IT WAS once famously said that “whatever women do, they must do twice as well as men to be thought half as good.” While I tend not to subscribe to clichés, when I started in the City in the late 1990s, the dearth of senior women suggested something was awry.
Just 15 years later, we have come a long way in terms of attitude and approach towards women. Christine Lagarde now advises the world on financial matters as managing director of the IMF and, following Lord Davies’s 2011 report on the lack of diversity in top companies’ leadership, women now make up 16.7 per cent of all board posts in FTSE 100 companies, up from 12.5 per cent a year ago.
However, old habits die hard and, against a backdrop of continuing bad economic news, gender stereotypes are in danger of creeping back. Some are beginning to ask whether women have less of an appetite for risk.
The debate has been sparked by Credit Suisse. The bank’s research institute has released a report showing that boards with female members outperformed those without by 26 per cent over the last six years.
On the surface, the research shows the clear value of a more gender-diverse boardroom. But it concludes that the reason for this is circumstantial – women’s natural risk aversion helps financial institutions get on the straight and narrow in a period of volatility and contraction, when caution is more valued.
The inference is clear. Female executives are good for a slump when risk is off, but less suited to a boom when risk is on. It’s another unfortunate typecast that takes us back to women being thought of as half as good, despite doing twice as well.
In truth, there is no male or female appetite for risk. According to McKinsey’s annual Women Matter report, European companies with the highest gender diversity outperformed others on all fronts, including return on equity, operating result and stock price growth over the period 2005-2007 – before the credit crunch started. What we’re really seeing highlighted by Credit Suisse is the value of board diversity.
Having a range of perspectives on the board leads to a management team that is more likely to ask awkward questions. Women can bring different perspectives and voices to the table. By helping to minimise group-think, this results in a more constructive debate, leading to more sound and reasoned policies in good times as well as bad.
Events in the banking sector over the last several years have reiterated the value of questioning voices and diverse views. But that doesn’t mean the value of that ends when the difficulties do. The City is based on dynamism, competition and merit – that’s what has made it so strong over the centuries. But, if it is to stay at the top, it needs to become even more dynamic and competitive. Greater diversity at the highest levels will be key to that effort, wherever we are in the business cycle. It’s time that more businesses recognised women for being just as good as they really are.
Sue Langley is director of market development at Lloyd’s of London, and sits on the government’s Women’s Business Council.