Simon Hayward from Cirrus writes for The Guardian
New research reveals that women are more inclined to favour higher return investments and avoid risky transactions.
The more women on a corporate board, the less a company pays for its acquisitions, according to a study by researchers at UBC’s Sauder School of Business.
I’ve been involved in quite a few mergers and acquisitions over the past 30 years. I’ve led companies who’ve bought, been bought, and merged with other businesses. On every occasion, female leaders have been part of the decision-making process.
The study shows the cost of a successful acquisition is reduced by 15.4% with each female director added to a board. It also found that each additional female director reduces the number of a company’s attempted takeover bids by 7.6%. The researchers say these results suggest women are less interested in pursuing risky transactions and require the promise of a higher return on investment.
How does this make me feel as a man? Well, I am sometimes driven by the need to prove myself and that this can lead to opportunistic (and occasionally risky) corporate activity, which I justify as being necessary to achieve goals in a short time space. And while taking a risk can open up opportunity, female colleagues are often more risk-averse when it comes to major deal-making, and this can be very beneficial.
The researchers believe that the prudence exhibited by female directors in negotiating mergers and acquisitions has a substantial positive effect on maintaining firm value, and that this helps build the case for increasing the number of women on boards. At Cirrus we have a balanced leadership team with an equal number of men and women. I think this helps us to make better decisions. It’s important to listen to every voice in the room.
The will to win the race, to be bigger and stronger than competitors, can lead to great success.
However, it can also cause a blinkered perspective, which can inhibit sound decision-making. If men are more prone to this will to win, then we risk taking decisions based on an overly optimistic view. In mergers and acquisitions, the risks are significant, so the potential upsides and downsides are also significant. A more balanced view from a mixed team is usually a good thing.
I’ve learned a lot from many of the women I’ve worked with. I’ve tried to develop the ability to process information in a more balanced way, and therefore to make more stable decisions. This is partly about a balanced approach to risk, partly about developing my emotional intelligence, and partly about acting in line with our values. I suppose that trusting my intuition could also be considered a more feminine trait – one I am learning to appreciate.
Could more men learn from women in the boardroom? Absolutely. The research uses real, credible data to make its point. This is a good starting point, as many men are drawn to data to make sense of a phenomenon such as the success of mergers and acquisitions. If the data is robust, we are more likely to take the conclusions on board and to act on them in practice. I also think we are increasingly recognising that the old male-oriented approach to career progression is outdated and not trusted by the younger generations in the workforce. So we need to adapt and take each person on their merits, whatever their gender, or any other aspect of what makes them an individual.
As this study shows, sound values such as fairness and equality not only make cultural sense – they actually impact the bottom line, which is something that every business leader, male or female, should appreciate.