CEO turnover is at an all-time high, and the small percentage of women at the top are exiting the fastest, according to Russell Reynolds Associates' most recent quarterly turnover index. This trend highlights a significant issue within corporate leadership dynamics and raises questions about the sustainability and support systems in place for female CEOs.
In the first quarter of 2024, CEO appointments and departures worldwide reached a record high. There were 52 departures and 68 new appointments among corporations listed on global stock markets such as the FTSE 100 and S&P 500. A staggering 15 percent of these departing CEOs were what the research refers to as "failed CEO appointments," meaning they held the position for less than two years. Notably, women CEOs have significantly higher turnover rates than their male counterparts.
High Turnover Rates Among Women CEOs
Data from Russell Reynolds Associates dating back to 2018 reveals that nearly one in four female CEOs, or 24%, leave their positions within two years. This figure is more than twice the rate of male CEOs, with only 10% stepping down within the same timeframe. Women CEOs are four times as likely as men to leave their position in less than a year.
Ty Wiggins, CEO and executive transition practice head at Russell Reynolds Associates and author of "The New CEO," finds these numbers "surprising and disappointing." He raises concerns about whether women are being handed "poisoned chalices"—roles where their chances of success are inherently lower due to existing company challenges. This situation is often referred to as the "glass cliff," where women and underrepresented groups are promoted to leadership positions during periods of crisis, setting them up for potential failure.
The Pressure on Women CEOs
The first 12 to 24 months are critical for new CEOs to establish their impact and set a new agenda. However, recent difficult business cycles have intensified the pressures on CEOs and their companies. Wiggins notes that corporate boards have become quicker to respond to market pressures, often resulting in the dismissal of CEOs who fail to show significant improvements within two years.
Women CEOs, in particular, face harsher scrutiny and criticism when outcomes are unfavourable. Wiggins shares an anecdote of a female client who felt she needed to work twice as hard to receive the same level of support as her male colleagues. "There is a pressure to perform and deliver and be near-perfect," Wiggins stated.
Challenges and Solutions for Female CEOs
According to data from LeanIn.org and McKinsey & Company, senior-level women are leaving the corporate sector at unprecedented rates due to micro-aggressions, promotional gaps, and the burden of overseeing diversity and inclusion programmes. In early 2024, only five out of 68 newly appointed CEOs were women. In 2023, there were 156 male CEO appointments compared to just 22 female appointments, equating to only 12% of total leadership promotions. At this pace, it would take 88 years to achieve global gender parity in CEO representation.
Wiggins emphasises the need for corporate boards to better support and retain women in C-suite positions. Recognising the unique challenges women face both at work and home is essential. "Organisations need to create an environment that recognises that and meets individuals where they are," Wiggins advised.
Recommendations for Increasing Female CEO Representation
- Recognise Unique Challenges: Acknowledge the dual roles women often play at work and home.
- Set Realistic Expectations: Boards should establish reasonable expectations and provide continuous support and guidance for new CEOs.
- Create Inclusive Environments: Develop policies and practices that support the advancement and retention of women leaders.
- Promote Gender Diversity on Boards: Although global board composition is becoming more balanced, with 32% of boards consisting of women, more progress is needed. For instance, California courts recently overturned state laws aimed at increasing board diversity, highlighting the ongoing challenges in achieving gender parity.
Wiggins concludes that while there have been improvements, there is still a significant gap in the success rates of women CEOs. The corporate world must continue to strive towards true gender parity and support women in leadership roles effectively.
