There is something curiously consistent about the rogues' gallery of banking
executives paraded across the front pages whenever the R-word - recession -
is mentioned. There's Sir Fred Goodwin, the failed RBS chief executive whose
receipt of a tax-free lump sum of £2.7million, disclosed on Tuesday, adds
insult to the injury of a £700,000 annual pension. The staggering string of
zeroes was sanctioned by his chairman, Sir Tom McKillop. Sir Victor Blank,
the chairman of Lloyds TSB, is hardly covered in glory after his ill-judged
acquisition of HBOS (formerly run by chairman Lord Stevenson and chief
executive Andy Hornby).
They are all men. Where are the women? And does women's absence in boardrooms
affect the bottom line? A study by Leeds University Business School (LUBS),
revealed exclusively to The Times, suggests that women can make the
difference between success and bankruptcy. Having at least one female
director on the board appears to cut a company's chances of going bust by
about 20 per cent, according to Nick Wilson, Professor of Credit Management
at LUBS, who looked at all 17,000 companies that were wound up in 2008. At
first he thought that the presence of women in family-run businesses - which
fare well compared with companies in general - might be skewing the results,
but a re-analysis excluding family businesses showed a similarly strong
correlation between healthy accounts and a board with women directors.
“I was really quite surprised at how robust the finding was,” says Professor
Wilson. Having two or three female directors lowered the chances of
bankruptcy even farther, but the benefits tapered off once the gender split
was 50:50.
The professor's verdict, after trawling through one of the UK's most extensive
company databases (it holds information on all limited companies that are
registered at Companies House) is that “gender balance is worth taking into
account” when deciding on senior management. So could a feminised banking
industry have averted the virtual collapse of the sector, plunging Britain
into what the International Monetary Fund predicts will be a particularly
prolonged recession?
In the financial services industry, about one director in five is female.
“That sector, which includes banking, is a bit of a boys' network. It has
one of the lowest proportions of female directors,” Professor Wilson notes.
“Having more women could well have made a difference.”
The other sector most notable for its lack of women is the utility companies.
In construction and in hospitality (hotels, restaurants) a third of
directors are female; in education the figure is 40 per cent.
The next task, the professor says, is to find out why women make such a
difference. There are, he says, three main theories: “The first is that
having men and women on the board gives you a balance of complementary
skills, making for a better-run company. There is some evidence that women
take on a bit less debt and are better at managing cashflow. They may also
be stronger at people-management: a lot of HR directors are women.
“The second theory comes down to behavioural science: men and women behave
differently. Women tend to take a less excessive approach to risk, and that
may explain the lower insolvency rate.
“Third, it has been suggested that because women generally have to work harder
to make it to the boardroom, the ones that do make it are exceptionally
effective.”
Professor Wilson is not the only observer of the corporate world to have
highlighted the issue of gender. A recent report indicated that 50 per cent
of female entrepreneurs are worried about the downturn, compared with 75 per
cent of men - a difference in optimism that is credited to women's more
cautious approach to debt.
Two years ago, a study of the Fortune 500 companies (a list of leading US
companies compiled by Fortune magazine, based on turnover) found that those
with the highest proportion of women directors far outperformed those with
the lowest proportion. The companies with more women achieved higher sales
and a higher return on their investments, and showed “good governance”.
In the magazine Director, Bill Morrow, a professional investor, recently
praised the “frugal and pragmatic attitude” shown by women in their business
planning. But the analysis by Delta Economics - which suggested that
businesses with men at the helm were more likely to go bust than those
captained by women - did not please all businesswomen. In the same article,
Margaret Manning, the CEO of Reading Room, a digital communications agency,
scoffed at the stereotype: “Women are no better placed to deal with
recession than men ... show me a risk-averse woman and I'll show you an
equally risk-averse man.” Not that she is opposed to women bosses - half of
the Reading Room's directors are female, a rarity in the testosterone-heavy
arena of new media.
The businesswoman Rachel Elnaugh agrees that painting women as thrifty is
stereotyping, but believes that they do cope better than men when belts need
tightening. “Women have less ego,” she says, simply.
A former fire-breather in the BBC television programme Dragons' Den,
44-year-old Elnaugh set up Red Letter Days, a gift-experience company that
collapsed in 2005. It was subsequently bought by two fellow “dragons”. Last
year she wrote a book, Business Nightmares, about her dark days: in it she
blamed her company's collapse on its expansion into supermarkets, which
dented the aspirational nature of the gifts.
“Women tend to have a lot more humility about saying ‘help', Elnaugh says.
“When a business is struggling, women are more receptive to the idea of
getting mentors and outside help.
“It's a massive generalisation but men tend to struggle on in silence,
pretending that everything is fine. When things are going awry, it is
crucial to accept that you can't do everything. Men have that egotistical
arrogance that makes them think ‘only I can run this company'. It's the same
problem you get with husbands and navigating - they won't ask for
directions.”
Tatjana Hine, president of the British Association of Women Entrepreneurs,
believes that women are not quite as gung-ho when growing and running their
empires.
“Let's not kid ourselves: men and women are different,” says Hine, who runs a
graphic design company that employs seven people. “You do get careful men
and risktaking women but in general we operate our companies differently.
Women start smaller and grow more slowly - so yes, I think we are better
placed to cope with the downturn. We don't have to pull back from quite as
many things.
“Women tend to start their businesses later in life and are less likely to be
funded by the banks. They will borrow against the value of their house,
whereas historically men have managed to get unsecured loans - which the
banks are more inclined to call in when times get tough.
“Plus, we have had to housekeep all our lives. That sounds derogatory but it
isn't meant to be. We don't have the status problems that men do - very few
of our businesswomen rush out and buy themselves a big car, and if necessary
we'll downgrade from a Mercedes to a Nissan Micra. I can't imagine a man
doing that.”
Hine and Elnaugh agree that, in general, a woman will run her company more
like a family and will treat her staff better, inspiring greater loyalty:
“We tend to be reluctant to let people go,” says Hine, “and that's as true
of our members who run multimillion-pound companies as those who run smaller
ones. Of course you have to make tough decisions - but they have to be fair.”
Elnaugh claims that women in senior positions are less prone to skulduggery
and not interested in forming selfinterested coalitions and power bases.
Are there any downsides? Elnaugh suspects that women are more emotionally
attached to their companies - and also that, while those companies may cope
better with an anticipated squeeze, they may be more likely to go to the
wall once creditors are at the door. “Women are much more likely to get
walked over when it comes to the point of insolvency,” she says. “That's
when the tough guys get involved, and women make easier prey.”
A man's world? Not any more
In America the usefulness of women employees in a recession is not just the
stuff of business-school studies of the boardroom. It is the reality of the
wider workplace. The axe is falling on men faster than on women in the US,
and for the first time women will soon hold down more jobs than men.
To Guy Garcia this is further evidence of what he sees as the deteriorating
lot of men. He is the author of The Decline of Men, a book that has kindled
debate about the prospects for the males of the species.
Garcia paints a gloomy picture in which men, falling behind in education and
the workplace, are confused and unhappy about their role.
The former journalist says there is “nothing wrong” with women obtaining
parity with men, but that “as a society we haven't looked at the
implications, which are deep and far-ranging. In some cases there is an
imbalance that has taken place as women have moved into realms traditionally
dominated by men”.
In America almost 60 per cent of college students are female, and at work men
are slipping behind in the recession because more women are in
“recession-proof” jobs in sectors such as education and healthcare. Also,
the longer-term trend is away from jobs that have traditionally belonged to
men. Sixty years ago, says Garcia, men were defined by work that required
physical strength, in coalmines or car plants, and jobs were plentiful.
“Service economy jobs are better suited to the innate skills of women:
multitasking, communication, partnerships and co-operation. So the deck is
stacked against men.”
He argues that “men have lost a lot of ground economically as women have
risen. Now we are losing ground in education, and the end result is that you
will have a growing pool of guys who can't live up to their own
expectations, let alone women's.
“As men continue to slide down the ladder and are less motivated to succeed,
women are losing respect for men. Some men are fighting this and some are
not fighting back - they just seem a little hurt.”
Garcia sees “a whole generation of men who are keenly aware that they may not
succeed as well as women. For guys there is an existential void. If a woman
can do anything that men can do - and increasingly do it better than men -
then why do we exist? Why are we here? If we are here to take out the trash
and be good partners, it's not a good answer.”
He claims that “as women have become wealthier and more powerful in the media,
the depictions of men have become more and more negative. They are
increasingly depicted as losers, as slackers, as doofuses and deadbeats -
literally as cavemen.”
Garcia does seem to overstate this media representation and the extent to
which women have achieved parity,
and understates the opportunities for men to lead lives that don't conform to
traditional stereotypes.
But there isn't really much choice for men, he argues. “Many of the women I
know say they want equality, they want equal pay, equal power in the
relationship - and then if it's raining outside they want you to hold the
umbrella.”
Men who make arguments like his should not be dismissed as whiners, he says.
“When women tell me that ‘men disrespected and dominated women for so long -
now it's our turn, this is our payback, stop whining', I point out that
these are your daughters' future boyfriends, your sons-in-law, your sons.”
Damian Whitworth
