Women Underrepresented in Corporate Leadership

News Updates

Although there are many reasons to celebrate the contributions of women, a series of reports released shortly before International Women’s Day, March 8, 2012, reveals a disparity between the number of women participating in the global workforce and the number holding corporate leadership positions around the world.

In most Western nations—primarily Europe and North America—women account for nearly half of the workforce, according to government statistics. In the United States, for example, 52 percent of workers are women, and in Europe the number of women averages slightly less than 45 percent of workers.

Yet when it comes to the number of women holding corporate leadership roles, the percentages are much lower. An analysis of compensation surveys released by Mercer on Feb. 21, 2012, found that women held 29 percent of senior-level management jobs in Europe. A report released by Catalyst in December 2011 showed that women held just 14 percent of the executive-level jobs at Fortune 500 companies in the U.S.

“For a gender comprising over half the global population, women’s representation in senior corporate roles is woeful,” said Sophie Black, a principal for Mercer’s executive remuneration team, in a statement. “The causes are complicated. It’s cultural, social; in some cases it is intentional discrimination, but it can also be an unconscious and unintentional bias,” she explained. “The end result of these issues is the creation of a ‘pyramid of invisibility’ for women in corporate life.”

Mercer researchers analyzed 264,000 senior-management jobs at approximately 5,300 companies in 41 countries and found that countries in the former Soviet bloc had the highest percentages of women in senior-level positions. The researchers found that women held 44 percent of the senior management jobs in Lithuania, followed by Bulgaria (43 percent) and Russia (40 percent).

However, Spain, the United Kingdom and France each had a female representation level of 28 percent, while the Netherlands had the lowest level of female executives in Europe at 19 percent.

Other data released by organizations such as Thomson Reuters, World Economic Forum, Catalyst, Randstad, the Economist Intelligence Unit and the Organization of Economic Cooperation and Development (OECD) appear to confirm many of Mercer’s findings. Several reports and sources indicated that the number of women in executive-level jobs has leveled off since the global recession began in 2008, and that in some countries a tepid recovery led to a regression in the percentage of women holding executive and corporate board director positions.

“The number of women in senior leadership roles had moved up steadily through the 1990s and up to 2005 or 2006, but that number has definitely plateaued in the U.S. and in Europe,” said Alison Winter, co-chair of Women Corporate Directors in New York.

According to Winter, the percentage of women on corporate boards climbed as high as 19 percent in the U.S. but, since the onset of the recession, it slid under 17 percent.

The percentage of corporate directors in Europe is generally higher than the U.S., but it varies from nearly 40 percent in Norway to less than 5 percent in Germany and the Netherlands, according to statistics released on March 5, 2012, by the OECD.

The OECD figures, which track the world’s 34 largest economies, show that Asian, Latin American and African nations tend to lag behind Europe and North America in the number of female corporate leaders. In Japan, for example, women account for slightly less than 4 percent of corporate board directors, while in Mexico the share of female board directors is approximately 8 percent.

“While the number of women in corporate leadership roles in Europe tends to be stronger than other regions, the number of female corporate directors has also plateaued over the past two or three years, much like the U.S.,” Winter told SHRM Online.

Several countries in Europe, including Norway, Iceland, Spain, France and the Netherlands, have enacted or are working to enact laws to promote gender equality on corporate boards and in senior leadership positions. Government officials in the United Kingdom have proposed enacting a gender equality law to boost the numbers. In spring 2003, Norway took action to require many of its companies to fill at least 40 percent of board seats with women.

More Work Is Needed

Winter said it will take more than quota systems and changes to laws to achieve gender equality in corporate leadership.

“We have to challenge some long-held traditions and change perceptions,” she said. “This is why diversity and inclusion initiatives are so important. Many businesses are limiting themselves because they simply exclude nearly half the workforce from career and talent development opportunities. And that just doesn’t make sense in today’s workplace, where many businesses are struggling to identify, hire and retain talented and skilled workers.”

Research finds that businesses which promote gender equality at all levels of the organization tend to have a stronger bottom line, according to a recent Women in the Workplace report released by Thomson Reuters on Feb. 27, 2012.

The data compiled by Thomson’s researchers found that the stock prices of businesses that have women in corporate leadership roles tend to be higher than their counterparts. The research revealed that these businesses perform considerably better and pay larger dividends to corporate investors even during economic downturns.

“The evidence is pretty clear that promoting gender equality is good business strategy,” Winter said.

While the statistics and reports released for International Women’s Day might not reflect strong progress in global gender equality, there are signs the situation is improving, according to Winter. She points to IBM, which, in October 2011, appointed Virginia Rometty as the technology giant’s first female CEO. IBM has placed several other women in top management positions.

“The largest and most visible companies typically face more scrutiny and pressure to practice what they preach,” said Winter.

IBM has been very visible about promoting diversity and inclusion, and Rometty’s appointment as CEO culminates a fundamental culture shift at IBM, which for years had a conservative, buttoned-up reputation. IBM’s transformation to become a multinational corporate leader for gender equality could set the tone for other large corporations around the globe, according to Winter.

“Companies in the lower tiers of the Fortune 500 and 1000 just aren’t quite as visible, but now that prominent companies like IBM and Campbell Soup have female CEOs, there will be more pressure for other organizations around the world to follow suit, especially if IBM and Campbell’s continue to excel and perform well,” Winter said.

Bill Leonard is a senior writer for SHRM.