Women Are Stalling Out on the Way to the Top
Clipped from: https://sloanreview.mit.edu/article/women-are-stalling-out-on-the-way-to-the-top/
Here’s what we’ve learned from 40 years of data on executives in the largest U.S. corporations.
Kotryna Zukauskaite/theispot.com
A decade ago, we were poised to make serious progress: Employers started showing considerable interest in both measuring and improving gender diversity. They dug into the analytics and kicked off initiatives with hopes of turning the numbers around — only to shelve a lot of those efforts during the COVID-19 pandemic, when many companies struggled to stay afloat. As those that have survived begin some kind of restart, they face an exceedingly tight labor market where employees have no shortage of career options. So now is a good time to assess where we are in the advancement of women — particularly in the most visible leadership roles in our biggest businesses, where inequities can be clearly seen.
To do so, we’ve analyzed the career histories and demographics of the executives in the 10 highest-ranking jobs in Fortune 100 companies during the past 40 years. We began the project in 2001 and looked back to 1980 as the baseline, given the evidence that the wave of organizational restructuring that followed the 1981 recession marked a turning point in career advancement generally. Since then, we have checked in on who has these top jobs every 10 years, gathering detailed biographical information about 4,000 executives.
Gender representation has certainly improved, because there was nowhere to go but up: Not one woman held any of the top 1,000 jobs in 1980. Since then, women have actually advanced more quickly than their male counterparts into executive positions. But they remain largely stuck in support functions rather than moving into key operating roles. At the oldest companies, women’s numbers are backsliding even in those functional jobs.
So organizations seeking gender diversity at the top still have a lot of work to do. We’ll provide more details on where they’ve made strides and where they’ve fallen short — and offer recommendations on how they can do better.
We’re Seeing More Women Overall, But…
Despite accounting for 47% of the U.S. labor force, women held just 27% of the Fortune 100’s top leadership positions in 2021.2 That represents a huge advance since 1980, but it is still far from equal representation. (See “Women Are Gaining Ground in the Top 10 Executive Jobs.”) One reason for the increase is because the composition of the Fortune 100 shifted from industries that tended to employ fewer women (manufacturing and steel in 1980) to those that employ more (financial services, health care, insurance, and retail in 2021).
Women Are Gaining Ground in the Top 10 Executive Jobs
The representation of women in top jobs in Fortune 100 companies overall has grown steadily over the past two decades. Women made enormous gains at younger companies in 2011 but lost some ground in 2021.
But industry is not destiny. Some Fortune 100 players in traditionally male sectors have relatively high percentages of female executives. For instance, women hold more than half of the top positions (58%) at Northrop Grumman, a defense and aerospace company. Caterpillar, Ford, and Phillips 66, also in male-dominated industries, have higher proportions of women in these roles than average.
That’s surprising, but even more so is the extent to which gender diversity among executives skyrocketed from 2001 to 2011 at the older, more traditional companies that have consistently appeared in the Fortune 100 rankings since 1980. That spike (from 7% to 26% women) was much steeper than in the other F100 companies (from roughly 13% to 16%). But then, among those same traditional companies, the percentage of women actually dropped a few points in 2021.
That decline seems to center on a few companies that had seen enormous gains in 2011. That year, women accounted for 50% of the top executives at Pepsico and Lockheed Martin, and 40% at Coca-Cola, General Electric, and IBM, but by 2021, those percentages had dropped by half at some of these companies. One lesson from this is that the advancement of women has not been anything like a linear process. In fact, General Motors is the only company in that older set where the ranks of women were substantial and increased continually throughout the study. In nearly every other company listed since 1980, there has been a huge uptick followed by backsliding.
Women Are Mostly Stuck in Support Roles
Although gender diversity has grown overall among executives, the distribution of women is uneven across types of roles, and that hasn’t changed much over the past 20 years. Among all of the leadership positions held by women in 2021, just 6% were at the highest tier (CEOs, presidents, and COOs) — hardly any change from 5% in 2011 and 7% in 2001. Most were support roles, overseeing enterprise functions such as HR, finance, and legal: 60% of the leadership roles held by women fell into this category in 2001, 66% in 2011, and 55% in 2021. (See “Women’s Leadership Roles.”) Representation of women was middling to poor among heads of product-specific functions, such as marketing, R&D, and sales, and among general managers (GMs), who have P&L responsibility for a region, unit, or division.
Women’s Leadership Roles
A lower percentage of women are heading support functions than 20 years ago, potentially positioning more for the top leadership track.
When we look at the distribution of leadership jobs between men and women for the most recent year, we see the greatest inequities in the highest-tier roles and the GM position, which are feeders for top operating roles. (See “Leadership Roles by Gender, 2021.”) It appears that the drop in the proportion of women in GM roles in 2011 might have kept their numbers from growing in the top tier in 2021. Although their percentages had increased in functional roles, those jobs rarely put leaders on track to become CEO.
Leadership Roles by Gender, 2021
Four out of five general management roles — feeders for top jobs — were held by men.
Women Advance Faster than Men
Speed of advancement from the beginning of a career to an executive job is another way to measure progress. Moving up sooner means having more time to make an impact and to keep advancing. Individuals can and do follow different paths upward. Some skip over what have previously been seen as required steps or make lateral moves to avoid dead ends, and others get promoted with less “time in grade” than their peers.
Over the past two decades, the women in our sample advanced faster than the men — typically two to four years faster — and that difference held across types of executive roles. (See “Women Reach the Top Faster.”) Partly as a result, the women in high-ranking jobs were, on average, younger than the men (by almost two years in 2021, and by four in 2001). Both differences — in speed and age — are in step with the findings of a small but growing body of literature showing that the gender gap in advancement, which typically favors men, might actually reverse under certain circumstances.3 More broadly, our analysis contradicts the prevailing notion that promotions are increasingly harder for individual women to get as they move up, with the caveat that fewer women than men are positioned to advance to the very highest levels.
Women Reach the Top Faster
It takes less time for women than men to reach a top-tier executive position from the start of their careers.
It’s not entirely clear why female executives advanced faster than men. Some of the difference is explained by the fact that the women appeared to be more qualified, but even controlling for qualifications, they still moved up faster. That probably reflects pressure from stakeholders to diversify leadership.
Women Switch Employers More Often
One of the most striking differences between the female and male executives is length of tenure in their organizations. In 2021, for example, the women had been with their companies an average of three fewer years than the men (14.6 versus 17.5), and their tenure in their current role was also almost three years shorter (10.9 versus 13.7). (See “Career History for Men and Women, Past 20 Years.”) We saw similar patterns in 2001 and 2011.
Career History for Men and Women, Past 20 Years
Women had worked for more companies than men and were more likely to be outside hires in their current roles. (Differences in lighter text are not statistically significant.)
Since women moved around more often than men, it naturally follows that a higher percentage of women came to their leadership roles as outside hires (33% of them, compared with 23% of men), like UPS CEO Carol B. Tomé, who was previously Home Depot’s CFO. (UPS is otherwise a company known for internal employee advancement.) They also gained experience in more companies than men did (3.4 versus 3.1, on average). Among women of color in our sample, these company-switching patterns are even more pronounced: In 2021, their tenure with their employer was shorter than the tenure for White female executives (11.8 versus 15.2 years), and a greater percentage were outside hires (41.4% versus 31.5%). One likely reason why we saw more female outside hires at the top tier is that succession pipelines are smaller for women, given their relative absence in general management roles. Those pipelines are smaller still for women of color, who are “outsiders” in even greater percentages than White women.
Some of the differences in tenure between women and men are related to the fact that most female executives lead functional areas — finance, accounting, HR, legal — that are “far from the product” and therefore require skill sets that transfer across employers and industries more easily. Empirical research bears this out.4 So does our analysis: In 2021, for instance, women’s attachment to employers wasn’t as strong in support function roles (they stayed 13.2 years, on average) as in general management (17.5 years) and product function roles (15.6 years).
Women at the top tier are more likely to be hired from outside than female GMs (25% versus 18%, respectively). They also have shorter tenures at their company (by 2.5 years, on average) than female middle- and lower-tier GMs. Among male top-tier executives, the pattern is different: They are less likely to be outsiders (13.7% versus 15.2%, respectively) than their male GM counterparts, and they have a longer tenure with their employer (17.0 versus 16.5 years, respectively).
How Companies Can Do Better
What can be done to increase numbers of executive women where they’ve gained the least traction — in top-tier and general-management roles? Here’s what we recommend, given our analysis.
Don’t count — or count on — board diversity. Although some research suggests that having more female directors on boards boosts gender diversity in Fortune 100 leadership roles, we found a more nuanced story there.5 While the companies with more women on their boards indeed have more female executives overall (and more who have advanced internally), this result is driven largely by a much higher percentage of women who lead support functions. In these organizations, we actually found fewer women in top-tier positions and in feeder roles than we did in companies with a lower percentage of female board members. Since the board is highly visible, adding women there can create the appearance of diversity, often without promoting advancement to the very top. Key decision makers, if they’re merely checking off a box, may “count” board representation as gender-diverse leadership. Even if their intentions are better than that, they might assume that having women in those board seats shapes leadership teams more than it really does.
Boost external hiring. To make more meaningful progress, we can take a cue from companies within male-dominated industries that still managed to have a large percentage of female business leaders: They were much more likely than the others we analyzed to bring in female executives from outside the organization, hiring 47% (versus 32%) externally in 2021.6 In such companies — including Northrop Grumman, where Kathy Warden is CEO — executive women had, on average, a much shorter organizational tenure than men when they started their current role (7.9 versus 11.2 years). They were also much less likely to have spent their entire career at their current company (9% of executive women, compared with 18% of the men). In contrast, men at the same companies were much more likely to be “lifers” (29% of them in the subsample, compared with 21% in the rest of the companies analyzed). Knowing that women are less likely to hitch their future to a single organization, the only way these companies can possibly increase gender diversity in senior leadership roles is to bring in more women at that level. And so they do.
Other companies can follow their lead in external hiring by working with executive search firms, which do a better job targeting female candidates and supporting their hiring than employers do on their own.7 Additional possibilities include tapping places with a high proportion of female members (such as professional associations or niche job boards) and getting the company’s male executives involved in its efforts to recruit women; both approaches have been shown to increase gender diversity.8
Of course, outside hiring that simply moves women around does not increase the number of women in executive roles. It helps when organizations find women whose advancement has been blocked or slowed and move them to better jobs where they can develop and advance.
Promote more women to “feeder” roles. Companies should also think about where their own promotion pathways lie. While promoting women in general helps the diversity picture, it helps more when they advance to general management and operating roles that feed the highest tier.
In our sample, companies in the top quartile of gender diversity overall (those where 33% or more of executives were women) also had a higher percentage of female GMs than companies in the bottom quartile (those where less than 19% of executives were women). Those feeder jobs are critical because people who hold them report directly to the CEO, which means they have a say in strategy and other high-stakes decisions. GM roles also involve overseeing P&Ls, products, divisions, and multiple job functions. That combination of exposure and experience can prepare executives to do similar work on a larger scale later on, running a whole company.
Double down on development. Promotions are important, but they’re not the whole story. Employers must also provide more developmental support overall and more opportunities for women to gain the experience needed for bigger jobs. Two basic places to start are making the internal pathways for advancement clearer for all employees interested in going after GM roles, and removing common barriers, such as requiring permission from the current manager to move (as employers have increasingly done since the 2008 recession). Organizations can also explicitly encourage people to step up for feeder opportunities.
No doubt, some of the difficulty companies are having supporting the advancement of women is related to organizations’ lack of career management generally. For the most part, we don’t give enough attention to our talent pools below the C-suite; we don’t have serious high-potential programs, plans for succession, and so forth. And at least under U.S. law, we cannot increase diversity by making gender a criterion for advancement into executive roles. To move the needle closer to parity, we have to invest more in leadership development overall and give women more equitable access to opportunities for growth.
About the Authors
Monika Hamori and Rocio Bonet are associate professors at IE Business School in Madrid. Peter Cappelli is a professor of management at the Wharton School and a research associate at the National Bureau of Economic Research. Samidha Sambare is a research associate at Wharton’s Center for Human Resources.
Hamori, M. et al. (2022) “Women Are Stalling Out on the Way to the Top”, MIT Sloan Management Review, p. Available at: https://sloanreview.mit.edu/article/women-are-stalling-out-on-the-way-to-the-top/ (Accessed: 3 September 2022).
