With the announcement and recent departure of Pepsi’s Indra Nooyi in October of 2018, it has brought into the spotlight (again) the topic of women in management, in particular as CEOs of public companies and on Boards of Directors. Let’s have a look at the data surrounding this topic and into some of the issues that might be hindering women to obtain the position that is so often reserved for men.

After the departure of Indra Nooyi, 24 women remain as chief executive of the top companies in the S&P 500s stock index – just 4.8 percent of its leaders. Most recently, Denise Morrison of Campbell Soup and Irene Rosenfeld of Mondelez International also stepped down from their CEO and Chairman positions. Why is it that during a time of so much public focus and effort on gender diversity and inclusion are so few women occupying the top positions of CEO?

Many reasons can be attributed to this; boards still have fewer women, (around 21 percent for the S&P 500) a gender pay gap still exists, female executives generally still lack the opportunities to progress up the ladder and there are still less women in senior management from which to promote from within. It is interesting to note that only three times has a woman succeeded another woman as CEO of a public company, according to research by Catalyst, a non-profit consulting and research firm. Anne Mulcahy was succeeded at Xerox by Ursula Burns in 2009, Andrea Jung of Avon was succeeded by Sheri McCoy in 2011 and Susan Cameron of Reynolds American was succeeded by Debra Crew in 2017.

Another possible explanation that seems almost counter-intuitive is one that no female executives have wanted to discuss openly. They fear that by promoting a woman into a senior position or that of CEO, they might be perceived as showing bias and their motives questioned versus a man who might be applauded for such an appointment.

The flipside of the argument is why women should be pressured into feeling they have to favour or appoint another fellow woman to the role. Ilene Lang, CEO and interim President at Catalyst Research, thinks it shouldn’t be left to women to be responsible for creating opportunities for women any more than men are. “Why are women expected to promote more women?” she asked. “Why are the women being over scrutinized more than men? That’s the issue. It’s unfair to conclude that women should be doing more than men do.”

In today’s world with women playing an increasing role in the workforce and job market, more complex issues come into play and often need to be figured out within families and corporations on a way forward or how to obtain some semblance of balance. Questions such as child care duties, balancing two duel careers between a husband and a wife and what happens if a job opportunity comes up overseas for a woman – what might be the husband’s view on moving? Factors like this certainly play into the picture and have an impact.

Closer to home in Canada, at the recent G7 summit held in Charlevoix, Quebec in June 2018, Prime Minister Justin Trudeau placed gender equality at the top of the priority list. “One of the main points we’re putting forward is understanding that gender equality and including women in our success is not just a moral argument, it’s very much an economic argument,” said Trudeau ahead of the meeting. Upon closer look at the 100 most influential companies within the S&P/TSX Composite, only one woman holds the position of CEO, that of Nancy Southern who runs Calgary based Canadian Utilities.

There are certainly other female CEOs in Canada of public companies such as Linda Hasenfratz of Linamar, Dawn Farrell of TransAlta, Heather Reisman of Indigo Books, Susan Riddell Rose of Perpetual Energy and Jan D’Alvise of Acasti Pharma, however all of these companies fall outside the S&P/TSX Composite. Certainly, from this data we can see change needs to happen and more needs to be done. Further highlighting this point are publicly traded companies with women on their Board of Directors. Of those top 100 companies within the S&P/ TSX Composite, fifteen companies have just one woman on their Board. Looking at TSX listed companies, fourteen percent of Board seats are held by women while 76 percent of new Board seats in 2017 went to men.

A previous feature entitled, “ESG and its impact on Investor Relations” mentions how the global conversation has moved to ESG evaluation when looking to invest, and under the “S” and “G” categories falls diversity and inclusion of women so it is definitely a topic under much debate and scrutiny. With regulators and investors taking increasingly bigger notice, this should mean faster change. “At this year’s annual meetings, shareholders have taken a hard stance when looking at diversity,” Paul Gryglewicz, senior partner at Global Governance Advisors, told BNN Bloomberg in a recent television interview. U.S. funds such as BlackRock, Vanguard Group and State Street are using their shareholder votes to push for more women in director positions. And in March 2018, RBC Global Asset Management launched an ETF focused on companies committed to female leadership.

In the end it doesn’t boil down to men versus women in the top position. It’s a deeper issue of reaching equality and balance – as when we do everyone wins from a social and economic standpoint. It has been quoted that as much as $28 trillion dollars could be added to global GDP if the world reaches full gender equality by 2025. It’s about working together and mindfully and not placing arbitrary quotas in place. There have been many steps in the right direction – recently California passed a law that by the end of 2019 there must be women on the Boards of all publicly traded companies. In the UK, companies with more than 250 employees are required to report their gender pay gap. And Microsoft started a program that tied the compensation of senior leaders to meeting diversity hiring goals – which demands executive participation by holding them accountable which has shown a slow but steady increase in women in leadership positions. It takes small steps and requires companies, management teams and Boards to start. To start the conversation, to continue the conversation and to action the talking points. None of this will take place overnight but hopefully the next generation will see greater change.

Sources:

IR Magazine
Catalyst Research
New York Times
BNN Bloomberg