05/14/2014

Ms CEO: increasing the odds that one of your successors is a woman

Authors: Per-Ola Karlsson and Gary L. Neilson, Strategy&

Mary Barra, Meg Whitman, Virginia Rometty. Female chief executives are still relatively rare—in 2013, they were only 9 out of 291 incoming CEOs at the world’s largest 2,500 public companies. But the companies they lead are increasingly notable in sheer size, global reach, and financial might—do we need to mention that Barra, Whitman, and Rometty run General Motors, Hewlett Packard, and IBM, respectively? And women’s ranks are growing—by 2040, female CEOs will comprise one-third of incoming CEOs, a ten-fold increase, we project in Strategy&’s 2013 Chief Executive Study.

For 14 years, our study has analysed the ebb and flow of chief executives at the world’s largest public companies; the 2013 study took a special look at our data on women CEOs over the past 10 years. We found women already running companies in all industries and all regions, though still only 2.2% of all CEOs in the past 10 years have been women.

We were surprised to find only two statistically significant differences in the professional backgrounds and tenures of men and women CEOs. First, female CEOs are more likely to be recruited from outside their companies than male CEOs (35% vs. 22% over the past 10 years), because companies aren’t doing a good enough job building their leadership pipelines. And in what may be an indicator of the challenges that female—and outsider—CEOs face, women are forced out of their jobs significantly more often than men (38% vs. 27 %).

 

Strategy& Hiring women CEOs
 

What can you do today as a CEO to ensure your company is giving its women their chance to get the top job and stay in it?  It seems clear that companies have not been able to cultivate enough female executives in-house and are losing the few they have to competitors. So you must lead an active approach to finding, retaining, and preparing your future women CEOs for leadership. You can start now with programmes such as sponsorships (in which senior leaders adopt women throughout the organisation and make sure to coach them, support them and find the right opportunities for them to develop).  And doing so may well have benefits beyond winning a skirmish in the talent war: companies that are able to hire more women CEOs from inside may also benefit financially, since our research shows that on the whole, insider CEOs generate higher returns over their tenures than outsiders.

 

Per-Ola Karlsson• Contact Per-Ola Karlsson

Per-Ola Karlsson is a Senior Partner with 25 years of consulting experience, based in Dubai. His main areas of expertise include strategy formulation, organisation development, corporate centre design and governance. Read more

 

Gary Neilson• Contact Gary Neilson

Gary L. Neilson is a Senior Partner based in Strategy&’s Chicago office. He has 30 years of experience with the firm, focused on helping Fortune 500 companies with operating model transformation challenges.
Read more

 

 


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