New Research Reveals How to Reverse the Gender Imbalance Among Corporate CEOs: Join a Corporate Board

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By Michael Blanding
Illustration by Carole Henaff

Ten years ago, Lisa Wardell was working as chief operating officer at asset investment firm The RLJ Companies, when her boss, Bob Johnson, came to her with a proposition: A global education company was looking for a new board member. Would she like him to recommend her?

“He had the foresight to say, I want my executives to be on public boards and getting that experience early in their careers,” Wardell says in an interview with Black Enterprise.

In 2008, she joined the board of that company, now known as Adtalem Global Education, and in 2016, the company tapped her to become its CEO. In 2019, she was named chair of the board, as well. She is now the only black female chair and CEO in the S&P 400 Index — and thinks it would not have happened at all without the board experience first. New research suggests she is right.

The Door to the C-Suite

For decades, women have been entering the workforce at equal numbers as men, and many have risen to the highest ranks of their companies as senior vice presidents, presidents, and chief operating officers. There has been one exception to this progress however: Very few women have become CEOs.

In fact, only 4.8 percent of CEOs in the Fortune 500 ranking of the largest U.S. corporations in 2018 were women. And when two researchers from Georgetown examined the top 3,000 largest publicly traded companies in the corporate database D&B Hoovers, they found an even lower number: 4.6 percent.

“Such a gender imbalance is not likely to be a natural equilibrium point,” says Catherine Tinsley, Raffini Professor of Management in the McDonough School of Business and faculty director of the Georgetown University Women’s Leadership Institute, who co-authored this new research. “Obviously something — or likely a set of ‘things’ — is systematically affecting one gender and not the other.”

Only 4.8% of CEOs in the Fortune 500 ranking of the largest U.S. corporations in 2018 were women.

In their research, Tinsley and Kate Purmal, senior industry fellow at the Women’s Leadership Institute and Georgetown parent, set out to discover what some of those “things” might be — and how they can be overcome. Publishing their findings in Harvard Business Review in July, they found a chicken-and-egg problem that is difficult to overcome: When public companies look for new CEOs, they tend to hire people who have already been CEOs, and because most current CEOs are men, so are most future CEOs.

In the midst of their investigation, however, they also found an emerging pathway to the C-suite that an increasing number of women may be using: corporate board service.

The research was initiated by Purmal, a technology executive and co-author of the 2016 book The Moonshot Effect: Disrupting Business as Usual. Purmal rose to become a senior vice president at flash memory company SanDisk, reporting directly to the CEO, before leaving to found her own company.

“I’ve been up in that realm of C-level executives, and seeing how many women make it to that point and not make it to become CEO made me curious,” Purmal says.

By selecting women with prior board experience for CEO positions, even if they don’t have prior CEO experience, companies are taking managed risks, says Catherine Tinsley, Raffini Professor of Management in the McDonough School of Business and faculty director of the Georgetown University Women’s Leadership Institute

When her daughter started attending Georgetown, Purmal contacted Tinsley, who invited Purmal to speak to her class. They began to discuss possible research they could do together, and their thoughts turned quickly to female CEOs. “We are leaving a vast amount of talent on the table,” Purmal says.

On the other hand, according to Purmal’s experience, many women also often suffer from “imposter syndrome,” doubting their ability to ascend to the top job in a company. Tinsley believes it is not hard to see why.

“How can we expect women to envision themselves as CEOs when they see few to no female CEOs in their line of sight?” Tinsley asks.

Compounding the problem, the researchers say, is that unlike other jobs, CEO positions are often initiated by personal connections through other top executives or board members. “Often those opportunities don’t come through a recruiter — generally you are tapped on the shoulder to be considered,” Purmal says. “There is a distinct lack of sponsors for women.”

A Matter of Difference

To examine how these phenomena play out in the workplace, Purmal and Tinsley circled back to the statistics they uncovered from the D&B Hoovers database. Of the largest 3,000 publicly traded companies, only 140 had women CEOs or just over 4.6 percent of the total. After eliminating all female CEOs who had founded their own companies, they picked 100 female CEOs at random and looked up each woman’s biography on Bloomberg Business and other public sources to determine their career path prior to their first public CEO role. Finally, for each female CEO, they chose a male CEO for a company of a similar size in the same industry and repeated the analysis for them.

What they found surprised them. For candidates promoted from within a company, there was a well-established career path that was virtually the same for men and women. Almost 70 percent of CEOs of both genders rose to the position after serving as chief operating officer or president. For candidates recruited from outside, however, the story was dramatically different. For men, 52 percent had previously served as CEO of a private company or division, while for women that number was only 18 percent.

“I was floored by the difference,” Purmal says. “I didn’t have any idea we’d find that.”

“Companies are recognizing that the gender discrepancies at the top of corporations is likely an unnatural state and seem to be taking creative steps to try and correct the imbalance.”

— Catherine Tinsley, Raffini Professor of Management

When they looked at service on corporate boards, however, the numbers were reversed. For women recruited to public companies, 59 percent had served on a board before becoming CEO, while only 42 percent of men had. For private companies, those numbers were 23 percent and 12 percent, respectively. From that data, Purmal and Tinsley conclude that corporate boards, which have a fiduciary duty to hire the best candidate for their company, are treating board tenure as a proxy for CEO experience.

“They are taking risks by selecting outside women who lack prior CEO experience, but at the same time, they are mitigating that risk by selecting women with prior board experience,” says Tinsley. “In other words, companies are taking wise or managed risks.”

That hiring tactic makes sense, the researchers say, because the same skills required to serve on a board are often transferable to the role of CEO.

“I was a senior vice president at a $4 billion company, and I had no idea I was one step from the CEO role, and I had no idea board service could get me there,” says Kate Purmal, Senior Industry Fellow, Georgetown University Women’s Leadership Institute

“You are dealing almost exclusively with strategy, and this is a CEO-level task,” Purmal says. “They also have a fiduciary responsibility to maximize shareholder value, which is exactly what a CEO is supposed to do.” Moreover, serving on a board solves the sponsor problem because it puts women into regular contact with board members who may serve on other boards that may hire in the future.

“This is a way for them to see you. It’s all about relationships, especially at the CEO level,” says Wardell, who now also serves on the board of Lowe’s Companies. Once she had board access, she could showcase her talent for finance and mergers and acquisitions that convinced her fellow directors that she was suited for the top spot. “It’s not just sitting on a board. It’s how you carve out that place of leadership within that board.”

Stepping Stone to CEO

While a woman’s own CEO might not recommend her for a top job at another company, after serving on a board, she may have a half-dozen advocates who will keep her in mind when a job materializes.

“They know these women, they have seen their performance, and they feel comfortable recommending them for consideration in the CEO candidate pool,” says Tinsley.

The good news from their research, Purmal and Tinsley say, is that if board membership is a stepping stone to the CEO position, then women are already making the leap. While boards have been traditionally male-dominated in the past, that is rapidly changing.

“We are seeing an unprecedented growth in the number of women joining boards right now,” Purmal says. For example, Spencer Stuart’s 2018 Board Index report found that of incoming board members in the S&P 500 in the previous year, more than half — 53 percent — were women.

“I’ve been up in that realm of C-level executives, and seeing how many women make it to that point and not make it to become CEO made me curious.”

— Kate Purmal, Senior Industry Fellow, Georgetown University Women’s Leadership Institute

Perhaps the increase in women board members has been given a push recently due to the #MeToo movement. “Companies need to make sure they have the gender bias issues covered,” Purmal says. It also has been bolstered by a new California law that requires companies headquartered in the state to have at least one female board member by the end of 2019, with those requirements growing in the future. Some companies are proactively requiring a more diverse applicant pool for hiring board members and CEOs as well.

In 2019, the number of female CEOs of Fortune 500 companies has risen to 6.6 percent, the highest number ever, according to Forbes. “Companies are recognizing that the gender discrepancies at the top of corporations is likely an unnatural state and seem to be taking creative steps to try and correct the imbalance,” Tinsley says.

Given the current huge discrepancy between male and female CEOs, however, reversing the trend will likely require a more conscious effort. That effort starts with women themselves actively pursuing those opportunities, including board membership.

“I was a senior vice president at a $4 billion company, and I had no idea I was one step from the CEO role, and I had no idea board service could get me there,” Purmal says.

In 2019, the number of female CEOs of Fortune 500 companies has risen to 6.6% the highest number ever.

Women should not be shy about asking their own superiors to sponsor them for board positions, which could be a win-win for everyone. “It’s really good for the company for women to be trained at the board level,” says Purmal. “It makes them much stronger in their executive skills.”

Current CEOs also have a role to play. Internally, they need to work on retention, according to Tinsley, so women stick around long enough to ascend to the top.

“Companies know how to develop talent for the C-suite; they just need more women at the penultimate level so they are in the candidate pool for the CEO spot,” says Tinsley.

But CEOs also could be more active in mentoring strong female candidates and recommending them for corporate board positions that may help them advance.

“CEOs have a responsibility to develop their own executives for purposes of succession but also to look at how they can get high-potential women involved in corporate board roles,” Purmal says.

For board committees who recruit a new CEO, Purmal and Tinsley recommend more proactively considering prior board experience as a viable qualification for the CEO spot.

“When they are looking at their succession plan, they can reach out to other boards and look for females serving on the board as candidates,” Purmal says. “They can fulfill their shareholder duty without necessarily considering someone who has already been a CEO, so they have an ability to cast a wider net.”

Doing so, Purmal adds, will give them a more competitive applicant pool at the same time they are evening the playing field for women seeking to become CEOs.

Since becoming CEO of Adtalem Global Education in 2016 and now as chairman, Wardell has worked to increase diversity on her own board, including adding three women. One of those female directors was later hired by Wardell to lead the company’s largest business unit. By seeding the pipeline with more female directors, she hopes more companies will consider more women as CEOs in the future, so she will not be the 1 in 20 CEOs who is female. “Gender diversity in the boardroom is not only accretive to the performance of the companies, but it is a valuable qualification for women to become CEOs,” Wardell says. “That was precisely the course of my career and a pathway I am intentional about creating for other women and diverse professionals.”

Published in Georgetown Business magazine, Fall 2019