For the first time since the women’s movement came about, an economic recovery has come and gone and the percentage of women at work has fallen, not risen, the Bureau of Labor Statistics reports.
Has girl power lost its momentum?
Women continue to be underrepresented in top management positions on both sides of the Atlantic. Currently, 12 FORTUNE 500 companies are run by women, and a total of 24 FORTUNE 1000 companies have women in the top job. That’s down from last year, when 25 FORTUNE 1000 companies were run by women.
Photo: vintage-ragdoll, Creative Commons, Flickr
Why don’t we have more women in top management positions? (Hint: this article is not about gender inequality, it’s about the money we are flushing down the drain by keeping women out of top positions.)
There is evidence to suggest that companies run by women perform better on the stock market. Mekong Capital recently conducted a research project on the profile of publicly listed companies that outperformed within Vietnam’s stock markets in the period commencing on 1 January 2007 and ending 10 April 2008. While 9% of listed companies in Vietnam have female CEOs, 27% of Vietnam’s market capitalization is represented by companies with female CEOs. Over the period of Mekong Capital’s study, companies with female CEOs delivered an annualized return to shareholders of +8.9% while companies with male CEOs delivered an annualized return to shareholders of -20.4%. The average market return over this period was an annualized -16.3%.
In Finland, banks recently issued a new index option tied to firms that have women in leading positions because such companies have been shown to be more profitable. There is also evidence to suggests that companies with the greatest number of women on their boards performed significantly better financially than companies with fewer female board members.
So if evidence suggests that females improve corporate performance, why don’t we have more females in top management positions? And what does it have to do with Grand Slam tennis?
"Tennis matches are particularly well-suited for statistical analysis," explains Daniele Paserman, an Associate Professor of Economics at Boston University. Paserman points out that tennis’ non-linear scoring structure introduces significant variation in the importance of individual points. "It is often a small number of individual points at critical junctures that determine a match’s result," he argues. "A break point in the latter stages of an evenly fought early set can be more decisive than a point in the early stages of the final set. It is exactly this substantial variation in the importance of points across and within matches that allows identification of a link between performance and the degree of competitive pressure."
Here is the crux of Paserman’s experiment: "Women are significantly more likely to hit unforced errors at the most crucial stages of the match, while men exhibit no significant variation in performance. Specifically, about 30% of men’s points end in unforced errors, regardless of their placement in the distribution of the importance variable." The bottom line: Passerman’s experiment suggests that the sexes perform differently under competitive pressure.
Of course, it would be inappropriate to extrapolate from a single study of a group of tennis players to the broader labor market. But other research provides "additional evidence from a series of natural experiments drawn from the French higher-education system where, contrary to tennis tournaments, men and women compete with each other, as is the case when they compete for top management positions."