Which is the bigger issue for women leaders: the glass ceiling or the glass cliff?

13 Mar 2019

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Progress can’t be made if women are hired when all is lost and fired when all is fixed

What do you need to innovate in the Transformative Age? You need diversity. You need men. And you need women. Gender equality is not only a fundamental human right but it is also linked to a country’s overall economic performance. Organizations where women hold nearly 30% of leadership positions could add up to 6% to their net margins.

Therefore it makes no business sense to overlook diversity as a part of a business strategy. In fact, doing so only diminishes opportunities for sustained economic growth, innovation and social progress.

So if women are critical for innovation and long-term growth, why are we still an estimated 202 years away from achieving gender parity in the workplace?

The uphill battle

Despite the gender gap narrowing slightly this past year according to the World Economic Forum’s Global Gender Gap Report 2018, women still face an uphill battle in leadership positions. And, it turns out, the higher women climb, the more biases, challenges and stereotypes they face. 

Interestingly, though, when women are appointed to the top job, it’s usually at a time of a crisis – when an organization is grappling with a financial crisis or other challenges and may even be on the verge of collapse. This phenomenon was coined the ‘glass cliff’ by British academics Michelle Ryan and Alex Haslam who in 2004 published findings from an extensive study of FTSE 100 companies and found a tendency for women to be appointed leaders of failing organizations.

While more women are breaking through the glass ceiling, by accepting roles in troubled companies or challenging times in government, they often risk being held responsible for outcomes that were set in motion well ahead of their appointments.

Take a few notable examples:

  • Jóhanna Sigurdardóttir became Iceland’s first female prime minister and the world’s first openly gay head of government amidst economic and political fallout from the global financial crisis. She stabilized Iceland’s economy in a relatively short period of time.
  • Former Xerox CEO Anne Mulcahy, is often deemed a ‘glass-cliff’ success story. She took over as CEO in 2001 as Xerox was on the verge of a Chapter 11 bankruptcy and a year later, following an aggressive restructure, the company reported an operating profit.
  • It’s encouraging to see women being called upon to lead in times of crises – and succeed at the highest levels. But despite their success, they are still being fired – even after they’ve fixed the problem.

In fact, female CEOs are about 45% more likely than male CEOs to be dismissed from their own companies. And, strangely, while improved organizational performance may protect a male CEO against being fired, the same does not hold true for women. In other words, women face greater challenges when appointed to leadership positions and are provided fewer opportunities to establish their leadership capabilities.

The savior effect

When a female CEO gets fired, she’s usually replaced by a man. It’s what some academics refer to as ‘the savior effect.’ We’ve seen this story in news headlines again and again.

Former Reddit CEO, Ellen Pao, is one example.

According to several sources, Pao was only in the role for eight months before being replaced by Steve Huffman. Reddit's chief engineer, who stepped down after just two months, said she believed Pao had been placed on a glass cliff.

Another article describes Patricia Russo as fitting the glass cliff and the savior effect. Russo led Lucent Technologies (later Alcatel-Lucent) through three consecutive years of negative shareholder returns before the board hired Dutchman, Ben Verwaayen.

An article titled, Theresa May is the latest woman leader appointed in a crisis and set up for failure, highlights yet another glass cliff scenario, with other headlines suggesting the candidates who are most likely to replace May are all men. 

Despite greater attention being paid to gender inequality, women continue to face an uphill battle. While they are more likely to be hired when all is lost, they’re still more likely to be fired than men

Fortunately, there are some practical ways to help level the playing field for women in leadership positions.

  • Make sure your board is gender balanced and diverse in composition.  This plurality of perspectives will give it a better chance of mitigating unconscious biases and fairly evaluating leaders.
  • Recognize where stereotyping exists within your organization. Use data analytics to reveal unconscious biases in recruitment, promotion decisions, performance evaluation and salaries.
  • Take a strategic approach to succession planning, mapping out leadership tenures and candidates against a purpose and an objective to drive long term value. That way leadership transitions are not driven by a reaction to a crisis or short-term results.

As CEOs and world leaders gather in Davos next month, let this serve as a reminder. Until we address the underlying biases that hold women back, gender gaps will remain. And as a result, deep-seated inequalities and a lack of diversity will continue to hinder sustained economic growth, innovation and social progress.

What’s possible in the Transformative Age? Join EY to discuss this and all the pressing economic and social issues as we look to the World Economic Forum Annual Meeting 2019 – from 22-25 January. Join the debate via ey.com/wef and using #WEF19 and #BetterWorkingWorld.

A version of this article originally appeared on the World Economic Forum’s Agenda

Summary

The glass ceiling has not been broken everywhere, but where women have smashed through into leadership positions they can often fall victim to the ‘glass cliff’: an effect where women leaders are given less opportunity to prove themselves and less recognition for their leadership achievements.  Acknowledging the unconscious bias behind this trend is the first step to addressing it.