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Gender diversity in top management

Various studies have explored whether there is a demonstrable connection between the gender diversity of top management and organisational financial performance. This study has however showed that there is a connection between diversity and financial performance. The groups of companies with the highest representation of women in their senior management teams have been experiencing better financial performance than the group of companies with the lowest representation of women Catalyst, (2004).

The top quartile of financial performers in Catalyst’s sample average over 20% women in their top management teams, and in the bottom quartile almost no women were represented in most senior management teams. However, this examination failed to show the underlying nature of the causal relationship between gender diversity and performance. It could be the case that both phenomena – gender diversity and financial out-performance are expressions of the same organisational efficacy, as Hunter correctly stated

Diversity of senior management is from this point of view – an expression of a culture that outperforms the competition. Most recently a study was published on the performance of 2500 Danish firms. The purpose was to evaluate the influence of the proportion of women in management on firm performance. One of the motivations behind this study related to new regulations in some countries (Norway) as regards the gender composition of the boards of directors of private firms in order to improve equal opportunities. Does gender balance affect performance?

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The conclusion was ambiguous and dependent on definitions of performance and the measure of women’s representation in management. The effect on firm performance varies fromn one to positive – positive effects mainly related to female managers with a university degree. Less well-educated women have less influence on firm performance. The study also tried to reveal the direction of the causality: do women on boards really affect firm performance or is it actually the case that better performing firms are more likely to hire women?

The study found that if there is a positive relationship, this is due to board diversity affecting firm performance and not the opposite. Findings In order for women entrepreneurs to grow their business, they access to a wide range of business development support. This includes information training and advice and demonstrates an understanding of gender constants that women often have to overcome when setting up and running an enterprise. Business women are often marginalized in the business community and therefore unable to easily access much of the information they need on how to enter the export market.

Even when government agencies attempt to provide such information, most do not recognize the specific needs of women owned business. At the same time, access to information about trade opportunities and WTO regulations and requirements cannot be fully exploited by women if they continue to lack access to telephone, computers, the internet, e. t. c. Firms must support the careers of those who wish to invest time in providing for the welfare of their families as well as the success of the firm.

It is not only a question of protection and support of the worker, but also of the welfare of the firm and its owners. Given the sizeable human capital investment that firms make in their highly educated professionals, firms should develop policies that offer opportunities to balance work and family in order to retain highly qualified workers of either sex. ’Time sovereignty, and flexibility, seem to be crucial Conclusion Kochan (2002), the dichotomy between the diversity of teams and the bottom line is more complex than implied by the popular rhetoric Kochan et al. (2002).

The empirical literature does not support the simple notion that diverse groups perform better; on the contrary, if not managed, diversity is likely to have a negative effect; leading to conflict and turnover. An extensive extensive research conducted at four large US organisations that have long-standing commitments to building diverse workforces showed that gender diversity had either no effect or a positive effect on team processes Kochan et al. (2002). The positive effect is that gender-balanced groups have more constructive interaction than either predominantly male or female groups.

This last conclusion was supported by the results from Laure Turner’s investigation of team performance in four participating companies (Turner, this volume). She found that the individual performance was highest in teams that were gender balanced (those which were 33-66% women) followed by predominantly male teams and finally the predominantly female teams. Through the analysis of a sample of 1506 individuals (30%women) indicated that gender diversity has a positive impact on the individual performance of men and women. However, only the increase in women’s individual performance proved to be significant.

Hard evidence of the positive impact on collective performance was difficult to obtain due to the low number of investigated cases (69 teams), but the data indicate a positive effect of gender diversity. Managing diversity: the real challenge. The expert group has discussed the complexity of managing diversity on many occasions. As we have described above, there is no unambiguous evidence for the premises that gender diversity will improve team performance.

References:

Fairn-Dunlop, Peggy (1999) Gender, culture and sustainable development, in Hooper A (ed) culture and sustainable Development in the Pacific.

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