Women in business - New perspectives on risk and reward

Women Opportunityin business RiskNew perspectives on risk and reward LeadershipMarch 2017

“Many of today’s companies are still run by male-only teams and they are in danger of myopia when it comes to risk.” Francesca Lagerberg Global leader for tax services and sponsor of women in leadership Grant Thornton

Contents 5 6Foreword from Francesca Lagerberg 8Executive summary 13Diversity in leadership 20Gender and risk 23RecommendationsHow Grant Thornton can help

4 Women in business

Foreword fromFrancesca LagerbergIn 2017, leadership teams are grappling with newconditions of global risk. With few predicting thehappenings of recent years, businesses aroundthe world are striving to prepare for the furtherpossibility of inconceivable events.But businesses should do more than However, despite evidence that links The reasons for this lack of diversity arereact to the challenges of our time. As diversity and improved business many and varied, and they depend onthey respond to concrete realities, they performance, the dial on gender diversity the culture of individual businessesmust also consider opportunities that in senior leadership is shifting at a and the broader culture in which they sit.promote long-term growth. The need to painfully slow rate. Worryingly, this year we have detectedgrasp these chances has arguably a sense that the issue of gender diversitynever been greater. Research from the Grant Thornton is beginning to lose its bite. International Business Report revealsWe have surveyed the role of women in that, globally, the percentage of women We simply cannot let this happen whilebusiness for the last 13 years and, in this in senior management teams has risen progress is still marginal. Companiesyear’s report, we look at the issue of risk just one percent in the last year – from today need to be more productive, moreand reward. We find that men and women 24% in 2016 to 25% in 2017. This innovative and in many ways more opensee risk and opportunity in different ways, contributes to a six percent shift in the if they are to thrive.and that they act differently as a result. 13 years since our research began.Recognise, celebrate and seize upon Unfortunately, at the same time, the It is why in this year’s report we providethese differences, and companies stand number of organisations with no female a number of recommendations on howa better chance of seeing the world as it participation at a senior level has risen to increase the number of women inreally is and as it could become. Fail to from 33% in 2016 to 34% in 2017. This senior leadership positions for thecreate diverse teams, and companies is a serious weakness. benefit of businesses as a whole, andbecome susceptible to ‘groupthink’ – the risk strategies in particular. Businessesphenomenon where by engaging only Companies today need to must heed these lessons: many of today’swith those who share a similar view of the be more productive, more companies are still run by male-onlyworld, we muffle other perspectives and innovative and in many ways teams and they are in danger of myopiado not see change coming. more open if they are to thrive. when it comes to risk. As one of our contributors said: “The real risk to business is not getting women involved.” Francesca Lagerberg Global leader for tax services and sponsor of women in leadership Grant Thornton New perspectives on risk and reward 5

Executive summaryGlobally, one in four senior roles is now held by a woman.This is a slight increase from last year. But the proportionof businesses with no women in senior leadershippositions has also risen. Once again, developingcountries are leading the charge on diversity, withmany major economies continuing to lag behind. 24% 24% of senior roles 25% 2 33% 33% held by women of s Proportion of man of senior roles of businesses senior roles held are w held by women have no by women of women in of businesses senior 34% have no women in management Percentage of senior businesses with no Source: Grant Thornton IBR 2016 women in senior management leadership1 20% 1:15of senior managers are women 1:15 20 of se man are w6 Women in business

Figure 1: Proportion of women in senior leadership30%25%20%15%10% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Grant Thornton IBR 2016Diversity in leadership Gender and riskDiversity is key to business success. Risk management is the process ofWith a mixture of men and women at identifying, evaluating and managingthe helm, companies are better prepared uncertainty. It is vital for business success.for all eventualities. And yet, in 2017 the Men and women perceive and respond toneedle has barely shifted. Each year, risk in different ways, contrasting in howwe seek to add new insights and they balance speed and decisiveness withrecommendations that will further careful consideration. Brought together,our understanding of and solutions these strengths facilitate effective riskfor greater gender diversity. strategies for the sustainable growth of dynamic businesses.Recommendations Recommendations1 Take action to speak up for diversity and embed change throughout the 1 Build mixed gender teams for organisation, not just at the top effective risk management2 Encourage diverse leadership styles 2 Provide women with leadership and role models opportunities that make them familiar with risk3 Invest in sponsorship programmes, not just mentoring 3 Create a culture where taking calculated risks is part of successful business strategy, not something to avoid 4 Use neutral terms like ‘risk aware’ rather than ‘risk averse’ or ‘risk loving’ to avoid gender stereotyping 5 Include opportunities in the company risk register 6 Engage in a more collaborative risk management process 1 Senior leadership refers to chief executive officers, managing directors, chairmen and other senior decision-makers New perspectives on risk and reward 7

Diversityin leadershipThis year businesses arrived at a milestone as the percentageof senior leadership roles held by women reached 25% for thefirst time since our survey began. But although firms may bedoing better, change is slow and uneven.Progress and procrastination and we need constantly to update our on behaviour: “Once people have done understanding of the gender barriers to a certain amount, they feel they’ve doneThe proportion of senior leadership roles leadership and the solutions for greater enough and focus on something else.”held by women has moved by just one equality. This year, we pinpoint threepercent in 12 months (see figure 1) - from issues that deserve special attention, Macroeconomic and geopolitical24% in 2016 to 25% in 2017 - and four and add to these an in-depth study of uncertainty isn’t helping. Leaders arepercent in the last five years. Moreover, gender differences when it comes to concerned with reducing costs andthe percentage of businesses with no risk and opportunity. retaining talent, relegating diversity towomen in senior leadership has risen at a nice-to-have rather than a must-have.the same rate - from 33% in 2016 to 34% “From a purely business “I don’t feel there’s been a decrease inin 2017 - with no improvement since 2012. perspective, at least 50% recognising the value of women,” says of the population are female, Lindsay Degouve De Nuncques, “but itDiversity is a commercial imperative.2 and if they’re not working isn’t the priority.”Broaden the diversity of a group and for me, they’re working foryou widen its peripheral vision. Diverse someone else. The question Others recognise that althoughteams benefit from connections to a wider I keep returning to is: how leadership teams may be committed tonetwork, increased legitimacy among do I create an environment gender parity, the middle ranks remainstakeholders and better decision-making.3 that’s attractive to women?” less convinced. Maria Cunha Matos,But despite a growing consensus among managing associate at Linklaters Brazil,business leaders on this issue, the pace Phil Smith explains that “the issue of getting womenof change is painfully slow. Chairman, UK & Ireland into leadership roles is not about men Cisco not working well with women; in myThis is not to say that all efforts are failing. experience, it’s partly related to resistanceEastern Europe leads the charge in terms A creeping complacency to having more competition for jobs.”of the percentage of senior roles held bywomen, while the MINT economies A number of leaders are beginning to Clearly the conversation suffers when(Mexico, Indonesia, Nigeria and Turkey) worry about ‘diversity fatigue’. Lindsay it takes place within too narrow a frame.have seen the most improvement. But Degouve De Nuncques, head of Middle Firms should be aware of the groupthinkprogress in these countries has been East at ACCA, fears that the novelty is effect. As Greg Keith, chief executivetempered by the static performance of already wearing off: “Pushing forward officer at Grant Thornton Australia, warns:developed economies in Asia Pacific, the the agenda of getting women in “The conversations being had are oftenG7 countries and North America, and a leadership positions has lost some of its with those already converted. That’sdecline in Southern Europe (see figure 2). shine. There’s almost a bit of a plateau.” the issue. Leaders must have these Phil Smith, chairman, UK & Ireland, at discussions at all levels of theReams of research have sought to Cisco, describes the effect this can have organisation, and outside of it too.”uncover the subtle and complex causeslimiting women’s progress to the top. Butdiversity is not an issue that stands still,2 Women in business: The value of diversity – Grant Thornton (2015) 3 Women as a Valuable Asset – McKinsey & Company (2012)8 Women in business

Figure 2: Proportion of senior management roles held by women 2016 201727% 29% 26% 29% 13% 13% 34% 36% 26% 29% 24% 26% 24% 26% 22% 22% 18% 20% 23% 23% 24% 28% 28% 27%Africa Emerging Developed ASEAN BRIC EU Eurozone G7 Latin North MINT Southern APAC APAC America America EuropeSource: Grant Thornton IBR 2016Pamela Harless, chief people and culture for smaller start-ups or setting up on This is exacerbated by another caricatureofficer at Grant Thornton US, believes the their own. Choice is good but larger of a leader who, according to Pamelaissue has lost some of its heart. “There’s firms cannot afford to miss out on Harless, “is stereotypically dominant andno shortage of data on the rational female talent. assertive.” Businesses need to encouragebusiness case,” she says, “but leaders a belief that no single behavioural style isare far more effective when they lead Childcare support and flexible or best – controlling or analysing, supportingthe conversation from a place of real home working are important factors or promoting. As Pamela Harless says,passion.” Pamela calls for courageous in attracting and retaining women in “it’s the combination of all those stylesand committed leaders to set an example business.4 But Sacha Romanovitch that leads to better decisions.”by holding themselves accountable for describes a much deeper need:the extent to which they create an “I think women are looking for a more Individuals need permission to ‘bringinclusive environment. fundamental shift in what leadership their whole selves to work’. In so doing, looks like and what is expected of a company creates a more diverse setGreg Keith adds “the issue of gender people in senior leadership positions.” of role models, allowing individuals todiversity has to be led strongly and She describes the prevalence of the design an authentic leadership stylepassionately by senior leaders.’’ ‘hero model’, where the individual must that is in tune with their natural selves.5Though formal efforts – such as diversity be perfect and the job all-consumingprogrammes, quotas and resource and this needs to change. Other less Lack of supportgroups – may help to accelerate self-sacrificing forms of leadershipbehaviour change, such rules cannot are overlooked. A growing area of study also exploreswork unless change is led from the top. the tendency for women to be mentored “Women are notnaturally and not sponsored.6 Mentoring involvesOutdated leadership models comfortable with self- support and advice offered by an promotion, so having other employee to another employee a levelSacha Romanovitch, chief executive leaders within the business or more below them in the companyofficer at Grant Thornton UK, fears that promote your skill and structure. It should be a private,established notions of leadership are expertise is helpful.” developmental relationship betweenletting women down: “The issue is that two people. A sponsor, on the otherwhat women see of leadership isn’t Maria Cunha Matos hand, advocates for employees belowalways that attractive.’’ More women are Managing associate them at the decision-making table whenfinding other interesting ways to achieve Linklaters Brazil it comes to staffing high-profile projectsthe balance they want – like working and promotions. They have the power to effect change on women’s behalf.7 4 Women in business: Turning promise into practice – Grant Thornton (2016) 5 Ibid 6 Why Men Still Get More Promotions Than Women – Harvard Business Review (2010) 7 Women in business: The path to leadership – Grant Thornton (2015) New perspectives on risk and reward 9

Diversity in leadership regional spotlightCultural differences play an important part in helping “Patriarchal systems are still very strong in ato explain the variation in performance around the significant number of countries. The pressuresworld, with emerging and developing regions continuing of tradition often do not allow women toto outperform developed regions when it comes to diversity develop in their profession, and sometimesin leadership (see figure 2). even limit their access.” Elena Proskurnya Managing partner FBK Grant Thornton RussiaFigure 3: Top and bottom countries survey by Grant Thornton’s IBR research programme*Proportion senior management team femaleRussia: 47% Poland: 40% Japan: 7% Germany: 18%Indonesia: 46% Philippines: 40% Argentina: 15% Brazil: 19%Estonia: 40% Lithuania: 37% India: 17% United Kingdom: 19% Source: Grant Thornton IBR 2016*refer to the methodology section on page 23 AfricaHigh versus low performers 29% of senior roles are held by women; 18% of businesses have no women in senior roles.Eastern Europe38% of senior roles are held by women; Botswana has improved significantly in terms of the percentage9% of businesses have no women in senior roles. of senior roles held by women – up eight percent from 2016 at 31% – and has also seen a six percent reduction in theEastern Europe continues to top the rankings (see figure 3), percentage of businesses with no women in senior leadership.with Russia in the lead as the only country in which every Nigeria and South Africa have both seen improvement, withbusiness has a woman on its senior leadership team. In Poland, the percentage of businesses with no women in senior rolesthe proportion of senior roles held by women has improved falling from 15% to 9% in Nigeria, and the proportion of femaleby six percent to 40%. The region owes some of its strong leaders increasing from 23% to 28% in South Africa.performance to the legacy of communist principles whichhave placed women as equals for generations.10 Women in business

Emerging APAC Latin America29% of senior roles are held by women; 20% of senior roles are held by women;26% of businesses have no women in senior roles. 48% of businesses have no women in senior roles.China remains above the global average, with a spot in the In Mexico, the percentage of businesses with no women in seniortop ten economies worldwide at 31% of senior roles held by leadership has fallen by 14%. But Brazil has seen no change overwomen. Rose Zhou, acting managing partner Shanghai, at the past year. Argentina has taken a step backwards, with theGrant Thornton China, comments that the strong performance proportion of women in senior roles falling from 18% to 15%is partly a product of the one-child policy: “The first generation and a record 53% of businesses with no women at a leadershipto emerge from this policy is now in its professional prime. As the level. Arnaldo Hasenclever, managing partner at Grant Thorntononly child in the family, these individuals have a responsibility to Argentina, comments: “In Argentina, we have branches ofmake something of their career – regardless of gender.” India, foreign companies where there are women in leading positionshowever, despite a one percent improvement to 17%, continues but there are a lot of family-owned companies which areto rank in the bottom ten countries. typically led by male family members.”European Union Developed APAC26% of senior roles are held by women; 13% of senior roles are held by women;36% of businesses have no women in senior roles. 54% of businesses have no women in senior roles.Following a slight deterioration last year, both measures have New Zealand ranks in the ten worst performing countries,recovered to 2015 levels across the region. France and Spain with only 20% of leadership positions held by women andlead in terms of the proportion of women in senior roles at 31% 37% of businesses with male-only executive teams. Australiaand 27% respectively, with notable improvement in Ireland – fares better, with 23% of senior roles held by women and 20%up seven percent to 26%. Despite a three percent uptick on of businesses with no women in senior positions, but it has seenlast year, Germany trails behind with 18% of senior roles held by no movement on last year.women. The UK has failed to repeat the progress made in recentyears, with the proportion of women in senior roles falling bytwo percent to 19%, and the percentage of businesses withoutwomen in top positions increasing by five percent to 41%.North America23% of senior roles are held by women;31% of businesses have no women in senior roles.Canada has the tenth lowest percentage of women in seniorroles at 23% – a three percent fall over the year. The US hasseen no movement in the past year, with the proportion ofsenior roles held by women still at 23% and the percentageof businesses without women in top positions remaining at 31%. New perspectives on risk and reward 11

A rise in female CEOs sparks hope for the future It is still most common for senior women to be in supporting roles, particularly as human resources directors or chief financial officers. However, it is promising to see a three per cent rise over the last year in the number of women (see figure 4) taking the top C-suite position of chief executive officer, now at 12%. Francesca Lagerberg, global leader for tax services at Grant Thornton International Ltd, comments: “This gives a spark of hope that there is some change coming through.” There is a recognition that seismic change takes time and female talent needs to be encouraged throughout the ranks. Companies will find it hard to suddenly find women suitable for those senior positions, acknowledges Francesca Lagerberg. But, she says, “we must build for the future now. The thought of these kind of statistics still being relevant in another decade is a disaster.” “Our efforts include looking at our succession plan and making sure that there are women ready to go into every senior role.” Emily Cox Director of public affairs Virgin Money Figure 4: Senior management roles held by women 2017 2016 2015 23% 19% 12% 9% 8% 8% 6% HR CFO CEO COO CMO Corporate Sales Director Controller Director 23% 21% 9% 8% 11% 10% 8% HR CFO CEO COO CMO Corporate Sales Director Controller Director 9% 27% 18% 9% 12% 14% 10% COO HR CFO CEO CMO Corporate Sales Director Controller Director Source: Grant Thornton IBR 201612 Women in business

Gender and riskResearch shows that individuals are over-confidentabout the accuracy of their forecasts and risk assessments,as well as far too narrow in considering the range ofoutcomes that are possible.8 It’s a timely point.Businesses face every new year with uncertainty. But the Despite now knowing the results of the UK’s EU referendumoutlook for 2016 was particularly hard to predict, with big and the US presidential election, continued unknowns aboutpolitical events keeping everyone in a state of suspense the pace, breadth and scale of these changes could weigh onfor most of the year. economies and firms around the world for some time to come.“It’s quite simple: diversity of thinking, Many say that uncertainty is pervasive and has become thediversity of experience and diversity of ‘new norm’. As a consequence, businesses need effectiveknowledge all help to expand our views leaderships teams equipped to assess the risks and opportunitieson risks and opportunities.” associated with change, and then develop and implement inclusive strategies in response. We set out to explore wherePaul Badrick there are gender differences and how firms can harnessChief executive officer these differences for more effective risk management.Grant Thornton JohannesburgRisk is:Business criticalRisk taking has statistically and economically significant effects on corporate growth and earnings.9 Companies that are both‘risk resilient’ (able to mitigate risk events) and ‘risk agile’ (able to more quickly meet new opportunities) will find long-term success.10Male-dominatedA career in risk management has traditionally required a strong technical foundation. Graduates with a background in such subjectstend to be men. But outside a specific career in risk management, all senior leaders must invest in (and be accountable for) riskmanagement programmes. Certain careers expose you to risk more than others, such as the financial industry. This, too, isa sector traditionally occupied by more men than women.11StereotypedMedia reporting on business is full of common stereotypes about gender and risk. Academic literature also reveals a strong linkbetween risk-taking and masculinity, which further feeds popular notions that men are risk-seeking and women are risk-averse.The media at the time of the financial crash blamed a buccaneering business culture, reckless and overwhelming male. Someeven claimed that if women had been in control, the collapse could have been prevented.12Under-researchedMedia stories may serve as a useful wake-up call on diversity in business, but do they give an accurate representation of women’sstrengths and weaknesses compared to those of men? Academic literature is rich with studies on gender differences regarding riskperception, but speaks comparatively little about how men and women manage risk in a business context.8 Managing Risks: A New Framework – Harvard Business Review (2012) 9 Risk Taking and Firm Growth – Peng (2015) 10 Risk in Review: Going the Distance – PWC (2016) 11 Women in Financial Services – Oliver Wyman (2016) 12 Lagarde: What If It Had Been Lehman Sisters? – New York Times (2010) New perspectives on risk and reward 13

Women see risk feelings of empathy and honesty in “This is not adifferently to men women. In general, men are considered fix-the-woman issue.” to be more competitive, risk-lovingWe asked 5,500 male and female and confident.16 Pamela Harlessbusiness leaders to indicate on a scale Chief people and culture officerof 1–5 the amount of risk posed by Given that women are perceived to be Grant Thornton USdifferent aspects of organisational and less likely to engage in risky behaviour,commercial life. Figure 5 shows that they we expected our findings to show that So, despite the common perception thatrank risk fairly similarly. Economic change women see more risk than men. And yet women are more risk averse than men,tops the list for both sexes. This is followed Figure 5 shows the reverse. In eight out our findings dissuade a black and whiteby competitor activity, political change of ten categories, men see higher risk analysis. Emily Cox characterises menand legal/regulatory change. Media than women. The exceptions are security and women as “equally good and equallyactivity, social change, technological and, to a lesser extent, competitor activity. bad at managing risk”. Pamela Harlesschange and environmental change are agrees that “although it may take longerseen as areas of lower risk. On security, Francesca Lagerberg for women to come to a conclusion about suggests that “an anthropologist might whether or not something constitutesAcademic literature reveals that women see this as women’s instinct to look a risk, they are equally open to takingare more pessimistic about relative gains after the home.” Meanwhile, Rose Zhou such risks.” Indeed, we know fromthan men.13 They also reportedly attributes women’s heightened focus numerous studies that having womenexperience emotion more intensely.14 on competitor activity to a sensitivity on the board does not lead to moreTogether these factors are said to to what is happening around them. risk-averse descion-making. A study ofdampen women’s propensity for risky She says: “Men focus on what they US firms from 1996 to 2010 shows that achoices.15 The only domain in which they themselves are doing, while women board with a higher proportion of femaleare perceived to show greater risk-taking also focus on what others are doing.” directors is no more nor less risk-takingtendencies is regarding social risk, where than a more male-dominated board.17higher social sensitivity encourages Risk aware, diligent, detail-driven – these were some of the preferred terms for theFigure 5: Gender differences in perceptions of risk qualities that women bring among our interviewees. Pamela Harless explainsBusiness impact % women voting high risk % men voting high risk that “women tend to operate more inPolitical change 30% 34% the grey than their male counterparts”.Economic change 40% 45% By this she means that women do notSocial change 14% 20% rush to label a situation as a risk. TheyTechnological change 17% 22% consider context and nuance to fullyLegal/Regulatory change 30% 32% understand the implications first. PhilEnvironmental change 18% 19% Smith agrees that “women steer throughSecurity 26% 23% a broader sense of reality, whereas menPersonnel 25% 30% have a simpler acceptance’’.Competitor activity 36% 35%Media activity 13% 14%Total 249% 274%Source: Grant Thornton IBR 201613 Analyzing and Managing Risks: On The Importance of Gender Differences in Risk Attitudes – Schubert (2006) 14 Risk as Feelings – Hsee, Loewenstein, Weber and Welch (2001)15 Gender Differences in Risk Assessment: Why Do Women Take Fewer Risks Than Men? – Glaser, Harries and Jenkins (2006)16 Men, Women and Risk Aversion: Experimental Evidence – Eckel and Grossman (2008)14 Women in business

“ While women may be taking as many risks, they do so in areas that aren’t as visible.”Out with old labels Pamela HarlessThe impact of biases is important in this context. We all use Chief people and culture officerstereotypes as mental shortcuts to speed up decisions. Intuition Grant Thornton USkicks in and we succumb to unconscious bias to reach closureon an issue.18 This can lead us to focus on the wrong things orfail to seek out relevant information, which results in poordecision making.Characterising women as risk averse leads companiesdown a path with many traps. Greg Keith believes “there’s aneed for businesses to adapt their language right across theorganisation, including around risk … Language often supportsunconscious bias and can impact women in a way that was notintended by the speaker at the time.” As Phil Smith describes:“labels shape our perception but they also determine what wesee. And they’re very often exaggerated or completelyinaccurate.” Gillian Saunders, head of advisory services atGrant Thornton South Africa, wonders if the labels we apply tomen and women are “a left-over part of our primal conditioningto see men as the protectors”.Men suffer from stereotyping, too, as Gillian Saunders explains:“There is a construct of what masculinity should be and manywomen buy into that construct too.” Emily Cox worries thatthis can result in a “focus on and a concentration of alpha-malecharacteristics. That’s why balance is important.’’ However,Pamela Harless says that over time, “I’ve witnessed a growingnumber of men embracing a more collaborative approach.The traditional paradigm of what a male leader looks like isshifting, along with the definition of what it means to be a man.’’Pamela Harless also offers a further reason for our tendency toassociate risk-taking with men: “Men tend to consider if takinga risk will facilitate strategic growth; whereas women focusmore on the wider environment and the impact on people.”She explains that strategic risk is often better publicisedand more highly regarded so “while women may be takingas many risks, they do so in areas that aren’t as visible”.“If you already have women in your leadershipteam, you’re more likely to recognise biasand therefore reduce the risk of it becomingself-perpetuating.”Greg KeithChief executive officerGrant Thornton Australia17 Women on Board: Does Boardroom Gender Diversity Affect Firm Risk? – Gonzalez, Hagendorff and Sila (2016) 18 Women in business: Turning promise into practice – Grant Thornton (2016) New perspectives on risk and reward 15

Women see opportunity It can be easy to forget that risk and Consistent with the risk findings,differently to men opportunity are a duality. Companies Figure 6 shows that women tend to see can lose substantial sums of money and less opportunity than men across variousWe also asked respondents to indicate damage their reputation if they fail to aspects of business life (the only exceptionsthe level of opportunity posed by different identify and avert risk in time. But they are security and personnel). There areaspects of organisational and commercial may also forgo beneficial opportunities theories that this is connected to self-life. Again, Figure 6 shows that men and arising during the course of these efforts. assurance, with many suggesting thatwomen rank opportunity in a similar way. Firms need to consider on both sides a confidence gap separates the sexes.19Economic change tops the list for both of the coin, as Sacha Romanovitch Research shows that while the majoritysexes. Other areas of opportunity to advocates: “In our organisation, the of women consider themselves equallyconsider are competitor activity, personnel conversation focuses on opportunity capable as their co-workers, the majorityand technological change. Again, media as well as risk, and we try to view things of men consider themselves more capableactivity, social change and environmental from an outside perspective.” Francesca than their co-workers.20change appear low down. Lagerberg agrees that risk and opportunity should be part of the same process. She “Men will put themselvesEffective risk management has always suggests that firms could encourage forward for new things,been a hallmark of successful companies. individuals to submit their thoughts even when they’re not reallyBut in today’s more uncertain environment, on both areas before attending a risk qualified. Women tend to waitlarge strategic risks affecting the entire committee, so that when the group until they can tick every box.’’business are ever-evolving and accelerated comes together, the discussion is notby social media, mobile devices and taken over by the most dominant Nicole Vanderbiltbig data. person’s agenda on risk. Vice president, international EtsyFigure 6: Gender differences in perceptions of opportunity Female hesitancy regarding opportunityBusiness impact % women voting high % men voting high is partly a product of culture and opportunity opportunity upbringing. Phil Smith says that “boysPolitical change 20% 22% are taught to be courageous and girlsEconomic change 35% 40% are taught to be cautious.” But leaps intoSocial change 13% 17% the void can be a good thing, as MariaTechnological change 26% 31% Cunha Matos explains: “I see the wayLegal/regulatory change 24% 25% men behave and I’m encouraged byEnvironmental change 17% 18% them to see the opportunities.”Security 23% 19%Personnel 29% 29% Companies need to help individualsCompetitor activity 29% 31% learn to tackle risk and spot opportunities.Media activity 15% 16% Maria Cunha Matos describes the benefits of experience: “As a lawyer I’mTotal 231% 248% engaged in helping people to take on and manage risk, so in this way I’veSource: Grant Thornton IBR 2016 learnt how to deal with it. Experience is essential in building a woman’s confidence. It makes the monster of risk less scary.”19 The Confidence Gap – The Atlantic (2014)20 More Women at The Top: The Impact of Gender Roles and Leadership Style – Eagly (2003)16 Women in business

Women react to riskdifferently to menFigure 7 shows that men and women Research showing that men and women Because women are more exposed,prioritise similar risk management differ in their impulsive base-reaction she says, “if something goes wrong,methods. Globally, both genders provides insight for our findings. Literature we’re really in the spotlight, and soare primarily focused on running the shows that where men are most likely we sometimes pull back a bit.’’company smoothly. Convening a to respond through action, women are All of this affects the speed and naturemeeting of the board and analysing most likely to respond through feeling.21 of decision-making. Men are morethe commercial impact of the risk also Moreover, when confronted with inclined to jump to a yes or no decision,rank in the top three priorities for both uncertainty, women tend to report which facilitates action. But by the samemen and women. fear, whereas men report anger. These measure, men can act too quickly emotions have different effects on our because they feel something has toThe fact that men and women choose behaviour: where fear diminishes the risk happen fast. Here women can providesimilar methods comes as little surprise response, anger increases it. Research checks and balances to encourageto Pamela Harless, who believes that also shows that stress amplifies gender the right risks and opportunities to“by the time you’ve become a seasoned differences in strategies used during risky be pursued, as Phil Smith describes:member of the senior leadership team, decisions. Men allegedly take more risk “Not only do women bring strengthyou’ve learned how to balance different under stress, while women take less risk to the group, but men are deterredways of evaluating and managing risk’’. in the same conditions.22 from getting caught up in quick thinking.”But beyond these similarities, mentlaFfiiokinngeaddluyibnrwetguooss7msi:nsaeTheoynosostwdhlsroetishayskatn.wrtdikiwlitlneoagcmclhytenidnniqiavrueeresergpsfeoaf.norOsrleeursersspondinPtbe golauenttmmouseehrrlntieasutkarHoel afs. o nrlaeasttustrraiebg utro teegessepnthad arettrotd hfifeitfrs eere’esfnfaecnce t, Wsbocwaopeaoymcpymsao.puterLahtisnnuraeednttedtsi“htnaywtedoyyointtDmohhaeaeeaghinvrpoeomrpuleairsvaqotegluiaecrDicer,cehedaoemtruNeitnsuaorktnrinelea-cerdnpqaerdaudinveraeftsolnsyrsis a balanced and complete view beforeRisk management % women % women % men % men taking action.” Nicole Vanderbilt alsotechnique voting low voting high voting low voting high comments that “I have found that likelihood likelihood likelihood likelihood women do extra preparation for aRefer to risk mitigation plan 40% 35% 29% 43% decision, including asking for others’ input, whereas men often just rely onConvene meeting of board 30% 48% 18% 62% themselves to figure it out.”Establish working group 29% 43% 20% 54%Ask the experts 32% 44% 21% 52%Engage comms team 36% 36% 30% 40%Analyse commercial impact 26% 49% 18% 59%Consider new opportunity 29% 41% 20% 49%Release additional funds 37% 32% 28% 41%Alert staff and customers 32% 37% 19% 52%Run company smoothly 26% 54% 13% 66%Total 314% 419% 216% 518%Source: Grant Thornton IBR 2016 21 Inside Her Pretty Little Head – Cunningham and Roberts (2012) 22 Risk and Reward Are Processed Differently in Decisions Made Under Stress – (2012) New perspectives on risk and reward 17

Diverse teams balance strategies of riskOur research has revealed differences in men and women’sapproach to risk and opportunity. Risk-taking role models ofboth genders are important in an increasingly complex world.Risks do not unfold in a predictable way and, especially sincethe financial crisis, regulatory and commercial imperativeshave expanded the risk portfolio.Men may be more inclined to take risks and this can bring highrewards in the form of growth. But big bets can also go wrong.The risk awareness of women might be a significant factor forsuccess. Not only do women tend to moderate extremebehaviour, they can possess a higher social sensitivity andtake time to listen and acknowledge feelings such as dangerand fear before carefully assessing the business risk anddevising a strategic plan.Francesca Lagerberg sums it up: “The old-world order is beingchallenged in a way that it’s never been challenged before,and risk has become a much more significant factor in decision-making. A mixed gender team brings a broader range of input,help and consideration to bear on big, strategic issues. It’s avital part of putting your team in a position of strength.”18 Women in business

Risk and opportunity regional spotlightLatin America and North America go Africa of self-confidence. Pamela Harlessagainst the global trend completely. explains that “there are still some womenHere, not only do women see higher risk Gillian Saunders explains that gender who feel a pressure to conform to theand opportunity than men (see figure 8) diversity came into play with economic male prototype, but I do think it’s a dyingthey are also more likely to act. Women development much later in Africa. paradigm”. This is encouraged by the factin Eastern Europe also see more risk and Corporate structures are newer and were that “girls are told at a very young ageopportunity then men, though they are less sensitive to traditional ways of doing ‘there is nothing you can’t accomplish;less likely to respond to risk. In Africa, business. She says: “In Western Europe, you’re just as good as men,” she says.women see higher risk than their male men were entrenched in the economycounterparts and are more likely to long before women even got the vote. Eastern Europerespond to it, but in keeping with the Women therefore had to contend withglobal trend they see less opportunity. older, systemic factors.” She also Women see both higher risk and higherCultural environment determines to a comments that “African men, whether opportunity than men, which Elenacertain extent how men and women innately or not, feel they need to Proskurnya, managing partner atsee and respond to risk. be the breadwinner, to work, to provide. FBK Grant Thornton Russia, believes And I think this makes them more risk is connected to the region’s strongLatin America averse because they don’t feel free of performance on gender diversity. societal pressure. Some of us women are She says, “I belong to a society whichLeaders in Latin America perceive high breadwinners but the pressure isn’t felt in has made it a priority to maximiselevels of risk in the region (see figure 8). the same way, so we are open to taking every person’s potential for growth.“It is a part of daily life and also a part more risk.” Both women and men are supported toof business,” says Arnaldo Hasenclever. take risks and seize opportunities.” It’sHe also suggests that “if you’re a woman North America why, across Eastern Europe, women arein a leading position in Latin America, taking leading positions even in areasyou’ve already jumped over a lot of Women in North America are more likely that were previously perceived to behurdles to get there.” to respond to risk compared to their “men’s business”. global peers. This is possibly a functionFigure 8: A global comparison between men and women* Women MenAverage % 28% 23% 34% 24% 23% 31% 24% 25%votinghigh risk Africa Asia Eastern EU G7 Latin North Global Pacific Europe America America 25% 23% 26% 27% 37% 31% 26% 22%Average % 29% 23% 30% 19% 19% 30% 22% 23%voting highopportunity Africa Asia Eastern EU G7 Latin North Global Pacific Europe America America 38% 20% 21% 25% 33% 28% 28% 19% 42% 50% 42%Average % 70% 28% 49% 59% 58%voting EU G7 Globalhigh likelihood Africa Asia Eastern Latin Northto respond to risk Pacific Europe 48% 54% America America 52% 63% 48% 58% 55% 56%Source: Grant Thornton IBR 2016*Average percentages across business impacts and risk management techniques from figures 5,6 & 7 New perspectives on risk and reward 19

RecommendationsFor 13 years, we have sought to uncover what more canbe done to improve corporate culture to accommodateand nurture female leadership.At the same time, we have shared the commercial benefits companies can increase female participation in seniorof diversity and made these transparent.23 Each year we business leadership. Secondly, we address the benefits ofseek to draw out new insight that builds on our previous mixed gender teams managing risk and make recommendationsanalysis. Drawing on this year’s research, our report makes on how to maximise the contributions of women to this pressingrecommendations in two main areas. Firstly, we address how business issue.Diversity in leadership 2 Encourage diverse leadership 3 Invest in sponsorship styles and role models programmes, not just mentoring1 Take action to speak up for diversityand embed change throughout the The diversity agenda is not about giving Women downplay their success to others.organisation, not just at the top women the confidence to operate like The emotional support offered through men; it’s about creating an environment mentoring is extremely valuable.Many companies are striving for gender that is conducive to all. This starts with But recognition and encouragementdiversity at leadership level. But there is a the individual. The benefits of diversity from the right sponsor can have aneed to consider how individuals further will not surface if people’s differences dramatic impact on an individual’sdown view the issue. Leaders should not aren’t allowed to actually come out in career advancement. Not only will aassume everyone understands or their job. Leadership styles do not need sponsor champion the prospects andsupports the argument. Continue to to conform to predetermined moulds; skills of women in the workplace, butarticulate the commercial need to inspire nor must leadership be all-consuming. they will also protect them enough tothose not convinced of the need of take Demonstrate that there are multiple take risks and make mistakes withoutsignificant steps across the organisation. models of a successful leader and these hampering an individual’s career.Leadership teams must also understand encourage people in your organisationhow issues such as unconscious bias to consider what kind of leader they “Mentoring is one thing;play into different settings, and then want to be. sponsorship and sharededucate employees on their effects. accountability – being elbowKeep refreshing your approach, so that “Firms need to re-balance to elbow – is another thing.men and women alike continue to step what leadership is to make And I think the latter is farback, think and act. it attractive to future leaders more impactful.” who expect the role to be“In some firms, men are open interesting, meaningful, Stephanie Hasenbos-Caseto female leadership and really flexible and with reasonable Global leader, people and cultureembrace it. Unfortunately, reward too.” Grant Thorntonthere are places where mendon’t embrace it and women Sacha Romanovitchcould be sitting at the table Chief executive officerbut not feel able to voice Grant Thornton UKtheir opinion.”Gillian SaundersHead of advisory servicesGrant Thornton South Africa23 Women in business: The value of diversity – Grant Thornton (2015)20 Women in business

Risk management 2 Provide women with leadership 3 Create a culture where takingin leadership opportunities that make them calculated risks is part of successful familiar with risk business strategy, not something1 Build mixed gender teams for to avoideffective risk management The majority of leadership positions involve risk management. Experience Individuals and teams need to feelMen and women perceive and manage and leadership bring confidence and supported, not penalised, when makingrisk differently. It’s not that one approach familiarity. But to nurture diverse future decisions about the risks their companiesis right and the other wrong. But we need leaders requires confidence-building encounter. Creating cultures that clearlyto break with the assumption that risk early in people’s careers. Companies communicate the organisation’s riskrequires quick thinking and swift action. should not rely solely on technical appetite and avoid blaming people canClearly companies that hesitate for too training, but provide young women help bridge the confidence gap, andlong will miss vital opportunities. But the with on-the-job experiences too, exposing allow people to ‘lean in’ and embrace risk.international business environment has them to the process of risk managementbecome more volatile, and the ability to and – where appropriate – involving Companies need to provide training andmanage uncertainty is becoming more them. This creates a virtuous circle: the allow more room for women to experimentimportant. Dynamic, resilient companies more you’re familiar with considering and ‘fail well’, as Google calls it. This canwill navigate the extremes with a calmer, risk, the more capable and confident be done by establishing a growth mindsetmore balanced assessment of the risks you will become. where individuals and collective teamsand rewards. Women are vital to this of decision-makers can learn from theirendeavour, but over a third of companies mistakes and actively seek out newdon’t have women in senior positions. challenges. A number of businesses inCompanies that fail to bring women this report run what Nicole Vanderviltto the table will jeopardise their long- calls ‘blameless post-mortems’. Thisterm growth. analysis of past decisions to establish a fact-based account of what happened“Teams without diversity when something goes wrong, and whatare at a much greater risk goes right on other occasions, empowersof going down a path without people to take decisions. Externalconsidering all the options facilitators can help run such sessionsor coming up with other and build trust in the process.more complex solutions.”Greg KeithChief executive officerGrant Thornton Australia New perspectives on risk and reward 21

4 Use neutral terms like ‘risk aware’ 5 Include opportunities 6 Engage in a more a collaboraterather than ‘risk averse’ or ‘risk loving’ in the company risk register risk management processto avoid gender stereotyping Risk and opportunity are different sides The research in this report demonstratesWhether you’re male or female, it’s of the same coin. Avoid referring to risk that when women hold senior leadershipincredibly difficult to break with exclusively as a threat, and include positions they are most often in financeestablished norms. Companies need opportunities for growth. One idea that and HR. Companies should facilitateto be aware that language carries surfaced through the research was to the involvement of these positions inhidden messages. Accepting the allow mixed leadership teams to contribute discussions around risk as businessprevailing narrative that women are ideas and observations about threats opportunity and threat. The benefitsrisk averse and men are risk loving and opportunities anonymously to risk of this are two-fold: firstly, women haveinaccurately characterises both sexes. registers in advance of discussions. These greater exposure to this increasinglyInstead there should be a neutral submissions can then be considered important management and strategicconversation about different ways without bias and encourage participation role, boosting their potential for careerof thinking about risk. Recognise the that will maximise the benefits of diversity growth. And secondly, it acts as aterms used to frame discussions around and welcome a wider spectrum of views. mechanism to incorporate greaterrisk; assess whether they’re appropriate, diversity into the process of identifyingand be mindful of unconscious bias. “If you turn risk on its head risky but important business decisions. you have good sustainabilityHow to un-bias our biases? It helps and the right decisions for “When the team is balanced,to know such biases exist and to make your business.” more debate happens,time to redress them. Seeking advice more voices are heard,and getting an outside view on an Gillian Saunders more facts and perspectivesissue also broadens our awareness. Head of advisory services are incorporated… and this Grant Thornton South Africa leads to really comprehensive“The word ‘averse’ definitely solutions.”has a negative connotation.It sounds like you don’t want Stephanie Hasenbos-Caseto take action.” Global leader, people and culture Grant ThorntonPhil SmithChairman, UK & IrelandCisco22 Women in business

How Grant Thornton can helpIn today’s globalised and volatile business environmentorganisations need to be able to take a balanced approach toexploring risk and opportunities to create sustainable growth.Leaders also need to ensure they can We help you create, transform andbring a balance of perspectives to the protect value. From exploring yourtable to take decisions. Grant Thornton strategic growth options, understandingengages with business leaders to build how to manage risk and opportunity,and foster a resilient and collaborative to getting the best from talent, ourworkforce equal to the task. global network provides the specialist support you need to thrive in a fast- changing world.IBR 2017 methodology mid-market varies across the world: in More information: mainland China, we interview businessesThe Grant Thornton International with 100-1,000 employees; in the United Publications: grantthornton.globalBusiness Report (IBR) is the world’s States, those with US$20million toleading mid-market business survey, US$2billion in annual revenues; in Europe, Methodology: grantthornton.globalinterviewing approximately 2,500 senior those with 50–499 employees. For theexecutives every quarter in listed and purposes of this research senior Andrew Brosnanprivately-held companies all over the management is defined as those holding Insights and thought leadership managerworld. Launched in 1992 in nine European C-suite jobs, such as chief executive Grant Thornton International Ltdcountries, the report now surveys more officer (CEO), chief operating officerthan 10,000 businesses leaders in 36 (COO) or chief finance officer (CFO), T +44 (0)20 7391 9613economies on an annual basis, providing managing directors or partners.insights on the economic and commercial E [email protected] affecting the growth prospects ofcompanies globally. The data in thisreport are drawn from 5,526 interviewsconducted between July and December2016 with chief executive officers,managing directors, chairmen and othersenior decision-makers from all industrysectors in mid-market businesses in36 economies. A further 15 in-depthinterviews were conducted withbusiness leaders from inside and outsideGrant Thornton. The definition of New perspectives on risk and reward 23

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