Women Excel at Business

In this week's column, we look at some surprising financial data, including research showing female leadership might improve the profitability of American banks.

• Christiane Lagarde, the Managing Director of the International Monetary Fund said of the 2008 banking crisis, “If Lehman Brothers were Lehman Sisters, the economic crisis would have looked quite different.” And there is good research to back up her opinion. A massive study of 22,000 companies in 91 countries by the Peterson Institute found that an increase in the share of female managers from zero to 30% was associated with a 15% increase in profitability. On the banking side, in a review of 6,000 American banks, the ones led by female CEOs average 6% more equity capital and are thus less likely to fail.

• In a related report, 75% of people surveyed believe that working with their boss is the worst and most stressful part of their job. What they did not report was what percent were women bosses and vice versa.

• Raises are usually seen as one ameliorating factor in a tough work environment. Interestingly, a study from the University of Cologne found that the size of a raise is not as motivating as the frequency of raise issuance. Psychologically, people quickly get used to their new pay level and their motivation may, even subconsciously, sag. The research showed the biggest gain in productivity from a raise was in the afternoon when energy and attention normally flag. The objection to an even revenue-neutral increased frequency of raises is the alleged increase in administrative hassle.

• Another surprising study of psychology economics reported in New York Magazine is that when stores increase the length of time available to make a return, the amount of returns drops. Perhaps the longer you have something, the more it feels like you “own” it. And an open-ended return policy makes such an effort seem less urgent.

• New York also reported a study that showed that the average employee spends 34 minutes per day not working. Interestingly, when researchers looked at those claiming not to slack off at all, the figure rose to 50 minutes per day. Shades of Wally in the Dilbert comic strip.

• The San Francisco Chronicle reported that domestic gun violence just since 1970 has led to more deaths than in all of the US’ wars going back to the American Revolution. What is wrong with us?

• Here is an interesting finding for all of you love-lorn singles. The Federal Reserve, of all sources, looked at 12 million people over 15 years and found that higher credit scores correlated with longer, more committed relationships. Similar scores for each separate spouse had an even stronger effect. The theory is that credit scores reveal trust and responsibility levels. So now, when you meet someone, not only do you have to give DNA and blood samples, but you also have to share your FICO score as well. Ah, romance.