By , on Gender, Integration, leadership, Mergers & Acquisitions (M&A), Potentious.

Count on One Hand

If you think about the great business leaders you have had the pleasure to work for in your professional career, they likely can be counted on one hand…and there may be some fingers left. In my 21 years in the U.S. Navy, five years in the federal government, and four years in the private sector, I had the pleasure to work with great leaders of both genders. Each brought leadership acumen, some similar and some unique, to the variety of different situations we faced. Their abilities to use strategic, results-oriented, people-focused and management skills were apparent.

While investigating where to concentrate during the second phase of my research on leadership in M&As, I did wonder if any research into specific gender-specific leadership skills in these deals had been done. I looked and I discovered that…gender leadership is an important aspect of M&As.

Research on Gender Leadership in M&As

While there is a significant body of academic research specific to gender and leadership, very little has been performed specific to the context of M&As. The best article I was able to find was by Parola, Ellis, and Golden (1) in 2015. The researchers looked at top management teams (TMTs), examining the connection between pre- and post-integration performance and the relationship to the gender diversity of the TMTs. The researchers acknowledge that TMT gender diversity has an effect on firm performance.

“…there is growing consensus that gender is another characteristic of top managers influencing their values, cognitions, perceptions, and thus decision processes.”

The researchers also recognized that little has been studied regarding gender diversity in M&A to date.

“Yet, despite the recognition that TMT characteristics in general and gender of TMT members in particular influence M&A decisions and outcomes at various stages, few studies examine this critical issue.”

The authors’ first finding was that as the tasks and nature of TMT involvement changes during the M&A process, gender diversity offers positive effects in the selection stage, and negative effects during the integration process. In the selection stage, it had a positive effect because gender diversity offered a greater variety of important perspectives for information processing, particularly when scanning multiple, complex target environments. Additionally, the researchers shared the following perspective:

“Gender diversity among the TMT members is posited to have varied effects as the M&A decision-making process evolves, given that the stages of a deal require different leadership capabilities and knowledge resources.”

The realization that different leadership capabilities are needed during different parts of the M&A process is significant to understanding the impact of gender-related leadership in M&As. The researchers pointed out that leadership skills required during the pre-selection phase would include leveraging relationships and collaboration within the TMT.

With respect to success during the post-integration phase, Parola, Ellis, and Golden believed that it required a different leadership skill set that included purposeful action, decisiveness, communication, effective change management, and strategic consensus. Their perspective was that gender diversity of the TMT negatively impacted each of these skill areas due to the effect of having a variety of perspectives to view this phase differently.

Another specific area that the researchers added insights was regarding the leadership skills that women bring to organizations.

“Female strategic leaders are found to be more innovative, proactive, and transformational, while also more cautious and risk adverse than males in equal positions.”

These findings are based on the researchers’ review of existing research.

I want to voice two areas of concern regarding the sum of this research. First, it only is from the perspective of the acquiring company. While the selection stage is clearly an acquirer function, the post-integration stage is both about acquirer and target leadership and how it impacts M&A success. Secondly, this research only focused on the TMT or senior executives in the C-suite exclusively.

So what does this mean?

Potentious® Research on Gender Leadership in M&As

Potentious® recently conducted a phase II analysis of our dataset of more than 30,000 360-degree leadership assessments. Gender was one of the many areas that we looked into to determine if specific leadership skills correlated to M&A success were different for men and women (of acquirers and targets). The initial findings, which we plan to release later in 2016, were fascinating.

For acquirers, women possessed more strategic leadership skills (strategic thinking, innovation management, etc.) correlated to M&A success than men (Women had four out of five strategic leadership skills compared to one of five for men.). Whereas, men had a greater number of results leadership skills (planning, focus on customers, etc.) associated with M&A success than women (Men had five out of six results leadership skills compared to three of six for  women.), In people leadership skills (build relationships, motivate, etc.), both men and women possessed four out of nine skills each. Finally, in personal leadership skills (build trust, show adaptability, etc.), men possessed three out of vie, while women had two of five. Of the 25 total leadership skills analyzed, both men and women possessed 13 each related to M&A success, but the differences in skill sets is notable. The difference in strategic leadership skills for women and results leadership skills for men supports Parola, Ellis and Golden’s perspective that gender diversity is important in M&As.

The target results deviated from those of acquirers. In strategic leadership skills, men possessed one out o five, while women had zero of five. For results leadership skills, men had one out of six, while women had two of six. For people leadership skills, both men and women had three out of nine, and and neither men nor women had any personal leadership skills that correlated to M&A success.

The implications of these findings are quite significant. Gender leadership does play a significant role in M&A success. For both acquirers and targets, their female and male leaders bring different leadership skill sets to M&As. By knowing and using these results during all phases of M&As, acquirers can more strategically assign the right leaders to pre- and post-deal teams to leverage the leadership strengths of both men and women to assure M&A success.

Change the mindset. Change the model. Change the outcome.

Dr. J. Keith Dunbar is founder and chief executive officer of Potentious. He can be found connecting and sharing knowledge on Google+, Twitter, and LinkedIn.

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  1. Heather R. Parola Kimberly M. Ellis Peggy Golden , (2015),”Performance Effects of Top Management Team Gender Diversity during the Merger and Acquisition Process,” Management Decision, Vol. 53 Iss. 1, pp. 57 – 74