What better time than International Women’s Day to hum that tune from the Kalman’s operetta Gypsy Princess, “Yes, the world without women is sad”? Business people can paraphrase the sentiment by noting how impoverished the business world would be without women. Yes, the percentage of females is not as high as that of men in management circles, but should increasing the proportion be a goal unto itself?
In the last few decades, the topic of female executives has received consistent attention in the industrialised West. The results of international studies conducted by Grant Thornton over the last 13 years show that the percentage of women in management is growing – slowly but surely. Estonia is among the leaders here – the results of last year’s study among companies in 36 countries show that 40% of Estonian company boards include at least one woman. The same figure is below 20% for Germany and Great Britain, as just two examples.
But why should there be more women on company boards? Easy: for diversity’s sake. Women and men are different and use different management techniques, and their decision-making processes also vary somewhat. For example, men and women see risks similarly but act differently in managing risks – women are more cautious and deliberating than men in actions they undertake to hedge risks. If we put two and two together – the fast-acting and bold call to action from the men and the more considered plans from the women – we can shape higher quality decision making processes in the corporate world. That could have directly monetarily appraisable benefits.
A couple of years ago, Grant Thornton analysed publicly listed companies in Great Britain, the US and India from the perspective of how gender balance in the management affects the performance of the company. The results of the analysis showed that the average ROA was higher in companies with at least one female executive than it was in companies with all-male management boards.
Still, we should look at corporate management not just in gender terms, and thus we should address diversity in the broadest sense. A company’s management should have younger and older people, as this provides a richer experience of life. The existence of different genders and – why not – different nationalities on the same board is also a boon. Diversity of management members, different skill sets and personality traits are essential for a company looking to grow.
But what to do if the management board is made up of only one or two people? Considering the small size of Estonian companies – 94% of companies have fewer than 10 employees and the boards are small, too, as a result – it isn’t really possible to achieve diversity in the management in the first place. Here an outside perspective comes in handy – the use of a coach or business adviser who is able to see the company with a fresh eye and identify new development opportunities and potential risk areas. This helps to improve the company’s business results and supports sustainable growth. Considering that according to a 2012 Praxis study, only 28% of SMEs used the services of an outside business coach, I believe Estonian companies have barely tapped their potential. Harnessing this potential could really be the business community’s gift to Estonia for its 100th birthday.
