2013-04-02

Co.Exist

Women Have Better Decision-Making Abilities Than Men, Make Better Corporate Leaders

It might be the most fool-proof argument for ending the disparity between men and women in the boardroom: A new study finds that women just might run a company better.

Do you think women make better decisions than men? Let us know in the comment section below.

It’s never a good idea to make generalizations about the differences between men and women. But when there’s real data to back these generalizations up, it’s worth paying attention. Take a new study from McMaster University, which found that women tend to be better corporate leaders because of their decision-making abilities. Women, take note: regardless of whether you subscribe to Sheryl Sandberg’s "Lean In" philosophy, this study indicates that your innate abilities make you well suited for corporate power.

The study, published in the International Journal of Business Governance and Ethics, surveyed 600 board directors (75% of them were male) and found some striking differences between the way men and women make decisions in corporate settings: the men opted to make decisions based on tradition, rules, and regulations, while the women tended to shirk tradition, consider the interests of all stakeholders, cooperate, and be more inquisitive.

From the McMaster press release:

Arguments for gender equality, quotas and legislation have done little to increase female representation in the boardroom, despite evidence showing that their presence has been linked to better organizational performance, higher rates of return, more effective risk management and even lower rates of bankruptcy. Bart’s and McQueen’s finding that women’s higher quality decision-making ability makes them more effective than their male counterparts gives boards a method to deal with the multifaceted social issues and concerns currently confronting corporations.

Numerous studies over the years have provided evidence that women deserve to be board directors. One 2007 study found that boards with significant representation of women have a 66% higher return on invested capital, 53% higher return on equity, and a 42% higher return on sales compared to boards with more men. Another 2009 study discovered that having a female board director slashes a company’s bankruptcy risk by 20%.

Other studies have shown that women can yield superior results in other areas of business as well. We recently reported on a study from financial services firm Rothstein Kass showing that female hedge fund managers outperform their male counterparts—by a lot.

And yet, women make up just 9% of corporate board membership globally. In the alternative investment space, women say that there is little motivation to stay in the sector, and in any case, there aren’t enough available positions in what they call an "'old boys’ club." Something needs to change.

Do you think women make better decisions than men? Let us know in the comment section below.

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