Women on board

Women in senior business roles are the exception rather than the rule. Even today, the female CEO is certainly a rare breed, but female CFOs are also not the norm. Last year Microsoft appointed its first female CFO, Amy Hood. And this year, General Motors named Mary Barra as its chief executive.

Although cracks in the glass ceiling are beginning to appear, it is far from being shattered. According to executive placement firm Crist|Kolder Associates’ Volatility Report 2013, only 9.9% of CFOs at Fortune 500 and S&P 500 companies are female. A mere 4.2% of Fortune 500 and S&P 500 companies have female CEOs, the report found.

While some organisations are realising the value of having women at the helm, what’s stopping so many others from benefiting? After all, businesses with female senior management exhibit stronger financial performance, and, because female leaders work differently than their male counterparts, they can bring real competitive advantage to a business, according to research by the Chartered Institute of Management Accountants.

“Female leadership and diverse management teams is not a ‘nice to have’ for organisations,” says Myriam Madden, FCMA, CGMA, director of finance at Historic Scotland. “When you consider how often women are the buyers or the decision-makers, or are influential in choosing products and services, then you see that it is essential for organisations to have this perspective on their boards and in their leadership teams. Frankly, it’s a business imperative.”

About 62% of accountants and auditors in the US are women. Yet there appears to be a shift when approaching the top echelons of the corporate pyramid. While women account for almost 50% of employees at the Big Four accountancy firms, the ratio of female to male partners in any of these firms is less than one in five, according to Catalyst Inc., a not-for-profit that tracks the progress of women in executive roles.

“Usually a man is assessed according to his potential, but a woman is judged by her achieved results,” says Julia Zakharova, a Nord-West division CFO at Danone in St. Petersburg, Russia.

Barriers to the top

None of the female finance executives interviewed for this article feel they’ve been penalised for their gender – except in one instance, when bosses admitted to passing over a new mother for a position involving considerable travel. But they’ve noticed that the higher they climb, the more male-dominated the environment is. So what’s preventing an ambitious woman from reaching the pinnacle?

“Men are generally more self-confident about their abilities, and they probably push themselves further to be in the limelight and grasp some of the opportunities,” says Elizabeth Legge, FCMA, CGMA, CFO of Nestlé UK & Ireland. “I think women typically tend to sit back and think, ‘If I do a good job then I’ll be recognised for this and then I will get my just reward.’”

Until recently, Deirdre Mahlan, CPA, CGMA, the CFO at Diageo, was more concerned with job satisfaction than her job title. When her employer asked her to relocate from the US to the UK, at that stage to become head of tax treasury, Mahlan met with the CFO to discuss her career objectives. Although her aims to become finance director of a major multinational or to consult with medium-size companies were lofty enough, they were too vague, and Mahlan was asked by the then-FD why she didn’t have his own job in her sights.

“I responded that I wouldn’t be so presumptuous,” Mahlan says. “And he rolled his eyes. I think that’s the difference between men and women – men will say, well, I think I’m the best person for the job, women tend to point out possible gaps.”

For many women, a career break compounds the issue. Legge works closely with high-potential employees before they take maternity leave to broaden their skills so they don’t lose out. And it was Mahlan’s husband’s career, not her own, that took a back seat for the sake of their children.

Some female leaders say that true equality in the workplace won’t exist until men have the same parental leave as women. The problem, some argue, is that men are already reluctant to take the limited amount of leave they’re currently entitled to, because of continued pressure to be the breadwinner.

“It’s a societal progression that’s required, not just a corporate progression,” Mahlan says.

The global outlook varies enormously, as women from different cultures face different barriers and varying levels of family support. Deloitte research indicates that emerging markets still have a considerable amount of catching up to do: Female representation on boards in India is just 5%, in Malaysia 6%, in China 8% and, in Brazil, on the boards of listed companies, 7.7%.

Legislative impact

A study published in 2006 by the Wellesley Centers for Women, the largest gender-focused research centre in the world, reported that a “critical mass” of women directors – at least three, according to the researchers – establishes:

  • More wide-ranging discussions covering the viewpoints of multiple stakeholders.
  • Better decision-making, as difficult issues are less frequently brushed aside or ignored.
  • A more open, collaborative boardroom dynamic.

Last year, the European Parliament voted overwhelmingly in favour of legislation that will require large listed European companies to grant four in every ten non-executive board positions to women by 2020. The proposal for the mandatory quota follows successes achieved by similar quotas rolled out in Norway in 2005 and, in 2010, in France and Spain. Evidence from other countries is less conclusive.

“Many of us operate in a competitive and challenging environment, so it is important that we recruit the best quality finance professionals for our teams,” Madden says. “Quotas may not necessarily complement the search for the best talent. We do have to challenge ourselves, however, by testing preconceived notions. What we mean by best is not necessarily what’s most familiar to us.”

Mahlan is against quotas. “It feeds into the mindset that says you’re compromising your standards,” she says. “A quota has two effects: Even the women who get promoted can feel the men are thinking, ‘You’re not really qualified for that role.’ Then the men start thinking, ‘It doesn’t matter how good I am, I’ll never get promoted because I’m not female.’ ”

A quota should be used only in a desperate situation, she adds. “But I do believe in targets, and I do believe people should be held accountable. It should be a case of ‘comply or explain’.”

Targets can instead help businesses ensure they’re putting the right resources into talent management to give everyone a fair crack of the whip. Mentoring, leadership development and networking opportunities can help to increase the talent pool and ensure that the right person for the job is not overlooked.

Networks and mentoring

According to Zakharova, women who want to reach their full potential in finance must be more proactive, take on ambitious tasks and be more aggressive in goal-setting. Crucially, they should strive to advertise their achievements. Constantly improving one’s management skills is key, and it’s also important to extend relations, attempt horizontal development and lead projects. Learning by example and mentoring can help – where support is not offered automatically, women must be prepared to ask for it.

The employer’s contribution should be to encourage mentoring, actively develop female staff and offer flexible work practices. Mahlan likes to lead by example at Diageo, supporting its Spirited Women network, which operates in the UK, Ireland and North America. It focuses on moving up the group agenda areas of particular interest to women in the workplace, such as flexible working, returning from maternity leave and mentoring. But she worries that something else about corporate culture is getting in the way of women’s career advancement.

“What’s interesting is that if women do decide to leave the corporate rung rather than taking on a senior role, they often don’t leave to stay home, they leave to do something else,” she says. “They leave the corporate environment and start up a small business, or they go to work in charity. They are not opting out of challenging roles, they are opting out of corporate roles. So what is it about the corporate environment that is causing them to make a different choice?

“I don’t have the answer, because I chose to stay. But I think we need to keep asking ourselves that question.”

As such, diversity remains an important area of focus for Diageo. Last year, the company signed up to the “Women’s Empowerment Principles”, a joint initiative between the UN Women and the UN Global Compact, that set a blueprint for the business in advancing the equality of men and women in business generally, in the marketplace and in communities. This is aligned with Diageo’s target to have 30% of its senior leadership roles filled by women by the end of the current financial year.

Mahlan also notes that, in the past 16 months, there have been at least eight changes in the Diageo executive team. As a result, 40% of the executive team will be female, up from 7%.