Out with Command and Control Leadership

Written by Jan Jaben-Eilon Tuesday, December 13 2011

The statistics are grim. The solution is complicated. But increasingly there are focused attempts to increase the number of females in the financial services industry.

Females constitute only 1.2 percent of CEOs in the financial industries, according to Mary Quist-Newins, director of the State Farm Center for Women and Financial Services at The American College in Bryn Mawr, Pa. The mission of the Center for Women is to promote the advancement of women in the financial services industry.

But there’s a chicken-or-egg problem with attracting more women in investment management, says Lakshmi Bhojraj, director of Cornell University’s Parker Center for Investment Research and founder of the Women in Investing (WIN) conference sponsored by Cornell’s Johnson Graduate School of Management.

“There are not enough role models for women. We did a survey of those who attended our recent conference in Boston, and they said they don’t enter the field because there are not enough women in the field,” she says. The survey also indicated that there’s a feeling that the industry isn’t “friendly enough, especially for those who want to slow their career and return” after childbirth. Another hindrance to women entering the field, Bhojraj says, is the stress factor. “It’s stressful when you are in charge of other people’s money.”

The Johnson School is not dissuaded. The school is trying to cultivate the best female MBAs. Quist-Newins says her organization also is trying to address the imbalance in the financial industries by attracting more females into leadership roles in the educational arena. “Education is a great equalizer,” she says.

The challenge to attract females into the financial services industry is based on the fact that the majority of American women have a low regard for the industry. The Boston Consulting Group conducted a survey in 2008 of more than 12,000 women. The survey showed that among 33 consumer product/service categories, financial services was the worst rated in how women felt they were treated. They cited lack of respect and trust. This statistic is even more crucial to the industry when one realizes that, according to the Boston Consulting Group, women now own about half of the nation’s private wealth, a percentage that is expected to jump to two-thirds by the year 2030.

Better targeted marketing may increase women’s trust in the industry, but placing more women in the industry would be more convincing, says Quist-Newins.

The mission of the Johnson Graduate School, Bhojraj says, is to train investment specialists. “We run a student-managed hedge fund with $10 million under management.” That hands-on experience attracts students, but it’s still difficult to get women into the investment world. Thirty percent of MBA students are females, she says, but only about 10 percent of the investment professional work force is women. That is true despite the benefits for females in that industry.

“Women should pursue the investment management field because it is merit-based; you are judged by your results. Moreover, the industry has a reasonable work-life balance compared to Wall Street careers or careers as consultants, which require a lot of travel,” says Bhojraj. “Studies also show that women are more judicious in risk; they are less reactive and think more long term.”

The financial services industry is attracting more females into the workplace. A 2010 Catalyst Research study showed that women now account for 57.5 percent of the finance and insurance industry labor force. Yet, they account for only 19.1 percent of executive officers, 17.4 percent of board directors, and 1.2 percent of CEOs.

Quist-Newins says those poor percentages will increase as management understands that organizations are now less hierarchical. The traditional command and control leadership style, or rewards and punishment style, is becoming an anachronism as organizations seek to achieve breakthrough results using teams. She notes that academic research shows females can excel in communal and transformational leadership styles, engaging teams in participative decision making and innovative solutions.

“Women are better at human capital development,” she contends. This is particularly important because the work force is more highly educated and they have choices. No longer do employees stay with one corporation their whole careers. This leads, Quist-Newins says, to a “flattening out of the organization. There are fewer top executives and more middle management – more teams, flat and wide, so it’s necessary to respect employees more. A good leader sets a vision and then is able to bring out innovation.”

Women have natural gifts that lend themselves to create followers who want to be led, says Quist-Newins. Among those gifts are holistic thinking skills, participative decision and solution processes, engaging teams in winning outcomes, and building social capital. They key, however, is that women need to develop those gifts through education and recognize the value of those gifts rather than try to emulate men’s traditional command and control leadership style.

Jan Jaben-Eilon was a founding staff writer of the Atlanta Business Chronicle. Since then, she has been the international editor of Advertising Age magazine and has written for such publications as The New York Times, International Herald Tribune, Washington Journalism Review, and Consumer Reports. She is the author of soon-to-be-published (There is) Life After Cancer. Jan and her husband have homes in Atlanta and Jerusalem.