There's good news and bad news surrounding female presence in the top ranks of corporate America. The good news: There are currently more female chief executive officers than ever. The bad news: The number of female CEOs or corporate directors remains extremely low. Then there's the mixed-up news: The path by which more females climb to the top of corporate America has some possible wrong turns and potholes.
More high-ranking females would add value to corporate operations, and could result in better-run businesses (and better returns for shareholders). However, exactly how this comes to pass raises some legitimate questions.
Why we need more girl power
The marketplace has a definite need for more females at the top: The benefits of gender diversity go far beyond impassioned arguments about workplace equality. Increasingly, research shows that women are less likely than men to fall prey to destructive, potentially value-destroying traits like overconfidence and excessive risk-taking.
Females' calm, patient, cautious traits play out well in all facets of business and investing. As Warren Buffett once said, "I am a better investor because I am a businessman and a better businessman because I am an investor." Data and studies from sources like mutual fund giant Vanguard and major universities also show that female investors have an edge over their frenetically trading, overconfident, often short-term-oriented male counterparts.
In a particularly interesting piece of data, Vanguard pointed out a fascinating discrepancy between its male and female clients during the financial crisis of 2008 and 2009. Out of 2.7 million people with IRAs through Vanguard, the gentlemen were much more likely to sell their shares at stock market lows than the ladies.
Again, these gender differences play out in both investing and business. For example, a 2008 study of mergers and acquisitions from the University of British Columbia found that female CEOs and corporate directors saved their shareholders money by paying lower premiums on acquisitions.
Let's get back to the good news/bad news dichotomy. According to Fortune, the new record-breaking number of female CEOs at Fortune 500 firms has skyrocketed to an eye-popping, er, 18. A little more than a month ago, Hewlett-Packard (NYSE: HPQ ) tapped Meg Whitman as chief executive.
More recently, Mylan (Nasdaq: MYL ) named Heather Bresch to its top management post. Ginny Rometty will take the helm at IBM (NYSE: IBM ) , making it the largest company by market cap headed by a female CEO. (PepsiCo (NYSE: PEP ) previously held that distinction.) Patricia Woertz heads up Archer Daniels Midland (NYSE: ADM ) , and Big Oil can even boast a female CEO: Sunoco's (NYSE: SUN ) Lynn Elsenhans.
As much as infusing some estrogen into corporations' top ranks is a positive development, female CEOs are human too, and aren't going to be any more perfect than their male counterparts. Carol Bartz's tenure at Yahoo! (Nasdaq: YHOO ) isn't viewed as a resounding success, nor was Carly Fiorina's stint at Hewlett-Packard.
Wharton recently warned of mixed results when adding female presence to corporate boards. First off, again, there simply aren't that many women on boards to begin with. Despite the fact that half of the U.S. workforce is female, women hold only 16% of the seats on Fortune 500 boards.
Forcing change to fix such ills could create its own problems. Wharton expanded on a concern that many of us likely share: Simply mandating gender quotas could result in sub-optimal results. Dangers include choosing from limited pools of female talent simply to satisfy a quota, resulting in less experienced directors (after all, it's harder to find female executives with decades of experience in corporate America). There's also the unpleasant point that corporate managements could purposely push less competent females onto their boards.
As ugly as that sounds, it's not an outlandish possibility even in this day and age. Last summer, The Economist pointed out that some French CEOs had a particularly nasty response to the possibility of legally mandated gender quotas for women on boards. As the Economist article put it, some French CEOs planned to seek out female directors "who will look decorative and not rock the boat." One high-ranking jerk apparently said that he would favor good looks over industry experience. Wives and girlfriends were also suggested as "suitable" options despite the clear problems, not least of which is what we'll call a conflict of interest.
The power of thinking differently
Quotas aren't the answer; opening corporate America's eyes to the very real benefits of diversity (and how to recognize different kinds of valuable talent) is. Cognitive diversity in groups -- which, of course, definitely includes female perspectives -- is a major part of robust businesses and markets. Research into prediction markets proves that groups lacking diverse perspectives make bad predictions -- and bad decisions.
We shouldn't look to quotas for change at work, but rather work to change the status quo. Women are moving forward in corporate America, and hopefully, wiser ways of viewing diversity in corporate leadership and boards are destined to become commonplace in the not-so-distant future.
Check back at Fool.com every Wednesday and Friday for Alyce Lomax's columns on environmental, social, and governance issues.