Women in the C-suite are changing the way organisations think, with a greater willingness to grow through research and development and less willingness to assume risk through mergers and acquisitions, according to an Academy of Management Journal.
Female leaders are also more likely to make impacts when there are already women on executive teams and when women join top management as part of small groups of new appointees.
“I’ve always been intrigued by what actually goes on in top management teams (TMT). What changes when women get on board and what impact does it have over the long term?” said Corinne Post of Villanova University, Boris Lokshin of Maastricht University, and Christophe Boone of University of Antwerp are coauthors of, What Changes After Women Enter Top Management Teams? A Gender-based Model of Strategic Renewal.
Their findings by Academy of Management Journal are based on an analysis of 163 multinational firms that belong to the Organisation for Economic Co-operation and Development (OECD). They studies firms in Europe, the United States, and Japan, from 1998-2012. Post, Lokshin, and Boone looked at changes in organizational language over the 13-year span, in letters to shareholders, and found that after women were appointed to the top management team, those top teams became less likely to use words associated with risk, and more likely to choose language associated with change. For example:
- Risk words
- Change words
“Because these communications go through such scrutiny from lawyers, we weren’t sure if we would find changes in language when we compared the language in those documents before and after women joined top management teams. But there were,” Post said.
Based on their analyses, the authors for Academy of Management found that organisations’ openness to risk-taking decreased by 14% while openness to change increased by 10% a year after women were appointed to top management teams.
“Our findings suggest that female top management team appointments contribute to (re)shaping innovation-oriented renewal strategies in multinational corporations in the span of just a couple of years, and especially so when the (team) includes female incumbents,”
That approach is reflected in the leadership style of current and former female CEOs, including:
- Mary Barra, who steered General Motors’ shift into electric and driverless cars
- Marilyn Hewson, who rolled out the world’s most complex defense plane at Lockheed Martin
- Susan Wojcicki, who oversaw YouTube’s expansion into YouTube Gaming, YouTube Music, YouTube Premium, and YouTube TV
“They represent the more inclusive, more transformational leadership approaches that women, on average, tend to favor,” Post said.
After becoming more oriented to change and more averse to risk following the appointment of new female executives, organizations respond by:
- Ramping down their acquisition of innovation capabilities by doing fewer tech-based mergers and acquisitions</li>
- Ramping up their innovative capabilities internally by investing more in research and development</li>
“Because R&D investments are a capability-building pathway to strategic renewal, and therefore, require being at ease with, and confident in long-term results, it stands to reason that, as TMT change orientation increases, so does the TMT’s preference for R&D investment,” they wrote.
If there already is a woman on the top management team, female newcomers benefit because the rest of the team already has experience working with women. “It isn’t a novelty,” Post said. Further, the women who already are in place can help the new women understand the dynamics of the organisation.
Women also benefit from being part of a small group joining the TMT. “In a large group, there’s more competition among newcomers to be heard. When there are fewer, it’s easier to integrate,” Post said.
Token women appointees have a much more difficult time making a difference in an organisation, she said.
“If a woman is placed on a top management team to appease people from the outside, and the people on the team don’t see the value of having her there, that woman is less likely to have an impact,” Post said. “It’s hard to make an impact when you are an outsider.”
The authors’ findings offer practical implications for in building top teams and generating new ideas.
“When you add women to a top management team and make certain they are well-integrated, firms benefit from new ways of thinking and developing innovation capabilities,” Post said.
If the woman is the only female in the C-suite, leaders need to inform the men on the team what the newcomer brings to the table, then follow up by engaging and responding to her ideas. “She should be included in informal conversations and her ideas should not fall on deaf ears,” Post said. “Be clear as to why she was added to the team. It’s not just checking a box.”