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Money Maven Blog by Sheryl Sutherland, Authorised Financial Adviser and Director of The Financial Strategies Group

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Recommended Reading by Sheryl Sutherland: Girls Just Want to Have Fund$ - Every Women’s Guide to Financial Independence, Money, Money, Money Ain't it Funny - How to Wire your Brain for Wealth, and Smart Money - How to structure your New Zealand business or investments and pay less tax.

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Monday, 26 September 2011


Is imposing quotas for women in the boardroom a bad idea? It is according to a recent article in The Economist. The article, as is normal for that August Journal, is reasonably balanced. I say reasonably as it does acknowledge many verities relating to women and work. Some excerpts follow:

There is a powerful business case for hiring more women to run companies. They are more likely to understand the tastes and aspirations of the largest group of consumers in the world, namely women. They represent an underfished pool of talent. And there is evidence that companies with more women in top jobs perform better than those run by men only.

McKinsey, a consultancy, recently looked at 89 listed companies in Europe with a very high proportion of women in senior management posts and compared their financial performance with the average for firms in the same industry. It found that these firms enjoyed a higher return on equity, fatter operating profits and a more buoyant share price. The authors described the correlation between promoting women and doing well as “striking”, though they admitted that they could not prove what was causing what. It is possible that firms that are already doing well tend to hire more female directors.

The evidence from Norway, the first European country to impose strict quotas, suggests that compulsion has been bad for business.

To obey the law, Norwegian firms promoted many women who were less experienced than the directors they had before.

A study found that firms that were forced to increase the share of women on their boards by more than ten percentage points saw one measure of corporate value fall by 18%.

Men do persistently underestimate women, argues Herminia Ibarra of INSEAD, a business school in France. Ms Ibarra looked at more than 20,000 assessments of INSEAD’s executive students. Male work colleagues of the women judged them to be just as capable as the men (or more so) in most areas, but thought that they lacked strategic vision. No such lack was seen when their female work colleagues judged the students.

The way patronage and promotion work within the corporate world may count against women. Nearly all the executives who rise to the top have had a powerful backer.

In all societies, at least for now, women shoulder most of the burden of looking after children and ageing parents. European women devote twice as much time as men to domestic tasks, according to McKinsey. It varies from country to country. Latin men are slacker than Nordics. Italian men spend only 1.3 hours a day on domestic chores, whereas Italian women spend 5.2 hours. In Sweden, the ratio is a somewhat fairer 2.3 hours to 3.4.

Partly because it is so tricky to juggle kids and a career, many highly able women opt for jobs with predictable hours, such as human resources or accounting. They also gravitate towards fields where their skills are less likely to become obsolete if they take a career break, which is perhaps one reason why nearly two-thirds of new American law graduates are female but only 18% of engineers.

Deutsche Telekom, a German media behemoth, has declared that 30% of its middle and upper management jobs will be filled by women by 2015. “We have tried mentoring, coaching and networks, but nothing worked,” says Anne Wenders, a spokeswoman for the company.

The fact remains that promotion and advocating women is in its early years. I am reminded of Kim Campbell the former prime minister of Canada she offers a possible solution to the perceived increase in ethics within corporations – female leaders – in several studies results show that when you have a critical mass of women in an organisation, you have less corruption...lest you think that all we aspire to for the world can be accomplished by male dominated organisations I have only to say to you: Enron, Taliban, Roman Catholic Church.

Finance and Investments

The acceptable face of Facebook. Few corporate types can charm hardened hacks so effectively. Sheryl Sandberg, the number two at Facebook, the world’s biggest social network, has been glad-handing reporters with spectacular results. The New Yorker says she may “upend Silicon Valley’s male-dominated culture”. New York magazine puts her in line for Secretary of the Treasury. Bloomberg Businessweek speculates that she might one day be the president of the United States.

Her sudden lionisation is well-timed. Facebook is expected to go public soon, perhaps this year. It may be the biggest internet flotation ever, with a market capitalisation of more than $100 billion. Investors might be less bullish if the 27-year-old Mark Zuckerberg, the founder, were in sole charge. Many consider him somewhat socially awkward.

Ms Sandberg, a 42-year-old former Google executive, joined Facebook in 2008; without her, insiders say, it would not have grown from a cash-bleeding start-up to a titan with estimated sales of $2 billion last year. She complements Mr Zuckerberg well. He is technologically brilliant and knows it. She is a good listener with a keen financial brain (she was once an aide to Larry Summers, the then treasury secretary). She provides adult supervision and a professional face to a firm growing so powerful and so quickly that it is bound to clash with governments. Were Mr Zuckerberg to be grilled by senators who have not yet grasped the concept of e-mail, he might let his irritation show. Ms Sandberg would not have that problem.

Since Carly Fiorina and Meg Whitman left HP and eBay, female bosses of big Silicon Valley firms have been rare. Ms Sandberg is doing her part to change this by encouraging women to be more assertive and by building an “old girls’ network”. Thanks to her efforts Facebook has more female executives than the average technology firm.

It is to be hoped she succeeds in forming a powerful “old girls network.”

Everyday Money

We all know that coping with everyday money in our relationships can be like climbing Everest without oxygen but in Japan it appears that before partners are united in wedded bliss, financial status is the yardstick.

It appears that the most widely cited reason for stalling on getting married for men, and second-highest among women, was anxiety over whether the wedded couple would be economically comfortable enough: It seems 3 million yen in annual income is the magic number.

The marriage rate among men sharply diverges between those who bring home at least 3 million yen per year and those whose income comes in under the bar. The marriage rate soared more than two-fold among men both in their 20s and 30s once they made more than 3 million yen or more. Roughly just 9% of men both in their 20s and 30s who make less than that were married. Meanwhile, 25% to 40% of men whose income exceeds that stratum were coupled up.

It may however be that some men are just not that into the idea of getting married. In 2010, the average monthly salary of men up to 34 years old was 313,980 yen, which would be about 3.7 million yen a year, according to the communications ministry.


Early this past spring, the White House Council on Women and Girls released a much-anticipated report called Women in America. One of its conclusions struck a familiar note: today, as President Obama said in describing the document, “women still earn on average only about 75 cents for every dollar a man earns. That’s a huge discrepancy.”

And it’s the same discrepancy existing ever since women started earning money – it’s well documented through 16th, 17th centuries and beyond.

The facts are that women work fewer hours, choose less demanding jobs, and then earn less than men do? The reason for this is obvious: kids. A number of researchers have found that if you consider only childless women, the wage gap disappears. June O’Neill, an economist who has probably studied wage gaps as much as anyone alive, has found that single, childless women make about 8 percent more than single, childless men do (though the advantage vanishes when you factor in education). Using Census Bureau data of pay levels in 147 of the nation’s 150 largest cities, the research firm Reach Advisors recently showed that single, childless working women under 30 earned 8 percent more than their male counterparts did.

The most compelling research into the impact of children on women’s careers and earnings—one that also casts light on why women are a rarity at the highest levels of the corporate and financial world—comes from a 2010 article in the American Economic Journal by Marianne Bertrand of the University of Chicago and Claudia Goldin and Lawrence Katz of Harvard. The authors selected nearly 2,500 MBAs who graduated between 1990 and 2006 from the University of Chicago’s Booth School of Business and followed them as they made their way through the early stages of their careers. If there were discrimination to be found here, Goldin would be your woman. She is co-author of a renowned 2000 study showing that blind auditions significantly increased the likelihood that an orchestra would hire female musicians.

Here’s what the authors found: right after graduation, men and women had nearly identical earnings and working hours. Over the next ten years, however, women fell way behind. Survey questions revealed three reasons for this. First and least important, men had taken more finance courses and received better grades in those courses, while women had taken more marketing classes. Second, women had more career interruptions. Third and most important, mothers worked fewer hours. In other words, these female MBAs bought tickets for what is commonly called the “mommy track.”

In fact, women choose fewer hours—despite the resulting gap in earnings—all over the world. That includes countries with generous family leave and child-care policies. Look at Iceland, recently crowned the world’s most egalitarian nation by the World Economic Forum. The country boasts a female prime minister, a law requiring that the boards of midsize and larger businesses be at least 40 percent female, excellent public child care, and a family leave policy that would make NOW members swoon. Yet despite successful efforts to get men to take paternity leave, Icelandic women still take considerably more time off than men do. They also are far more likely to work part-time. According to the Organisation for Economic Co-operation and Development (OECD), this queen of women-friendly countries has a bigger wage gap—women make 62 percent of what men do—than the United States does.

That doesn’t mean that the mommy track doesn’t present a problem, particularly in a culture in which close to half of all marriages break down. A woman can have a baby, decide to reduce her hours and her pay, forgo a pension, and then, ten years later, watch her husband run off with the Pilates instructor. The problem isn’t what it used to be when women had fewer degrees and less work experience during their childless years; women today are in better shape to jump-start their careers if need be. The risk remains, however.

In summary the risk to women’s earnings is what we intuitively know: kids! And in a situation where marriage breaks down that earnings gap is further exacerbated.

Who's Counting?

A recent Wall Street Journal article reports on male selection. Since the late 1970’s, 163 million female babies have been aborted by parents seeking sons.

Mara Hvistendahl is worried about girls. In "Unnatural Selection," Ms. Hvistendahl reports on this gender imbalance: what it is, how it came to be and what it means for the future.

In nature, 105 boys are born for every 100 girls. This ratio is biologically ironclad. Between 104 and 106 is the normal range, and that's as far as the natural window goes. Any other number is the result of unnatural events.

Yet today in India there are 112 boys born for every 100 girls. In China, the number is 121—though plenty of Chinese towns are over the 150 mark. China's and India's populations are mammoth enough that their outlying sex ratios have skewed the global average to a biologically impossible 107. But the imbalance is not only in Asia. Azerbaijan stands at 115, Georgia at 118 and Armenia at 120.

What is causing the skewed ratio: abortion. If the male number in the sex ratio is above 106, it means that couples are having abortions when they find out the mother is carrying a girl.

High sex ratios mean that a society is going to have "surplus men"—that is, men with no hope of marrying because there are not enough women. Such men accumulate in the lower classes, where risks of violence are already elevated. And unmarried men with limited incomes tend to make trouble. In Chinese provinces where the sex ratio has spiked, a crime wave has followed. Today in India, the best predictor of violence and crime for any given area is not income but sex ratio.

A high level of male births has other, far-reaching, effects. It becomes harder to secure a bride, and men can find themselves buying or bidding for them.

Sex determination has been against the law in both China and India for years, to no effect.

Musings and Amusings

One of my favourite writers Kay S. Hymowitz suggests that the conflict between parenting and career is hardwired in the female brain.

In the struggle for equality between the sexes, it keeps coming down to motherhood, doesn’t it?

If there’s one part of evolutionary thinking that spells bad news for the feminist worldview, it is parental-investment theory, an idea originally proposed by Harvard professor Robert Trivers. Trivers was attempting to clarify Darwin’s theory of sexual selection, which went something like this: females of most species are more particular about their mates than males are. That means males must compete for female attention; hence the colourful tails of peacocks and the lovely songs of many male birds.

But why should females be pickier than males? It is also mostly females who feed and guard the kids. In fact, females do nearly everything that increases the survival, and eventual reproductive success, of their offspring. Trivers concluded that females, as he put it, “invest” more than males—and that includes being cautious about their sexual partners, the fathers of their offspring.

In fact, as neuroscientists and geneticists piece together the human brain’s evolution, it’s becoming clear that, if it’s natural for a woman to go crazy over her babies, it’s also natural for a woman to run the State Department. The same human female brain that’s primed with oxytocin is, like the male brain, a fantastically complex machine, capable of reasoning, innovative problem solving, and manoeuvring through hugely varied social environments.

And so in the twentieth century, the big-brained female—Femina sapiens, ready to use her brain in new ways, coincidentally at a time when the intellectually gratifying jobs of an advanced economy were becoming more plentiful. Men invented the antibiotic and the washing machine; today, women in economics departments calculate the benefits of these discoveries for their sex. Better yet, they themselves can make future discoveries in labs and R&D departments.

If human society can sometimes reconfigure biology—by curing polio and increasing athletic stamina, for example—could it reconfigure sexual selection so that fathers and mothers made equal investments in their young children? We don’t have much evidence for thinking so. Until the mid-1990s, Swedish parents got nine months of leave after the birth of a child. By 2004, only 20 percent of fathers were taking the two months. By contrast, a large majority of mothers made full use of their leave. Iceland launched a similar effort to equalize parental investment; fathers there are doing more, but nowhere near as much as mothers.

How do we make it easier for working women who want more time to invest in their young children to work part time, or to return to their jobs after an extended leave? What is the proper role of government in all this?