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ANALYSIS

Women CEOs ‘more likely to be fired’

Dubai, April 29, 2014

Women chief executives are more likely to be fired than their male counterparts, a study said, highlighting that over the past 10 years, 38 per cent of women CEOs who left their positions were forced out, versus 27 per cent of men CEOs.

Strategy&’s (formerly Booz & Company’s) 14th annual Chief Executive Study also found that in most other aspects, incoming men CEOs and women CEOs have similar profiles.

CEOs of both genders rarely come from a region outside of the company headquarters region; they’re more likely to come from line, rather than staff, roles; they became CEO in their early 50s; and they have a tenure of about five years, the study said.

The study noted that in eight out of the last 10 years, the share of women becoming CEOs of the world’s biggest public companies has been higher than the share of women leaving that office.

And, over the past five years, the total share of women becoming CEOs was considerably higher than in the prior five-year period (3.6 per cent versus 2.1 per cent).

But despite the upward trend, the numbers are low and wobbly: women made up just 3 per cent of new big-company CEOs in 2013, a 1.3 percentage point drop from 2012.

The study authors do expect a bit more progress over the next quarter of a century. “As much as a third of the incoming class of CEOs will be women by 2040, based on a 10-year trend in our data, ever higher education of women, continuing entry of women into the business workforce and changing social norms around the world,” said study co-author Ken Favaro, a Strategy& senior partner.

“We see a similar trend also in the Middle East with an increasing amount of women as CEOs or in other senior leadership positions, not least in family-owned businesses that constitute an important part of these economies,” added study co-author Per-Ola Karlsson, a Strategy& senior partner and Managing Director of the Dubai office.

Women ‘less often hired from inside than men’

The study has consistently found that boards most often elevate “insiders”—i.e., people who are currently with the company. In fact, 78 per cent of men who became CEOs between 2004 and 2013 were insiders (vs. 22 per cent outsiders). But only 65 per cent of women who became CEOs in the same period were insiders (vs. 35 per cent outsiders).

“That women CEOs are more often outsiders may be an indication that companies have not been able to cultivate enough female executives in-house. So when boards look for new CEOs, they necessarily find a larger pool of female candidates outside their own organizations,” said study co-author Gary L. Nielson, a Strategy& senior partner.

“Our research shows that on the whole, insider CEOs generate higher returns over their tenures than outsider CEOs, so companies seeking to hire women may benefit from looking inside more often than they do today,” said Karlsson.

The industry with the lowest share (0.8 per cent) of women CEOs between 2004 and 2013 was the materials industry.

The countries with the highest share of women CEOs between 2004 and 2013were the US and Canada (3.2 per cent). The country with the lowest percentage (0.8 per cent) was Japan.

The Strategy& study examines CEO turnover and incoming and outgoing CEOs at the world’s 2,500 largest public companies. The current study looks at women CEOs over the past 10 years as well as overall succession trends with a focus on 2013’s incoming class of CEOs. – TradeArabia News Service




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