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Thursday 17th May 2012

Sheconomics: Why women make the group smarter.

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Sheconomics: Why women make the group smarter.

Posted by Guest Blogger 11 August 2011 Business |  Careers |  Miscellaneous |  Research |  Technology |  Women Written by Professor Karen J Pine, School of Psychology.

Imagine that you have a really smart bunch of people in the room. How would you measure their collective intelligence? The straightforward answer might to take the IQ of each person, then work out the average and get the group IQ. In fact this tells us nothing about the intelligence of the group. One other factor does. The number of women in the group.
This was the finding from research at Carnegie Mellon University. Teams that had more women outperformed those comprising individuals with higher IQs.

‘Diversity prediction theorem’ is now one of the most cutting-edge of all business improvement strategies around. In simple terms, it means adding more women to the mix, a simple strategy that can significantly improve a company’s profitability.

Three, it seems, is the magic number.

Research from Pepperdine University showed that companies with just threee women on their boards outperformed competitors by at least 40%. The researchers also found that Fortune 500 companies with three women in senior management positions scored higher on measures of organisational excellence. In Norway one in every three board members is female, following legislative changes made in 2003. Subsequently Norway enjoyed 3% economic growth in 2009 and a budget surplus, while many of its EU neighbours were experiencing economic recession.

In the UK the government will require all FTSE 100 companies to have at least 25% female representation by 2015 (it’s now at 12.5%). If not, quotas will be introduced. According to a report by the Equality and Human Rights Commission, at the current rate of change it will take more than 70 years to achieve gender-balanced boardrooms in the UK’s largest 100 companies. Quotas may be unpopular but they may also prove to be necessary.

As a psychologist I am interested in the dynamics behind groups that make financial decisions. Homogeneous groups are very similar in their values, beliefs, styles of communication, race and gender. Heterogeneous groups, characterised by wide diversity in these factors, make better decisions and are less at risk of group-think. By adding women to the board, heterogeneity is virtually guaranteed irrespective of expertise or IQ. Balancing male and female attributes and creating a more diverse mix may be the solution to many challenges facing organisations today.



Karen J. Pine, PhD, MBPsS, CSci is Professor of Developmental Psychology at the School of Psychology, University of Hertfordshire. More details on Karen can be found at the following links:
www.karenpine.com, www.sheconomics.com, http://www.linkedin.com/pub/karen-pine/14/76b/982
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