and her co-authors conclude that this practice exposes token individuals to the risk of higher levels of depression and stress.

“They’re more likely to experience discrimination and sexual harassment than women and racial minorities who are working in more balanced environments,” Baskerville Watkins writes. 

Cautionary tales

These conclusions resonate with the findings of Dr Barbara Jayne Orser, Deloitte professor in the Management of Growth Enterprises at the University of Ottawa.

Orser and her colleagues studied the field of North American women-focused capital funds. They noted that only a minority of the firms studied genuinely sought to enhance equity and counter structural barriers associated with women entrepreneurs accessing funding.

They observed that many equity investors, a field dominated by high-net-worth men, still view female entrepreneurs as lacking in some way. At these firms, Orser argues that a practice known as pinkwashing — symbolic, shallow gestures pertaining to promote women — are prevalent.

“Pinkwashing was more likely to occur when WFCFs [women-focused capital funds] were created as add-ons to mainstream programs and services, rather than as a central element of the organisation’s mission of supporting women,” the researchers write.

This study highlights the fact that, in progress, nothing should be taken for granted. While the evidence is overwhelming that women in business and in leadership roles have a tremendous amount of value to offer, efforts to foster diversity must be carefully appraised, vetted, and rooted in sincerity.