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Mixed teams? Maybe not a mixed blessing!

Mixed teams? Maybe not a mixed blessing!

By Paul Quain - 30 August 2018

Would you like to increase performance, revenue and profit? A new study has once again shown that teams with a mixture of men and women out-perform single sex teams.

This new research feeds into a wider discussion in recent years about the value of maintaining a much more balanced workforce has been widespread. Gender imbalance, in particular, is frequently reported as existing in pretty much every sector, at most levels. The most frequently reported examples include boards of major FTSE companies, national parliaments and prominent media organisations.

Much of the reasoning behind the need for change focuses on equality issues, discrimination, unfairness and the overall morality of men having more decision-making power than women. Some people (mainly men) complain that it is a result of “political correctness”. 

However, a recent study (called Alpha Female 2018!) reported in The Times earlier this month sets out a strong commercial reason for companies to address this issue more seriously. The study was carried out by Citywire which analysed the performance of 16,000 fund managers over a three-year period, comparing teams made up of only men, teams made up of only women and teams which were a mixture of men and women. Of the fund managers in the Citywire database, 14,204 (88.3%) were men and 1,662 were women (10.3%). In this context, where only one in ten fund managers is a woman, the results of this study are fascinating.

Superior returns were always delivered by the mixed gender teams. These teams of men and women outperformed the all-male and all-female teams. The mixed gender teams produced three-year returns that were 4.3% higher, on average, than the returns of female only teams and 0.5% higher than male only teams. The results were also true when the results were broken down by asset class. Mixed gender teams outperformed single-sex teams in bonds, equities and mixed assets in absolute returns over three years. It would appear that female only teams tend to have lower risk, while male only teams have higher risk, with the mixed teams providing a balance.

This study confirms the results of research around the world which has come to the same conclusion. The Massachusetts Institute of Technology has reported on a number of studies which have demonstrated that companies with more diverse boards perform better and teams made of up of people from different backgrounds are more innovative. Some studies have found that revenue can be boosted by 41% with greater gender diversity.

Instead of using the stick of onerous regulations not to discriminate, businesses should recognise the carrot of a money-making gender-balanced workplace. If only the teams making these decisions had a more balanced view!