More women in finance, a more sustainable economy
If one-third of corporate board members had been women, Wall street might have avoided a meltdown.
The amount of taxpayer dollars that has gone into cleaning up our top financial institutions' collective mess is staggering. Bank of America received $15 billion as part of the federal Troubled Asset Relief Program (TARP). Citigroup, JPMorgan Chase, and Wells Fargo each received $25 billion. But here's a cost-effective solution: Hire more women.Skip to next paragraph
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As has been pointed out with increasing frequency, a certain groupthink has been widely blamed for the economic crisis we find ourselves in today.
Barnard College president Deborah Spar dubbed our predicament a "one gender crash," and The New York Times's Nicholas Kristof wonders if we might all have been better off had it been "Lehman Brothers and Sisters."
Studies indicate that women are more comprehensive thinkers and less attracted to excessive risk than are their male peers. It seems we have reached a fairly broad consensus on the meltdown: Guys were the ones flying too close to the sun.
Now that we've landed back on earth with a mighty thud – a little humbler and a whole lot poorer – it's time to deal with the most important question of the day: How do we get more women into the good-old-boys network at the highest levels of the financial sector?
Recently, the Financial Times (not exactly a bastion of feminist ideology), called for a gender quota for corporate boards – sparking floods of outraged responses from readers.
Such recommendations usually unleash a swift and vigorous backlash against rocking the status quo. Arguments are made about how diversity somehow degrades the talent pool – irrelevant, of course, because women are just as talented as men and in abundant supply.
The Financial Times is spot on. It's time that the financial sector – at all levels, but especially at the top – institutes what we at the National Council for Research on Women are calling the "critical mass principle." Explicit quotas may be illegal, but research has found that to have significant impact on decisionmaking, women, or any other underrepresented group, need to attain a critical mass of 33.3 percent.
The bottom line is that, because of advances in women's education and careers, there are sufficient numbers of qualified women in every area of specialization and expertise. Research bears out the fact that if you get this mass of women and others from underrepresented groups in leadership positions, whether in the boardroom or the corner office, the decisionmaking dynamic changes for the better.
Examples from across the business sector show that applying a "critical mass principle" is a powerful force for positive change. Research shows that for corporate boards, a core of three or more women leads to greater collaboration and inclusivity. And companies with more gender-diverse boards outperform companies with nondiverse boards by 53 percent according to Catalyst, a nonprofit organization that tracks women in business.
Moreover, companies with the most gender diversity among employees bring in nearly $600 million more in sales revenue than companies that lack gender diversity.
Beyond the corporate sphere, a Stanford University study of women's suffrage demonstrated a national policy shift and improvements in public health and services in the wake of women's political participation.