Sunday, March 08, 2015

Why are there so few female chief executives? Why are there so many named Peter?

Fewer big Australian companies are run by women than by men named Peter.

The shocking finding after decades of talk about breaking the glass ceiling comes from a count of the 200 biggest public companies that constitute the ASX200 index.

Thirteen of the top 200 are run by men named Peter; among them Westfield, Woodside Petroleum and Macquarie Roads. Twelve are run by women; among them Coca-Cola Amatil, Cochlear and Harvey Norman.

Companies run by a Peter, a Michael, a David or an Andrew outnumber those run by women four to one.

The idea for the survey isn't original. It comes from the US economist Justin Wolfers who wrote in the New York Times this week that fewer large American companies were run by women than by men named John.

Wolfers is an Australian by birth and a visiting professor at Sydney University, so he'd probably be disappointed to hear that things are just as bad back home. Whereas in the US four chief executives are named John, Robert, William or James for every one who is a woman ("including every woman's name, from Abby to Zara") in Australia there are four named Peter, Michael, Andrew or David for every one who is a woman.

It's unfortunate, not just for women who might want to run organisations, but also for the organisations themselves. That's because there's good evidence that organisations run by women are better run. Really.

The most compelling evidence is brand new. It's from a 15-year study of Luxembourg banks published in January. The researchers compared the representation of women in the senior management of the 264 banks with their quarter-by-quarter financial performance reported to the regulator.

They found a 10 per cent increase in the proportion of women in the senior management ranks of a bank lifted its financial performance by more than 3 per cent per annum.

There's more. The 15-year period included the years of the global financial crisis. During those years, from 2007 to 2009, the effect almost doubled.

Women managed the banks better in the lead-up to and in times of crisis...

It's easy to guess why. Women are less inclined to take stupid risks. It's one of the reasons women live longer than men. Fewer die in accidents.

The study quotes Neelie Kroes, the European Union commissioner for competition during the crisis.

"If Lehman Brothers had been 'Lehman Sisters', would the crisis have happened like it did?" she asks.

"No," she replies. "Generally, women have a better ear to listen, and they are less likely to pretend to know everything themselves. They are team players with less ego."

It's not only attitudes to risk that can make women better at the top, it's also attitudes to women.

Another study finds that the performance of firms with women at the top increases with the share of women workers. Women taking over male-managed firms with at least 20 per cent of women in the workforce lift sales per employee by about 14 per cent.

Women are better at dealing with women.

I am sure you are about to scream that this is a generalisation, not true in every case and perhaps not true of someone you know. But most things about gender are generalisations. Not all women fail to make it to the top. Some (almost as many as men named Peter) do. But taken together women are more likely to fail to make it to the top than men. And taken together women are more likely to run certain types of firms better than men. Taken together that seems to be because women are more cautious and better at dealing with women.

So how do we get more women to the top?

A team led by Dr Danielle Merrett, of the University of Sydney, has come up with the simplest of easy fixes: when selecting candidates for a job (any job) make sure the shortlist contains an equal number of men and women.

Its experiments suggest that doing no more than that can lift the proportion of women chosen to 60 per cent.

It opens up the possibility of a new type of quota - not one that insists on a certain proportion of women being appointed, but merely one that insists on there enough women available so that choosing a woman doesn't look unusual.

What if that's all it takes? What if instead of being chosen from a panel with names like Peter, Michael, Andrew and David the next head of BHP is chosen from a panel where half have names are like Peta, Michelle, Andrea and Davinia. What if it could lift BHP's performance?

In The Age and Sydney Morning Herald

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