The corporate landscape is grappling with a disconcerting trend – the departure of accomplished female leaders outpacing their male counterparts. This intriguing development is, in some cases, an unanticipated by-product of prevailing workplace policies. As the trend continues, it is crucial to understand the drivers behind this phenomenon and devise strategies to reverse the tide, ensuring organisations remain appealing to top female talent.
The law of unintended consequences
We have observed an emerging trend in the talent market for several months as a result of the economic uncertainty and potential over-hiring pre-2023. Where firms are rebalancing and offering voluntary redundancies to optimise senior leadership costs as the economy remains unpredictable and growth stalling, there is a correlation between those accepting the packages and gender. If organisations are not careful, they may soon have unintentionally pushed out key senior female leadership.
This can only negatively impact these organisations’ ability to innovate and grow at a time when cognitive diversity is arguably more important than ever. It also has the potential to reverse the hard-won progress made in female senior leadership diversity by several years.
So, what is going on? Why are so many women so willing to leave leadership roles, and what can companies do to keep them – especially when only around one in four senior leaders are women to start with?
Why are female senior leaders leaving the workforce in record numbers?
It has been found that the issue of voluntary redundancy is just the beginning of a larger problem. McKinsey’s most recent Women in the Workplace survey, in partnership with LeanIn.Org, reports that a record number of senior female leaders are leaving their current roles. The survey, which was conducted with over 27,000 employees at 276 organisations, reveals that there is a “Great Breakup” happening in the corporate world. Women are not only leaving their jobs in record numbers but are also switching jobs instead of leaving the workplace altogether. The results of the 2023 Women in the Workplace report suggest that there is still work to be done to create a culture where women can thrive.
Although women are becoming more ambitious, and there is progress in terms of representation at the C-suite level, with women currently occupying the highest rate of C-suite positions in history, making up 28% of C-suite executives, with 6% being women on colour. This is a 6% increase since 2018 when women held only 22% of C-suite positions. However, some of the other findings are concerning. The gains made are still modest, with the smallest gains being at the manager, senior manager and director levels, meaning the pipeline of women for leadership is not growing quickly enough. The gender gap continues to widen as you move up in a company, even though women make up almost 50% of entry-level employees. The numbers are even worse for women of colour.
Another concerning trend is the “Great Breakup” that McKinsey identified in its 2022 report, which is continuing and evidenced in the 2023 report. Women at the director level are leaving at a faster rate than they are being promoted. For every woman promoted to director, two walk out the door. This, combined with the modest gains in promoting women to manager and director levels, could have a catastrophic impact on our ability to narrow the gender gap in senior leadership. Without a pipeline, there simply won’t be enough female candidates in the pool to choose from.
The reasons for the higher exits by women cited in the report:
Experiencing frequent microaggressions – such as questioning their judgement or being mistaken for someone more junior.
Women work harder on inclusion and culture – but they are not being recognised or rewarded for this, which contributes to a feeling of burnout and being unappreciated.
Women feel that the culture is wrong for them – the survey suggests women feel that DEI, flexibility, and employee wellbeing are not taken seriously enough.
Fewer women are promoted to manager roles than men – signalling that the company values women less while also creating a smaller pool of women to promote into senior leadership roles.
The result of this is a long-standing and growing trend of women leaving their roles that has been going on now for several years – predating both Covid and the current uncertain economic climate:
Some also believe the rise of the so-called “glass cliff” could be another contributing factor to female leadership burnout and disillusionment. Researchers at the University of Exeter discovered this phenomenon, in which women are often promoted to high-stakes leadership roles during times of crisis.
These women then take on the responsibility for failures that could have long-standing causes. The failure causes them to step down, discouraging other women from taking those roles, contributing towards unconscious biases about the competence of women leaders during times of great stress – such as during the current economic uncertainty, for example.
Why this needs to be fixed.
Meanwhile, a landmark report on diversity and inclusion in the UK financial services sector published by the FCA, PRA, and the Bank of England put it like this:
“Research shows correlations between diversity and inclusion and positive outcomes in risk management, good conduct, healthy working cultures, and innovation. These outcomes directly contribute to the stability, fairness and effectiveness of the firms, markets and infrastructure that together make up the financial sector.”
Lack of diversity is bad for business and potentially bad for social equality. Rather than allow themselves to drift further into inequality by not considering the unintended consequences of making it even easier for disenfranchised women to uproot and move, organisations must recognise the scale of the problem and be more intentional about solving it.
How Companies Can Retain Top Female Talent
The fact that women are switching jobs instead of leaving the workplace altogether is terrible news for the organisations they are leaving. However, it is also a positive sign. It means that these talented women remain committed to their careers and are looking for the right companies to make a positive impact. Companies that can make themselves more attractive stand to benefit hugely from this trend. Let us look at some effective ways to do that.
Review Your Current DEI Strategy for Effectiveness
Many companies report on their gender pay gap, have gender-focused employee resource groups, or have started mentorship programs to get more women into senior leadership roles. However, these initiatives are only guaranteed to work if you try them. Review what you are doing and see if it is moving the needle. If your female employees do not feel any more motivated or happy at work, then your workplace policies and ERG’s may require review. They may need more resources and C-suite sponsorship and support to build trust with women in the organisation. The exact solution will vary from company to company, but the point is that you will not know you have a problem to solve unless you review and measure the impact of what you are doing now.
Less Mentoring, More Sponsorship
Research has shown that mentoring without sponsorship is not very effective. High-potential women are over-mentored and under-sponsored relative to their male peers and are not advancing in their organisations. Women are less likely than men to be appointed to top roles without sponsorship. Therefore, companies should focus on sponsoring women for senior roles more than mentoring.
Stop Setting Your Female Leaders Up to Fail
It would be more favourable to be able to write, “Set your female leaders up for success”, but there are so many cases of the opposite happening that actually stopping the opposite would, at this point, do more to retain top female talent. If you only promote or hire senior female leaders during times of crisis, you do not give them a fair shot at success. Organisations should always have a proper female-centric succession plan in place so female talent is always in the wings and ready to take over key senior leadership roles. That way, you should avoid only appointing women to effectively take the fall for years or decades of institutionalised mismanagement. Your female talent should feel reassured that there is a process and a program they can participate in.
Incentivise and Reward DEI Efforts
Women are “1.5 times as likely as men at their level to have left a previous job because they wanted to work for a company that was more committed to DEI,” says McKinsey, adding that 43% of senior women leaders feel burned out compared with 31% of men at the same level. Recognise the efforts that your female leaders are putting into diversity and inclusion. Consult with them on creating manageable and measurable KPIs for all leaders and managers to embed DEI into your organisation. It is important to put this on the same level as commercial KPIs, or else the dial will never move, and those leaders who work harder at it will never feel rewarded.
Invest in Unconscious Bias Training That Works
Unconscious bias training is hardly a new concept at this point. But it had become, unfortunately, politicised and watered down by the plethora of ineffective and opportunistic courses adopted by organisations as a tick-box exercise. That said, most of the issues facing female leaders – from microaggressions and perceptions of lack of competence or experience to lack of recognition and lack of attention to employee well-being – are mainly the result of unconscious bias. So there remains a place for good training.
Look for Organisations Where Female Talent Is Thriving
Forbes’ Best Employers for Women list and Working Mother’s 100 Best Companies for Women are great resources for identifying and studying these organisations’ practices. By doing so, you can gain valuable insights into their successful strategies for supporting their female employees and apply these strategies to your own workplace.
It feels like we are at an inflexion point in shaping the future of female leadership. This year’s International Women’s Day campaign theme underscores the crucial role of inclusion in achieving gender equality. Creating corporate environments where all women are valued and respected is an excellent place to start.
by Frances Wright and the Gender-Equity Group
