At a time when opportunity (or lack thereof) for women in the workplace is a topic of intense discourse, one way to look at the matter at the executive level requires merely some simple addition.
Among the largest 1,000 U.S. companies by revenue, as of last month only 12% had a woman in the CFO role, notes a new study by recruiter and succession planning firm Korn Ferry. There were more women finance chiefs than CEOs, but significantly fewer than the number of women who held posts as chief information officer, chief marketing officer, or chief human resources officer (CHRO).
That doesn’t mean diversity was lacking only among finance chiefs and their bosses. Among the five executive positions, only CHRO was more than 29% filled by women.
But while the math might be simple, the nuances that influence the relative prevalence of women in such roles are notably less so.
According to Bryan Proctor, global leader of Korn Ferry’s financial officer center of expertise, at least 50% of client companies doing CFO searches are requiring the recruiter to include women in the candidate pool. Further, he says, when “all else is equal” between a male candidate and a female one, companies are tending to choose the latter specifically to enhance the diversity of perspectives on the management team.
But are there really many cases where “all else is equal”? Yes, Proctor says — but only at a macro level, where companies state their, say, five “must-have” requirements for a CFO, such as experience in the industry, internationally, with capital markets, with a company of similar size and scope, and with a turnaround or growth company, as the case may be. “But when you get into the nuances? No, of course not.”
Indeed, it’s clear that too few women are being hired as CFOs to nudge the needle on gender diversity all that much.
Six years ago, in mid-2010, the number of women CFOs among the Fortune 500 companies was 8.8%. By the spring of 2016, the proportion had grown to 13.8% (slightly more than in the larger group of companies Korn Ferry looked at) — growth to be sure, but hardly transformative growth.
“Companies want to minimize risk,” says Proctor. “And when you get into the subconscious or unspoken aspects of their decision making, they may measure risk [avoidance] as [selecting] individuals they are able to align with and understand, that understand their industry — and maybe even that look like them.”
Gravitating toward people that are like you is a human predilection, Proctor continues. “In fact, that may be viewed as increasingly more important when forming partnerships in very senior roles,” he says. “The CEO-CFO relationship has to be very strong, and [a CEO] may not have as strong a level of trust and connection with someone who is not like himself.”
Not that Proctor is stamping his approval on that bias — far from it. “Some of the best leaders we’ve seen are those who have the courage to surround themselves with people who are less like them, because it gives the greatest opportunity for [gathering] input and sourcing the best solutions,” he says.
Proctor is convinced that client mandates for women to be included in candidate pools are about more than mere optics — that is, pursuing diversity because it “looks good.”
“I truly believe that at both the C-suite and board levels, there’s a belief that diversity of perspective and experience is beneficial,” he says. “They want to find something that’s going to augment and improve what they already have.”
But achieving that end can be challenging. Unfortunately, there aren’t enough women in senior, experienced roles to populate the candidate pools of all diversity-minded companies. So it’s not enough to decide at the CFO level to hire a woman. The relevant decisions must be made and opportunities offered earlier, at the developmental stage of potential finance leaders.
For one thing, companies need to provide more mentors who can share wisdom about things like where to invest time and ways to be motivated, according to Proctor.
But as importantly, increasing the number of women at executive levels is a shared responsibility, he says. Of course, it requires companies to provide the necessary opportunities to women, although, as too many women have discovered, those may not be plentiful in some cases. But where such opportunities are available, it requires women to take advantage of them.
When people are in their early to mid-30s and being identified as potential future leaders, going abroad or taking on new roles may require them to spend some personal capital, notes Proctor.
“But there may be a view that a woman isn’t necessarily as willing to take those risks,” he says. “Women need to raise their hand for an opportunity or accept one when it’s presented, if that’s the path they have to take in order to gain a promotion — right or wrong. I’m not saying it’s right. There are certainly opportunities for companies to improve how they think about development and the flexibility around that, so they can increase their [internal] candidate pools.”
For those with leadership potential who prioritize family and stability over always making the best career move, the path to the C-suite may be inherently more difficult in finance than in other functions, like IT and human resources.
In those areas, “people can often stay in one location and go up the line without moving into the business, or going abroad, or doing a variety of other things that could help them get selected as a CXO,” Proctor says.