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Unexpected impact of unconscious biases

Chief Investment Officer Anne Richards held a “Backroom 2 Boardroom” luncheon in Aberdeen Asset Management’s New York City office in September 2015. Here are her thoughts on why diverse teams make better decisions.

Defining diversity

Everyone talks about diversity, but what does the word actually mean? What results can it bring to a company? And importantly, how can we apply it in the workplace?

Let’s start with the first question. Gender inclusion and racial or ethnic characteristics are the common short-hand terms when defining diversity. This is because these are the traits that are endemic to us as individuals.

While that is the obvious meaning of diversity, the word also includes other, less visible qualities. This can be diversity of educational background, diversity of spoken languages, diversity of cultural skills and diversity of experiences gained throughout someone’s life.

Better decisions can be made with that kind of cognitive variety in work environments.

That is what we mean when we talk about diversity. In many workplaces today, diversity has improved. There is increased inclusion of men, women and various cultures in office settings. But recent research shows that gender biases remain a hurdle, especially in larger corporations.

There are more people individually named John or David who run companies listed on the S&P 500 Index than all the women combined.

Diversity benefits

Let’s now answer the second question we posed at the beginning and see what difference it could make to have more females at the top and in the board room.

A board with at least one woman on it is less likely to have instances of governance-related scandals like bribery, corruption, fraud and shareholder battles, according to MSCI research.

And having at least one female on the board reduces a company’s bankruptcy risk by about 20%, according to a Leeds University study.

Having at least one female on the board reduces a company’s bankruptcy risk by about 20%.

Based on these statistics, it might be accurate to assume that many corporations have female board members. And also correct to say that females and males receive equal treatment on job performance and assessment. The answers are, respectively, not exactly and no.

While gender parity is getting better, there is still a long road ahead in terms of reaching equality. The ratio of female presence in the boardroom is 19% in the U.S. and close to 25% in the UK. Norway has a 40% mandatory quota.

When it comes to job assessment, the statistics don’t look favorable for women. In one study quoted by Ms. Richards, a job review committee was given two identical resumes. One had the name John on it. The other had the name Jennifer.

When asked to rate these resumes, John received a rating of 4 on a scale of 1 to 7. This rating meant he was more likely to be offered mentorship and a starting salary north of $30,000 a year. On this identical resume, Jennifer received a rating of 3.3. In other words, she was seen as less competent, less likely to get offered mentorship and had a starting salary $3,500 lower than what John would have received.

There’s more. The review committee was made up of both men and women. It wasn’t only the men that rated John more favorably. It was the women as well.

Power of perceptions 

So what is the root of the issue here – where both men and women appear to rate male job performance more positively? This has a bit to do with societal conditioning.

At young ages, we are already taught how to behave in our gender roles. Girls have dolls, and boys have train sets. It isn’t only toys that are gender-specific. Even colors, like pink, are assigned to a gender. These are challenges because they imbibe unconscious biases in us before we even make it to the classroom.

What happens when women reach the workforce? There’s a common perception that women tend to lack confidence, especially when compared with men.

The reality is that women are overconfident. In one study, women overrate their own abilities by about 15%.

Men overrate their abilities by about 30%. With both genders, it isn’t about lack of confidence. It’s an overconfidence issue.

Another perception most people have about women has to do with leadership. It is a myth that women don’t want leadership positions. This may be the most damaging of the perceptions because it is a hidden, and unintended, assumption.

The reality is many women do want to be leaders, but that ambition can be drained out of them. This is especially true during the mid-year career stage when women begin to feel there is less likelihood of them attaining those leadership positions.  

Biases beyond gender

Unconscious biases don’t only pertain to gender. Gender aside, even physical attributes like height, can impact someone’s ability to score a top job.

Let’s take a look at height and leadership positions. Roughly 4% of the U.S. population is 6’ 2” and above. Translate that to C-suite roles in the country. About 30% of the Fortune 500’s chief executives are 6’ 2” and taller. What happens if we lowered the height bar to 6’ 0” and above?

In the U.S., about 14.5% of the population is 6’ 0” and taller. Now for the proportion of Fortune 500 chief executives that are 6’ 0” and above: 58%. In other words, more than half of the people leading the country’s largest corporations are men that fall in a height category that applies to less than 15% of the U.S. population. Men who are 5’ 6” and shorter have less chance of becoming a Fortune 500 chief executive than a female does.

It’s easy to believe that height could have contributed to skill 10,000 years ago when a man with a longer throw arm was useful for throwing spears. But today, that physical skill is probably less useful when dealing with shareholders or business strategy. Yet, this bias persists.  

Shifting gears

Now to answer the third and vital question on this topic: how do we apply it in the workplace today and create a better environment for future generations?

First, the simplest thing any one of us can do is to challenge broad stereotypes. The world has come a long way in the past century. One hundred years ago, women still couldn’t vote. In a relatively short time, society has made a lot of progress. But there is still a lot to be done. 

When it comes to reducing societal conditioning of gender biases, the issue extends beyond early childhood with gender-specific toys. It’s an issue that is carried with us through high school and to job recruitment.

There are a lot of groups that we need to convince, and they all need to be convinced in different ways. The biggest group of people that need to be convinced don’t even know yet that these inequalities even exist. 

With greater awareness on diversity, and increased collaboration among stakeholders to address these issues, we can help our current and future work environments flourish.

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