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PMA’s State Of Industry Address Makes The Case For Women In Executive Positions:
But Is This Analysis Or Advocacy?

Jim Prevor’s Perishable Pundit, November 12, 2013

The annual State of the Industry address at PMA was for several years a speech delivered by PMA President and CEO, Bryan Silbermann. It was generally fact-checked to the nines. In recent years, however, other people have been included in the State of the Industry presentation, and the same fact-checking doesn’t seem to go on. This year’s presentation included a flawed claim as we mentioned in a piece titled, White House Chef Tells Industry To Try Harder; But He Needs To Check His Facts. Beyond the cartoon connection with produce, though, the State of the Industry address had other presentations that raised at least as many questions as they answered.

For example, Elisa van Dam, Senior Director of Executive Education and Corporate Outreach at Simmons School of Management, which is the institution PMA works with to conduct its annual Women’s Fresh Perspectives Conference, gave a speech telling the assembled why “women are good for business.”

It was an odd speech because it didn’t rise to the burden it assumed. In 2013, we are not aware of anyone in the industry arguing that women are incompetent or shouldn’t have executive or board roles. So, in consequence, there is unanimity that if one is trying to fill a position and the best candidate available is a woman, one should hire the woman.

So the burden of a speech such as this is higher, and the argument has to be made that having women in the business is a virtue in and of itself — that hiring the best qualified person for each job is not sufficient — that there is an independent value to having women more prominent on the team that goes beyond the value of any individual. In other words, that one should hire a lesser qualified person specifically because she is a woman because having more women on the team is an independent variable and increasing that variable produces benefits.

However, this speech, which you can read here, didn’t persuasively make that case.

Ms. van Dam started out by building a “financial case” which she acknowledged only proved correlation, not causation. In truth it didn’t really even prove correlation in a meaningful way. Three studies were presented, all of which basically took a group of companies, for example, the Fortune 500, and determined that companies that had the highest representation of women in senior management positions did better compared to those that had fewer women in senior positions.

But this type of study isn’t very helpful because all of these groupings, such as the Fortune 500, include companies from multiple industries.

It is quite possible, for example, that old industrial companies, say, coal mining or certain types of manufacturing, are both slower growing and have not been as open to, or as attractive to, female executives as more modern organizations.

Put it another way, Facebook may have Sheryl Sandberg of Lean In fame as Chief Operating Officer, and Joe’s Old Fashioned TV Manufacturing Company, may not have a top female executive at all — but that doesn’t mean that if Joe’s acquired some good female executives, it would grow like Facebook, and it doesn’t mean that if Sheryl were Stanley, Facebook wouldn’t have grown.

For these studies that Ms. van Dam mentioned to be meaningful, they have to be industry-specific. Otherwise they throw off more smoke than light.

Now Ms. van Dam also made what she called the “talent case,” which is that roughly half the people in the world are female, so companies should look to mine this talent pool. This is both obvious and unobjectionable. One reason why, say, the Islamic world has found its comparative power and influence in the world to decline compared to Christendom, is clearly that conservative Islamic countries don’t fully utilize the talents of their women.

But, once again, the “talent case” just establishes what is now a truism: that a company would be foolish to confine its recruiting to males. It does nothing to establish that one ought to preferentially hire women.

Then Ms. van Dam makes what she calls the “market case,” which basically asserts that companies should have executives that look like your customers.” Since grocery shopping, and thus produce purchases, skew heavily toward females, having more females in the executive ranks is a plus.

This sounds intuitive but, upon analysis, is quite questionable. First, it is not at all clear that Ms. van Dam is actually cautioning executives at companies whose  products sell predominately to men against the dangers of hiring too many women and thus not “looking like your customers.” 

Second, although customers for some companies may be women, they also are many other things. They are white or black or Latino or Asian; they are senior citizens or Jewish or Muslim or Catholic or Protestant; they are high-IQ or low-IQ; they are rich or poor.  Is Ms. van Dam really arguing that companies should have executive staffs that mirror their ultimate consumer base? If she is, she is certainly not presenting evidence that this produces higher profits.

Third, the notion that businesses should “look like their customers” in some way may be true, but it may not be. We have a male friend who owns a brassiere business, a successful one. How does he manage to do this? Well here is a possibility: When we were writing about Tesco’s efforts to establish Fresh & Easy in America, we suggested that the fact that we both spoke English was a big disadvantage.

In Thailand or Poland, Tesco knew it somehow had to listen to the locals, but in America it could assume it understood the market. Perhaps our male friend at the brassiere company has an advantage. A female might be inclined to assume that her anecdotal experience with brassieres is reflective of those of women in general or of the particular women who are customers of this firm.

Having no personal experience with the product, perhaps our friend is compelled to rely on statistically significant market research. We don’t know if this is true but just going on about the importance of “looking like our customers” is not necessarily true either.

Fourth, the question of who is “the customer” is something that requires some reflection. Frieda Caplan has spoken out many times to say that she thought being a woman was an advantage — not because she looked like her customers — the ultimate consumers – but because she looked different from her customers — the retail buyers and her competitors. So she was distinctive and remembered.

Finally, Ms. van Dam makes what she calls the “effectiveness case.” This relies on some studies, one in particular. Ms. van Dam puts it this way:

… ultimately, we at Simmons believe that the most important reason that women are good for business is the effectiveness case. When you have more women on a team, the team is more effective. There’s a lot of research out there, but I’m just going to highlight two studies. First, there was a great article in the Harvard Business Review not too long ago. It was actually in the “defend your research” section, because the researchers were surprised by their results.

They started by giving their subjects a standard intelligence test, and then assigned them randomly to teams. Each team was asked to complete several tasks — including brainstorming, decision-making, and visual puzzles — and to solve one complex problem. Then the teams were given effectiveness scores based on their performance. What researchers thought would happen is that the teams with the highest average IQ would also have the highest effectiveness score. That didn’t turn out to be the case. Instead, what they saw was that the teams that had more women had the best results.

This is interesting but, actually, not what the study found! The study, titled, Evidence for a Collective Intelligence Factor in the Performance of Human Groups,was a search for a collective intelligence — what makes a group smart — and that characteristic is called “C,” and here is what the study actually says:

Finally, “C” was positively and significantly correlated with the proportion of females in the group (= 0.23, P = 0.007).However, this result appears to be largely mediated by social sensitivity (Sobel z = 1.93, P= 0.03), because (consistent with previous research) women in our sample scored better on the social sensitivity measure than men [(441) = 3.42, P = 0.001].

In a regression analysis with the groups for which all three variables (social sensitivity, speaking turn variance, and percent female) were available, all had similar predictive power for “C”, although only social sensitivity reached statistical significance (b = 0.33, P = 0.05) (12).

In other words, what the study actually found was that individuals with high “social sensitivity” allow a group to have higher “collective intelligence” and that women, selected randomly, are more likely to have higher “social sensitivity” than randomly chosen men. However business executives, especially high ranking business executives, are most decidedly not chosen randomly. Business executives are hired through a selection process that selects for the traits believed necessary to succeed in that particular position.

If Ms. van Dam’s argument is that companies under-value social sensitivity and should make that more a priority, that is one thing, but that might not translate into more female hiring at all. People who apply or are considered for senior management positions do not reflect the median characteristics of their race or sex or religion. These are elites, and nothing in this study provides any support for the idea that a company will be more successful if it selects more women from senior management applicants.

The study itself is flawed in other ways. Although the groups were given tasks that were then graded, that is different than actually studying real-world business outcomes.

For one, it may underrate the value of specific expertise. A group that works well together is all fine and good, but if the task is to develop a rocket that can go to Mars and back in some time frame or on some budget, the “winning” group might be the one with the best aeronautical engineers, not the one that has the highest collective intelligence.

Second, there may be a price paid in being so “socially sensitive.” Did Steve Jobs, who was notorious for making business associates cry, succeed less than he could have, had he only been more socially sensitive? Read this description:

As early as 1987, the New York Times wrote: by the early 80's, Mr. Jobs was widely hated at Apple. Senior management had to endure his temper tantrums. He created resentment among employees by turning some into stars and insulting others, often reducing them to tears. Mr. Jobs himself would frequently cry after fights with fellow executives".

Some twenty years later, Michael Wolff's description of Jobs was little different: "There's the mercurialness; the tantrums; the hours-long, dictator-like speeches; the famous, desperate, and transparent hogging of credit; and always the charismatic-leader complex, through which he has been able to seduce and, subsequently, abandon so many of the people he's worked with. He may be as troubled and unsocialized (and, too, as charismatic) a figure in American business life as anyone since Howard Hughes".

The notion that success in business is predicted accurately by how well groups perform on the McGrath Task Circumplex is, to be generous, unproven. 

*****

The truth is that the industry is filled with super-talented women. We would hire loads of them in a snap if we had the opportunity. The vast majority of them got to where they are and keep their positions because they are talented executives, not because their companies think they should hire less talented women just to “up” the numbers. It is actually very insulting to these accomplished women.  On the industry’s “up and coming” roster, women are well represented, as in this year’s 40 under Forty group — where 33% selected are women — clearly demonstrates.

The question for us is why PMA thinks it is a good idea to have people lecture the industry with one-sided presentations. There is nobody at PMA with particular expertise in this subject, no reason to think PMA knows the “right answer” to these questions. So if PMA thinks these subjects worthy of exploration, then the association should arrange to explore it. Maybe conduct a debate, or a panel discussion with people of different views.

We don’t even mind break-out session which people choose to go to and where one person is presenting their views, but to subject the general session audiences to the highly biased viewpoint of one individual speaker really doesn’t serve the industry.

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