Germany is poised to join the 30 Percent Club. Beginning in 2016, women must hold at least 30 percent of board seats at large, public companies. Germany will join other countries like Norway, France, Spain and the Netherlands in mandating female representation on boards of directors.
Will it work? It depends on what the goal is. Norway began the trend in 2006, mandating 40% representation. As The Economist puts it, “…[the] law has not been the disaster some predicted.” Not exactly a ringing endorsement but the magazine suggests that the real benefit may be a change in attitude.
The Financial Times appears a bit more optimistic: “Early analysis appears to show that quotas work and have been highly successful across Europe.” Fortune appears less sanguine, “a close look at the results of these quotas – and of Norway’s in particular, which have been in effect the longest – shows that the results might not be all that their backers intend.” Fast Company is more positive.
The articles I’ve cited here seem to have different views of what success means. If success is defined as:
Unfortunately, none of the articles discuss why boards with women might perform better. I’ve found two different reasons in the literature that suggest that women can bring important qualitative differences to board discussions and decisions.
First, women appear to make better decisions about risk, especially under stress. The research comes from Mara Mather and Nicole Lighthall who study the effects of stress on decision-making. They found that stress changes the way we select alternatives and accentuates differences between men and women. Bottom line: “…stress amplifies gender differences in strategies during risky decisions, with males taking more risk and females less risk under stress.”
Why would that be? Writing in the New York Times, Therese Huston argues that it may be empathy. We generally view women as more empathetic than men. Under stress, Huston writes, women “… actually found it easier than usual to empathize and take the other person’s perspective. Just the opposite happened for the stressed men — they became more egocentric.”
The second major reason stems from the impact of women on group behavior and effectiveness. MIT reports that the “tendency to cooperate effectively is linked to the number of women in a group.” In The Atlantic, Derek Thompson writes that group intelligence is similar to general intelligence in an individual. General intelligence suggests that an individual who is good at one thing is likely to be good at other things as well. Similarly, a group that’s good at one thing is likely to be good at other things, too. This is dubbed collective intelligence, which varies from group to group.
What factors contribute to collective intelligence? It’s not the average intelligence of the people in the group. Nor is it the intelligence of the smartest person. Thompson notes that we can rule out many other things as well, including motivation, cohesion, and employee satisfaction.
So what makes a group collectively intelligent? Average social sensitivity. It’s the ability to read between the lines and understand what someone is really saying. Thompson writes, “social sensitivity is a kind of literacy, and it turns out that women are naturally more fluent in the language of tone and faces than the other half of their species.”
So women make better decisions in stressful situations. Boards have to deal with high levels of stress. Women also make groups more effective. Boards, of course, are groups of people trying to reach effective decisions. The debate on women on boards was generally framed by the question: Why would we put women on boards? With our new understanding, the proper question is: why wouldn’t we?
(The New York Times also has an interesting on group effectiveness and female participation. Click here.)