Gender diversity in teams Updated

Greater representation of women may better represent women’s preferences but may not help economic performance

Sciences Po, France

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Elevator pitch

Women's representation on corporate boards, political committees, and other decision-making teams is increasing, this is in part because of legal mandates. Evidence on team dynamics and gender differences in preferences (for example, risk-taking behavior, taste for competition, prosocial behavior) shows how gender composition influences group decision-making and subsequent performance. This works through channels such as investment decisions, internal management, corporate governance, and social responsibility.

The proportion of Fortune 500 board
                        seats held by women is steadily rising

Key findings

Pros

Gender diversity leads to broader representation of preferences.

Diversity policies help promote equal opportunities and make up for past inequities.

Promoting diversity could help break down cultural barriers.

Greater female participation might encourage other women, who will be better prepared.

Cons

The transition to greater diversity has adversely affected performance, at least in the short term, due in part to adjustments in team dynamics.

The short-term decline in performance is often attributed to team members’ skill mismatch and team interactions.

There is evidence that endogenously formed teams are hard to sustain and that they revert to less diversity.

Legislative mandates might be ineffective and counterproductive if committees with a higher share of women are less likely to select female candidates.

Author's main message

The success of policies that promote gender diversity depends on the outcomes being measured and how quickly the policies are implemented. There is evidence of a negative impact on performance in the short term. However, this does not necessarily reflect the potential positive long-term influence on gender equality and better representation of women's preferences. The adverse results are explained by changes in the decision-making process and team dynamics, and in some cases by the inexperience of (new) female team members. As gender diversity becomes the norm, these problems may fade.

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