Women CEOs outperform men, so why aren’t companies giving them the top job?
Women CEOs outperform men, so why aren’t companies giving them the top job?
When you look at the largest companies in the country, few of them have female CEOs or even female board members. Some high-profile female CEOs have been forced out of their jobs recently. Yet, companies led by women tend to have better returns than those that aren’t. So what gives?
Marketplace host Kai Ryssdal talks to Julie Creswell at the New York Times and Jena McGregor at the Washington Post about why corporate America has been so slow to hire women for C-suite positions and what happens once women get to those positions. The following is an edited transcript of their conversation.
Kai Ryssdal: Julie let’s start with you, and give me a survey, would you, of the state of play with female CEOs in some of the biggest companies in this economy, where do we stand?
Julie Creswell: It’s totally depressing. Female CEOs make up about 5 percent of management or the top spots at Fortune 500 companies and that’s up from a few years ago. A decade ago or so it was about 2 percent, but you’re still talking a very small percentage of women running large corporations.
Ryssdal: And we should point out here, Jena, that in the past weeks and months many female CEOs have departed, whether by choice or not.
Jena McGregor: We’ve lost a couple. Irene Rosenfeld at Mandalay and Sheri McCoy at Avon. I remember the Fortune 500 list came out recently and we had a headline that was something like, “The number of female CEOs comes up to a all time high of 32.” And so the numbers can be at a high but still be pretty low.
Ryssdal: The catch though, Julie, is that when you do look at the numbers, and I’m talking performance numbers here, of companies with female CEOs they generally do pretty good. And yet more women aren’t getting these jobs.
Creswell: That’s right. And I think Jen has written about this a bit more than I have, but that’s exactly right. There’s these studies out there that show that women as CEOs do tend to outperform men.
McGregor: Yeah there was a recent study that just came out last week from an investment firm in Scandinavia, who looked at companies globally. And over about an eight year period the annualized return of companies led by women was 25 percent, whereas for the broader market it was 11 percent. And the question is why.
Ryssdal: Yeah well so let’s answer that, right? What gives?
McGregor: Well there’s a lot of speculation about what it might be. But there’s kind of a chicken or the egg thing is a company that is big and performing well more likely to have better governance and more diversity? Or are the women leading to the better performance?
Ryssdal: Is it possible, Julie, that women are just better managers, right?
Creswell: Well absolutely. I mean I think there’s a lot going on, some of it’s very company specific. I think there’s obviously a lot of challenges still, though, in various industries with what you see happening. Right now in Silicon Valley, for instance, with the culture around mentoring diversity and women, that we have large tech companies like Google and Uber that are struggling right now with the role of women in the workplace. It’s a much bigger question even than how this gets to women CEOs.
Ryssdal: And what do you do about Uber. I mean the headline was Uber’s search for new female CEO results in three male finalists.
McGregor: It’s apparent that maybe women didn’t want that job. I don’t know. It speaks to a phenomenon that is much broader, that women seem to receive a preponderance of jobs that are difficult, that are, you know, the companies in a turnaround strategy. There’s a name for this, it’s known as the “glass cliff.” It’s a difficult, precarious position that women are often entrusted with.
Creswell: And then I think that same research also shows that the women that do wind up in these companies that are turnaround companies, or troubled companies, also therefore lack tend to lack the support by the board is needed to make the changes and tend to have shorter tenures than men in similar turnaround or fix-it positions. So it’s it’s a catch-22 for women when they end up sometimes in these turnaround jobs.
Ryssdal: You know the name that comes to mind is Marissa Mayer at Yahoo, right? I mean they went through a raft of CEOs before that thing finally went under.
Creswell: For sure, including I think there was another female CEO.
Ryssdal: Right, Carol Bartz.
Creswell: Yeah. Carol Bartz.
Ryssdal: And yet Marissa Mayer will be remembered as the CEO who undid Yahoo, right? That’s going to be the first line of whatever remembrance of her is eventually published.
Creswell: For sure.
Ryssdal: You know the thing you hear about Silicon Valley all the time, about the lack of diversity, and a lack of female engineers, and lack of engineers of color in that field. And tech companies, although they’ve moved away from it since, their initial response was it’s a pipeline thing we just have to wait for women to get here. Is that a factor in female CEOs in some of the biggest companies in America?
McGregor: I think that does play a role and is a factor to some extent. But one of Julie’s colleagues wrote a really great story recently where she talked to one of the heads of one of the biggest executive search firms who says there really is bias at that level. Once you get to that level there is a crowding out and so much competition for that top job and so women have to fight that at that top level.
Ryssdal: And men fundamentally have to get over themselves. I mean, right? You know, that’s what it is!
Creswell: Absolutely.
Listen to an extended version of the interview on our Corner Office podcast.
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