3/30/2017

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Business Decisions
How do women make them?
by Sharon Hadary

It's an argument I've heard for years. "When woman-owned businesses are as large as male-owned businesses, and they move into industries like engineering, construction, and high tech, they will start making decisions in the same way that men do." But today, women entrepreneurs do own and run sizeable, high-growth enterprises in all industries, including those that are traditionally male-dominated. However, rather than emulating their male counterparts, women are embracing a decision-making style that is inclusive, consultative, and collaborative. In fact, say women leaders, this very different decision-making style is what is carrying them successfully through the recession.

This came as no surprise to me. As the former executive director of the Center for Women's Business Research, I have been studying women business owners, and their decision-making styles for 20 years.

It has become common knowledge that men tend to stress what is known as "left-brain" thinking while women prefer "right-brained" thinking. Research into male and female entrepreneurs' decision-making styles by the Center for Women's Business Research found that women and men entrepreneurs are similar to the general population in that way. Men entrepreneurs strongly prefer left-brain thinking, characterized by facts, logic, and hierarchy. On the other hand, women are more likely to use right-brain thinking, characterized by relationship building, values, and intuition. The real news in this research is that women are also likely to use both right-and-left-brain thinking. While they do indeed focus on relationship building, values, and intuition, they also utilize facts and logic in the decision-making process.

Neuroscience research o the brain provides physiological support for this result. The connections between the two sides of the brain are larger in women's brains than in men's. This leads to stronger communication between the two hemispheres. A study using a language task illustrated this point by finding that men used only one small area of the left side of the brain for the task while women used both sides of the brain. In addition, the brain's outer layer, the cortex, which performs much of the higher level processing, is thicker in many places in women, leading to faster processing speeds.

Science aside, women's decision-making styles are as much nurture as nature. Women entrepreneurs combine their preference for relationship building and the ri quest for information to create a diverse and expansive circle of advisors. Time and again, research shows that no matter the context, whether they are seeking information on business management, technology, or human resources, women business owners are significantly more likely than male business owners to seek advice, and they seek advice from a greater range of advisors. Their advisors no only include professionals such as lawyers, accountants, and bankers, but also other business owners, industry colleagues, family, and friends. the result is a rich and expansive range of options, which is especially valuable in dealing with today's challenges.

Another key differentiating factor in female entrepreneurs' decision-making styles is their outreach to those who will be affected by the decision, which includes employees, customers, and vendors. They seek advice from them and encourage ongoing communication.

When a group of women business owners, who had worked for an employer prior to launching a business, was asked what they did differently, the response over and over again was, "We asked employees for their opinions and ideas, and actually listen to and use their responses."

Kathleen Diamond, a founder and former CEO of Language Learning Enterprises, a nearly $10 million international enterprise, shared this example of how her company addressed market changes. "To stay competitive, when the language services industry moved from being value-based to price-driven, we had to seek ways to manage our costs. My senior team agreed that we had to reduce the compensation levels of our more than 800 translators and interpreters worldwide," says Diamond. "We spoke personally with our top 300 contractors and explained our challenge. By bringing people together, working collaboratively, and being respectful, we were able to retain most of them."

Female leaders frequently focus on issues of employee welfare that are ignored or given little weight by male leaders. These issues, often characterized as "soft" issues, can be the most difficult issues to address.

"I started my business with several goals in mind, one being to provide people with a work environment that embraces their strength and provides the opportunity to grow within the organization," says Linda Wein, founder and president of The BOSS Group, a high-growth, 40-person staffing company with more than $20 million in revenues. "When the economic downturn hit our company, we reduced benefits, retained quality work, cut expenses, and stopped hiring. We consciously took a hit ont he bottom line in order to retain all employees."

The company's focus on becoming lean and efficient paid off. As business began to rebound this year, most benefit cuts were restored, and the company has started hiring again.

The weight of such soft issues is even evident in women's exit strategies. The Center for Women's Business Research found that while women are as likely as men to say that the price is the most important factor when deciding to sell the ri businesses, women business owners were almost twice as likely to be concerned about the characteristics of the buyer, including experience, background, and personality.They were also significantly more likely to take into account the buyer's plans for current employees.

A pervasive myth is that women are risk averse. However, it is not so much that women focus on long-term strategies while men focus on immediate returns. Studies of male and female investors in both the United Kingdom and Australia found that women invested for the long term, building a balanced portfolio. Men were more likely to buy hot stocks and invest based on tips. The punch line is that the women's portfolios outperformed men's portfolios and the overall market.

Despite the recession, women business owners are holding on to their long-term perspectives and focusing on how they want the business to be positioned when the economy turns around.

"Clients often want to go for the quick fix, which can be very profitable for me," says Alicia Jacobs, founding partner, Ajament Partners, a consultant to Fortune 100 companies and leading non-profit organizations. "But these are short-term gains with no long-term potential. For example, recently a new client offered me a contract to provide consulting services to a single unit. Recognizing that the issues were broader than just the one unit, I decided to gamble on the future," Jacobs shares. "I turned down the contract and gave the client my recommendations for a more comprehensive approach. Some months later, the client came back, and the result was a contract that is much more effective for the client and one that provides substantially more income and visibility for my business."

What sets women apart is what positions them for success in these challenging times. Women's leadership and decision-making styles are especially well-suited to leading in times of economic and social turbulence and transformation; a time when ideas and collaboration are taking precedence over production and procedure.

This nation's recovery will not depend on simply recreating what we had before. Business models are shifting, and indeed must shift. Values are being revisited. And women business owners are at the leading edge of these transformations.

Sharon Hadary was the first executive director of the Center for Women's Business Research. Today, she is principal of Sharon Hadary & Co and teaches in the women in business program at University of Maryland University College. She speaks nationally on women's business leadership.

An excerpt from the Minority Business Entrepreneur (MBE).

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