Gender diversity alone not sufficient to guarantee high performance

Mark Hulbert, writing for the International Herald Tribune, covers a study that finds that mixed gender mutual fund teams actually have lower performance on average than same-sex teams, and that the same-sex teams, whether all men or all women, had equal performance.

The take home lesson here is that the mere presence of gender diversity is not sufficient to guarantee high performance. Men must be willing to respect women and their opinions - and Wall Street's culture is hostile to women.

Past research has found instances in which gender diversity improved investment performance. E. Brooke Harrington, an assistant professor of sociology and public policy at Brown University and visiting scholar at the Max Planck Institute for the Study of Societies in Germany, found that, on average, mixed investment clubs outperformed the typical single-sex investment club. She attributed this so-called diversity premium to the additional perspectives included in decision-making when both sexes were present.

Ruenzi said he thought that his findings and those of Harrington were not as contradictory as they might appear. Compared with Wall Street, he said, the typical investment club is far more welcoming to women and thus better able to benefit from the additional perspectives that diversity can introduce into decision-making.

This more welcoming attitude is evident in the composition of investment clubs. Women have traditionally made up about 60 percent of the membership of these clubs, according to Bonnie Reyes, president and chief operating officer of BetterInvesting, a U.S. organization of investment clubs. By contrast, according to Ruenzi, fewer than a third of team-managed mutual funds have even one woman on their management teams. As a result, it is hard to draw firm conclusions about how gender diversity might be affecting fund performance, Harrington said.

She did say, however, that Wall Street was "notorious for being inhospitable to women." When a woman serves on a fund management team whose other members are all men, for example, she may not be willing to share her perspectives and ideas or will not be taken as seriously when she does. As a result, the fund may realize little, if any, of the benefits of diversity, while still suffering from the inefficiencies often caused by intra-team strife.

This is a blog about religion, so obviously this has implications for the church. I think the Episcopal Church is on the right track, but it is imperative that we aim to make our leadership bodies representative of the composition of the church as a whole. It is also imperative that we not pigeonhole female priests, for example, into less prestigious leadership positions.