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Women are underrepresented in management.
Men hold 62% of manager-level positions.
According to an article published November 20, 2018 by the Center for American Progress, women are a majority of the U.S. population (50.8%). They earn a higher percentage of undergraduate and master’s degrees than men (but only 38% of MBA degrees).
In the financial services industry, “they constitute 61% of accountants and auditors, 53% of financial managers, and 37% of financial analysts. But they are only 12.5% of chief financial officers in Fortune 500 companies.”
Women account for less than 20% of all advisors.
It’s even worse in mutual fund families. Women manage only 2% of all assets and the proportion of female portfolio managers declined to 9% from 10% from 2009-2015, “despite the fact that women managers outperform their male counterparts, according to Morningstar.”
As of May, 2020, only 7.4% of the CEO’s of Fortune 500 companies were women.
The gender gap extends to pay. Women with MBAs earn 74 cents for every dollar earned by men with the same degree.
Benefit of having women in leadership positions
There’s ample evidence of the benefits of having women in leadership positions.
They score higher on tests designed to measure emotional intelligence, which is considered crucial for effective leadership and business performance.
Women are more emotionally self-aware, more empathetic, and outperform men in, “coaching and mentoring, influence, inspirational leadership, conflict management, organizational awareness, adaptability, teamwork and achievement orientation.”
According to Daniel Goleman, co-director of the Consortium for Research on Emotional Intelligence in Organizations at Rutgers University, “When you factor in the correlation between high emotional intelligence and those leaders who deliver better business results, there is a strong case for gender equity. Organizations must find ways to identify women who score highly on these competencies and empower them.”
Why the disparity?
Tomas Chamorro-Premuzic believes he can explain the disparity. He’s a psychologist and author who has written 10 books and published over 150 scientific papers on the psychology of talent, leadership, innovation and artificial intelligence.
Chamorro-Premuzic’s view is that the reason more women aren’t in leadership is because of “our inability to discern between confidence and competence.” We generally believe (and this is especially true in corporate environments) that excessive confidence (which he labels as “hubris”) is “commonly mistaken for leadership potential.”
Since men exhibit these qualities more than women, more men ascend to the top.
Chamorro-Premuzic observes that men tend to believe they are smarter than women. He asserts this “arrogance and overconfidence” is “inversely related to leadership talent.”
Here’s the irony. There’s ample evidence the trait that most positively correlates with effective leadership is humility, which is more commonly found in women than men.
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According to Chamorro-Premuzic, the traits used to promote men into positions of leadership aren’t just wrong-headed, they’re often typical of personality disorders, like narcissism, psychopathy, histrionics or Machiavellian. Perhaps this explains why “most leaders – whether in politics or business – fail.”
Chamorro-Premuzic notes that men face fewer career obstacles than women because we mistakenly equate leadership, “with the very psychological features that make the average man a more inept leader than the average woman.”
As a consequence, we have a system, “that rewards men for their incompetence while punishing women for their competence, to everybody’s detriment.”
What do you think? Is he right? Can we do better?
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
