A Woman's Touch

Research suggests that training at business schools may foster ruthless behaviour and greed in managers. The VW emissions scandal in 2015 may be a case in point. Managers at the top hierarchy level, if given the chance, may try to maximize own salaries at the direct or indirect expense of their employees.

But, as it turns out, not all managers are equal. It appears that when you examine ethics, greed and morality in business, women may be more morally inclined than men.

The late and much beloved scholar Nora Szech, together with colleagues David Huber and Leonie Kühl, ran experimental studies to find out whether female managers do exert a positive effect on work atmosphere and wages paid to employees. In two gender-controlled setups, they studied what influence incentive schemes, manager’s gender, and experience of the real work environment have on appreciation of workers, reflected in the wages chosen for them.

They designed four treatments, in which they varied managers’ personal incentives, particularly whether they can maximise their own earnings or not, as well as their experience with the tasks their workers had to perform.

In the first treatment, Baseline, managers decided what they considered an adequate compensation for their workers, up to a maximum amount. Any money not awarded to the workers stayed with the employer. The Self treatment was identical, except that the managers could keep for themselves all the money not spent on their workers’ compensation. Two further treatments, ExpBaseline and ExpSelf, are identical to the first two, respectively, except that managers had to acquire some direct experience of the tasks their workers performed before deciding on their compensation. And, in all four treatments, particular focus was placed on manager’s gender.

They found that workers’ compensation in Self was lower than in Baseline, even when compensation in the latter was quite moderate compared to the local minimum wage. Female managers, however, were not as swayed by the underlying incentives as their male counterparts, giving their workers better wages. The same happened in the remaining two treatments.

While direct experience of the work that their charges perform significantly increased workers’ compensation, the effect was mainly driven by the fact that in ExpBaseline the higher compensation for workers did not reduce the managers’ earnings, since compensation in both Self treatments remained low regardless of whether or not managers had been exposed to the real task their workers performed.

That male managers are more focused on their own interests has already been suggested by previous research that found that male managers lie more often to secure a monetary gain than females, perhaps because women are reportedly less self-promoting. Still, males can also be very generous and moral—provided this does not lead to monetary disadvantage for themselves.

All in all, female managers exhibit a more consistently generous behaviour that does not seem to be swayed as much by the opportunity to be selfish.

Put more succinctly, if there is a female manager on the executive board of your company, your chances of securing a somewhat better pay package are noticeably higher.

A woman’s touch, indeed.