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Women in the C-Suite: Key Challenge for Gender Diversity

By Melissa J. Anderson

Last week Dunn & Bradstreet and the organization Chief Executive Woman released new research on the attitudes of Australia’s CEOs toward gender diversity. The results were not inspiring.

According to the study of 1,200 chief executives, 75% of small to medium sized companies have no women in senior management – and don’t plan to include any. Similarly, 65% of small to medium sized companies are not planning to mandate the inclusion of women on candidate slates moving forward.

Larger firms do better on gender diversity, the study revealed. Belinda Hutchinson, president of CEW, pointed out that many of Austalia’s larger firms have made their senior management gender targets public – for example, ANZ, one of the larger banks in Australia and New Zealand, has set a goal of 40% for women in senior management.

Hutchinson said, “What we know from a wide range of international studies is that firms that have gender diversity in their leadership, tend to perform better on a range of measures including return on equity. More needs to be done to support small and medium sized businesses increase female participation in management.”

Christine Christian, CEO of Dunn & Bradstreet pointed out the challenges facing Australia in implementing gender diversity when it comes to the executive suite. “The survey found that just 22 per cent of businesses have appointed, or intend to appoint, at least one female to a senior management position,” she said.

Critical C-Suite Diversity

When it comes to leadership, the study reveals that many of the individuals at the top of Australia’s companies don’t really think gender diversity is important.

But, of course, we know it is. In fact, it’s critically important, considering research done in recent years by organizations like Catalyst and the Center for Talent Innovation, as well as companies like McKinsey and Bloomberg, and plenty of academic studies as well. The research shows that increasing diversity at the top – particularly when it comes to gender – helps companies make better management decisions and improve financial performance.

C-suite diversity also plays a role in fueling the pipeline of diverse board directors. Many boards consider executive suite experience a key factor in hiring directors. Diverse boards have been shown to provide better governance than homogenous ones, so it should be of importance to shareholders to ensure women are getting the training they need in order to eventually move to the boardroom.

And finally, women in senior management serve as role models to women climbing the career ladder – one key factor behind the leaky pipeline is that women don’t see a clear path to the top if no other women have made it there in their company. When this is the case, they leave – to join other companies, start their own, or exit the workforce all together. Enabling women to see a role model – not just one, but many – who have has made it to senior management helps keep the pipeline strong, and ensures companies aren’t losing out on funds they have invested in talent acquisition and development.

Why the C-Suite is a Better Measure of Diversity in a Company

The decision on behalf of Australian CEOs to ignore the importance of gender diversity and the continued promotion of women to senior leadership is surprising given the focus in the past few years on women in the boardroom.

And, many have argued that the C-suite is, in fact, a more critical location for gender diversity. For example, since the first Womenetics 101 Survey published in 2009, Aviva Wittenberg-Cox, CEO of 20-first, has been a strong proponent of this theory. She wrote, “Boards are oversight bodies. They do not actually run companies. So getting more gender balance at board level does not necessarily have a very direct impact on the gender balance of the organization as a whole.”

Additionally, she said, by examining executive suite diversity, we can get a better feel for the commitment companies have toward gender balance. “As companies have discovered, it is much easier to appoint a woman or two onto a corporate board than it is to actually groom a woman for power and have her progress through the traditional, internal route to the Executive Committee.”

Companies should work to ensure a balanced proportion of women occupy both the boardroom and the executive suite – but focusing on one rather than the other doesn’t tell the whole story.

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