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Iceland suffered by far the worst financial and economic collapse of any European country, because of its banking system’s disastrous risk management and credit policies. Recently, BBC journalist Peter Day, who spearheads the BBC program Global Business, interviewed two remarkable Icelandic women, Halla Tomasdottir, Chairwoman, and Kristin Petursdottir, Chief executive officer, Audur Capital, who founded a private investment firm in Reykjavik, Iceland, at the precise moment the global financial markets collapsed. Here is what they told him, in their own words.     
 
We founded our company to incorporate feminine values in the world of finance. Women will represent a formidable financial force in the future. We want to unlock the potential value in women. This opportunity is too good to miss. 

We did not  like the bonus culture of modern financial institutions. Regulation should come from within, from the internal ethical values of the business. We believe in market forces tempered by humanity. Women will have a big role in restoring balance to the wreckage of the financial system. Much of the credit crunch crisis came from masculine attitudes. Men were responsible because they sold things they did not understand.

Overwhelmingly, it’s been men at the decision-making tables. If it had been women, the troubles would not have been as big. Token women have no choice but to behave as the rest of the group. If you had several women in senior management, with greater diversity, the decision-making quality would have been better. Women think differently.   We are not the same as men. We bring different things. They should be valued. A business that does not take advantage of women in boardrooms or key executive teams is missing an opportunity. A world with only women would be equally imbalanced. We need the balance, it brings healthier debates and decisions.    

It’s not the role of women to clean up the mess. We are saying, it’s so important to have a system where men and women work together. Women tend to bring a lot of things to the table. They are risk aware, not risk averse. Men tend to be risk takers. Women think more long term. They think about the team, not only themselves. They think more about the people. Women see other business opportunities than men do. I’m saying that women on the Board will look at more things than just financial profits. They will ask different questions, they will consider more stakeholders.  It’s about the wellbeing of the employees. It’s not about the narrow definition of shareholder value. Women are ready to ask stupid questions.  That was not allowed any more. Risk awareness means you won’t take risk you don’t understand. So you will ask questions. Tokenism isn’t helping. One woman on a 10-person board is not helpful. As tokens, you can either belong by behaving like men, or be marginalized. Behave like men, women are told. But to be yourself? You need the support of one or two more women. Three is a critical number. Three women is much better.  

In Iceland, banks were taken over by people with little experience in banking. There was a great influx of people seeking higher returns, there was an orgy of extravagant lending, at home and abroad.

It was a group of alpha males that caused this crisis. In general, most women in Iceland work outside the home, over 80 %. We have well-educated women, but on an executive or Board level, we are male-dominated. It is slowly changing, but not fast enough.  

I don’t think it is right that women should clean up the mess. The men should clean up the mess after themselves. We will take part. But it’s not our job to clean up, and then they come back and start the party all over again. It has to be balanced, we have to do it with the men. 

Career vs. family: There is a stage in women’s life where they take a break in their career. But now we have paternity leave, where the fathers take up to 3 months leave. That has changed a lot. It is equal: 3 months for men, 3 for women, and they can choose. That made a huge difference.

The crisis we are going through now can be an eye-opener, men will understand we need something else. It is such a good example of when you have homogeneous decision-making, a group of only alpha males, city bankers, men on Wall St., — business have to realize the value of diversity. I hope this crisis will make people come to their senses. 

In a way women have gained authority because men have messed up. We are listened to. We have a stronger voice.  What we are saying makes a lot of sense. Men told us, we were nuts, when we started a company. Why would we choose to be in the world of women? Here we are, 6 months after the crash, and we are one of two companies alive and doing well, and not accepting government aid. I am worried that it will be a glass cliff situation for women. A trap. It can break off so easily, and then she will never rise again. Look at all the men that went belly-up, and they will rise back to glory after too long, many are still in complete denial about the need to change the ways of doing business, they are scrambling to get back into the game just as the played it before.

Peter Day: “The fantastic talent of women is not being properly used, it is being wasted”. Halla and Kristin: We should tell women, they are OK the way they are, we should tell men their demands for pay packages and bonuses are excessive. Women should not adopt male ways of doing things to advance. We should talk to men and women how to create healthier organizations, with a broader definition of bottom line that benefits society and the world, to build a capitalist system that will not fail the way this one did.

Auder Capital: What was it like to launch a new financial services company so close to disaster? We founded the company two years ago. It took time to get shareholders in. We didn’t get our license until May 2008. The cracks were beginning to show. The system was about to tumble. We were risk aware. We saw the risks. Everywhere you look, assets are being shredded. But this is a buying opportunity. We can buy at the rock-bottom prices you are seeing. If you are risk-aware, and wait out the situation, we are careful when we enter into investments, at a slow pace.

Our values are indeed different. Human financial services provider – we are more human, we value different things than typical financial services. For instance, we do not due typical due diligence. We do an emotional due diligence.  You can present anything in Excel. It is down to the people, their culture, their values. What is a good investor? Just money? A good investor brings more than money. Also, emotional capital. You can squeeze the blood out of a turnip, but it is better if you can make something flourish. We use both our rational minds and our EQ, to release value from our investments. It is smarter, and more long-term. The soft side of the business is actually the hard side of the business.

We find investment opportunities based on our emotional due diligence.  

Female values: Our values got us through the crisis. We tripled our wealth management business during the crisis, when others were losing business. One of our values is straight talk. We told our clients things that were not spoken honestly elsewhere. We believe in being authentic. It is in our DNA. Some will love it. Others will not. We are not worried. We are the place for those who want that kind of value-driven business that will build relationships on long-term thinking. 

P.S. Iceland has now chosen a female Prime Minister to lead it out of the crisis.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
May 2009
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