Women Making It to C-Suite, But Challenges Persist

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By Genevieve Douglas

Women are increasingly moving up the corporate ladder and into the coveted C-suite, but employers should continue efforts to provide career development to ensure that progress continues. That’s the advice from several consultants as well as a leading software company.

Leaders need to understand that having female executives in a company is not only “nice to have” but also a competitive advantage that affects the bottom line, Jewell Parkinson, senior vice president and head of human resources for SAP North America, told Bloomberg BNA via e-mail Feb. 2.

The number of women taking over the role of chief executive officer increased for the third consecutive year in 2016, according to data from global outplacement consultancy Challenger, Gray & Christmas Inc. Of the 1,043 replacement CEOs recorded in 2016, 193--or 18.5 percent--were women. In 2015 only 15 percent of replacement CEOs were women.

Overall, the CEO replacement rate among women has grown by 71 percent since 2013, when women accounted for 11 percent of the 977 new CEOs announced by U.S.-based companies, Challenger, Gray & Christmas found.

A combination of strategies are likely at play, John Challenger, CEO of Challenger, Gray & Christmas, told Bloomberg BNA Feb. 1. Companies are trying to diversify leadership, and talented people are rising to the top of their organizations, he said. Companies and executive boards are saying that diversity matters so “let’s just change,” but the rate of change can at times be “glacial,” Challenger said.

Is It Real Progress?

“If you really peel the onion back, women may be making it to the C-suite, but they’re doing it in HR. That’s the lowest-risk job,” Mara Swan, executive vice president of global strategy and talent for consultancy Manpower Group, told Bloomberg BNA Feb. 2.

And the position of chief human resources officer comes with its own glass ceiling because it doesn’t often lead to the position of CEO. “I don’t think that’s real progress,” Swan said. Women who really represent second-generation diversity should be in jobs that put them in the pipeline to eventually be CEO, she said.

The larger an organization is, the slower the flow of women to the top, according to the findings of Challenger, Gray & Christmas. As of 2015, just 7 percent of Fortune 1000 CEOs were women.

“This slow flow could be institutional bias or bigger bureaucracies,” Challenger said. At small and medium-sized companies, women make faster progress because there are fewer people, layers and structures in place to block the movement of women into the C-suite, he added.

Despite the gains, however, women still represent a small fraction of the nation’s CEOs, Challenger said.

Technology Challenges

Women in traditional sectors of a business, such as marketing, sales or HR and administration, are at a greater risk of being replaced by future automation and technology, Swan said. The future of work is changing in a way that may stall women’s progress.

Swan recommended that employers create strategies for looking at the jobs they will need in the future. “If you are focusing your strategy on where you are operating today you’ll find yourself five paces behind where you started,” she said. Employers and HR can’t just focus on employees’ skill sets, they need to assess people for “learnability,” and adaptability to developing new skills, Swan said.

This change in focus “can be the great gender equalizer” for women advancing to the C-suite, Swan said. Companies will need to consider who in leadership has that kind of adaptability and flexibility and then invest in them as they acquire the technical skill sets needed going forward, she said.

Having Women at Top Leads to Profitability

Parkinson pointed to a working paper from the Peterson Institute for International Economics on gender diversity, which found that having women in the C-suite boosts company profitability. Going from no women in corporate leadership (the CEO, the board, and other C-suite positions) to a 30 percent female lineup is associated with a one-percentage-point increase in net margin, according to the Peterson Institute study. That translates to a 15 percent increase in profitability for a typical firm, Parkinson said.

SAP has also found its own success in promoting women to leadership roles. The technology provider set a goal in 2012 of having 25 percent of management globally be women by the end of 2017, and is “on a path to hit that goal,” Parkinson said. As the company has promoted women, it has also experienced “significant growth in profitability and margin.”

“While at first there was some unrest in having what some considered to be a ‘quota’ in women in management, the impact is clear, and now most hiring managers know they should interview at least one diverse candidate for open management positions,” Parkinson said.

Having women in leadership roles is also essential to attracting top talent, Parkinson said.

“Females need to see other females in leadership roles. This shows the company is committed to and sees the value in diverse leadership,” she said, noting that female leaders are also valuable as mentors to other women at the company. “Females need to work to establish a relationship with an executive who can advocate on their behalf, actively seek opportunities for the future leader, and give that person and their work the visibility among their executive peers.”

To contact the reporter on this story: Genevieve Douglas in Washington at gdouglas@bna.com

To contact the editor responsible for this story: Tony Harris at tharris@bna.com

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