Was the Economic Meltdown a Crisis of Masculinity Run Amuck? It's Time for Women to Step In
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Everywhere you look these days, someone is making a case for why the latest economic shake up could be a tremendous gift in the long run. No one is pushing that point of view more enthusiastically than feminists, who see a great opportunity for gender equality in these uncertain economic times. The big boys have been humbled and the women emboldened by the financial meltdown. In fact, a new report by the National Council for Research on Women argues that the economic crisis was caused by a perfect storm of things, but was in part, a result of masculinity run amuck.
As controversial as this claim sounds, it’s been made in the most mainstream of places -- including in the New York Times, where Nicholas Kristof wondered if we might all be better off if it were “Lehman Brothers and Sisters.” Barnard College president Deborah Spar even went so far as to call it a “one gender crash” in the Washington Post.
The report, titled Women in Fund Management: A Road Map for Achieving Critical Mass -- and Why it Matters, aggregates research on gender differences in investment style and makes the business case for diversifying women's presence at the top echelons of the financial sector. It cites multiple studies that conclude that women -- on the whole -- tend to make less risky, rash financial decisions. According to a 2005 study from the Center for Financial Research at the University of Cologne, for example, "women managers tended to take less risk and to follow less extreme investment styles (which are more stable over time), while male managers had a more active style, with higher turnover ratios than female mangers." And in another study, this one by the International Journal of Bank Marketing, "women process investment-related information more comprehensively than men in the same context."
These kinds of findings, and the policy extrapolated from them, make some feminists nervous. Miriam Zoila Perez, blogger and feminist activist, explains: "It's a slippery slope between noting trends along gender lines and making claims about how women's biology influences the way they make decisions. In reality, there is probably just as much variation within the gender categories as between them. Any statistical difference should be equated with society, not biology, and that isn't always distinguished in these kinds of reports."
The Council's report doesn't speculate on biological versus social sources for the gender differences in investment styles, nor does it assert that that risk-averse leadership is inherently good. Spar explains, "Women make financial decision differently than men do. They don't make them better. They don't make them worse. They make them differently."
And Maria Chrin, a Founder and Managing Partner of Circle Financial Group, explains: "What we have found is that the talent that women bring to the table is complimentary to a portfolio where there are already mangers who are willing to take a lot of risks." Those risk-taking managers, she attests after 20 years of experience interviewing the best and the brightest in the financial sector, tend to be men.
Despite the anecdotal evidence and scientific studies, some may still doubt the notion that women are inherently less risk averse in their financial decision making, but few will argue that more diversity in our nation's financial companies isn't a critical next step in economic recovery. The National Council for Research on Women recommends a "critical mass principle"--recognizing that it isn't a token few women, but enough (often set at 30%) to truly change the culture within financial institutions, that is needed.
Jacki Zehner, the lead sponsor of the report and the President of the Jacquelyn and Gregory Zehner Foundation, explains, "It really bothers me that the people who were on the ship went it went down are the same people being put on the new ship."
Zehner knows all about being the only woman among a sea of men; in 1996, at just 32-years-old, she was the first female trader and youngest woman to be invited in to the partnership at Goldman Sachs. She writes, "At the time I made partner I was one of two women in a class of 38 and the percentages are not that much different today."
In fact, women make up just 10 percent of all mutual fund managers and only 3 percent of the approximately $1.9 trillion invested in hedge funds. This, despite the fact that women-owned funds outperform funds in general; Hedge Fund Research has just released a study that found that women-owned funds delivered an annual return of 9.06 percent compared with 5.82 percent among all hedge funds from 2000 to date.
So why are so few women in the financial sector when it's clear they are well-equipped to be there?
Zehner explains: "The barriers that continue to prevent women from reaching senior leadership in critical mass in the financial services industry and more generally--negative gender stereotyping, lack of women in line positions, a narrow pipeline, lack of mentoring and promotion opportunities, work/life balance challenges, limited access to powerful professional networks--are the same ones faced over a decade ago."
She and so many others are hoping that this financial crisis will be the catalyst for a long overdue transformation in the financial sector. Spar explains, "This year has really taught us that if you want to have the best performance over the long run you need to have both genders' perceptions represented among the decision makers, not because it's better for women, but because it's vital for the economy."