Women CEOs are on the rise.
Corporate America has a long way to go to clear out the corner office for more female CEOs, but there’s been a dramatic shift over the last decade. Nearly 22% of new chief executives were women in the first half of 2019, up from 12% during the same period in 2010, according to an analysis released Thursday by Challenger, Gray & Christmas, a Chicago-based out-placement and career transitioning firm. Of the 607 replacement CEOs recorded in the first half of 2019, 131 were women. That’s up from almost 19% female CEO replacements in the first half of 2018.
Those in positions of power who create employment and teams tend to hire people who are similar to them.
Challenger, Gray & Christmas tracks CEO changes from U.S.-based companies that are at least two years old and have a minimum of 10 employees. In many cases, replacement data is not available when a CEO departure is announced. “Gender diversity, along with other visible and unseen diversity, is crucial to creating an environment that finds and develops the best talent for the role,” said Andrew Challenger, vice president of Challenger, Gray & Christmas. The U.S., for instance, is the only country in the developed world that does not provide guaranteed paid maternity leave.
More male CEOs are still replacing outgoing CEOs; they represent 78% of CEO replacements, and women are still vastly under-represented in the C-suite overall. “Those in positions of power who make employment decisions and create teams tend to hire people who are similar to them,” Challenger added. “It’s an inherent bias. When companies make it a point to promote a diverse slate of candidates and try to sidestep this bias, they cast a wide net to find the best talent.” (Seniority does matter: Women are still paid 83 cents on the dollar compared to men.)
So what’s behind the increase in women CEO replacements over the last decade? The government/nonprofit sector has named the most women CEOs in the first half of this year with 53 or 44% of all incoming CEOs in that industry. That sector, however, pays CEOs significantly less than the corporate sector. Apparel had the highest percentage of female CEO replacements (67%), but women only accounted for 4 out of 6 replacement CEOs. In percentage terms, real estate (42%), fintech (33%), financial services (24.5%) and food (23%) had the highest female replacements.
It may be no surprise to women’s rights advocates that there’s been a surge in new women CEOs in the years after the Great Recession. Case in point: Carol Bartz helmed Yahoo! AABA, -0.11% from 2009 to 2011 and Marissa Mayer took over from 2012 to 2017. Last year, Bartz spoke about the “glass cliff,” the theory that women are more likely to get offered leadership roles during or just after a company is in crisis. Put bluntly, many women are hired to clean up the mess, often left by male CEOs. “Mostly because a lot of times men don’t want the job,” she said.
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“And so they go for the Tier 1 man on their list, and they take a look and say, ‘I wouldn’t touch that with anything,’” Bartz told the podcast “Freakonomics.” And then they get to the Tier 2 man. And by the time they get to the Tier 2 man, some woman has finally popped up in their mind. And she’s so happy that she has a chance to have a senior position as a director or a CEO that she takes it.” She added, “Women have a lower unemployment rate than men. More women get bachelor’s degrees than men; nearly 40% of MBA graduates are female.”
Women hold just over 5% of CEO positions at Standard & Poor’s Composite 1500 companies.
Indeed, women still have a long way to go for equal representation in the C-suite. Approximately 10% of 5,700 chief executive officers and chief financial officers at Standard & Poor’s Composite 1500 SP1500, +0.35% stock index companies are women, according to a study published last year by the Pew Research Center, a Washington, D.C.-based think tank. Women hold just over 5% of CEO positions at those companies. The study was based on an analysis of federal securities filings by S&P 1500 companies, which mostly covered fiscal years ending in 2016 or early 2017.
Although women constitute a significant pool of potential future CEO candidates, the women executives identified by Pew tended to be in positions such as finance or legal that, according to previous research, are less likely to lead to the corner office than more operations-oriented roles. A separate survey of corporate human-resource heads at large U.S. companies found that women made up only 10% of the short-term CEO candidate pool, meaning the group of potential candidates who could step into the CEO role within three years.
Some sectors appear less welcoming for high-level women executives, according to Drew DeSilver, author the Pew report. Utilities had the biggest share of female executives who were not CEOs (17%). That was followed by 16% in the consumer sector, which includes the automobile, clothing, broadcast, hotel and restaurant industries. But only 6% of non-CEO executives at S&P 1500 telecommunications companies were women. “Despite the advances women have made in the workplace,” DeSilver wrote, “they still account for a small share of top leadership jobs.”
In corporate America, it’s difficult for women to be promoted to the top spot. Women CEOs are twice as likely to have come from outside a company than be chosen internally, according to one Harvard Business Review report that looked at 2,000 top-performing companies. And there appears to be a cultural resistance to ambitious women in corporate America: Women negotiating for a promotion were labeled as bossy, aggressive or intimidating, according to one-third of respondents in a 2016 Lean In/McKinsey & Company survey of 34,000 employees.
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