A new report featured on the Harvard Law School Forum on Corporate Governance has found women CEOs have notably shorter tenures and are more likely to be fired than their male counterparts.
Authored by researchers at Russell Reynolds Associates (RRA), a management consulting firm, the report uses data from RRA’s CEO Turnover Index. Since 2018, women CEOs hold the role for an average of 5.2 years, compared to 7.9 years for male CEOs. In their analysis, the authors found several distinct contributing factors leading to this gender disparity.
First, women CEOs are more likely than male CEOs to be dismissed from their role after a short period of time. Regardless of their performance, nearly one-third of women CEOs were fired within three years, compared to about a quarter of their male peers since 2018. Men who leave their CEO posts are more likely to do so because of retirement, with 31 percent departing for retirement compared to 13 percent of women CEOs.
Outside of dismissal and retirement, the authors identified several other reasons for CEO departure. Women are more likely than men (10 percent versus 4 percent) to leave their posts to pursue external opportunities and more likely (13 percent versus 6 percent) to cite personal reasons, such as family obligations and health, as a contributing factor. Women were also more likely than men (16 percent versus 11 percent) to be replaced by a succession plan.
Women CEOs who do depart from their roles are more likely to be scrutinized by the media than male CEOs who have left their posts. Women CEO departures are almost twice as likely to be covered by the media than male CEO departures. Media coverage surrounding women CEO departures is also more likely to carry a negative sentiment. This is consistent with overall media coverage for women CEOs, who are both twice as likely to be described as too ambitious or lacking ambition compared to their male peers.
The report also highlights the “glass cliff” phenomenon, in which women CEOs and those from underrepresented backgrounds are appointed to their roles when their organization is going through a crisis, thereby increasing their risk of failure.
To address the gender gap in CEO tenure, the authors say organization boards must focus on helping new CEOs transition into their roles and ensuring CEO performance standards are consistent and unbiased.
“While boards can’t expressly dictate organizational practices, directors should work to build an accurate understanding of the organization’s culture to help guide the CEO —especially while they’re new in seat,” the authors conclude. “Our research finds that boards whose leaders actively seek a range of perspectives are 1.8 times more likely to feel they have the data needed to understand the company’s culture. Ultimately, it’s on the board to ensure that the conditions for success are in place.”