Female Leadership in Tech: Is decision-making truly rational?

The rise and fall of Female Leadership in Tech

An analysis conducted throughout 2020 by Deloitte Insights predicted that large global technology firms will reach an average of nearly 33% overall female representation in their workforces in 2022, and noted that the fastest advances are being made in leadership positions. The analysis’s forecast was that one in four leadership roles at large global tech firms will be held by women in 2022.

The above predictions were accurate, and women in tech did indeed gain ground in the workforce, but the rising trend did not seem to continue in the following year as well. While the tech industry has never really been considered female-friendly, in 2023 a downward trend of women in tech is highlighted, and is currently at 28%, according to DDI’s 2023 Global Leadership Forecast. And although a thorough report, it does not accurately represent the entirety of the industry. The percentage is probably much lower if taking into account smaller tech companies around the world. Tacy Byham, the chief executive officer of DDI considers that the drop is not necessarily surprising, with women predominantly taking on the burden of pandemic-related issues around caregiving responsibilities, on top of the insular nature of the industry, which often translates into inequity, stress, and burnout in the workplace.

What research says about the benefits of Female Leadership

Research suggests that diverse teams perform better and are more innovative, but there’s another advantage to diverse workforces and executive teams - it’s good for business. With $31.8 trillion in annual consumer spending being effectively controlled by women, the necessity for gender-balanced leadership is even more clear. Let’s explore together some of the positive aspects that come with female leadership:

Different perspective and different approach to problem-solving.

Diversity in leadership creates room for extended problem-solving resources derived from a variety of lived experiences, both personal and professional. Taking into account multiple insights leads to better-shaped opinions, ideas, and decisions that can cover a broader demographic. It also represents an advantage by enriching the capacity of connecting with employees, current or prospective clients, as well as investors.

Furthermore, studies show that team collaboration is improved by the presence of women in the group, due to their greater ability in conversational turn-taking. This enables group members to be responsive to one another and to use their members' knowledge and skills in the best way. Needless to say, a higher degree of cooperation will enhance the complexity of the group’s perspective and thus, of the proposed solutions for a particular issue.

Increased revenue.

A McKinsey (2020) report revealed a strong relationship between diversity in executive teams and financial outperformance. A substantial differential likelihood of outperformance of 48% separates the most (more than 30% women executives) from the least (less than 10% women executives) gender-diverse companies.

Another piece of research (Noland, Moran & Kotschwar, 2016) conducted on 22,000 firms globally, found that gender diversity is profitable for companies. Firms that went from no female corporate leadership to a 30% female share experienced a 1% gain in net margin, meaning 15% increase in profitability for a typical firm. Maybe the most intriguing finding of the research was that female leaders were not better at their jobs than their male colleagues, but the component of gender diversity at a corporate level is what started a chain reaction in the company - from increased skill diversity in upper management, to less gender discrimination at all levels, to an improved ability to recruit top talent.

When asked about the benefits of women in leadership position, most respondents are keen to talk about psychological safety, or their ability to relate to others, which still stand as valid, but with all the data supporting both gender and ethnic diversity, it is very telling that most don’t even think about women’s impact on the company’s revenue an aspect to consider. This points to the need of reframing how we understand the concept of leadership outside language-rooted stereotypes. We are used to associating certain words such as “revenue”, “rationality”, and “certainty” with men while associating “compassion”, “understanding”, and “safety” with women. Defining leadership in terms of processes, attitudes, abilities, and results is the first step to having a sturdy framework when evaluating the efficiency of a leader, regardless of their background.

Retention and development.

Representation in tech through successful retention and development of women also plays a role in hiring additional female talent and retaining new joiners, and makes a company’s opportunities more attractive to other women. Employers can support female talent by offering the opportunity for upward mobility and establishing mentorship programs that support advancements to leadership positions. However, in order to increase the number of female employees it is necessary to prioritize diversifying the pipeline - which is indeed a great effort, considering the STEM gap.

Psychological safety at work.

One study (Joshi & Diekman, 2022) showed that the mere presence of women in leadership roles leads both male and female employees to anticipate fairer treatment in their organization.

The Internal Barriers to Becoming a Woman Leader

As highlighted in a thorough article posted by Harvard Business Review, “People become leaders by internalizing a leadership identity and developing a sense of purpose”. While gender bias still exists, the path to becoming a leader involves more for a woman than having the right hard or soft skills. It takes an internal identity shift, a process of embodying the potential within, in an industry where women are underrepresented still. As the article reinforces, simply encouraging women to strive for leadership roles and to proactively seek better opportunities is redundant. Policies and practices in the company need to be addressed as well and the group-level perception of what makes a leader needs to match or adjust according to the new leaders.

“Integrating leadership into one’s core identity is particularly challenging for women, who must establish credibility in a culture that is deeply conflicted about whether, when, and how they should exercise authority.”

We would like to use the above quote from the mentioned article to introduce another theme that derives from this identity issue:

Decision-making.

Leadership, authority, and decision-making are concepts that go hand in hand, and one common point is that we tend to associate them with male figures. It may be a matter of growing up with more authoritarian male role models, but linguistics also plays a role in it. Studies show that language shapes the way we internalize the meaning and attributes of different concepts. For example, the word “bridge” is a feminine noun in German, thus German-speaking persons tend to describe it with traditionally feminine describing adjectives such as “beautiful” or “elegant”. However, the same noun, “bridge”, is masculine in Spanish, and Spanish speakers use words such as “big” or “sturdy” to describe it. Similarly, people associate a series of characteristics with women and another one with men and stick to their internalized perception of what the feminine and the masculine could bring to the table even in contexts where gender is not a deriving factor to assess efficiency - like in the case of leadership.

In an analysis of 81,000 performance evaluations of leaders (Smith et al., 2018), the authors found that people used more words to describe women in negative ways than in positive ones. Take a look at the table below extracted from the article and notice how words such as “analytical” and “competent” are the most used for men, and do not appear on the women’s side. If one were to decide their leader based on the adjectives below they would probably choose an analytical one over a compassionate one.

Picture Source: The Different Words We Use to Describe Male and Female Leaders, David G. Smith et al., 2018, HBR.ORG

Going back to decision-making - how does the above phenomenon affect people’s views about women’s capacity to make good decisions?

Because women are not associated with words such as “analytical” or “rational”, their decision-making process is perceived accordingly, meaning irrational. While the scope of this article is not to prove if women are or are not rational, let’s explore the following idea:

Can decision-making actually be rational?

We have all heard at least once the wise advice to make “rational” decisions. However, research shows this practice could be counterproductive. As much as we would like to think otherwise, rational decisions are not based on only objective factors and devoid of any emotion. In the process of decision-making, taking into account experience, whether consciously or subconsciously, is unavoidable. Psychology tells us that in any decision there is a series of unperceived factors at play, such as our mood that can shape cognitive distortions, the expected positive feedback from others, the fear of non-conformity to the group, the reluctance to or the excitement for the unknown, and so on. In short, even “rational decisions” are a sum of some good ol’ pros and cons, plus a bunch of other irrational factors we are not even conscious about.

From a utilitarian point of view, rationality should maximize overall utility, and feelings are essential for this. Studies have shown that encouraging people to be rational is making them more likely to choose options that result in less happiness and other benefits, and thus these decisions are less rational in a utility-maximizing sense. (Li & Hsee, 2019)

So why are then women discredited for their decision-making abilities based on the argument that they are less rational than men?

Decisions, however well-thought, are still question marks. The future remains unpredictable, a constant change governed by unknown rules. Yes, we can try to make predictions based on data already gathered, but can anybody really guarantee a 100% chance of success? Real-life experiences are imprinted by emotions, dynamics, numbers, and lack thereof. This is why no decision is truly rational, but more so a sweet spot between intuition, rationality, utility, and commitment.

Model of inclusive decision making - Prosocial

The Prosocial model (Atkins, Wilson & Hayes, 2019) proposes a process that helps groups produce a more powerfully shared identity, stronger participation in purpose, better relationships, and improved performance. Inclusive-decision making engages all members of a group, which in turn creates a vitalized attitude toward the outcome and an advanced interest in the purpose of the group and the group itself. This process is, of course, context-dependent, seeking a beneficial balance between autocracy and whole-group consensus.

From a subjective point of view, we would argue that this is more of a decision-making process that women tend to engage in. The utopic rationality that defines decision-making in the corporate world usually works by the principle of command-and-control, meaning that the decisional power is in the hands of the leader(s). But, regardless of the gender of the leaders, what does it mean for a company to be Prosocial?...

… This remains to be covered in our next article :)