There have been some significant changes to executive recruitment and talent development that have swept across corporate leadership. Chief among those changes, gender diversity has become a flashpoint for conversation and, importantly, for intentional planning. The latest data gathered from BoardEx shows that women are stepping into leadership roles across almost every industry, albeit at different speeds.
Insights from Altrata’s Global Gender Diversity 2023 report paint a clear picture: progress is being made, but it’s time for some ‘productive acceleration’ in the workplace. Additionally, there are a few surprises in the data. Let’s look at these recent trends, how female representation in the business world is evolving, and how a diverse talent pipeline creates more successful businesses.
Gender and diversity trends: an overview
The landscape of gender diversity within the workplace is experiencing a gradual yet significant transformation. While progress has been made, the journey toward achieving gender parity at the senior executive level remains a challenging one. Looking at the Global Gender Diversity 2023 report shows us a few key things:
Evolving Female Diversity in the Workplace
The workplace is seeing ‘slow but steady’ progress in the representation of women. Our examination of BoardEx data for the past ten years illuminates the intricate patterns and trends that underscore this evolution, but it also shows us some challenges that still need to be addressed.
Gender parity, particularly at senior leadership levels, remains a distant goal. Focusing on Global 20 economies (20 selected major economies in the world), we can see that achieving better gender representation at a broader level is still something more aspirational.
“All Global 20 countries have increased in their share of female board members since 2014. Ireland, Spain, Switzerland and the UK were the biggest improvers.”
Altrata’s Global Gender Diversity 2023 report
Representation of women at senior executive and board levels
Within the corporate hierarchy, women continue to encounter barriers to securing director positions. Currently, there is a distinct gender gap, with men occupying most of these influential roles. The statistics indicate that there’s much ground to cover in creating a more balanced distribution of power. According to the report, the countries with the highest levels of representation (France, Italy, and the UK), don’t even make parity. After 13th place (the US), the fall-off is sharp, dropping from around 30% to 20% and below.
This is perhaps most clear in executive director positions. The report states that the proportion of women in executive director roles has only gone up 0.6% year-on-year, topping out at 10.5% among the Global 20 countries. In other words, men still hold nearly 90% of all executive director roles.
While progress can be observed on boards, female participation on corporate leadership teams lags even further behind. The numbers tell a story of women assuming influential roles but often without the full spectrum of decision-making executive power.
Female participation in corporate leadership teams hovers at a low 20.5%. Even when women hold leadership roles, they often occupy positions with influence but less decision-making executive authority. The percentage of female CEOs in the Global 20 remains at a mere 6.4%, for reference.
Analyzing the talent pipeline
Looking at the ‘talent pipeline’ is a great way to see some of the factors contributing to trends regarding C-suite and board appointments. Look at the root to see the fruit, and the hiring processes and talent acquisition methods are some of the most important “roots” we can see to understand the “why” behind the trends.
Internal vs. external appointments
The report states that organizations favor internal promotions over external hires for C-suite roles, with 73.8% of men and 67.2% of women appointments coming internally (within the S&P 500). This trend reflects a preference for familiarity with the company’s culture and operations. Internal leaders bring in-depth knowledge of the business, its financial status, and digital transformation progress. This isn’t necessarily a gender-oriented statistic, but it can help us understand how women are most likely to advance.
The pipeline of female talent
Identifying emerging female leaders is crucial. Pinpointing these individuals within the organization allows for strategic talent development. Examining common backgrounds and experiences among female leaders offers insights into factors facilitating leadership growth.
“Not enough women are accumulating the corporate experience necessary to progress to the most senior C-suite roles.”
Altrata’s Global Gender Diversity 2023 report
The development of these future female leaders is certainly factoring into why there are fewer reaching senior leadership levels. There is a distinct disparity in corporate experience, with male senior executives in S&P 500 companies more likely than their female counterparts to have backgrounds in vital functions like commercial, sales, operations, or finance. Conversely, those with experience in HR, a female-dominated function, lags in representation at the most senior levels.
The top C-suite positions, namely the CEO, COO, and CFO, are primarily filled by individuals with prior commercial, operational, and financial roles. Since women are less likely to hold these leadership positions, this is a visible bottleneck to achieving gender parity in the C-suite. In order for a talent pipeline to be considered more effective, let alone equitable, it would benefit organizations to recognize these weaknesses and implement some changes.
“Jobs running divisions, operations and finance are common paths to chief executive.”
Emma Jacobs, Financial Times 2023, based on BoardEx data
Additionally, according to data from Boardroom Insiders (another Altrata company), there are some discrepancies in the interests between male and female senior executives that show up in the workplace. Female Fortune 500 executives show interests that trend towards curiosity and learning (travel, mentoring, reading, volunteering), while male executives show interests that trend towards traditional bonding and networking hobbies (golfing and sports). These differences in interest aren’t totally diverged, but they may be enough to reinforce exclusivity, mainly because men still hold the majority of the decision-making power.
At the same time, the most common roles that women often are promoted into, namely HR, are not common pathways to the CEO position. For instance, over 75% of S&P 500 executives appointed to HR roles are women. In order, the other top appointments are sustainability, marketing and PR, and legal.
“Only 1.4 percent of current CEOs in the S&P 500, and 1.6 percent in the FTSE 350 had HR experience over the 20 years prior to their appointment. About 9 percent of US bosses and 5 percent of those in the UK had held marketing roles.”
Emma Jacobs, Financial Times 2023, based on BoardEx data
Essentially, not enough women are gaining the needed relevant experience in their careers to pursue CEO roles in large companies. Building robust talent pipelines that include women in top commercial, operations, and finance roles will ultimately help fill out the talent pool and increase the candidate depth in regard to gender.
Addressing this experience gap and broadening conventional ideas of interest and connection are essential for advancing gender diversity in top leadership roles.
Female leadership: all boats rise with the tide
As women ascend to top positions, they bring with them a transformative influence. Companies led by female CEOs or chairs tend to exhibit greater gender diversity throughout their boards and leadership teams. The question arises: Is this due to the corporate culture of such firms or the proactive efforts of female leaders? Or, perhaps, it’s a synergy of both factors.
Ultimately, this isn’t just a matter of equity; it’s a strategic imperative for organizations that want to level up their organization from the ground up.
Financial impact
Companies with diverse leadership teams generally show superior financial performance. This diversity fosters innovation, astute decision-making, and adaptability, ultimately impacting profitability and the bottom line.
At the same time, diverse leadership aligns more closely with increasingly diverse consumer demographics. Connecting with different types of people increases customer loyalty and even consumer understanding.
For instance, reworking roles to better include the unique strengths and interests of women appears to have a direct impact on customer satisfaction.
“The female CEOs tended to pursue roles (or even invented roles) that leveraged their skills in a way that made a difference by adding value to the business but also advancing something that the world, customers, or employees benefited from.”
Jane Edison Stevenson and Evelyn Orr, Harvard Business Review
At the same time, these role changes lessened the chances that extremely talented women would leave the organization. Creating these roles, with a clear emphasis on the impact, outcomes, and contributions, is more likely to interest talented and successful women.
Cultural and relational impact
Female leaders can be instrumental in shaping organizational culture, business and personal relationships, and broader company perception. The report found, additionally, that female executives are slightly more likely to be part of a diversity network. Diversity networks provide a source of support for employees with social identities outside the majority in their specific business territory. Whereas over 15% of female S&P 500 board members opted to be a member of a diversity network, this still at just over 12% among men.
“Women show a greater membership of diversity networks at both board and leadership team levels.”
Altrata’s Global Gender Diversity 2023 report
For organizations prioritizing gender diversity, understanding the characteristics that are commonly found in todays leaders can give you an edge when looking for top talent. To learn more about how BoardEx can help, schedule a call with our team today.
Maya Imberg is the Head of Thought Leadership and Analytics at Altrata. She is responsible for spearheading the company’s thought leadership efforts and overseeing its analytics and predictive modeling services commissioned by clients. She joined Wealth-X in 2016 as Director of Custom Research responsible for secondary research, data analytics and branded content. Maya has over fifteen years of experience in research, spanning market research, macroeconomics and financial services. Prior to joining Wealth-X, Maya held a variety of consultant and economist roles at the Economist Intelligence Unit and spent a number of years working for Datamonitor’s Financial Services practice. Maya holds an undergraduate and MSc degree in economics and comparative politics from the University of Pennsylvania and London School of Economics respectively.