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NextGen Magazine


Study Finds Female Execs Rarely in Roles That Lead to CEO, Due to Lack of P&L Impact

Chris Gaetano
Published Date:
Feb 7, 2020
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A study of top public companies conducted by the Wall Street Journal reports that when women do make it to the C-suite, it is often in a role that lacks direct impact on profit and loss at the firm, which generally is not a path to becoming CEO. Women are more likely to be the executive in charge of, say, human resources, administration or legal. While these roles are very important to a company, they tend not to be where CEOs come from.

This means that while women may have a seat at the table, according to the Journal, it does not necessarily make them major players. To be a player requires a job that directly affects the company's bottom line, such as chief operating officer or chief sales officer. Managers in these roles can directly point to their impact at the company in dollars and cents terms, compared to the more qualitative impact that, say, those in administration might have on the company. This makes it less likely that they will eventually be selected for the top role. 

This calls to mind the results of another study finding that female auditors are less likely to lead complex engagements—just 15 percent serve in this role. The Big Four often serve as a natural pipeline to train people who later on become high-level corporate executives at public companies. Fewer women leading the complex financial audits that typically characterize large firms mean fewer getting the experience and visibility necessary to take on such industry roles in the future. 

Other research suggests that similar situations exist in other industries, all of which has the effect of women not getting prime assignments in their companies, which further kneecaps their career advancement compared to men. One study, using Finnish metal workers as an example, found that "women are initially assigned to less complex jobs than men," which can have long-term effects, as "the effective ability of the worker is revealed after these assignments and the subsequent promotions are based on the observed effective ability." In other words, women have fewer chances to prove themselves to their employers than men, and so are less likely to be promoted. Since, in this study, women seemed to start their careers in clearly less complex jobs than men, despite no corresponding difference in productivity, the threshold for them to get promoted is higher.

This phenomenon manifests itself not just in business but in the military world as well. The push to allow women in front line military roles is motivated, at least in part, to remove a barrier to women's advancement in the military. These sorts of assignments are one of the ways that armed forces members can distinguish themselves and earn promotions, but if women are barred from them, then this cuts off a significant avenue for career advancement. 

One consequence of this phenomenon outside gender equity is that senior women are more likely to leave the company and take their talent and experience with them. The Journal said that senior women leave their jobs at a rate nearly four times higher than that of senior men, 27 to 7 percent. The Journal noted that the large number of women entering private equity, or starting their own ventures, is a reflection of these job departures.