Women are Good For Business: So Where are the Women Leaders?
by Beth O'Neill
Fortune’s 500 list released last month revealed good news and bad news for women leaders. The number of women CEOs in the Fortune 500 is at its highest yet — and has been on a steady incline in the last 16 years. The bad news is: that number is 24 (51 in the Fortune 1000). Despite the low number, Fortune 1000 women-led companies generate 7% of the Fortune 1000’s total revenue and outperform the S&P 500 index during their respective tenures. Although CEO gender is only one variable, the data still begs the question: Why don’t more women hold leadership roles?
There are many compelling theories about why this is so. Bentley College’s Center for Women and Business - Engaging Men to Advance Women in Business - offers 18 articles from business leaders about why we don’t have more female CEOs. Most agree that gender bias plays a huge role. Steven Manfredi, a retired executive says, “I … remember that when a guy left work at 3:30 in the afternoon to go watch his son’s soccer game, he was Dad of the Year, a great family man. But when a woman had to leave at 3:30 in the afternoon to go home and take care of a sick child, people frowned. And there were no Mom-of-the-Year awards given out.”
In a recent Fast Company article, Sally Blount, dean of Kellogg School of Management, says there are “three critical pivot points where we’re losing women on the way to the C-suite: the launch, the child-rearing years, and the transition to senior leadership.” She says women may be quitting even before they start. “Recent stats from Northwestern and Harvard show that, in their first year out of college, women from these top schools are up to 50% less likely than their male peers to enter the most competitive business tracks, like investment banking and management consulting.”
The child-rearing years present challenges for men, too. In his Fast Company article, The Promotion I Didn’t Take, Clint Edwards says, “Much of my professional life has come down to choosing between an evening reading stories with my kids, and working late on a project; between taking my wife out for dinner, and meeting with colleagues at a pub to chat about a new project; between a Saturday dance recital, and getting ahead at the office. I think a lot about the tug-of-war between family and work, and in this moment, I decided to keep the rope on my family’s side of the pull.” My sense is that women feel the same pull in spades.
And then, there’s the money issue. A University of Miami research report found “… High school grade point average (GPA) is a strong predictor of income in adulthood. That doesn’t play out evenly, though. The team of University of Miami researchers found that a one-point increase in GPA means a 12 percent boost in earnings for men and a 14 percent boost for women. Even so, there’s a big gender gap in total earnings. A woman who got a 4.0 GPA in high school will only be worth about as much, income-wise, as a man who got a 2.0. A woman with a 2.0 average will make about as much as a man with a 0 GPA.
The article goes on to say, “A woman who is one credential ahead of a man will always be worth less in terms of income: a woman with an associate’s degree makes less than a man with a vocational degree, a woman with a bachelor’s makes less than a man with an associate’s, and a woman with an advanced degree makes less than a man with a bachelor’s. Even among recent college graduates with the same grades, majors, and career fields, men will make more in their first jobs.”
Despite acknowledgment of the issue and the business case for change, all agree that while there’s momentum to change, companies are not taking action. A white paper from the Center for Advanced Human Resources Studies, Re-Examining the Female Path to Leadership Positions in Business (pdf) states, “According to a 2010 global survey by McKinsey & Company, although 72% of respondents believe there is a relationship between diversity and financial success, an overwhelming majority reported ‘no change in their companies’ view of gender diversity as a strategic issue’ since the financial crisis. Out of 540 U.S. companies surveyed by Mercer in September 2010, 70% reported not having a strategy for developing women into leadership positions. Additionally, 43% of respondents did not offer any programs targeted to develop women leaders, and only 5% of respondents offered robust programs. In other words, companies were eight times more likely to not take any action to develop women than to take strong action.”
At Interaction Associates, we worked with Deborah Kolb, Simmons Professor Emerita, to develop a program for women — to increase their understanding of personal strengths and barriers for being a successful and authentic leader, and to create an action plan to leverage their strengths and address existing barriers. But it can’t all be on the women to bring about change. To achieve sustainable change, CEOs must be committed to driving efforts which address enhanced leadership diversity. It will take a systemic transformation of organizations’ recruiting, sponsorship, mentorship, and talent management policies to create gender diversity that seems so hard to come by, yet yields such great results.
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Promoting women to top leadership roles is good for business. In fact, having more women leaders at the top is a no-brainer for more robust financial results. Here's why.
by Beth O'Neill