Category: Insights

Leadership: Why aren’t there more women executives on boards?

Gender diversity at board level means more profit. So why are we not at 50% yet?

Fortune-500 companies with the highest number of board-level women can enjoy ‘42% greater return on sales’ and ‘53% higher return on equity.’ Firms with just one woman on their board are 20% less likely to go bankrupt, while British, American and Indian companies with male-only directors ‘missed out on £430 billion in investment returns’ in 2014.

The benefits are clear, and the studies have been undertaken again and again, but the number of women at board-level, in C-level roles and in corner offices, remains worryingly low across the world.

In the US, women hold just under 20% of board seats, and 24.6% of those companies have just one woman director. Norway (46.7%), France (34.0%), and Sweden (33.6%) have the highest proportion of female board members in their biggest corporations, but it’s rare they achieve parity. In Europe as a whole, women hold just a quarter of board seats in publicly listed companies. 29% of 2017’s new board members in the UK are women, which is actually down compared with 2014 and 2012’s results.

Obstacles come from the top

To work out why entry to board level is such a different experience for women, businesses need to pinpoint where progress stalls. McKinsey’s survey of 222 US companies and 12 million employees found that fewer women are hired at entry-level positions, and their representation continues to decline as you search up the hierarchy. And don’t think that employers have fewer candidate choices; women actually hold 57% of university degrees in the US.

Examine ethnic diversity and the picture gets much worse. While one in five C-level roles are filled by white women, just one in 30 is filled by a woman of colour. McKinsey’s study highlighted that black women are less likely to interact with senior leadership and they’re the group least likely to be promoted within a company.

The survey also found that women have the same intentions as their male counterparts and the same level of ambition. If women joining a company ‘were promoted at the same rate as their male peers, the number of women at the senior vice president…level would be more than double’. Perceptions of women’s abilities, a workplace controlled by senior men, and fewer female decision-makers to advocate for them, makes the climb to the top harder.

Women Executive Search: Diversity and competitive advantages

Women make the majority of buying decisions throughout the world. In the US, their purchasing power is worth $5-$15 trillion annually, and they control 51% of personal wealth. Breadwinner status, educational level, and labor participation are all up, but women are underrepresented in the decision-making roles that directly influence the products and services they buy.

A room of people who fit one specific demographic can’t universally cater to people from different backgrounds with different needs. A diverse board of decision-makers is more equipped to move quickly through the market and outsell their competitors, but many publicly listed companies still need to be reminded they have no female participation on their boards.

Handing leadership roles from one man to another

The McKinsey study found 50% of men think women are well represented in their workplace already, despite the stats not remotely supporting this. 15% of men think it’s going to be harder for them to be promoted as the landscape changes and women advance further.

The bare truth is that board members are more willing to open the doors to people who are just like them, and if the current crop of executives is predominantly white and male, women are unlikely to get many seats at the table unless the promotion process changes.

A survey by Women Corporate Directors and Harvard researchers found the main reason cited by male board members for not welcoming more women is ‘a lack of qualified female candidates’. Mentorship and networking created and controlled by women can change this inaccurate perception, and shine a brighter light on an untapped pool of female talent.

Women in senior roles have the power to recognize the achievements of women beneath them and make sure their fellow board members pay more attention. At director and senior management level, recruitment and promotion needs to focus on women’s achievements just as much as men’s, or male-dominated boards will continue to claim they have limited choice and the picture will remain the same.

Some of the most powerful people of today’s world are women. They are leading nations and fortune 500 companies and are holding up extremely well in a male dominated world, bringing change and new perspectives to the established ways of doing politics or business and setting new standards. There are numerous examples where women did prove their business acumen and ability to tackle the odds of a global business world – on many occasions, with considerable more sensitivity and foresight as their male counterparts – and with better results, as noted by a study (Catalyst, 2007, Grant Thornton) : In his study, companies with a higher proportion of women on their board had significant higher returns on invested capital, returns on equity, and sales.

Underrepresentation of Women

And yet – the representation of women in CEO positions in Fortune 500 companies lies still below 5%

Why – in a modern, allegedly equal and liberal society – is it so hard for women to access these top jobs?
The stereotype answer to this question lies on hand: because they chose the family way over their career. True for some, but looking at the whole picture, one will find, even with the same education and willingness to succeed, most women stay miles behind their male colleagues.

Same work, same pay?

Starting with the salary: women are paid on average 25% less than their male counterparts – and this is not just due to the generously quoted fact that women often work in lesser paid industries, such as education, healthcare etc., as this only equates for a portion of the gap. Looking closer, the pay gap stays true when comparing functions within one industry: same work, same position, less salary.
As a matter of fact, the pay gap winds its way through all levels and sectors, and gets worse the higher a woman climbs in the hierarchy of a company. It is also true for the film and art industry.

A sad state of the affair, considering that its more than half a century ago, when the first women went on strike to fight for equal pay.

A recent study in Germany revealed that although over 80% of the jobs in the book industry are occupied by women, only 4% hold well paid executive positions. This inequality continues with the novelists itself. Although women novelists are clearly ahead of their male colleagues, when it comes to their representation on the top places of bestselling lists (paperback), they are rigorously underrepresented in the classy hardcover section and prestigious literature reviews. Looking at awards, it seems that the best entry ticket to win a book prize is a male name.

Lack of recognition

Which brings us to the next point of the dilemma: Recognition.

Parallel to the lack of recognition in the world of literature, women struggle hard to get the same recognition and respect for their (same) contribution to the success of a company as their male colleagues. This boils mainly down to biases towards women, both conscious and unconscious, equally from men and women.

The number of prejudices against women (and men) in our societies is huge and although many of them would not hold up against reality anymore, the people hold on to them, due to their socialisation.

I am not just talking about blunt prejudices such as: “women are no good at math, cannot take strategic decisions and are unable to park a car without denting it”. I am talking about the small underlying biases that tend to keep women in their place as perceived rightful by society.

The old mind-set

To give an example: a friend of mine, a very successful mother of three and top executive has to go on business trips on a regular basis. While her husband has no problem taking over the children and household when she is away, her mother keeps reminding her, that she ought to be careful with all those business trips, as one day, her husband might be gone. A worry her mother never aired at times when her husband joined the frequent flyer ranks. You might argue, that her mother belongs to a generation, where gender equality was still in its baby shoes, but what about her 10 years younger neighbour, who instantly offers to cook for her poor abandoned family as soon as my friend steps out of the house carrying a suitcase. A very kind, but nevertheless annoying offer, as it promotes inadvertedly the silent understanding, that a fulltime working woman needs no support caring for a family next to her job, while the same task is unacceptable for a man. This perception does not stop at her mother and neighbour, it follows her in form of the frequently asked question: “Oh, you got kids? Who is looking after them, while you are away?”

A question by the way, her male colleagues never will hear.

A question that nurtures her bad conscience towards her family, although her husband is perfectly fine looking after her children.

A question, that clearly indicates her perceived role in society and shuts her in the drawer “mother, not fully dedicated to business, not reliable”.

It’s a mind-set, so tightly woven in our perspectives that we can rarely free ourselves from the consequences: clear, linear career path for men, disrupted, then stagnant career for women. Worsened by the lack of sponsoring endured by women, though undeniably inevitable to progress to the very top. Furthermore, whereas men sponsoring men is regarded as normal, when a woman benefits from the same type of sponsorship it is often linked to a romantic interest beside the business matter.

Old fashioned? Sadly not. It’s still a typical reaction to female sponsorship, coming from both, men and women.

Assertiveness and vision versus adaptability and sustainability

Women tend to be more willing to take a step back if ought to be needed, to adapt to a changing situation and to put the interest of a community ahead of their own. Thinking in sustainability terms, these attributes should be highly sought after to lead the changing global business world into a sustainable and livable future. Yet, it’s the lack of assertiveness and pushiness that holds them back in second and third row, while men step to the top, elbows out, a visionary goal in mind and focus rather on their own achievement than the greater worth for the company, humanity or environment. Strangely, a man displaying assertiveness is regarded as a being strong; a woman displaying the same assertive attitude is easily cast as being difficult.

But – while assertiveness can be learned, to become visionary is hard to train.

Without visionary pioneers though, the world would be at a standstill. But visionary business tycoons, who set short-term goals above long-term livability and sustainability, act irresponsible to present and future societies. As we see well at the current state of our environment.

Out of the trap

There is one important question to ask: how can women (and men) get out of this trap?
There are many aspects to consider, many keys to turn. To begin with: changing the mind-set, where women are less able, less worthy, less important and solely responsible for childcare.

Children are the fuel oft the world, they are the future of any society; they are the most important people in any parents life. And still, when it comes to step back from a career path to raise them, men tend to disappear and hide behind the importance of their jobs not being affected, as their jobs are the better paid ones. (Remember point 2 – same work, same pay…)

In Germany, the state set a clear signal in the right direction: Women can take up to 3 years unpaid leave to look after a child and must be taken back into their old position without penalty to her career. A nice try, but what happens? Now women in the dangerous child bearing age, are less likely to be chosen for top jobs and set career paths, as they carry the risk of extended leave. Also, the state finances paternity leave, to enable shared responsibility. Still, so far this offer is rarely taken, mainly for fear to miss out on the next promotion or to weaken ones position within the company.

To change the mind-set, both, men and women have to consciously question their stereotype reactions in business situations and remember themselves again and again, that these days, there are more women than men with a University Degree out there and modern fathers are fully able to equally share household and childcare tasks.

Doing so, the burden of disrupted careers no longer lies on women shoulders.

Stay true

While women should be more assertive and fight for their rights and careers, they should stay true to themselves. To copy male behaviour to become successful is pointless. Women and men are different and this is of great benefit to any company. The moment, when one or more women enter the boardroom of a company, the overall behaviour of the board will change, because the dynamic of the board will change too. Perspectives will become diverse; the board will be more inclined to see different angles of the overall picture.

Bringing together the strengths of both gender will lead to the best results. Boards and C-Level positions should be equally placed with men and women and therefore, companies should create an environment, where equal pay and equal opportunities are more than phrases on a mission statement.

It’s time that men not just hold the door open when entering a restaurant with a woman. It’s the doors in the heads and the doors to the boardrooms, that need opening.

About the author:

Janet Clark studied in three countries, collected three degrees and started a promising career in Brussels. Then she tapped into the “woman trap”, got children and her career came to a sudden stop. It took her 5 years to get back on track. Since then she held positions as Vice-President Marketing Europe and Marketing Director before she joined CEO Worldwide as International Marketing Director.

When it comes to female representation in business and government, much of the world still needs to catch up.

The recent #TimesUp and #MeToo movements have begun to deliver change in certain industries around treatment and pay, but they’ve also highlighted how damaging perceptions and assumptions have been historically and continue to be.

“Women don’t want leadership roles”

In 2016, former Saatchi & Saatchi chairman Kevin Roberts said ‘their ambition is not a vertical ambition’ when asked about lower numbers of senior women in advertising. He didn’t deny the presence of talented women in the industry, but suggested that most women just don’t want to lead and hiring decisions should be made accordingly.

The Boston Consulting Group investigated this idea by asking 200,000 global employees about their ambition. Gender has no impact on people’s willingness to advance it found, but company culture does. Women enter the workforce with ‘the same – or higher – levels of ambition as men’ and having children doesn’t affect their desire for promotion. In companies where ‘both male and female employees feel that gender diversity at their organization is improving’, there’s no difference between male and female ambition.

“Women don’t have natural leadership skills”

A Harvard Business Publishing article from 2015 highlighted eight capabilities leaders need to be successful, including being able to manage complexity, think strategically, innovate, use their networks, and adapt. In reality, none of these abilities are innately masculine or feminine, but gender stereotypes are difficult to break down.

A study of 361 C-level executives found the majority believe leaders are made, or a combination of ‘made’ and ‘born’. The Center for Creative Leadership revealed 46% think experience makes the biggest difference to leadership ability, while 34% think it’s training, and 20% believe it’s down to natural traits.

A now-famous internal memo criticizing Google’s gender diversity policies stirred up a huge amount of debate in 2017. ‘Google’s ideological echo chamber’ is a 10-page article circulated by a male Google employee who claimed women are underrepresented in tech ‘because of inherent psychological differences’. The author believed women have a lower tolerance for stress, are too agreeable, and have “a stronger interest in people rather than things”, making them less suitable for a career in tech.

The female tech community was quick to dismantle this, including YouTube CEO Susan Wojcicki, who criticized the memo for ignoring the ‘implicit biases that haunt our industry’. She also highlighted the unfairness of Google’s female staff having to ‘face a very public discussion about their abilities’, something male staff rarely need to confront on such a scale. 

“Women have to behave like men to achieve leadership roles”

The leadership traits held in highest regard are largely influenced by examples set by the current crop of global leaders and world’s richest people, such as Elon Musk, Jeff Bezos, and Bill Gates.

Leadership skills and traits are often perceived as masculine, when actually they’re just shared by some of the men currently at the top. If women were more visible in leadership, we might be more inclined to associate risk-taking, learning by failing, and wielding authority as inherently female, rather than naturally male characteristics.

These generalizations are at best lazy, and at worst motivated by an unwillingness to share power, ideas and experience. The Boston Consulting Group’s research into male and female ambition also found ‘creating a culture that enables more women to be ambitious does not put men at a disadvantage’, demonstrating there’s room for a variety of skills and perspectives.

“Current female leaders are the only people who can make a difference”

Only looking to female senior leaders to welcome other women (currently 20% of boards in the US and 29% of boards in the UK), is going to slow progress down. Their influence can be really important, but they’re already drastically outnumbered.

Ilene H. Lang, the former CEO of non-profit Catalyst, believes ‘high-potential women must be sponsored by C-suite executives, most of whom are men’. Mentorship and sponsorship need to be initiated by the most senior in an organization, whether they’re male or female, or those lower down the hierarchy will have to open all the doors themselves and are less likely to be recognized.

Facebook’s COO Sheryl Sandberg conducted research through her organization, Lean In, and found ‘the number of male managers who feel uncomfortable mentoring women has tripled’ – an unfortunate side effect of #MeToo. According to Sandberg, senior men stepping back could have a huge impact. She believes ‘if you’re not going to have dinners with women, then don’t have them with men’.

The burden of mentorship and opening doors is currently on the few senior women, while many male-dominated boards continue to operate in the same way they always have. The barriers are starting to come down, but changing these damaging patterns is the only way to dismantle them completely.

Many biotech companies start as an idea for an idea: a business possibility for some scientific idea, often in embryonic stage. Their survival as companies and growth relies on the quality of the science but to a great extent on the team: the inventiveness of the scientists and other founding members, who, in order to transform the ideas into products, need access to money – often a lot of money, when it comes to the development of products for human health. Out there, there are extraordinary ideas, protected by good patents, fantastic projects to develop those ideas, and excellent CEOs, who know well the finance world, the industry and the investors, and can bring into the company the cash that will feed the advancement of the ideas.

While these tasks are being performed, who is creating the relationships with partners or customers that will potentially help develop the company, or have complementary technologies or skills, or complementary IP to that of the company, who is keeping an eye on the world “out-there” to understand early enough what will be the next hot themes or to find out if a large pharmaceutical company is about to start looking for just the type of product your small company got on offer, with a bit more of development work?

Well, everybody in management is doing it, but these functions are not being done full time, or in an integrated manner, because finding someone who knows how to do them well is expensive and companies in early stages have to watch every cent they spend. So, either there is already a person performing these tasks in the company, or they are not being performed to their best. Are these tasks sufficiently important that they bring the company a competitive advantage? I.e., is the cost of hiring a Business Development Manager justified by the value that the function brings to the company?

Read more at Business Development in Biotech – a competitive advantage?

As a CEO of a wholly owned Indian subsidiary having 2 Opcos in India, I spearheaded the company towards

–  Consistent top line growth YOY

–  Increased customer base 10x

–  New product applications for the first time globally

–  Multiple due diligence projects

–  Effective leadership to combat restructuring challenges

–  Implementation of 3 greenfield projects(Organic) – 2 In India and 1 in Indonesia (End to end ownership – land identification and soil testing to plant commissioning)

–  Implementation of JD Edwards ERP systems

–  Unbeaten track record of Zero adjustment in International transfer pricing

–  High level of Corporate governance

–  Commitment to Environment, Health and Safety leading to recognized certifications

Company:

A wholly owned subsidiary of a multimillion Euro company worldwide, with presence in about 10 countries spread over all continents. Indian plant having 2 Opcos. Parent Company originally owned by a Global Corporation listed on FTSE 100. Several ownership changes before being currently owned by financial institutions.

Industry:

Manufacturing in a B2B segment

Experience, Expertise and Core Competencies:

 I take this opportunity to share my experiences and several challenges that we encountered during the multiple restructuring events and implementation of several new projects. I also narrate how, as a CEO, the buck stopped with me every time, to combat these challenges successfully and spearhead the organization to stay afloat, to say the least.

In any restructuring or transformation for that matter, inevitably, there are at least three major challenges, the CEO has to lead proactively and not reactively.

1. Culture Change Management
2. Brand Reputation management
3. Talent Resource management

Culture Change Management:

• The organization I was associated with, was originally owned by a British Corporation who were into multiple sectors, several of them Cash cows but then changed hands to a European Private Equity fund, supported by Management buyout stakeholders of multiple nationalities.
• Besides the natural and easier challenge to adapt to different nationalities and time zones, the bigger challenge was that under new ownership, priorities had clearly shifted from a long-term customer centric goal to a relatively short term financial goal that was an offshoot of the exit strategy. The most important overnight conflict was to optimize Customer interest and Shareholder interest very carefully and strategically. This warranted some very structured pricing decisions and advanced Cost management processes to be implemented.
• As the adage goes, win your employees and they will win the customers for you. So, even amidst natural resistance to change, motivating and driving adaptability internally first to the new organizational objectives and culture was a priority and this we did, by driving home top down, the synergies expected out of the restructuring. Rest followed its course thereafter.

Brand Reputation Management:

• Secondly, when ownership keeps changing multiple times, it is quite natural and expected for the competitors to use the situation to their advantage. Overcoming this warranted a proactive communication strategy to deal with Customers’ perceptions. It needed very genuine intent followed by action to translate the brand promise to an even more lasting customer experience so they stay with us through the restructuring and thereafter .
• The questions in customers minds and their apprehensions spanned from continued and uncompromised Quality commitment and customer service to Company philosophy in terms of Compliance with Corporate Governance, Environment Health and Safety issues which had to be managed very carefully.
• Social media systems were not active and this made it more complex to reach out to a territory as geographically wide as the Indian subcontinent. But we leveraged on the strong relationship we had built and nurtured with the customers to overcome this challenge.

Talent resource management:

• Finally, the third biggest challenge was talent management during the restructuring phases, to retain high performing talent even as we had to let go some of the resources that were beyond adaptability to the new culture. This could have easily resulted in wrong perceptions about uncertainly and instability in the minds of also the high performing employees.
• But here again we created a strategic and proactive communication channel which played an important role. For those employees at the senior level who were fully involved and in the know of changes happening or foreseen, it was a fairly easy matter to come to terms with and adapt to changes but to ensure same level of understanding down the line with middle and lower management was a more difficult task.
• During these restructuring and transformation phases, it is very easy to get distracted from the core business objectives and revenue and margin targets and so it was clearly my responsibility to make sure that the entire management including myself stayed on top of the situation while also dealing with restructure related demands. Driving the entire team towards maintaining the financial performance across all Opcos as projected to the new owners was the key driver to justify the negotiated price for sale and ensure no Scope was ever given for them to renegotiate sale price.
• Even amidst all this, we achieved a JD Edwards ERP implementation by the team.

Financial challenges

Added to all of the above general challenges, in our case we also had to combat a unique financial crisis as the last restructuring coincided with the 2008 global recession that resulted in serious cashflow problems.

• The higher financial expectations from the new financial owners put me in an unenviable position to take prices up by 40 % in the very month I took over as a CEO and in retrospect feel proud to have managed it smoothly without losing any Customer.
• We had a finance team – created through conscious succession planning – who did a great job in reinventing the cashflow management efficiency and this was acknowledged profusely by the global CFO
• The 2008 global recession also hit badly a new investment in Gujarat that had just taken off while the ownership was in the hands of the cash rich Corporation. The project was running on a tight rope but we managed to find out of the box answers that not just saved the project but was also commissioned with very minimum time and cost overruns.

Proud to share that even under these challenging conditions-

• We increased customer base 10x within a short span by unlocking the full potential of the brand.
• Indian opco became the first unit globally to introduce new applications of our product which was unchartered for over 50 years.
• Finally, through a structured Brand Strategy, we achieved premium pricing for new product in Gujarat, in a market that had several well-established players for over a decade.

Clearly, In all these cases our mission was not just to optimize situation but to turn them into opportunities.

Skills that helped me manage the above Challenges

 No project can be successful without the backing and support of a good team and to me, the entire team – globally and locally – was with me through the challenges which made the big difference in being able to manage the situations well.

Apart from that, I can add the following factors that played key role in the success.

1. A natural ability to reach out helped me unleash the best potential of the team
2. Grit and Resilience to challenges, no matter how daunting.
3. Unique combination of talents in Finance management and Executive Leadership

About the author:

Asha Sampath is currently the head of Corporate Growth and Brand Strategy Practice at Brandhorizon, a Management consulting platform that specializes in Brand Management and Interim leadership for restructuring and transformation. Prior to this, her role was Country head for Operations for a wholly owned subsidiary of a European MNC – Originally 300 million Euro operations worldwide and having presence in all continents – having 2 Opcos in India. Earlier positions include role of General Manager for a New Green field Project in Gujarat and an Overseas role in Indonesia for setting up of trading operations, as part of Asia management team. In the run up to the role of General management and Operations, she has been in several finance roles which includes a CFO role for India operations and several finance positions across multi sectors and cultures both in India and PAN Asia markets. Her other current engagements include guest speaking at IIMB, a premier management institute and also a member of the Advisory Coucil for a global industry leader in Digital Print technology.