The pitfalls of female CEOs

The proportion of female CEOs is still very small, and there are quite some reasons for this. The latest Fortune 1000 list includes only 46 female CEO's. (http://www.geolounge.com/fortune-1000-companies-2014-list/).

Reasons for this have often been called the ‘glass ceiling’ or the ‘sticky floor’.

The glass ceiling refers to the resistance women encounter on their way to the top. Women who want to grow in a company are often prejudiced because of the fact that they won’t be the perfect mother/housewife. The glass ceiling is the “unbreakable” barrier that keeps women from rising to the top of the company, regardless of their qualifications or achievements.
Sticky floor refers to the fact that women who do not apply for challenging positions due to a lack of confidence, which limits their development in a company.

 In some cases women are given top positions that carry a greater risk of failure more often then men. Women are more easily promoted to top positions, especially in times of crisis, but they also have a greater risk of failing. Studies showed that women remain in their CEO position half the time compared to men. Wouldn’t you agree with them? Women are only considered the perfect fit for the CEO-position when the firm is going through hard times, so they have to ‘save’ the company and face a lot more pressure. This makes it fairly obvious why women quit this position sooner.

In my opinion, these terms of sticky floor and glass ceiling aren’t the most appropriate, we should say that it is a labyrinth for women to reach the top management.

It might take until at least 2030 before a third of all top-level positions are taken up by women.  Unfortunately, women are less likely than men to show interest in a job, since they often have the feeling that they should be approached. Otherwise they have the feeling that they are not competent for the high function. An explanation for the limited number of female top-positions can be that women are not applying for a job when they are planning to start a family in a few years.

 Quotas may be a solution, but it isn't  a perfect one. Solving the problem through the regulatory framework has often been shown as an unsuccessful approach. Quite some women oppose the idea because they don’t want to be favoured. For the moment I don’t think these quotas will make a huge difference in the amount of female managers.  It’s a pity, because this slows down the process while there are a lot of corporations out there who are engaged to grow the amount of female CEOs.

Women are more often hired for high-risk positions, because recruiters feel women have the abilities to solve a crisis or because it is less of a tragedy for women to fail.

The stereotypical image of women at the top: they are though. A man who has a tough approach is considered ambitious.

Or as the COO of Facebook said: “A little girl who is bossy is called bossy. A boy is immediately called a leader.”

Gender diversity: does it matter?

Gender representation in the board of directors looks at the proportion of men and women who occupy a place in the board. Globally men occupy more seats than women. This is being adressed by governments all over the world, trying to get an equilibrium between men and women in the board.  

In 2011 the quota for women in the board was implemented in the Belgium law. By 2017, at least one third of the board of directors of stock quoted companies should be women. The European Comission even raised these quota and by 2020 40 % of the board of directors of European publicly listed companies should be women. It is not a rigid quantitative quota obligation but a procedural quota. This in order to break the glass ceiling and have a better gender balance in the board. 

Looking at the graph below, comparing the percentages of female directors in the board of S &P 500 company boards by industry, we see a clear rise in all industries between 2010 and 2014. But it is obvious that the numbers are still far from the 40 % that the European Commission wants.

Some critiques wonder why it is necessary to implement quotas and if the companies will benefit from this. “Is it needed that we oblige companies to have more women in their boards?” Various research papers prove that the quota on female directors raise the quality of the board and their decisions, as well as the performance of the companies in a whole.

A recent report by Catalyst points out that the Fortune 500 companies with the highest representation of women on the board of directors attained significantly higher performance than those with the lowest representation of women. This proves that gender diversification at the board of directors has some positive effects. The study looks at three critical financial measures: return on equity, return on sales and return of invested capital. They compared those ratios for companies with the highest level of women on the board and companies with the lowest representation. 

This figure shows the result of their research. For all three ratios, companies with more women board directors (WBD) outperform the companies with the lowest representation of women. The return on equity is 53 % higher for companies with more women on the board. Looking at the return on sales, the companies with a higher diversification outperform with 42 %, and by 66 % for the return on invested capital. The correlation between company performance and gender diversification can also be seen across industries. 

Possible explanations of better performance of companies with more diversification on the board is that women are less ‘risk-takers’ and that they provide a better flow of information. Women will be more careful for reputational damage and they improve the corporate governance structure of companies overall. 

Fortune 500 Female CEO's

This might come as a shock to you -or it might not- , but of the Fortune 500 companies, there are 24 companies that had a female CEO in 2014. This means that only 4,8% of these 500 American companies have a woman as CEO. This is fairly little, yes. But let us look at the history behind it.

In 1998 only one company on the famous list had a female CEO, as times moved on and people's rationale became more open towards women in the businessworld, this amount slightly rose. In 2014, there were 24 companies that had a female CEO, which is a significant upward rise in only 16 years time.

 While the fact that the amount of female Fortune 500 CEO's is uprising is good news, we must keep in mind that this small percentage is still in shrill contrast with the amount of female employees in these companies. Women make up almost half of the work force (45%) in these 500 companies, while only a small amount of them is able to make their way to the top. Following pyramid graph makes this division of women in the organizational structure more clear. It is very clear that the higher we are on the organizational ladder, the fewer women are present.






How can it be that in a world full of powerful women like Angela Merkel, Christine Lagarde, Oprah Winfrey and so much others, there can still be a certain stigma concerning leadership by women?

Could it maybe be that people still expect women to be the number one caretaker for the kids? Let's face it, when a child is sick at school, the teacher is most likely to call the mother instead of the father. Women are associated with natural caregivers, which they are by nature. But this should not stand in their way of being ambitious and pursuing a busy career.

Or is it maybe because women are inherently more emotional than men, and men can be more 'cold' when necessary on the work floor? Here, I think it is important to take into account two important notes. First, as the years go by, we see that women and men do not act like the way they have been stereotyped for ages. Some women are not afraid to show their though side, just like more and more men are applauded for showing their more 'soft' side. Secondly, there is no 'one way' to be a good leader. While some leaders might gain respect with some employees by being a cold-blooded workhorse not taking others into account, other leaders might be praised for their empathic leadership-style. These are extreme cases of course, just to show that there is no one perfect leadership style.