For decades, the pinnacle of corporate America has been a notorious boys’ club. If you need proof, just note that, until recently, at any given time through history more male chief executive officers named John were running big companies than the total number of women holding down the same job.
There are signs that the door is starting to crack open, however. A study from executive search firm Spencer Stuart out this morning found that nearly half (49 percent) of the C-suites of Fortune 500 companies are now made up of women and people from historically underrepresented ethnic and racial backgrounds.
Champions of diversity in corporate America should take a moment to celebrate a real victory here — one that not all that long ago seemed far out of reach. But the big headline number, which on the surface suggests progress, also risks becoming a distraction from some troubling trends hidden within the data.
To get to nearly half the C-suite, executives who are women or are Black, indigenous or other people of colour have in large part capitalised on the creation of what’s considered “new” C-suite jobs. Spencer Stuart found that taken together, these two groups make up 89 percent of all chief inclusion and diversity officers and 64 percent of all chief sustainability officers — titles that after a rapid rise now exist at more than half of Fortune 500 companies.
These roles have provided a way into the C-suite for those who have long been excluded, but what they haven’t provided is a pathway to the top. While overseeing a company’s climate initiatives and diversity efforts is critically important in today’s world, corporate boards don’t view them as important enough to be a steppingstone to the CEO job. And that’s a title where progress has been woefully slow. Just 10 percent of Fortune 500 CEOs are women, while 12 percent are people from historically underrepresented ethnic and racial groups.
A separate study from Spencer Stuart from last year found that CEOs tend to ascend from four “last-mile” roles: chief operating officer or president, division CEO, chief financial officer and “leapfrog” leaders promoted from below the C-suite. That tracks with what we know about the ways boards value CEO candidates with operating expertise and experience running a profit-and-loss statement. These jobs, however, are not ones that historically tend to be held by female or BIPOC executives. Instead, they tend to dominate in areas like human resources, where women make up 70 percent of the Fortune 500 chief HR officers. At least so far, that hasn’t tended to translate into a CEO job. A few years ago, when executive search firm Korn Ferry interviewed nearly 60 women who were current or former CEOs, not one of them had started her career in HR.
Corporate America and the boards that lead it clearly don’t value all C-suite roles equally. Chief diversity officers, for example, have found themselves particularly vulnerable to the latest bout of corporate layoffs, a sign that they are viewed as more dispensable than other top executives. A LinkedIn study reported on by Bloomberg earlier this year found that the chief diversity and inclusion role was the fastest-growing C-suite position in 2020 and 2021, but the only one of the top-growing jobs to reverse hiring trends between 2021 and 2022.
There are two solutions. If companies are truly committed to a more diverse pool of CEO candidates, they need to be more intentional about where they place talent earlier in their careers so they’re better positioned for those “last-mile” roles. Granted, it’s fair to question how real that commitment is with the ways companies have gutted their DEI departments in the last year. But there may actually have been some progress here, with the number of female CFOs on the rise.
The alternative is for companies to reimagine what the path to the CEO job might look like. Could there be a day when it’s the norm for a chief diversity and inclusion officer or a chief sustainability officer to ascend to the CEO job? Let’s not forget that these jobs were created in the first place to help companies address some of the biggest and most pressing issues of our time. At the very least, it might be a smart move for corporations to start considering it.
Beth Kowitt is a Bloomberg Opinion columnist. Views do not represent the stand of this publication.
Credit: Bloomberg
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