A financial focus is unlikely to capture all the value a leader might generate, writes Kate Kearins.
For many years, mainstream business researchers have focused on identifying the factors that drive firm performance.
Occasionally we get a really good meta-analysis – a study of studies – that sums up all the other studies and tries to discern what the overall picture looks like.
This is the case with some recent work on the business case for women’s leadership. The researchers unpicked some of the findings in close to 80 journal articles, which collectively studied more than 117,000 organisations.
They concluded that it does pay to have a woman in charge, but… context matters. As we know, context often matters.
Having women in leadership roles is more likely to benefit businesses’ financial performance in cultures that are more gender egalitarian. That seems a fairly obvious finding.
Of more compelling interest, there came through a strong sense that we should be querying a reductionist approach that accepts that the way we – as firms and researchers – tend to measure performance through mainly economic and financial measures.
The researchers, Hoobler et al – Business Case for Women Leaders, called out commonly used methods for measuring the value that women, and minority groups, bring to organisations.
It’s largely driven by the easy access to data – search the annual report for the gender of the CEO and cross-reference with publicly available financial information. The researchers found very few instances of business case research examining affective or social outcomes for employees, organisations, and other stakeholders.
And there is little research scrutiny of the impact men in leadership have on a firm’s financial performance. “The predominance of a financial focus in business case research evokes an instrumental rationality that, in the end, women add value only if their direct contribution to earnings can be demonstrated,” say Hoobler et al.
Put simply, a financial focus is unlikely to capture all the value a leader might generate.
And it is unlikely to value the impact that takes longer than a quarter or a financial year or two to generate.
I’ve been around long enough to realise the work done on the business case for sustainability also told us what we might have already expected. That is that firms would likely be interested in social and environmental initiatives that paid off in dollar terms.
I had a student once who studied what I called the stakeholder case for sustainability. Did stakeholders really want sustainability – or were they often also rent seekers, out for whatever their own cause or stake was?
The stakeholder case for women’s leadership offers a clearer mandate, perhaps.
In organisations where women are the majority, and often on average earning less than men counterparts, then these majority stakeholders might well wish for a different outcome involving more egalitarian arrangements, in a society that takes a wider view of everyone’s value.
Again, it does not give the whole picture, there are many organisations where women aren’t the majority, and certainly not even equally represented at senior levels. However the idea of a stakeholder case, rather than a business case offers a different starting point for thinking about a different way forward.
Taken further into the realm of broader diversity, I think recent tragic events in this country are reminding us of all individuals’ value and inherent worth.
Kate Kearins is Pro Vice Chancellor and Dean of Business, Economics and Law at Auckland University of Technology.
