Why capitalism faces crises?

Kim Sang-kyung says male-dominated culture leads to hard times

This is the second in a series of interviews with prominent women leaders in the country’s financial and business sectors. Sponsors for this series include the Industrial Bank of Korea, Women in Innovation and Korea Network of Women in Finance. ― ED.

By Kim Tae-gyu

There have been a set of theories on why capitalism faces ups and downs on its course of time and sometimes disasters such as the financial tsunami in the late 2000s and the European debt crisis of late.

With none of the hypotheses designed to explain the business cycle having yet to win consensus acceptance, a female trailblazer in Korea comes up with a unique assumption involving gender factors.

Korea International Finance Institute (KIFI) CEO Kim Sang-kyung says that the male-oriented culture lurks beneath the advent of a few economic crises in the new millennium. KIFI is an entity of teaching various financial courses mostly to employees of companies.

``Men tend to take risks while frequently turning blind eyes to controlling them. In comparison, women tend to be careful enough to pay sufficient attention to risks,’’ said Kim who also leads the Korea Network of Women in Finance (KNWF).

``Accordingly, they typically do not keep creating risks-laden products such as derivatives, which are one of the reasons for the economic downturn over the past few years.’’

Kim took a pair of examples of Lehman Brothers, whose collapse heralded the global financial turmoil in 2008, and the European sovereign debt crisis, which is still weighing down on the global economy.

``If the investment bank had been Lehman Sisters, not Lehman Brothers, so that the femininity plays a certain role in bringing masculinity under control, the 2008 crisis would not have taken place,’’ Kim said.

“The debt mayhem in the euro zone is also associated with the side effect of the masculinity-dominated culture. Think of the process under which the euro was first introduced.”

She noted that no women participated in the meeting where the euro came into existence back in the late 1990s, which she said has something to do with the lingering difficulties in the region.

Max-max vs max-min approaches

“We can say that masculinity is about risk-taking, bigger sizes and short-term profitability while femininity is about risk-control, balance and long-term sustainability,” the life-time financial expert said.

“When masculinity rules without the check of femininity, things deviate from the natural courses and that’s how the financial crises happened.”

Simply put, males’ main strategy is typically to maximize the possible best results, or the max-max tactics, but females’ approach is usually to maximize the possible worst results, or the max-min tactics.

``The max-max philosophy is best when things are good. So a flurry of male financial guys rack up huge gains in the economy is good and the stock market is bullish,’’ she said.

``During rainy days, the max-max strategy is feared to lead to great losses and the alternative max-min policy can cut down on the risks. But the financial world just lacked the latter approach because of the dearth of femininity.’’

Glass ceiling

The Korean financial sector is notorious for its glass ceiling for women ― there have been no female CEOs in banks and only a handful took charge of executive posts in lenders.

Especially, the four major local banks ― Kookmin, Woori, Shinhan and Hana ― have not promoted women to the posts of deputy presidents and there are none in the pipeline.

Things are not that different in other segments such as insurance and asset management.

This compares to global 500 companies whose ratio for female executives are in the neighborhood of 15 percent.

Asked about why Asia’s fourth-largest economy has failed to shatter the glass ceiling in the area of finance, Kim picked the lack of networking capacity as one of the key reasons.

``Despite their outstanding achievements and overall capability, women tend to be weak in human networking that they fail to join the executive ranks. By and large, they are not so good at relationships,’’ she said.

``They are required to learn how to build up networks. It is also a good way to impose women quotas for executive posts as the United States did in the past to accelerate the promotion of capable women.’’

And the wide relationships are a must in order to climb the ladder of hierarchy in banks.

``For candidates to become deputy presidents, banks ask to present three very influential figures with whom they are on good terms so that the lenders will be able to take advantage of them,’’ Kim said.

``Male hopefuls typically offer three very prominent figures but females usually cannot. That seems to make a difference.’’

Indeed, Kim has chalked up a success on the back of her strength in human networking. Asked to choose three people to whom she is very close, she wasted no time to pick a domestic bank head, a former prime minister and a justice of the Constitutional Court.

``I make a list of people to whom I have to make a call or meet every month. I also send hand-written cards in late December to people. With small efforts, I can give great impressions,’’ Kim said.

KNWF

In order to jack up the networking capacity, Kim spearheaded the initiative of setting up an organization comprising promising females from banks, insurers and asset management firms.

When KNWF was established in 2003, it involved less than 30 members.

With founding Chairwoman Kim in charge, the number has jumped six-fold to around 200 by now and about 100 core members act briskly for the organization.

One of its main events are quarterly forums where big names deliver speeches. ``We mostly invite leaders of financial companies so that they know that there are lots of smart women in the finance segment,’’ Kim said.

There are some silver linings in the KNWF’s efforts of shattering the glass ceiling as almost half of new recruits of financial outfits are women.

Plus, some prominent of the farer sex have gained recognition, including Industrial Bank of Korea Senior Executive Vice President Kwon Seon-joo, who is the first woman to reach the post of the Seoul-based lender.

In the insurance sector, Prudential Life Korea has become the first major insurer to tap a woman as its head.

Asked when domestic banks would appoint females as CEOs, Kim said that if progressive candidates take power in the upcoming presidential election this December, it would be possible under the next administration.

Genuine success

The conventional image of successful career women is those who only work without caring about their homes, or those who sacrifice their family members for their office jobs.

Kim said that it does not represent real success.

``A woman banker worked so hard to be promoted to quite a high post. She simply worked around the clock while paying little attention to her home,’’ Kim said.

``After wrapping up her career at the bank, she realized that she had empty hands. She thought that she was very smart but she realized that she was not.’’

Kim said that career women with good family supports have better chances of eventually winning out than those who only work.

``Single women might have more time to focus on their jobs. But more time does not guarantee higher likelihood of being successful,’’ she said.

``Through marriage, she can learn what life is and that is crucial in understanding their customers and the demands of their jobs. At the end of the day, those with homes and families are more likely to succeed.’’

Kim is married to a renowned drama writer and has two daughters.