More women stalled on corporate ladder

The Economist

More women stalled on corporate ladder 

Sun. Aug 10 – 4:46 AM

When Alcatel-Lucent, the ailing Franco-American telecoms company, bid a less-than-fond adieu to Patricia Russo last week, French business lost one of its most prominent female chief executives — even if she was “une americaine.”

In Russo’s native country, two senior women on Wall Street have also walked the plank: last November Morgan Stanley fired Zoe Cruz, one of the bank’s two co-managing directors, and in June this year Erin Callan, the chief financial officer of Lehman Brothers, was ousted from her role.

In one sense, these departures are not exceptional: rarely a day goes by in the current economic downturn without an announcement that another CEO or senior lieutenant has been shown the door because of sagging sales, plunging profits or a combination of the two.

Wall Street, in particular, has seen a long line of (mainly male) heads stuck on stakes outside its troubled banking halls. All three companies cited above have produced appalling results over the past 12 months, so some blood-letting at the top was inevitable.

But these defenestrations are especially striking in light of a recent report from Catalyst, an international non-profit group that looks at issues related to women in the workplace.

The report claims that while many companies have made it easier for women to ascend the corporate ladder, efforts to propel them to the very top rungs have “stalled” in the past couple of years. Women occupy only one in seven board positions in Fortune 500 companies, according to Catalyst.

The report refers to no specific companies; instead it makes the general point that the more women a firm has on the board, the more it is likely to have in senior roles that could be springboards to the CEO’s corner office.

To back up this claim, Catalyst cites data from 359 Fortune 500 companies covering the period from 2001 to 2006. This shows firms with the highest percentage of female directors in 2001 had, on average, around one-third more women in senior roles by 2006 than those with the lowest percentages.

Why might that be the case? For one thing, says the study, the more female directors a company has, the more likely it is to have practices in place that support women’s advancement. For another, female directors are role models and sometimes mentors who inspire and support promising women.

So the departure of a senior female executive such as Russo or Callan might well worry professional women further down on the corporate ladder. But more and more women are likely to leap over the hurdles that remain and make it to the very top in the business world.

One reason for this optimism is that industries that have long been male bastions are being prized open. Take the oil business. On Aug. 8 Lynn Elsenhans, who previously worked for Royal Dutch-Shell, will take over from John Drosdick as the CEO of Sunoco, an American oil-refining giant.

Meanwhile Shell’s executive director of gas and power, Linda Cook, is said to be one of two internal candidates who could replace the company’s CEO, Jeroen van der Veer, who is due to step down next year. Should she do so, she would become the first female CEO of a major oil producer. Then there is the tire industry. Germany is presently in the throes of a rare and gripping hostile takeover battle inspired by Maria-Elisabeth Schaeffler, the controlling voice in Schaeffler, a bearing company that is trying to swallow Continental AG, a struggling tire maker far bigger than its aggressor. Although Schaeffler’s CEO, Jurgen Geissinger, is a man, there is little doubt that Schaeffler is the driving force behind the bid. Another reason for optimism is that savvy shareholders will increasingly see the value of selecting leaders from the broadest possible pool of talent, regardless of gender. That means actively developing ways to attract, develop and retain as many bright women as possible.

Even Wall Street is not a lost cause. Last month Credit Suisse announced that it had recruited Callan as global head of its efforts to drum up advisory business from hedge funds.

And on July 31 the investment bank said it was significantly expanding the responsibilities of Nicole Arnaboldi, one of a handful of senior women in the male-dominated world of private equity. Clearly Credit Suisse believes that what’s good for women in business is also great for its business.

 

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