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Why women leaders could have saved the day
The financial crisis might not have happened if more women had held top jobs in international finance.
Research into business views on the causes of the financial meltdown reveals that the ‘macho’ culture and male-dominated working environment in many City firms caused excessive risk to be taken.
Almost 90% of executives questioned in the study, by leadership and development consultancy the Aziz Corporation, agree that a culture that ‘encouraged and rewarded the taking of excessive risk’ contributed to the financial crisis, while 83 per cent believe that the failure to understand the risk that many financial institutions were running was fuelled by the male-dominated culture of many City firms. Nearly three-quarters of respondents think that, during the boom that preceded the recession, any senior executive advocating caution would have been regarded as ‘wimpish’ or lacking in competitive drive.
Some 77% of business executives argue that gender balance affects the culture in any working environment, and 93% that the management of major financial-services firms is dominated by men. More than 60% believe that women tend to be more cautious and risk-averse than men, while 55% agree that, in general, women are more likely than men to apply ‘common sense’ to apparently complicated situations. Almost half of respondents (49%) and a majority of those working in financial services (53%) say that having a greater number of women in senior positions in financial institutions could have prevented at least some of the excesses that caused the current crisis.
Part of the problem seems to be that men are more likely to ‘talk the talk’ than to ‘walk the walk’ when it comes to adopting a more participative leadership style. Madsen and Albrechtsen (in Scandinavian Journal of Management, December 2008) analyse the transcripts of three open-ended interviews with male leaders in Danish companies. Each of the leaders opened by emphasizing the importance of participative leadership, elaborating on this ‘alternative’ approach by describing their own experience of engaging in dialogue, listening to their employees and empowering them to take greater responsibility. But the managers’ way of describing their ‘non-belief’ in charismatic leadership, and their way of legitimizing the use of dominance and authority, revealed that they still see charisma as fundamental to the traditional leadership approach.
Difficulties arise when such dominance and authority come at the expense of paying proper attention to human needs at work. While not directly concerned with male and female leadership characteristics, Gallos (in Journal of Management Inquiry, December 2008) looks at the damaging effects of ‘toxic emotions’ in the workplace. The author defines these through the anger, frustration and disappointment that arise in organizational life in a competitive world with scarce resources. Gallos advocates structures and strategies that promote caring cultures, individual resilience and extraordinary performance using models that support high productivity and high attention to human requirements.
It is always dangerous to talk in generalities, of course, but caring cultures and the exercise of cautious judgement tend to be more often associated with women than with men.
Professor Khalid Aziz, chairman of the Aziz Corporation, concludes: ‘Politically incorrect though it may be, the fact is that men and women are different. There is now some accepted evidence of different personality traits and attitudes to risk. Many commentators have focused on the need for greater regulation of the City, and for improved systems to control risk. Of equal importance is the culture within those firms. A culture which encourages the taking of risks which are often without limit and poorly understood has its own downfall built into it.’
‘Our research shows that addressing the cultural problems within City firms is now a business imperative if they are to manage and control the risks that they run. A little more application of female caution and intuition might do wonders for our major financial institutions.’