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Female CEOs falling off the 'glass cliff'

Published on Friday, 09 May 2014
Illustration: Martin Megino

When Carol Bartz became chief executive of Yahoo in 2009, her appointment was seen less as evidence of a corporate breakthrough for women than of another trend – the “glass cliff”. The phenomenon, coined by researchers, describes how women are recruited disproportionately into tough jobs in which the title is big, but the odds of success are small.

This was highlighted in a recent “Chief Executive Study” by US-based consulting firm Strategy &, which found that women are more often forced out of CEO jobs than men. The study – which looked at incoming and outgoing CEOs over 10 years at the world’s 2,500 largest public companies – showed that over the past decade, 38 per cent of female chief executives who left their positions were forced out, compared with 27 per cent of male CEOs.

When Bartz joined Yahoo, the company was struggling to grow and diversify, its stock price was suffering, and it had recently navigated a failed acquisition offer from Microsoft and an attempt by investor Carl Icahn to replace its board.

At the time, Yahoo’s chairman called Bartz “the exact combination of seasoned technology executive and savvy leader that the board was looking for”. Then, like a comparatively high ratio of female CEOs, Bartz was fired (over the phone, no less).

Gary Neilson, one of the study’s coauthors and a senior partner at Strategy&, says the findings show something new about the glass cliff. “We don’t think it’s so much that they’re put into challenging roles than that they’re more often outsiders,” he says.

The report found that female CEOs are comparatively more likely to come from outside the company than their male peers. Between 2004 and 2013, 35 per cent of female CEOs were outsiders, compared with just 22 per cent of men.

Being CEO as an outsider “is a tougher job”, Neilson says. “They don’t have as many connections in the company to understand how things work, and their performance is not as high” as executives who have been carefully groomed in-house. Research has shown, for instance, that CEOs brought in from outside a company are 6.7 times more likely to be dismissed after a short tenure than homegrown ones.

While there are examples of notable female CEOs who rose through the ranks – General Motors’ Mary Barra, IBM’s Virginia Rometty and PepsiCo’s Indra Nooyi – Neilson says many companies lack female senior executives just beneath the CEO level who are ready to take on the job.

“Maybe this is the chicken-or-the-egg thing, but more women CEOs are outsiders because companies can’t find them inside their own companies, or they may find them but they’re not ready,” he says. “So they go pick them off another company.”

The study forecasts that things will probably improve over time. In eight of the past 10 years, the share of women becoming CEOs has been higher than those leaving the position, the report found. Although women comprised only 3.6 per cent of new CEOs in 2013, the authors predict that as many as a third of incoming CEOs will be women by 2040.

A greater focus on helping such candidates could accelerate that trend, Neilson says. “You can only steal so many other people” from other institutions, he explains. “Companies need to move down a more aggressive path [on internally developing] women who may be quite capable leaders.” Washington Post

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