Women are constantly underrepresented in the C-Suite. Although the number of women in top leadership roles continues to grow — 2020 marked women’s highest Fortune 500 representation — gender disparity remains. What’s holding women back from better C-Suite representation? Unfortunately, it’s caused by inequitable opportunities.
One of the most critical opportunities women miss is profit and loss (P&L) responsibility. Leaders with P&L responsibility are responsible for allocating resources across their operation or function and are held accountable for financial results. Most people gain this responsibility in early executive roles. It’s standard criteria for C-level roles.
That’s why lacking this experience is so significant. According to DDI’s Global Leadership Forecast, which surveyed 15,000 leaders representing 1,742 organizations globally, only 42% of women leaders have managed P&L functions. That’s 9% less than men. Why does this matter? It’s an immediate disqualifier for C-level roles, giving women fewer opportunities.
How can we start closing the gap? It requires a major commitment to get more women into roles with P&L responsibilities earlier.
Starting early is critical.
Oversight of a business and its P&L is the metric used to judge leaders’ C-Suite potential. Too often early management tracks for women don’t involve deep financial responsibilities, since their positions are usually in marketing, human resources and legal. In fact, the DDI research found nearly 81% of male executives received P&L responsibilities early, compared to 63% of women in the same roles.
Additionally, there are so few women role models at the executive level to sponsor promising female talent. Women account for only 21% of early executives, according to DDI’s Diversity and Inclusion Report 2020, highlighting a significant pipeline problem.
The much-celebrated announcement of Roz Brewer as the new Walgreens CEO happened because of her talents and organizational efforts to create a pipeline with meaningful career stepping stones. But, as Brewer encountered, the next position may not be within your company. She left her position as Starbucks’ COO, which isn’t unique.
High-level and high-potential women aren’t getting the experiences needed in their current companies. In fact, 45% of women expect to leave their current organization to advance, compared to 32% of men, according to the DDI study.
That means if organizations aren’t purposeful about accelerating women, significant turnover awaits. They won’t only lose talented female leaders — they’ll also lose investments in their growth and institutional knowledge. These departures widen the gender gap at the top, keeping organizations from realizing the benefits of diversity.
Same job, different experience?
As men and women move up through leadership assignments, they may be performing the same job but have different experiences. The difference lies in coaching and information. Women rarely receive information leading them to roles with P&L responsibilities. Unfortunately, promising female talent usually doesn’t have coaches, leaders, mentors or sponsors that directly state the importance of a career trajectory focused on financial responsibility.
While nearly half of men received detailed information and coaching for these spots, only 15% of women received the same details and encouragement, according to one report. Men are usually three times more likely to be encouraged to pursue these roles than women. About 80% of women who were encouraged to pursue a role believed they’d succeed. Without encouragement, only 51% believed they would succeed.
Clearly, we need to develop female potential early and often to create a diverse leadership bench.
The Pandemic’s Effect On Women, Now And In The Future
The pandemic set women back by decades. In fact, it has been referred to as a “she-cession” rather than a recession, since women have been disproportionally affected economically and in leadership ranks. Layoffs impacted women much more during the pandemic.
In September 2020, given the challenges of balancing work, children and homeschooling, four times as many women voluntarily left the workforce. Others took on more work at home. Another report estimated women with small children took on an extra 20 hours of work each week since the pandemic started.
An estimated 865,000 women left the workforce altogether in 2020, compared to 216,000 men. One-in-four women are considering stepping back in another way, such as a leave of absence or reduced hours, according to the above-mentioned McKinsey & Company Report.
These issues will have far-reaching consequences for gender diversity in leadership pipelines. As a result, organizations must be more thoughtful than ever in ensuring women get the support, encouragement, nudges and real experiences and opportunities to prepare them for next-level leadership.
One report estimated it will take 99.5 years to reach gender equity. The pandemic’s impact may further this, putting women immeasurably behind.
A Rallying Cry For The Organization To Take Control
Change must start at the top and CEOs need to commit to diversifying senior teams. This means targeted diversity goals for recruitment, promotions and advances, with a focus on processes to ensure women receive P&L responsibilities and development.
Other goals should include:
• Ensuring targeted high-potential pools are gender diverse — the Global Leadership Forecast found only 24% of high-potentials are women.
• Create metrics to monitor the effectiveness and objectivity of these programs. Unfortunately, less than half of organizations take this important step, according to the above-mentioned DDI study.
• The entire organization must truly embrace an inclusive and diverse culture. It must be a priority at all levels, starting first with the C-Suite, to enact change.
• Reinforce the importance of P&L responsibility for women and provide them with coaches, mentors and regular stretch assignments.
• Provide cross-functional experiences for women in finance, operations or sales to improve P&L role opportunities.
• Organizations should make hiring and promotion decisions based on data and metrics to increase objectivity and reduce any unconscious bias.
A Chance To Grow
Between the pandemic and traditional barriers, gender disparity has become a greater problem. But achieving gender parity should be viewed as an opportunity for growth instead of a problem. It’s not about advancing just a few women. Instead, it helps focus on aligning leaders and leadership in all organizational functions, at all levels.
This requires a proactive focus on gender balance. Organizations must aim to make high-potential, mid-career women and up equal to the number of men in P&L assignments and roles.