Enduring Myths and Broken Promises

By Gigi DeVault (Munich)

On day 4 of this year’s World Economic Forum‘s Davos Conference, members of a panel heading a discussion entitled The Gender Agenda asserted that gender parity is “not just a worthy goal — but also an excellent business proposition.” The panelists, three male chief executives and three professional women, said all the right things. They said what we would expect them to say. And they probably said what we all have been thinking.

Last month, the New York Times published an article on The Gender Agenda; readers posted comments that were manifestly concordant with contemporary thinking about gender-based dynamics in the workforce. To summarize: If you work hard enough—and deliver—you’ll move up the corporate ladder. But expect the “mommy track” to impact your career trajectory. Gender issues don’t really warrant all the attention they garner; if women come into the workforce prepared, companies will hire and promote them.

There’s not much here that would take the Davos debate to a new level, or even rekindle argument. Or is there? In fact, if a report by Catalyst, Pipeline’s Broken Promise, had been released in time for the Davos panelists to prepare for their debate, the discussion may well have taken a different tack.

Think gender parity is getting better? Myths abound, alive and well.

Catalyst has been tracking the aspirations and the progress of women in business for nearly 40 years. One project, a longitudinal study entitled The Promise of Future Leadership: A Research Program on Highly Talented Employees in the Pipeline, highlights gender-based differences in career experiences and satisfaction. Pipeline’s Broken Promise, a second report arising from that longitudinal study, shines the cold hard light of day on an enduring belief that, given time, qualified women will rightly establish themselves in the upper echelons of business. The study results just published by Catalyst suggest that a curtain may need to be torn down—our vision has been too long obscured by our hopes.

The promise is that a pipeline for women seeking senior leaderships is functioning in a fair and robust manner. Who says the pipeline is broken? A full 37 years after Betty Friedan published The Feminine Mystique and 36 years after the enactment of the 1964 Civil Rights Act, women represent less than 14% of CEOs at the top publicly-traded firms around the globe, 15% of members of the board of directors and 3% of the CEOS at Fortune 500 companies. Yet, according to the Economist, overall women represent 40% of global workforces, nearly 50% of all workers in America, and 51% of all U.S. management and professional jobs. If we single out the U.S. insurance and finance industries, women make up 58% of the labor force but comprise only 18% of the executive officer positions.

The conventional wisdom about gender dynamics has been conditioned by all that glitters: Inclusion / diversity programs instituted by companies, women’s accelerated achievements in advanced education, and the remarkable increase in the number of women in the workforce. Women have waited in the pipeline—poised to make rapid progress to the top of their fields. They have been fed solemn admonishments to trust that change will come. But, even for top talent, inequality is entrenched and women show significant lags in compensation, advancement, and career satisfaction. It is, apparently, not enough to combat systematic gender inequality; it is necessary to uncover the mechanisms that let gender bias take hold and choke off the potential of promising women leaders. The time to “audit the entire building for ‘gender asbestos’” is now and it is overdue. Pipeline’s Broken Promise is replete with ideas from CEOS about to push off from such an audit and make genuine, transparent changes.

The Rule for Women: Start Low, Stay Low

Starting with their first position following graduation from business school, women lag in the climb up the career ladder, and they do not catch up. A full 60% of the best and the brightest women took first post-MBA jobs at entry or individual contributor level, compared to 46% of the men. The trend reverses at the next level up, and holds all the way to the top ranks, with more men than women starting at manager, mid-manager, and CEO or senior executive levels following graduation from their MBA programs.

Unlike men, when women start low, they stay low. When comparing men and women who had their first post-MBA job at entry level or one level higher, women were significantly outpaced by men in moves up the career ladder. This was true even when men and women had the same number of years of experience and earned their MBAs the same year. However, if a woman can land a post-MBA job at mid-manager level or senior executive rank, where 10% of the women and 19% of the men were positioned at the time of the survey, they are better able to achieve parity in career advancement. Interestingly, despite their steeper and steadier trajectory, only 37% of men were very satisfied with their overall career advancement. Just 30% of the women said they were very satisfied with their overall career advancement.

Anne M. Mulcahy, Chairman of Xerox Corporation addressed the issue of start low, stay low. In the report, she wrote:

“One of the things companies have gotten very good at is managing grade levels and salary dispersions. But if you come in the door in the wrong placement, those systems aren’t going to adjust the imbalance. Most companies’ systems are designed to be all about equity among a like group of jobs and roles, it’s not looking for inequity in terms of initial position. This is a heads up that more work has to be done to make sure there isn’t inherent bias in the placement processes.”

Broken Promises, Busted Piggybanks

Women start at lower levels post-MBA than men and make an average of $4,000 less in their first jobs. For first jobs at every level, men outpaced women in compensation growth. The single exception was for CEO or senior executive level positions, where men were twice as likely as women to be placed following graduation from their MBA programs. The issues surrounding gender pay gaps have been roundly discussed, but in a recent debate held by The Economist, Ilene H. Lang, President of Catalyst, underscored the significance of these gaps over the course of a lifetime.

As she wrote, “an American woman will make $700,000 less throughout her lifetime than the guy sitting next to her at high-school graduation. She will make about $1,000,000 less than a male counterpart with the same undergraduate degree and $2,000,000 less than her male friend with the same grad school degree.” These numbers take on particular significance in light of the changed status of women as breadwinners for a majority of U.S. families. Lang points out that “when women are paid less, everyone loses: women, families, kids and yes, even men.”

Hop, Skip, and Jump

More men than women who participated in the survey left their first post-MBA job for more money, better benefits, and faster career advancement. It turns out this decision to move paid off; both men and women who left for career advancement were able to climb further up the ladder and both men and women who left for more money did achieve greater salary growth, in both instance, over those who did not give that reason for their job change.

Only 16% of the men reported that they left a first position because of a difficult manager, while 25% of the women gave that reason. Beth Horowitz, Former President and CEO of Amex Canada, Inc. wrote: “I find it very revealing that women were more likely to leave their first job because of a difficult manager. This tells us we still aren’t getting through to first line managers. This likely also affects the first promotion, who gets promoted, and when. Companies need to refocus on the point at which someone becomes a people leader for the first time. Have we provided adequate training?”

About the same number of men and women chose non-traditional career paths in the nonprofit, education, or government sectors, and they made up only about 11% of all the survey participants. Only 3% of the women, compared to 2% of the men, said they left their first post-MBA position for child rearing reasons. Men seem to be immune to the effects of choosing a non-traditional career path, experiencing no differences in advancement, compensation growth, or career satisfaction. Regardless of the career path they chose, men expressed more career satisfaction than women. Conversely, women who first choose a non-traditional careers, were self-employed, or worked part-time advanced less than women who stayed on a traditional career path and men who took either path. Women who were on a non-traditional path for a time were less satisfied overall with their careers than their peers who did not take a detour.

The proof of the pudding is in the eating

Mary B. Cranston, Esq., Firm Senior Partner, Pillsbury Winthrop Shaw Pittman LLP observed:

“In most organizations there are so many men relative to women. That fact leads to significantly more informal mentoring and coaching being available for men than women. This just opens the door for like-minded bias working itself into the system. I remember when I first became CEO I had men coming to my door to introduce themselves. I asked myself, ‘Where are the women? Why aren’t they showing up?’ I realized then how careful managers have to be not to respond to self-promotion, but be proactive in identifying high-performers based on competencies rather than stereotypes.”

To help companies make recruitment and hiring decisions more transparent—to themselves—Anne Mulcahy suggests that companies do blind studies of their last 100 hires, matching anonymous resumes to positions and subsequently comparing those matches with where the new hires were actually placed. She also believes that, “High potential women coming onto the job market need to be comparing companies. Which of them have a better track record for advancing women? Those are the ones they should be targeting as their employer.”

More About the Study

A total of 9,927 alumni graduating from MBA programs at 26 prestigious global business schools participated in an online survey conducted by Catalyst during 2007-2008. The survey data was used to generate career path profiles, and from this base, further analysis focused on the 4,143 high potential men and women who were working full-time in business when surveyed and who had graduated from full-time MBA programs. The 16-page report, Pipeline’s Broken Promise, may be found on the Catalyst website and downloaded for free. It includes a statistical appendix and a respondent profile.