Gabrielle Lieberman is a Leader of the Center for Leadership Insights at Russell Reynolds Associates. This post is based on a Russell Reynolds memorandum by Ms. Lieberman and Tom Handcock. Related research from the Program on Corporate Governance includes Politics and Gender in the Executive Suite (discussed on the Forum here) by Alma Cohen, Moshe Hazan, and David Weiss; Will Nasdaq’s Diversity Rules Harm Investors? (discussed on the Forum here) by Jesse M. Fried; and Duty and Diversity (discussed on the Forum here) by Chris Brummer, and Leo E. Strine, Jr.
Research shows that adding women to the C-suite changes how companies think. [1] Women executives impact how the C-suite approaches strategy and innovation. Simply put, women in executive leadership is good for business. And yet, women are still vastly underrepresented in the top leadership teams at America’s largest public companies.
In Russell Reynolds Associates’ analysis of the top 100 companies in the S&P500 (referred to as the S&P100 in this report), we found that men are 2.5x more likely than women to be executives in the top leadership teams. The roles in which women are well-represented are those that hold far less power and influence, highlighting the limitations of gender diversity and the perceived value of women in these organizations.
Closing the gender gap at the top remains a priority for companies as they continue to face increased scrutiny from stakeholders who demand more diversity in executive leadership. While there are currently no federal laws mandating gender diversity in executive leadership, many states have enacted legislation that specifically focuses on increasing gender diversity on corporate boards. Most notably, California became the first state in the US to mandate that public companies headquartered in the state must have women directors or face fines, up to $300,000.2 Although the law has been credited with improving the standing of women on corporate boards, gender diversity on corporate boards is not indicative of gender diversity in the C-suite.