Women Board Members + Strong Shareholder Protections = Higher Financial Performance

Kris Byron

Kris Byron

The relationship between women on corporate Boards of Directors and company positive financial results is mixed, according to Syracuse University’s Kris Byron and Corinne Post of Lehigh University.

Corinne Post

Corinne Post

To clarify conflicting data, they conducted a meta-analysis of 140 existing studies and found that women on corporate boards was related to positive financial outcomes in countries with stronger shareholder protections.

Companies with women on Boards and subject to rigorous shareholder protections reported higher accounting returns or firm profitability.

Richard Gentry

Richard Gentry

Accounting returns evaluate a firm’s efficiency in using assets to generate earnings and represent short-term financial performance, noted University of Mississippi’s Richard Gentry and Wei Shen of Arizona State University.

Wei Shen

Wei Shen

Another financial performance measure in Byron and Post’s meta-analysis was market performance, defined by University of Chicago’s Richard H. Thaler as marketplace behavior that reflects expectations of a firm’s long-term value.

Richard Thaler

Richard Thaler

Women on Boards of Directors provide “diversity of thought and experience” and tolerate less financial risk.
As a result, female board members made stronger efforts to monitor the firms and to ensure strategy execution, according to Byron and Post.

Kathleen Eisenhardt

Kathleen Eisenhardt

The team considered Agency Theory, proposed by Stanford’s Kathleen Eisenhardt, in her theory that Boards of Directors are “information systems” used by key stakeholders to verify organizational behavior.

Amy Hillman

Amy Hillman

These systems are influenced by Directors’ individual cognitive frames, derived from their diverse values and experiences, argued Arizona State’s Amy Hillman and Thomas Dalziel of University of Cincinnati.

Donald Hambrick

Donald Hambrick

These diverse cognitive frames yield more favorable organizational outcomes only when teams “engage in mutual and collective interaction [and] share information, resources, and decisions,” according to Upper Echelons Theory (UET) developed by Penn State’s Donald Hambrick.
This means that women Board members affect group decision-making and financial performance when other Board members are willing to consider their diverse perspectives and experiences.

Thomas Dalziel

Thomas Dalziel

Strong shareholder protections provide “an information-processing stimulus that motivates (Boards) to leverage the decision-making resources (i.e., knowledge, experience and values) that women bring,” asserted Byron and Post.
From this, they concluded that strong financial outcomes occur in companies with women on their Boards of Directors in countries with strong shareholder protections.

Byron and Post’s analysis illustrates that diverse perspectives provide little benefit if they are not solicited and fully considered in a context of regulatory oversight.

-*When have you observed diverse perspectives associated with increased profitability and performance?

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Range Offers vs Point Offers in Negotiation for Advantageous Settlements

Daniel Ames

Daniel Ames

Many people hesitate to present a negotiation offer as a range of values because they are concerned that co-negotiators will anchor on the lower value in the range as a “reservation price” or “bottom line.”

Malia F Mason

Malia F Mason

In fact, range offers may lead to stronger outcomes, according to Columbia University’s Daniel R. Ames and Malia F. Mason.
They compared range offers with point offers in laboratory studies of negotiations.

First offers can be powerful anchors, despite their risk of bias and marginal accuracy, reported University of Chicago’s Nicholas Epley and Thomas Gilovich of Cornell.

Nicholas Epley

Nicholas Epley

Even more influential aredual anchors” in range offers because they signal a negotiator’s knowledge of value as well as politeness.
Ames and Mason suggested that
negotiator credibility and knowledge of value increase anchor potency. 
Coupled with interpersonal relationship “capital”, these factors determine settlement outcomes.

Thomas Gilovich

Thomas Gilovich

Range and point opening offers can have varying impacts, depending on perceived preparation, credibility, politeness, and reasonableness of the proposer.

Ames and Mason tested three types of negotiation proposal ranges:

  • Bolstering range, which includes the target point value as the bottom of the range and an aspirational value as the top of the range.
    This strategy usually yields generous counteroffers and higher settlement prices, and is a recommended approach.
  • Backdown range, which features the target point value as the upper end of the range and a concession value as the lower offer.
    This approach often leads to accepting the lower value and is generally not recommended.
  • Bracketing range, which spans the target point offer and tends to have neutral settlement outcomes for the offer-maker.
    Compared with point offer-makers, bracketing range offers provided some relational benefits because they were seen as less aggressive.
Martin Schweinsberg

Martin Schweinsberg

Extreme anchors can be seen as offensive, and may lead to negotiation breakdown, according to INSEAD’s Martin Schweinsberg with Gillian Ku of London Business School, collaborating with Cynthia S. Wang of University of Michigan, and National University of Singapore’s Madan M. Pillutla.
Somewhat surprisingly, they found that negotiators with little power were more likely to walk away from extreme anchors.
Also surprisingly, high-power negotiators were equally offended.

Gilliam Ku

Gilliam Ku

Previously, Mason and team showed the benefit of precise single number offers, and the current research shows the value of less precise range offers.

Mason and team argue that point offers and range offers are independent and interactive informational processes with influence on settlement values: “…bolstering-range offers shape the perceived location of the offer-maker’s reservation price, (and) precise first offers shape the perceived credibility of the offer-maker’s price proposal.

  • When do you prefer to present a precise, non-rounded negotiation offers instead of a negotiation range?

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Group “Intelligence” Linked to Social Skills – and Number of Women Members

Anita Wooley Williams

Anita Wooley Williams

A group’s “general collective intelligence factor” is related to social and communication skills, not to the average or maximum individual intelligence of group members, found Carnegie Mellon’s Anita Williams Woolley, Christopher F. Chabris of Union College, with MIT colleagues Alex (“Sandy”) Pentland, Nada Hashmi, and Thomas W. Malone.

Instead, group intelligence was most closely associated with:

Christopher Chabris

Christopher Chabris

More than 695 volunteers completed an individual I.Q. test, then collaborated in teams to complete workplace tasks including:

  • Logical analysis,
  • Coordination,
  • Planning,
  • Brainstorming,
  • Moral-ethical reasoning.
Alexander Pentland

Alexander Pentland

Teams with higher average I.Qs performed similarly on collective intelligence tasks as teams with lower average I.Qs.

Simon Baron-Cohen

Simon Baron-Cohen

Each participant also completed a measure of empathy based on identifying emotional states portrayed in images of people’s eyes, developed by University of Cambridge’s Simon Baron-Cohen, Sally Wheelright, Jacqueline Hill, Yogini Raste, and Ian Plumb.
This instrument, Reading the Mind in the Eyes test, evaluates social reasoning.

Sally Wheelright

Sally Wheelright

Ability to infer other team members’ emotional states correlated with team effectiveness in solving workplace tasks, but not with extraversion and reported motivation.

David Engel

David Engel

Teams that performed best, both online and face-to-face, also demonstrated stronger social and communication skills:

  • Accurate emotion-reading, empathy, and interpersonal sensitivity,
  • Communication volume,
  • Equal participation.

High-performing teams excelled in inferring others’ feelings even if conveyed without visual, auditory, or non-verbal cues while interacting online in a study by Wooley’s team collaboration with MIT’s David Engel and Lisa X. Jing.

Reading the Mind in the Eyes

Reading the Mind in the Eyes

These studies demonstrate that teams may increase task performance when members have well-developed “Emotional Intelligence,” social insight, and communication skills rather than the highest measured IQ.

  • How do you enhance a work group’s collective intelligence in performance tasks?

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Nothing to Lose: Effective Negotiating Even When “Powerless”

Michael Schaerer

Most negotiators prefer to have alternatives as a “fall back position.”
However, having no alternatives and less power than co-negotiators can improve outcomes, found INSEAD’s Michael Schaerer and Roderick Swaab with Adam Galinsky of Columbia.

Alternatives enable negotiators to gain concessions from co-negotiators because they have a BATNA – Best Alternative To a Negotiated Agreement, defined by Harvard’s Roger Fisher and William Ury.

Roger Fisher

Roger Fisher

When an alternative is weak, it can undermine negotiating outcomes more than having no alternative because it establishes an “anchor point” based on competing options.

Anchoring is a frequent cognitive bias characterized by overvaluing one piece of information, according to Hebrew University’s Amos Tversky and Daniel Kahneman of Princeton.

William Ury

William Ury

Typically, negotiators anchor on the value of their alternatives when making their first offer, so people with weak alternatives generally make lower first offers than those with no alternative.
“Lowball” first offers based on few or poor alternatives usually undermine a negotiator’s final outcome.

Professional athletes and their agents provide many anecdotal examples of negotiating better deals when they have no “back up” offers and “nothing to lose” because they can set ambitious anchor points.

Amos Tversky

Amos Tversky

In a separate study of job negotiation, Schaerer and team asked a hundred people whether they would prefer to negotiate a job offer with a weak alternative or without any alternative.
More than 90 percent indicated that they would prefer to enter the negotiation with an unattractive alternative offer, confirming the popular assumption that any alternative is seen as better than no alternative.

Another of Schaerer’s lab studies asked volunteers to imagine they were selling a used music CD by The Rolling Stones.
They randomly assigned participants to three groups and gave each group different information about their alternatives, ranging from:

  • No offers (no alternative),
  • One offer at USD $2 (weak alternative),
  • A bid at USD $8 (strong alternative).
Roderick Swaab

Roderick Swaab

Volunteers in each group proposed a first offer, and rated the degree of power they felt.
Not surprisingly, people with the strong alternative felt the most powerful and those with no alternative felt the least powerful.

However, people with a weak alternative felt more powerful than those with no alternative, but they made lower first offers, signaling less confidence than participants with no alternative.
Having alternatives, whether poor or attractive, may make people feel powerful but can undermine negotiation performance.

Schaerer’s team further explored this paradox by pairing participants as a  “seller” who was offering a Starbucks mug during a face-to-face meeting, and a potential “buyer.”

Adam Galinsky

Adam Galinsky

Before the meeting, the seller received a phone call from “another buyer,” who was actually a confederate.
For half of the “sellers,” the potential buyer either made a low offer or declined to bid.

“Sellers” without an alternative offer said they felt less powerful, but made higher first offers and received considerably higher sales prices than negotiators with a an unattractive alternative.

In another situation, half of the “sellers” concentrated on available alternatives (none, weak, or strong) and the remaining negotiators focused on the target price.

Volunteers with unappealing alternatives negotiated worse deals than those without other options when they focused on alternatives, but “sellers” avoided this pitfall by concentrating on the target price.
This is another validation of focusing on the goal when alternatives are weak, and of the power of first-offer anchors.

Negotiators with non-existent or unappealing alternatives benefit from caution in setting modest first offers driven by feeling powerless.
Instead, the situation can be reconstrued as an opportunity to set audacious goals, reflected in an ambitious opening offer.

  • How do you overcome lowball anchoring when you have few negotiation alternatives?

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Positive Thinking, Mental Contrasting Plus WOOP to Improve Performance

Gabriele Oettingen

Gabriele Oettingen

Positive thinking without implementation strategies is wishful thinking.

It that may lead to complacence and poor performance, found NYU’s Gabriele Oettingen.
As an alternative, she advocates coupling an optimistic outlook with considering obstacles and potential ways to manage them, using a mnemonic WOOP:

  • Wish,
  • Outcome,
  • Obstacle,
  • Plan.
Andreas Kappes

Andreas Kappes

To mitigate reduced motivation triggered by wishful thinking, Oettingen and University of London colleague Andreas Kappas taught volunteers a “Mental Contrast” process.
This approach considers potential obstacles to desired future outcomes, and identifies ways to manage these challenges.

The team differentiated Mental Contrast from two less effective approaches to goal engagement:

  • Indulging by mentally elaborating only the desired future state,
  • Dwelling by mentally elaborating only the present reality.

These practices lead to less strong goal commitment than Mental Contrast, even when chances of success are good across interpersonal relations, academic achievement, professional achievement, health, life management experiences.

Mental Contrast was an effective self-regulatory technique when coupled with Implementation Intentions (MCII) to improve achievement, interpersonal, and health habits.

These trends changed when perceived chances of success were low:  Mentally Contrasting a desired future with present reality led to disengagement from goals.
However, Indulging in the future goal fantasy or Dwelling only in the present reality both maintained goal commitment.

Probability of Success-Mental Contrast-Indulve-Dwelling

In another study, volunteers who spent more time imagining working in a “dream job,” but who also had lower expectations of achieving this goal, received fewer job offers and lower starting salaries, found Oettingen and Doris Mayer of University of Hamburg.

They differentiated the motivational impact of:

  • Positive expectations for future success, which predicted high effort and successful performance,
  • Positive fantasies, which didn’t increase effort.

Mental Contrasting helped people disengage from unfeasible goals like rehabilitating an ended relationship or achieving an unattainable professional identity.
When chances of success are low, people Mentally Contrast desired future with present reality to move on to more feasible goals.

Similarly, Mental Contrasting linked negative thoughts about an undesirable future situation to avoidance goals when there’s a high probability of avoiding the undesired future.
This strategy can be useful for people with difficulty generating positive fantasies about future health status or reducing prejudice toward members of a minority or “out-group.”

When facing controllable and escapable tasks, people benefitted from Mentally Contrasting fantasy with reality.
However, when facing tasks that cannot be mastered such as terminal illness, Indulging in positive fantasies enabled people to maintain a positive outlook.

Volunteers who held a “silver lining theory” that a negative personal attribute is associated with a positive attribute, increased effortful performance toward the positive attribute when informed that:

  • They were impulsive,
  • The silver lining theory states that “impulsivity is associated with creativity.”
Timur Sevincer

Timur Sevincer

These on-line and in-person participants showed greater effort-based creativity than those who were given no information or for whom the silver lining theory was refuted.

The Silver Lining Theory increased performance and enabled people to mitigate a perceived negative attributes.
They did this by promoting effortful behavior toward a positive attribute linked to the negative attribute.

Mentally Contrasting a desired future (such as excelling in an intelligence test and writing an essay) with a present reality increased physiological energization measured by systolic blood pressure and grip strength to the degree a person expected to attain the desired future.

Mental contrasting may trigger energy activation that fuels effort to perform an unrelated task, concluded University of Hamburg’s A. Timur Sevincer and P. Daniel Busatta collaborating with Oettingen.

Philip Daniel Busatta

Philip Daniel Busatta

Coupling Mental Contrasting with Implementation Intentions (MCII) helped economically-disadvantaged children convert positive thoughts about future outcomes into effective action, found University of Pennsylvania’s Angela Lee Duckworth, Teri A. Kirby of University of Washington with NYU’s Anton Gollwitzer and and Oettingen.

Teri Kirby

Teri Kirby

Student volunteers learned to compare a desired future with potential obstacles, then developed if–then implementation intentions to potential outcomes.

More than 75 U.S. urban middle school 10 year olds were randomly assigned to learn either MCII or a Positive Thinking strategy as a control comparison.

Those who applied MCII tools to their academic goals significantly improved their report card grades, attendance, and conduct, suggesting the value of Mental Contrasting to enhance goal commitment and realization.

Mental Contrasting can be a powerful tool to increase motivation, particularly when coupled with Implementation Intentions.
The exception to this trend occurs when the probability of successfully achieving goals is low.
In those cases, Indulging or Dwelling strategies are more effective in maintaining goal motivation.

  • How have you seen Mental Contrasting and considering your probability of success to manage your motivation and performance?

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Do Women Advance in Careers More Slowly than Men?

Herminia Ibarra

Herminia Ibarra

Men received 15% more promotions than women, according to a Catalyst Benchmarking Survey.

Similar numbers of “high potential” women and men were selected for lateral moves to other parts of the business.
However, men but not women, received promotions after the career-developing lateral moves.

Nancy M. Carter

Nancy M. Carter

Women’s developmental lateral moves were substitutes for actual career advancement, suggested INSEAD’s Hermina Ibarra with Nancy M. Carter and Christine Silva of Catalyst.
Similarly, women receive social accounts – or explanations – as substitutes for salary increases.

Virginia Valian

Virginia Valian

This type of implicit bias was related to men’s being consistently overrated while women are underrated by coworkers, bosses and themselves, found Hunter College’s Virginia Valian.
Resulting discrepancies in opportunity accrue over time to create large gaps in advancement, she asserted.

In addition, women are typically evaluated in relation to a “masculine” standard of leadership, reported Catalyst’s earlier research outlining three predicaments that can undermine leadership and advancement opportunities:

  • Extreme Perceptions, in which women are perceived as enacting extreme behaviors, such as “toughness” or “niceness,”
  • High Competence Threshold, when women leaders are held to higher standards and receive lower rewards than men,
  • Competent but Disliked, as women may be perceived either as “competent” or “likeable” but not both.
Phyllis Tharenou

Phyllis Tharenou

Family structure can accelerate or slow career progress in unexpected ways.
Both “post traditional” mothers who have employed spouses, and “traditional” fathers whose wives are engaged in childcare only, more rapidly advanced in private sector careers than women and men with other family configurations, reported Phyllis Tharenou of Flinders University.
Somewhat surprisingly, non-parent women and men, and unmarried fathers   advanced more slowly in their careers.

Employment disruption, such as maternity leave or layoff, did not impair career advancement for women and men, but the industry sector was associated with differing rates of career advancement.

Alice Eagly

Alice Eagly

In a separate analysis, Tharenou noted that the strongest predictors of advancing in management were managerial aspirations and masculinity.
Women were more likely to advance when they received career encouragement and when organizational hierarchies included both women and men.

To explain career advancement rate discrepancies, University of Massachusetts’ Alice H. Eagly and Linda L. Carli of Wellesley suggested that women encounter a career labyrinth rather than a glass ceiling.

Linda Carli

Linda Carli

Differences in career advancement rates may be narrowed by sponsorship rather than mentorship, argued Catalyst and Center for Talent Innovation.
Male advocates can focus attention on the challenges women face at work and can advocate for organizational processes and structures that normalize equivalent competence in women and men.

  • What type of “career encouragement” enable women to advance in careers at a rate similar to men?

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Activate Women’s, Minorities’ Stereotype Threat Reactance to Enhance Performance

Claude Steele

Claude Steele

Stereotype threat, defined as activating prevailing but often-inaccurate concepts of a group’s typical behavior, was consistently associated with reduced scores on standardized test performance for women and African Americans in numerous studies by Stanford’s Claude Steele and Joshua Aronson now of NYU.

Joshua Aronson

They found that eliciting “reactance” or resistance to these stereotypes improved women’s and African Americans’ performance more than activating a positive shared identity, such as shared membership in a respected group.

Anthony Greenwald

Anthony Greenwald

Stereotypes may be invoked by implicit primes, which led both men and women to confirm gender stereotypes even when they explicitly disavowed stereotypes and associated prejudice, found University of Washington’s Anthony Greenwald and Mahzarin Banaji, then at Yale.
However, when evaluators focused on tasks, including judgment challenges about members of a stereotyped group, judges were less likely to render discriminatory decisions.

Laura Kray

Laura Kray

In contrast, both women and men showed stereotype reactance — the tendency to behave in contrast with the stereotype in negotiation tasks — when stereotypes were elicited with explicit primes, reported University of California, Berkeley’s Laura Kray, Leigh Thompson of Northwestern and Columbia’s Adam Galinsky.

Stereotype threat can be advantageous to men when negotiating with women, who are stereotypically considered less skillful negotiators.
Unlike Steele’s finding, Kray’s team observed performance-equalizing effects of activating a shared identity that transcended gender.

Gordon Moskowitz

Gordon Moskowitz

People can dissociate themselves from prevailing stereotypes with contrast primes, according to Lehigh University’s Gordon B. Moskowitz and Ian W. Skurnik of University of Utah.
They differentiated:

Standard-of-Comparison Prime, which produces greatest contrast by citing an extreme illustration.
This strategy relies on perception and requires less cognitive effort.

-Set–Reset Prime, which typically uses trait descriptions, and produces greatest contrast when moderate rather than extreme.
This approach requires significant mental effort.

Ryan P. Brown

Ryan P. Brown

Even men are not immune to stereotype threat.
Male participants “choked” when performing after a positive male stereotype was activated by University of Oklahoma’s Ryan P. Brown and Robert A. Josephs of University of Texas. 
Similar to women’s performance decrements in response to negative stereotype threat, Brown and Josephs hypothesized that men’s performance was undermined by “pressure to live up to the standard.”

Robert A Josephs

Robert A Josephs

People can manage stereotype threat by explicitly referring to the stereotype to activate reactance.
In addition, it’s valuable to refer to a shared identity that transcends the stigmatized group identity.
Eliciting contrast effects through examples and trait descriptions is another way to diminish the impact of stereotype threat of performance.

  • How do you manage stereotype threat for yourself and others?
  • How effective have you found activating stereotype reactance?

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