Women in Management: Ceiling is Believing

Female managers’ long march to corporate America’s corner offices has led to a record 26 female CEOs at Fortune 500 companies.

Danielle Weinblatt’s experience as a CEO, however, shows how much further women have to go to attain parity with men in the executive suite.

Weinblatt, 31, dropped out of Harvard Business School three years ago to start a human resources tech company called Take the Interview. Since then, she’s raised $6 million in venture financing, and was named a 2014 Workforce Game Changer. Yet when she attended an investor’s annual meeting last November, she was mistaken for an executive assistant. “One limited partner asked me where the name tags were,” Weinblatt said. Another wanted to know when refreshments would be served. “Stuff like that happens all the time.”

Closing the Gap

At Hyatt Hotels Corp., makeup mirrors matter. So do robes, menus and gift shop items sold in the company’s 573 properties worldwide.

Women account for more than 80 percent of overall travel decisions, so the $4.2 billion Chicago-based hotelier is paying closer attention to amenities they prefer, down to the type of makeup mirrors in guest bathrooms.

For help, Hyatt is turning to its female employees, who make up half its 95,000-person workforce. Hyatt isn’t merely relying on female employees’ feedback. The company is embarking on a multiyear mission to give women parity with men at all levels, including upper management.

Some changes have already taken place. In 2014, Hyatt added a second woman to its 12-member board. The company also is assigning more women to executive posts at regional offices in parts of the world like Asia, where male executives are still the norm.

Hyatt plans to spend the next two years making changes to help propel more women into upper management. To prepare, the company is reviewing hiring and other personnel management practices, and partnering with outside consultants to review things like flex-time and family leave policies, according to company executives.

Hyatt is also expanding a Women@Hyatt employee program. Since it started in 2012, the internal networking group has grown to 27 chapters, which host speakers and give women the opportunity “to connect with women in more senior roles,” said Nikki Massey, Hyatt’s director of learning and development.

In late 2014, Hyatt hired veteran diversity and inclusion specialist Tyronne Stoudemire to help more women move from middle management to top positions. Stoudemire declined to share what percentage of women hold executive positions at the hospitality giant today. However, at Mercer he consulted on a similar initiative at Kimberly-Clark Corp., which saw the number of women in director roles or above increase from 19 percent to 26 in four years. “I don’t think it’ll take us four years to get there,” he said.

—Michelle V. Rafter

Women have worked alongside men in increasing numbers since the feminist movement of the 1960s and 1970s and today account for more than 40 percent of the workforce worldwide. Some studies have shown that companies with more gender parity in top management roles do better financially.

As Weinblatt’s experience shows, however, old attitudes toward who should run companies continue to plague women with aspiration of making it to upper management. The glass ceiling that stopped women from ascending to top management jobs at the same pace as men for so long is sporting some enormous cracks. But it’s still there, held in place by attitudes as well as stagnant hiring practices and lack of effective efforts inside institutions to change the status quo.

The rise of CEOs such as Mary Barra at General Motors Co., Marissa Mayer at Yahoo Inc., Ginni Rometty at IBM Corp. and Indra Nooyi at PepsiCo Inc. proves the corner office isn’t the old boys club it once was.

Neither are corporate boards. For the first time, more than half of 4,000 corporations worldwide reported boards with 10 percent or more female members, according to an October report by Reuters.

In government, the 114th Congress seated 104 women, including a record 84 in the House of Representatives. Hillary Rodham Clinton is being mentioned as a potential front-runner in the 2016 presidential elections. In 2014, President Barack Obama tapped women to head the U.S. Postal Service and U.S.  Technology Office.

Some companies are rebuilding their workforces to be more gender diverse, including promoting more women into middle- and upper-management positions — in some cases to appeal to their largely female customer base and improve financial results.

Kimberly-Clark Corp., for example, remade its workforceto more closely resemble its predominately female customers, and as a result, increased the number ofinternal promotions of women to director level or above from 19 percent in 2009 to 44 percent in 2013. A globalinitiative that McDonald’s Corp. launched in 2006 to help women rise through the fast-food chain’s ranks saw the number of female general managers in the United States jump from 13 percent to 38 in four years. In fall 2014, Hyatt Hotels Corp. hired veteran diversity and inclusion specialist Tyronne Stoudemire to spearhead the hospitality giant’s efforts to help women in the management pipeline overcome obstacles that have kept more of them from reaching hotel general manager and other top positions (See “Closing the Gap,” page 48).

“We’re at a tipping point now in the workplace in general,” said Stoudemire, previously a diversity and inclusion consultant at Mercer. “You have more women in the workplace. They’re holding more degrees than any other demographic. Women anchor the community. So if we’re making a difference with diversity and inclusion, it will be with women across the board.”

Inequalities Linger
For all the progress that’s been made, male CEOs and board members still vastly outnumber women. The disconnect exists even in traditionally female-dominated fields. In human resources, for example, close to 7 in 10 rank-and-file HR roles are filled by women, according to HR industry surveys. By comparison, “some paltry percentage” of chief human resources officers in the large employer category are female, according to China Gorman, CEO of Great Place to Work Institute and former chief operating officer of the Society for Human Resource Management.

“There are some really powerful and fantastic female CHROs all over the world whose organizations are doing some extraordinary things,” Gorman said. “And there aren’t enough of them.”

Top male executives continue to earn more. A dispute over pay inequity was reportedly one of several reasons that led to Jill Abramson’s exit as executive editor ofThe New York Times in the spring of 2014. Sony Pictures Entertainment confidential personnel data leaked by hackers in December revealed that of 17 company executives withannual salaries of more than $1 million, only one was a woman: co-chair Amy Pascal, head of Sony’s movie business.

Because the conversation has gone on so long and some progress has been made, it’s easy to think the imbalance has disappeared. “But of course it hasn’t,” said Davia Temin, a reputation and crisis management consultant and adviser to nearly 20 male and female CEOs. “When you look at statistics and see the numbers at the highest levels of corporations, although they’ve improved, they’re not that improved,” Temin said. “While we are making more strides with corporate boards, we’re not making that many strides in the executive ranks or operational teams.”

A Mercer gender diversity survey published in late 2014 bears that out. Despite being 41 percent of the global workforce, women account for only 19 percent of executives, 26 percent of senior managers and 36 percent of managers, according to the report. To reach those conclusions, Mercer looked at workforce data from more than 1.7 million employees in 28 countries, including more than 680,000 women.

Helping Women Get Ahead

 

According to Mercer’s first-ever corporate gender diversity survey — “When Women Thrive, Businesses Thrive,” released in November 2014 — womenare better able to rise through the ranks and earn closer to what their male counterparts make when companies do the following:

• Take an enterprisewide approach to supporting female talent rather than relying on discrete programs or initiatives, which may actually slow down progress.

•Get company leaders activelyinvolved in diversity programs.

• Actively manage pay equity vs. making a passive commitment.

• Give women and men direct profit and loss responsibilities.

• Go beyond implementing traditional leave and flexibility programs to offer more proactive career management, such as coaching.

• Create health and retirement programs that cater to women’s unique needs.

• Recognize the different strengths of female and male managers as equallyimportant to success.

Source: Mercer

The numbers are slightly better at U.S. companies identified as the country’s best workplaces. At companies on Great Place to Work’s 100 Best Companies lists from 2011 to 2014, women made up 31 percent of executives and senior managers, and 45 percent of managers and supervisors.

Making Diversity Part of the Culture
Unless companies substantially change their diversity efforts, the number of women in executive roles at North American companies overall is expected to stay relatively flat over the next decade, inching to 26 percent in 2024 from 24 percent today, according to Mercer.

Senior leaders continue to be most comfortable hiring direct reports who look like them, and because most CEOs are still white males, that method of hiring perpetuates the demographic’s hold on top positions, Gorman said. The dynamic should change as baby boomer-era executives age out of the C-suite and are replaced by Gen X and millennial CEOs who grew up in a world that puts a higher  value on diversity. “There will still be a bias toward hiring people they’re comfortable with, but it won’t be people who look just like them,” she said.

Some organizations aren’t waiting for the next generation to make changes. Companies such as Kimberly-Clark Corp. and McDonald’s Corp. that have placed more women in top executive positions have woven diversity into their corporate culture, said Julie Nugent, a vice president at Catalyst Inc., a consulting firm that studies women in management. “If diversity and inclusion are a business imperative, that’s critical, and allows companies to make progress.”

Companies where women have made big strides toward getting into upper-level management have visible buy-in from senior executives, talent management programs that recruit and promote high-value female candidates and employees, strong mentor programs and “robust” succession planning, Nugent said.

In addition to those types of programs, Kimberly-Clark also sends promising female — and male — managers on three- to six-month international assignments, the type of posts that Nugent said help middle managers rise to the next level.

As a result of the strategy, Kimberly-Clark’s promotions of women to director-level or higher positions rose from 19 percent to 26 in the four years ending in 2013. The improvement led Nugent’s organization to give the consumer goods-maker its annual Catalyst prize in 2014 for expanding management opportunities for women.

The motivation to bring more women into executive positions isn’t altruistic — it’s about the bottom line.

“We knew to win the marketplace and achieve the business results our shareholders deserve, we needed to transform the organization,” said Sue Dodsworth, Kimberly-Clark’s chief diversity officer, in a company video about the initiative, called “Unleash Your Power: Strengthening the Business With Women Leaders.”

Kimberly-Clark and other companies that cultivate a more diverse workforce have lower employee turnover as well as stronger financial results, according to Great Place to Work’s data on top workplaces. Publicly traded companies on Great Place to Work’s annual 100 Best Companies  list consistently outperform major stock indices by a factor of two, according to the consulting firm. Top companies also typically have as much as 65 percent less voluntary turnover than their competitors, which saves on recruiting and training costs, according to the firm.

Diversity programs aimed at closing the management gender gap won’t work, though, if they’re viewed as remedial, said Temin, founder of New York-based Temin and Co. “The level of women who come through a program has to be high,” she said. “If it’s seen as remedial, it doesn’t get respect. If it’s seen as a high-potential training program, it does get that respect.”

Some industries have better track records of promoting women into top positions than others. At health care companies on Great Place to Work’s 2014 list of top large workplaces, women account for 74 percent of the workforce, 70 percent of managers and supervisors, and 43 percent of executives or senior managers. Health care organizations faced with a dearth of available outside talent have had to look inside their own organizations for management candidates, which could explain the higher than average percentage of women in top roles, Gorman said.

Professional services firms, including accounting and financial services companies, are also advancing more women into management roles. Women at professional services firms on Great Place to Work’s large workplaces list make up 47 percent of all employees, 49 percent of managers and supervisors and 39 percent of executives or senior managers. “That’s not accidental; it’s very intentional,” Gorman said. “It’s both creating a culture where we give everyone opportunity and creating special programs to help underserved parts of their population.”

Tech’s Problem With Women
While many industries are figuring out how to add women in middle- and upper-management roles, the tech field is struggling. Women at all levels, including executives, are more likely to leave tech-intensive industries for a variety of reasons, including lack of role models, said Catalyst’s Nugent. According to Catalyst’s research, a disproportionate percentage — 73 percent — of women say they feel like an outsider in the tech space, she said. “It can make it more challenging in some ways to even want to stay in the field,” she said.

Because so many startups are tech-related,it shouldn’t be a surprise thatfemale-run businesses account for a fraction of venture-based businesses. From 2011 to 2013, only 2.7 percent of 6,517 companies that received venture capital financing had a female CEO, according to a 2014 Babson College report on women entrepreneurs.

Small wonder Take the Interview’s Weinblatt was mistaken for a secretary. Weinblatt brushes it off, though, and agrees that the millennial generation she’s part of is more accepting of meritocracy and diversity than older generations, something she says will help more female founders and CEOs.

On top of that, younger women executives have role models such as Lean In movement leader and Facebook Inc. Chief Operating Officer Sheryl Sandberg and Yahoo’s Mayer to look up to, Weinblatt says. “Women are being more assertive,” she said.

This article originally appeared in Diversity Executive's sister publication, Workforce.