Aequus Partners' Diversity and Flexibility e-newsletter, March 2009
Dear ColleaguesIn this month’s newsletter, we address the issue of leadership and diversity in the context of the continuing financial crisis and its repercussions on organisations and their leaders.
We asked ourselves – did a lack of diversity amongst leadership teams help contribute to the crisis? Would greater diversity – and in particular diverse perspectives, experiences and expertise – have helped predict the crisis? More critically, if we don’t have diversity in leadership positions now, how will organisations be able to strategically navigate the crisis? And what can leaders (eg Executive teams and Boards) do to ensure that they get diversity around the table so that they think outside the square?
In this newsletter we consider these turbulent times as an opportunity for gender diversity, but note the barriers to selecting for diversity in leadership teams (eg lookism – the practice of selecting on appearance not merit). In particular we present a strong business case for diversity based on metrics, as well as new ideas about how to engage and leverage diverse perspectives.
- US research: Turbulence and the emergence of women in executive leadership: This article suggests that opportunities for different styles of leadership, in particular the styles women bring to the job, may present themselves during turbulent times of change in organisations and industries. This paper is timely given the turbulence present in the current global economy and the opportunities for advancement this may present for women in senior leadership.
- Swiss research: Are decisions about competence made on looks? This research explores whether people make decisions about competence based on the appearance of the person they are evaluating, and even when given additional information about skills and attributes, remain anchored in their original decision. The study used election candidates as the subjects, but the findings have repercussions for the selection of leaders in organisations and institutions as well.
- Book review: Mind: the diversity gap: Practitioners are very attracted to finding better (more effective, more engaging) diversity hooks, and especially ones that have numbers associated with them. Scott E Page has written a book The Difference: How the power of diversity creates better groups, firms, schools, and societies, which provides a potentially different, and numbers-based, diversity business-case hook. Our Dr Graeme Russell provides an insightful book review.
- French research: Women and the vision thing: In an evaluation of thousands of 360 –degree participant ratings of male and female leaders, women outshone men in most of the ten dimensions measured, but on one they were significantly below the ratings for men, and that was on “envisioning”. Three theories are developed in the paper to explain this finding, and suggest that women may be visionary, but in a different way, however it is the perception of colleagues as to visionary ability that is important. As such, the researchers suggest that women acquire visionary capabilities to ensure that their colleague’s perceive this capacity.
1. US research: Turbulence and the emergence of women in executive leadership
This paper poses a number of exploratory propositions to try and explain how women may ascend to leadership positions, rather than concentrating on the barriers they face along the way. Researchers Furst (University of Cincinnati) and Reeves (Duke University) propose the concept of “creative destruction” (that is, forces of capitalism which perpetuate a continuous cycle of creation and destruction of market leaders, generating new markets and new products) as an enabler which helps women reach executive management positions as a consequence of turbulent environments. In the current global financial crisis, and the turbulence that will continue, opportunities may present themselves for a different kind of leadership that promotes inclusiveness, openness and facilitates change. Most interestingly, the authors propose that the stereotypical perceptions of women held by decision-makers can act as a enabler for advancement, (eg women are perceived to be nurturing, facilitative and communicative) and that women might use these to advantage rather than eschew them.
1.1 Introduction
Women continue to lag far behind men in their appointments to senior management and executive ranks. An abundance of theories exist to explain why the glass ceiling occurs, but fewer offer explanations for why some women break through the ceiling. The authors argue that examining women who have advanced and search for commonalities in their experiences may explain why they have emerged as leaders.
Specifically, they propose that the concept of ‘creative destruction’, first formulated by Joseph Schumpeter (1942) helps to explain how women reach these leadership positions. This concept emerged when Schumpeter rejected the concept of a stable equilibrium in the market and insisted that capitalist economies are arenas of strategic interaction and constant change. Most important in this concept are market leaders, whose temporary leadership is eventually destroyed by new challengers. Thus, there is a constant cycle of continual creation and destruction of competence and market leadership which generates new markets, new goods and services.
More recent scholars have used this theory to explain how modern businesses function and how organisations compete strategically. By constantly creating new innovations, companies stay ahead of competitors and this body of research suggests that emergent firms must act differently to market leaders by offering something of value which is difficult to replicate or improve. When there is uncertainty and turbulence in the marketplace, challengers must be ready with effective, sustainable leadership, and the authors suggest that women may be viewed as especially attractive candidates during these conditions because they bring a fresh approach to leadership, varying skill sets and diverse life experiences.
1.2 Method
This paper is not an empirical test of ‘creative destruction’, rather it proposes a number of hypotheses which could be tested by future researchers. It does, however, outline the careers of eight women from companies such as Xerox, Avon, Citigroup, PBS, eBay and Merrill Lynch who hold CEO, CFO and President positions. The industries within which these companies sit have been subject to various forms of turmoil (many components of which contributed to the current financial crisis) and the authors propose that this turmoil has presented opportunities for these women to progress.
1.3 Propositions
There are nine propositions discussed in the paper which describe how and why women may ascend to top management during times of turbulent change. Each of those is outlined below:
- Women are more likely to ascend to top management levels in competitive, turbulent industries than in stable industries that are less vulnerable to challenger entry. The women described in the paper appear to represent a trend of talented women who work in industries which are competitive and susceptible to turbulence and sometimes scandal (eg media, technology and finance).
- Women will be more likely to ascend to top management levels following the involuntary rather than voluntary termination of a male CEO. Research has shown that women are more likely to hold top positions in industries with higher rates of voluntary management turnover. The authors suggest, however, that women rise to the top in industries with higher involuntary as well as voluntary turnover particularly as leader succession is a signal about the institution’s future position.
- The rate at which women are appointed to top executive positions will be highest immediately following (i) a strategic shift towards customer or market orientation and (b) a crisis or scandal. As a consequence of creative destruction, turbulence and uncertainty may prompt organisations to expand their executive search and consider non-traditional candidates with divergent experiences, goals, skills or leadership traits. Executive selection may be “market-driven” determined by the selection of an individual who can meet market demands, or driven by corporate scandal where subjective leadership decisions based on friendships and networks are replaced with objective and sophisticated methods of recruitment.
- In an uncertain or turbulent business environment, women may be considered superior candidates for a top position because they are perceived by decision-makers to be more charismatic or transformational leaders than male candidates. These environments may provide opportunities for women because of the type of leadership typically associated with women (eg social leadership, facilitative and relationship-oriented) which engender communication, trust and collaboration. The authors argue that whether men or women demonstrate this transformative or charismatic leadership is irrelevant, rather the perceptions regarding women’s ability to exhibit these behaviours acts as an aid to advancement. In other words, gender stereotyping can be used to advantage, rather than as a barrier.
- In an uncertain or turbulent business environment, women may be more likely to obtain a top management position because they are perceived by decision-makers to possess more of the desired communication skills than men. Amidst scandal and public mistrust, leadership traits that are highly valued include transparency in communication, open decision-making style and personal integrity. Women are perceived to have these leadership traits enabling them to communicate with diverse groups, as well as the ability to use highly developed discourse management skills to affect results.
- In an uncertain or turbulent business environment, women may be considered superior candidates for a top position because they are perceived by decision-makers to be more customer-focused or customer-savvy than male candidates. Women may be perceived as more attuned to customer preferences than men, and may also be attractive candidates due to the escalating buying power of female consumers.
- In an uncertain or turbulent business environment, women may be considered superior candidates for a top position because they are perceived by decision-makers to be more self-sacrificing than male candidates. Research suggests that women may have different moral, ethical and psychological tendencies than men which are “other-directed”. As such, during turbulence, corporations may want to demonstrate that their leaders care about the fate of employees and are willing to sacrifice along with everyone else.
- In an uncertain or turbulent business environment, women may be considered superior candidates for a top position because they are perceived by decision-makers to be more risk-taking than men and/or more likely than men to take strategic risks. Analysis of successful women suggests that they act aggressively by seizing unique and challenging opportunities in their careers. They possess a willingness to take on risky assignments and make moves that challenge conventional wisdom. There is emerging evidence that women leaders may be more inclined to ignore rules and take risks than men. It is possible this behaviour does not reflect risk taking, per se, but women appear less bound by convention and are willing to take risks to get ahead.
- In an uncertain or turbulent business environment, women may be considered superior candidates for a top position because they are perceived by decision-makers to offer a more diverse set of work and life experiences than male candidates. Research shows that successful women use a complex repertoire of actions, employing several different strategies at the same time, as well as complex behaviours and approaches to leadership. In addition, they have often had to balance work with family demands and bring some “life diversity” to their skill mix.
These proposals, then, argue that women’s emergence as leaders is due to an interaction of perceived personality characteristics, leadership styles and accumulated experience in the context of a turbulent environment. Clearly, research is needed to test these propositions, and measuring the degree of creative destruction is a significant challenge, thus the authors use the concept of “turbulence” to reflect conditions in which the process of creative destruction will occur. Turbulent changes will be those which are non-trivial, rapid and discontinuous and may include hostile takeovers, rapid growth or significant cutbacks.
The perceptions of decision-makers in regard to women as leaders can be measured through interviews or surveys, and the demographic profile of leaders, including gender, career progress can be tracked quantitatively. These propositions may provide some strategies that women should consider to increase their opportunities for advancement, in particular during turbulent times. Women may be advised to develop the skills they are perceived to have by decision-makers which include a transformational leadership style, using opportunities to take risks and/or follow a divergent career path. Perhaps more controversially, women may be encouraged to embrace rather than eschew the stereotypical perception of women as socially facilitative, nurturing and relationship-oriented.
The authors note that the method employed to profile women in this paper was neither rigorous nor theoretically-driven and they represent a small fraction of women leaders. However, they argue it is vital that scholars and practitioners identify conditions that facilitate the advancement of women and with further research, can perhaps equip women with advice on how they can better their chances of advancement.
For further information see: Furst, S. A. & Reeves, M. (2008) ‘Queens of the hill: Creative destruction and the emergence of executive leadership of women” The Leadership Quarterly Vol 19 (3) pp372-384.
Editor’s note: A February 2009 survey of Corporate Directors conducted by McKinsey found that only half the board members thought their boards had responded effectively to the economic crisis. Innovative strategies were found to be the key in evaluating the Board’s response, and of those who said their Board had responded well, 60% credited the success to new strategies and taking advantage of new opportunities. The results also indicated that Directors are willing to shake up board procedures by “inviting new participants” (18%). Will women leaders emerge in 2009 as a panacea to ineffective Boards? For the full report see Campbell, A. & Sinclair, S. (2009) ‘The Crisis: Mobilising for change’ www.mckinseyquarterly.com
2. Swiss research: Are decisions about competence made on looks?
2.1 Introduction
Both leaders and their subordinates expect that leaders are selected on the basis of merit, ie due to their demonstrated competencies, experience, skills and knowledge. However, a study from Switzerland, suggests that our choice in electing leaders is more likely to reflect our assumptions of competence based on “lookism” – ie the appearance of competence - rather than actual merit.
In this study, researchers Antonakis and Dolgas (University of Lausanne) investigated whether voters in a national election might be using the same cues used by children (ie facial stereotyping and rudimentary classification schemes) to categorise individual competency, and possibly ignore additional information on candidates. To find out, they compared the candidate choice of the voters in the real election with candidate choice made some years later by a group of Swiss university students and children. Overall, they found that a greater percentage of voters, students and children all selected the same person. The researchers concluded that selection of competence appears to be heavily influenced by the person’s appearance.
2.2 Method
In Experiment One, 684 Swiss undergraduates were asked to predict the winning candidate from a pair, based on how competent they looked. In Experiment Two 841 participants (of whom 681 were children aged 5-13) were asked to participate in a computer-simulated game involving a sea voyage from Troy to Ithaca. They were shown the same two photographs and were asked to choose a captain for their boat.
2.3 Results
Experiment One results showed that just over 70% of participants correctly selected the election winner from the pair of photographs. The margin of victory in the election was also predicted by the results (ie similar proportions of voters and students voted for each candidate).
Similarly in Experiment Two, the choice of captain in the game was the same as the choice of election winner in 70% of cases. The researchers suggested that young children, who are less experienced than adults in observing competence, played an innocuous game and still predicted correct election results. Lastly, the adults in Experiment One were compared with the children in Experiment Two and the study found no difference in child-adult response patterns.
2.4 Discussion
Democracies and organisations should be selecting leaders based on competence, skill and merit. However, this study suggests that facial appearance is highly influential in judgements of competence, and appearance is incorporated into decision-making by adults and children alike. A possibility suggested by the authors is that looks do correlate with competence, however, previous research has demonstrated that intelligence cannot be predicted by facial appearance.
On a general level, people automatically infer characteristics of people based on the way they look. Previous studies have demonstrated that naïve voters (voters with no knowledge of the candidate’s abilities or competencies) can accurately predict election outcomes by rating competencies of candidates from their photographs. It would be hoped, however, that rational voters would change their initial judgement as more information about the candidate’s policies, values and political affiliations became available. It would appear, however, that many people are anchored in their first impression and do not correct initial decisions when additional information is learnt.
This research suggests that the election of leaders is largely based on initial impressions of competencies, shaped by appearances. This is further evidence to suggest that facial stereotypes and other classification schemes are developed in infancy, and that adults and children use the same heuristics cues when choosing leaders. Clearly selecting business leaders based on, even in part, appearance is a risky decision making-strategy.
For further information, see: John Antonakis, Olaf Dalgas (2008) ‘Predicting Elections: Child’s Play’ Science, 323, 1183. www.sciencemag.org/cgi/content/full/323/5918/1183/DC1
3. Book review: Mind: the diversity gap (by Dr Graeme Russell)
3.1 Introduction
While we don’t seem to have any problem justifying paying people differentially (eg according to job level) or providing a physically safe workplace, we continue to have a problem in justifying the business case for workplace diversity. HR/diversity practitioners then are very attracted to finding better (more effective, more engaging) diversity hooks, and especially ones that have numbers associated with them. Scott E Page (a professor of economics and political science at the University of Michigan), in his 2007 book The Difference: How the power of diversity creates better groups, firms, schools, and societies (Princeton University Press), provides a potentially different, and numbers-based, diversity business-case hook.
Basically the proposition is that cognitive differences (ways of representing the world) lead to “better” outcomes (eg more effective solutions), for certain types of cognitive tasks (eg. prediction) and under certain conditions (eg the task has to be difficult).
3.2 What are the key arguments and evidence?
Many of us have become used to, and are comfortable with, the proposition that heterogeneous (where this usually means demographic differences) teams outperform homogenous teams in terms of decision-making and innovation. There is a reasonable body of research that has investigated this proposition, with varying degrees of support. In a recent article in Harvard Business Review, Amabile & Khaire (2008) argue that innovation is more likely when people of different disciplines, backgrounds, and areas of expertise share their thinking.
Research into this proposition, however, has been limited by an absence of clarity about: (i) how demographic differences contribute to group decision-making, and (ii) which particular decisions benefit from which differences.
A strength of Page’s work is that he has differentiated between differences in: (i) ability; (ii) identity diversity (defined in terms of skin colour, gender, ethnicity etc); and (iii) differences in perspectives. A key argument is that differences in perspectives makes the difference. In particular, he argues for a focus on cognitive differences, and on the following four components:
- Diverse perspectives: ways of representing situations and problems
- Diverse interpretations: ways of categorising or partitioning perspectives
- Diverse heuristics: ways of generating solutions to problems
- Diverse predictive models: ways of inferring cause and effect.
- Diversity in perspectives trumps ability, and
- Diversity in perspectives trumps identity diversity.
- The problem is difficult;
- The people are smart; there is a high degree of individual sophistication in relation to the particular problem or task;
- People are in fact diverse in terms of their perspectives or heuristics (on the dimensions that matter to the task);
- The group size is bigger than a handful and is chosen from a large population;
- The people working together to produce the outcomes have quality working relationships (hence, being open and inclusive matter!).
- Training (eg training in a particular discipline) and experience (eg having different experiences will lead to the acquisition of different perspectives and interpretations).
- Identity (eg culture can influence our perspectives and assumptions about cause and effect).
- Serendipity (eg chance experiences, unusual connections; however, as Page (p. 310) highlights, per Pasteur: “Chance favours the prepared mind”).
The book is strong on: theory and theorems, argument and ideas, and on evidence. There is a relative absence, however, of organisationally-based research or of ideas about, and rigour in workplace applications. Building bridges from Page’s work to the workplace will require:
- Clearly defining:
- Levels of sophistication, or ability required for particular workplace activities (eg product development).
- The critical dimensions of “diversity of perspectives” (eg what differences in the way the world is represented are likely to make a difference to a particular problem, or, “what is useful diversity in perspectives?”).
- Considering the possible benefits and costs of focusing on diversity in perspectives (eg costs associated with increasing group sizes, increasing communication activities etc).
- How to measure the contribution of different perspectives on team and organisational outcomes.
Despite the relative absence of consideration of potential workplace applications, it doesn’t require too much thought to begin to identify potential opportunities. These could include:
- Be strategic about differences in perspectives. Analyse your best opportunities to leverage this approach (eg when selecting people, designing a talent strategy, designing a new product, choosing a team; choosing where you have a team-building day).
- Build a “differences in perspectives” framework into your processes for day-to-day work and team decision-making.
- Consider the possibility of recognising and rewarding differences in perspectives, and working effectively with differences in perspectives.
- Examine the potential for varied job experiences to develop different perspectives.
- Build this approach into personal development plans, eg provide opportunities to have different experiences (that highlight different ways of representing the world).
- Use Page’s framework to do your own internal evaluation to demonstrate the power of “differences in perspectives” to add value to decision-making and innovation.
3.4 A postscript
Amabile & Khaire (2008) provide a different perspective (that should add value to Page’s work). They report that research shows that creativity is enhanced when people have multiple social identities (eg people who are both Asian and American or who are both women and engineers). Even within the mind of an individual, therefore, diversity of perspectives could enhance creativity. “Social identities often have distinct knowledge associated with them, and to the extent an individual is comfortable integrating multiple identities, his or her knowledge sets can combine productively” (p. 4).
For more information on the book and articles see Page, S.E. (2007) The Difference: How the power of diversity creates better groups, firms, schools, and societies, Princeton University Press; and Amabile, T. M. & Khaire, M. (2008) ‘Creativity and the role of the leader’ Harvard Business Review, October Tetlock, P. E. (2007) ‘Diversity Paradoxes’ Science, May, Vol. 316 (5827) p. 984.
See also a recent presentation by Scott E. Page: http://download.sfrs.fr/media-1/sfrs/Mpg4/CDF/CdF1_7.mp4.
4. French Research: Women and the vision thing
4.1 Introduction
Women globally continue to struggle to reach the highest levels of leadership, and many believe that a bias continues to exist against women in terms of assessing their ability as leaders. Researchers Ibarra and Obodaru from Insead Business School in France reviewed 360-degree feedback reports of nearly 3000 executives from 149 countries to examine the ratings of women compared to men. What they found was a surprise: women outshone men in most of the leadership dimensions, except one, “envisioning” which is the ability to recognise new opportunities and trends in the environment and develop a new strategic direction for the organisation. The researchers then questioned whether this weakness is a perception or reality? How much does it matter to women’s ability to lead? Can someone who is not “visionary” learn the capabilities they need? In essence, the researchers found that envisioning is perceived to be a critical leadership skill and women need to learn how to demonstrate this skill in a recognizable way if they want to succeed in their current corporate structure.
4.2 Method
The research examined 360-degree evaluations, the Global Executive Leadership Inventory (GELI), taken from executives in 149 countries in which a self-assessment was completed and subordinates, peers, colleagues and supervisors were asked to participate. In total, 22,244 observers were involved in the analysis, and 20% of the executives and 27% of observers were women.
The GELI was developed at Insead to identify significant dimensions of exemplary leadership. It contains 12 dimensions, of which 10 were examined in this study (due to insufficient response rates on the last two). These dimensions are: envisioning, empowering, energising, designing and aligning, reward and feedback, team building, outside orientation, global mind-set, tenacity and emotional intelligence.
The study looked for differences between the male and female leaders, in terms of how they saw themselves and how others rated them. The data was controlled for effects of age and level of seniority.
4.3 Findings
First, there was no evidence of the so-called “modesty effect”, sometimes attributed to women, that is women rated themselves significantly higher than men on four of the ten dimensions and on the remaining six, they rated themselves at a similar level to men.
Second, gender stereotyping did not appear to affect the ratings, particularly those given by men. If there was a gender bias, it favoured female leaders and they were rated higher than men on seven dimensions, by male observers. Female observers rated them higher on eight dimensions.
Amongst these positive female evaluations, there was one, however, which cast a shadow over the others. Female leaders were rated lower by male observers (but not by female) on their capabilities in “envisioning”. This is significant because the GELI instrument does not claim that the different leadership dimensions are equally important, rather that some do matter more than others. In particular, the envisioning dimension is, for most observers, a must-have capability. Intriguingly, the male peers (the majority group) rated women lower on envisioning than other groups.
4.4 What is “vision”?
The distinction between management and leadership has long been recognised and most agree that managing for the status quo is different from being a force for change and growth. If leadership is essentially about change and growth, then crafting and articulating a vision for the future is a prerequisite. Creating a vision involves the ability to realise current practices are inadequate, generate ideas for new strategies and communicate possibilities to inspire others. Visionary leaders make sure people around them know where they are going, they search for new paths, exchange information with a variety of sources and test new ideas pragmatically. This is a challenge for anyone seeking leadership positions, but why should it be a particular challenge for women?
4.5 Theory and discussion
In exploring why women had rated poorly on vision, the researchers turned to women participating in the Insead executive education programme to gather their views, and three theories were generated. One, that women are equally visionary, but in a different way, that is, they come to the vision collaboratively, thereby losing credit for it. Two, women hesitate to “go out on a limb”, that is, they may lack the presumption of competence afforded their male colleagues and adopt a “safe choice” with supportive data and facts to ensure successful implementation. Three, women don’t put much faith in vision, that is they take pride in concrete, practical solutions, with thorough attention to detail and pay less attention or are more skeptical of vision.
Hundreds of leadership studies have found that there is no significant difference between men and women in terms of their leadership styles. However, putting aside science and asking individuals for their opinion and perception, most women and men do attribute differences in leadership style to men and women. In other words, the responses to the 360-degree evaluation on vision may be due to the perception that women are not visionary, rather than reflecting the reality.
Despite the reality of no actual leadership differences, a further study cited in this paper on the leadership strengths of women and men found that both genders tend to believe there are distinct leadership strengths held by men and women, but that the “male” behaviours are more important. When women reach the mid-level positions that are the pipeline for executive leadership, it would appear that the perception that they are visionary is important to their progress. The irony is that for years, women have been told that to succeed they must behave more like men, be decisive, rational, non-emotional and efficient. Is it possible that in learning to behave in this way, women are placing a higher value on getting the job done at the risk of ignoring vision? Their challenge is to either develop the necessary visioning skills, or exhibit them to their male peers, as it appears in this research to be the only thing holding them back.
For more information see Ibarra, H. & Obodaru, O. (2009) ‘Women and the vision thing” Harvard Business Review January pp. 62-70.
Regards,
Juliet Bourke and Dr Graeme Russell
Partners
Aequus Partners
www.aequus.com.au
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