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Why we need more Lehman Sisters: the significant benefits of female leadership

Establishing gender equality is one of the founding values of the European Union, yet women are still underrepresented in decision-making positions in Europe. According to the European Institute of Gender Equality (EIGE), women represent just 32.3% of presidents, board members and employee representatives, and 21.5% of CEOs, executives and non-executives of the largest listed companies in Europe. The situation is much the same in other sectors, including governments, financial institutions and national academies of science.

Beyond the importance of equal representation, our research at the AXA Lab on Gender Equality shows gender-balanced leadership has many benefits. Given that women make up half of the earth’s population, ensuring that they’re equally represented among potential candidates for a leadership post results provides larger pool being available; this, in turn, leads to a higher quality of the person selected. Thus, when women are involved in leadership positions which were traditionally male-dominated, there is a higher probability to have more qualified leaders.

This has been empirically proved by research. For example, the introduction of board gender quotas in Italy not only increased the share of women on boards but raised the qualifications of all board members, male and female, because less-qualified men previously on the board were not re-appointed. This outcome depends on the status quo and becomes possible when qualified and competent women ready to be leaders are in abundant supply, as is the case today in many European countries.

Imagining Lehman Sisters

A second argument relates to the agenda and outcomes of institutions and organisations. The agendas of gender-balanced leaderships can include items typically neglected by a male-dominated groups, but that may be important for their organisations – for example, sustainability goals. There is evidence that the presence of women in political leadership is associated with higher childcare funding, which are positively related to maternal employment. This creates a virtuous circle, with women’s greater representation in leadership leading to policies that reduce gender gaps in the labour market.

The president of European Central Bank, Christine Lagarde, arrives for a hearing of the committee on economic and monetary affairs of the European Parliament in Brussels. Kenzo Tribouillard/AFP

Leadership style also matters. Research has established that compared to men, women leaders tend to be more risk-averse and less competitive, more democratic and innovative, and that they have a longer-term horizon. These traits are not details: Christine Lagarde, former director of the IMF and current president of the European Central Bank, often noted that if Lehman Brothers had been “Lehman Sisters”, the 2007-2008 financial crisis might never have occurred. The reason is that if decision-making bodies do not have an equal number of women, an overrepresentation of men may lead to aggressive and overcompetitive behavior. Given the global damage left behind by the financial crisis, a leadership of “brothers and sisters” has become a benchmark for organisations.

A more recent example is the Covid-19 pandemic. A 2021 study on 194 countries found that in the first quarter of the crisis, countries led by women experienced better outcomes because they tended to impose lockdowns significantly earlier than male leaders did. This is in line with women’s being more risk-averse than men, even when they are in leadership positions. Evidence also suggests that women were more likely to perceive Covid-19 as a serious health problem, to agree with restraining public policy measures, and to comply with them.

Shifting cultural stereotypes

A major obstacle to gender-balanced leadership positions are well-established stereotypes. There is a general consensus that gender gaps are a matter of culture, and because culture changes slowly, policies and measures can accelerate the reduction of gender gaps, but we will need time to see real changes. How to measure gender culture and how to assess the progress is difficult. Scholars use data from the World Value Survey to measure gender stereotypes.

These data show that explicit stereotypes have been declining over time, although differences across countries within Europe are still substantial. For example, the statement “Men are better business leaders than women” was approved by 15,8% of Italian citizens, yet only 4.6% of Swedes. Yet implicit stereotypes are everywhere stronger than explicit ones.

Recent research shows that implicit stereotypes, as measured by the Implicit Association Test on gender and career, are well established in the workplace: for example, people tend to associate women with family and men with careers. Managers who make hiring and promotion decisions are found to share such stereotypes, similar to rates in the general population. How to counter and diminish them is a more complicated task, but an important one to reduce gender gaps in the workplace.

A clear successful policy which has promoted women’s presence in the workplace in Europe is childcare. Day-care services are not only important for child development, but they also help families with small children – and in particular women – to deal with their professional and personal life. How to see this policy implemented? We could start by having more women in leadership positions as politicians and in top business places, as suggested by results of the research at the AXA Research Lab on Gender Equality.

Created in 2007 to help accelerate and share scientific knowledge on key societal issues, the AXA Research Fund has supported nearly 700 projects around the world conducted by researchers in 38 countries. To learn more, visit the site of the AXA Research Fund or follow on Twitter @AXAResearchFund.

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