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The right mix gender diversity

Opstrup, N., & Villadsen, A. R. (March 01, 2015). The Right Mix? Gender Diversity in Top Management Teams and Financial Performance. Public Administration Review, 75, 2, 291-301.

In this quantitative article, the researchers studied gender diversity and top management team. The purpose of the research was to find the relationship between top management team gender diversity and financial performance in a public sector organization. The researchers conducted a thorough literature review in which the following subject categories were discussed; gender diversity in top management team and top management gender diversity and financial performance. These categories encompassed prior research studies on the moderating role of management.

From the literature review, the researcher developed hypotheses. The first hypothesis stated that “Higher Top Management Team diversity is closely related to financial performance.” Page 294.

The second hypothesis stated that “The positive relationship between top management team gender diversity and financial performance is moderated by management structure, such that the relationship is stronger when top management team integration and discretion is higher.” Page 294.

The population studied encompassed the Danish municipalities. The ninety eight municipalities have the same task and are subject to same regulations. Top management consists of career bureaucrats promoted from ranks of civil servants. The method used was analyzing the yearly data of Danish municipalities from the 2008 to 2012.

The result of the study did not confirm hypothesis one but confirmed the second hypothesis since it showed relationship between the top management team gender diversity and financial performance with administrative structure of the organization.

The research had two limitations; the first one is that it only focused on top management team diversity and financial performance instead of looking at the other finer details and the second limitation is that it considered the organization while looking at team diversity instead of considering teams as units of analysis.

Impact of racial and gender diversity

Richard, O. C., Kirby, S. L., & Chadwick, K. (July 01, 2013). The impact of racial and gender diversity in management on financial performance: how participative strategy making features can unleash a diversity advantage. The International Journal of Human Resource Management, 24, 13, 2571-2582.

In this quantitative article, the researcher studied the impact of racial and gender diversity in management on financial performance. The purpose of the research was to determine how participative strategy making features can unleash a diversity advantage. The researcher conducted a thorough literature review in which racial and gender diversity in management as knowledge based resource and the role of participative strategic making were studied. The categories encompassed prior research study on inclusiveness, gender diversity in management and racial diversity in management.

From the literature review, the researchers developed two hypotheses; the first one tested was “Participative strategy making positively moderates racial diversity in management to firm performance relationship such that racial diversity is more positively related to performance when participative strategy making is high rather than low.” Page 2574.

The second hypothesis tested was “participative strategic making positively moderates gender diversity in management to firm performance relationship such that gender diversity is more positively related to performance when participative strategy making is strong rather than low.” Page 2574.

The population studied encompassed banking institutions with five hundred million dollars in their assets. Around two thousand banks were emailed the participative strategic making questions and only five hundred and thirty five replied out of which one hundred and sixty eight provided the information that was needed. Other than using the racial and gender diversity in each bank management composition, the researchers also considered the size of the banks. Return on assets represented the measure of performance and the research confirmed the two hypotheses.

The limitation of the research is that it failed to separately assess the diversity in the three different levels of management, which is the top management, the middle and the lowest management.

Board gender diversity and impact on financial management

Chapple, L., & Humphrey, J. E. (July 09, 2013). Does Board Gender Diversity Have a Financial Impact? Evidence Using Stock Portfolio Performance. Journal of Business Ethics, 2.)

In this qualitative article, the researcher studied the impact that board gender diversity has on financial performance. The purpose of the research was to get evidence using stock portfolio performance. The researcher conducted a thorough literature review in which he studied gender diversity, corporate governance and financial performance. The categories encompassed prior study on portfolio returns for diverse boards.

From the literature review, the researcher developed a paradigm stating that companies should develop a policy for gender diversity, secondly, companies should disclose in each annual report the measurable objectives that can be taken to achieve gender diversity and lastly, the companies should disclose in their annual report the proportion of women employees in the whole organization, those in top management and those who are on the board.

The population studied encompassed Australian market operator. In France, women must hold twenty percent of the board positions by 2014 and forty percent by 2017. In Italy, women must consists of thirty three percent of the board positions by 2015 while in Finland, companies have been required to have at least one woman on board since 2010.

A study into Westfarmers limited, a company in Australia showed that companies are already complying with the requirements which needs them to have policies on gender diversity, present in annual report ways that can be used to achieve gender diversity and also present the population of the total number of female employees in the organization as well as those in the executive positions and the ones on board.

The limitation of the research is that instead of proving that more than one woman in a board results in better performance, it showed that having more than one woman in a board results into lower and delayed performance.

Conclusion

Top management of organizations consists of individuals who lead in making decisions and giving guidelines to the organization on the crucial steps that the organization needs to take to realize its goals. Diversity on both gender and racial mixes is necessary for effective management since it provides chance and space for diverse thoughts and decisions given that it consists of individuals from different cultural backgrounds. Taking for instance the case of financial managements, female chief finance officers are believed to be more conservative in the way they operate hence are likely to make better finance managers. On the other hand, male chief finance officers are believed to be easy to operate with, hence they are the best to operate with as far as projects are concerned since they easily offer their support.

Participative strategy making positively affects the relationship between both the racial and gender diversity in management and performance of the firm. For the organizations to benefit from diversity there is need to stress on the importance inclusiveness so that creativity enhanced by the diversity may be of benefit to the organization. The top managements that do not make use of gender diversity and racial diversities do not really enjoy better performance in their organizations as compared to those who make use of diversities of gender and racial mixes in their top management.

Most individuals still consider the top managements to belong to the male and not the female generation. Therefore, to ensure that the organizations obey the gender diversity, there should be policy papers on gender diversity so that the organization can own up the whole idea of diversity ion their management system. There should also be a report on the gender performance and the number of women taking part in the top management.