To Fix Succession Snags, Retain Women
Posted on Dynamic Strategies: May 22, 2008 2:03 PM
What do the career prospects of female scientists, the general chaos of the mid-career managers' life, the failure to adequately develop new cadres of leaders internally, and escalating CEO compensation have in common? Let me suggest that these are interrelated phenomena whose connections with one another may be poorly understood.
Let's start with female scientists. According to a carefully done and well-researched study, American companies have an abysmal track record at retaining female scientists, technological people, and engineers as they move into mid-career. Faced with hostile workplaces, few peers, daunting working hours, and poor prospects for promotion, talented women leave in droves. Although 41% of younger scientists, engineers, and technology people are female, their numbers collapse catastrophically. Rather than whine about not having enough H1-B visas to fill technical positions, the authors suggest that a better answer might be lying right under the noses of leaders in corporate America. Were just one quarter of women drop-outs to stay in their careers, they estimate that some 220,000 talented people might be retained in the science and technology workforce in the US.
What do we conclude from all this? For technology companies, the ranks of potential leaders are depleted disproportionately of female talent.
Turning now to the chaos of mid career, Louann Brizendine makes that case that embedded career patterns also disproportionately damage the prospects of women. While all managers with the potential to reach "C Suite" positions go into overdrive in their late 30's and 40's, women are more likely than men to have many other commitments to honor. Among these are pre-adolescent and teenage children, who need unpredictable and varying parental attention, much of which falls to women to cope with. Sports, activities, teen issues and other distractions at home mean that a lot of women's mental capacity is chewed up by coping. Stepping forward to take on even more responsibility at work can seem overwhelming at that point, reports Brizendine.
What happens is that women as a group in their 40's are far less likely to push themselves forward to the next level—they have enough on their plates. Again, they vanish from the pipeline simply because the window of consideration in many companies slams shut before they are ready to take that next leap. I've been talking about this for years, in the context of women and men having different life cycles, while organizations are built around men's life cycles. So again, we have a lot of women who will never be considered for more senior leadership positions, a missing group of talent.
Then, map against this exodus of talent the fact that many companies have no systematic process for managing succession and building bench depth even when it comes to men! Further, the basics of developing and retaining talent seem to escape many companies. Where does all this leave us?
• Poor track records at keeping and promoting half the qualified management talent (assuming such talent is distributed across the population)• Poor practices for developing people• Poor practices for developing succession plans
So where does this leave many companies? At the end of the day, forced to look outside the organization for an external CEO "saviour" because they haven't done the hard job of developing internal talent. So how does this fit into runaway CEO Compensation?
I was recently privileged to be at a conference at which Jack Welch, the former GE CEO, was present. He observed that both the succession crisis and higher CEO pay are related, noting that McInerney (hired at 3M) got a "Brinks truck" full of extra pay. Bob Nardelli (who went to Home Depot) got two Brinks trucks. Meanwhile Jeff Immelt, who got the internal promotion got "a pat on the head and 20%." His essential argument is that CEO talent commands a huge price premium when boards haven't done their jobs to develop people and succession plans.
Which brings me to the last bit of data that ties all this together—John Cassidy of the magazine Portfolio notes the continuing escalation of CEO compensation, today reinforced by individual employment contracts which make it "almost impossible" for a Board to fire a CEO without paying him (or her) a kings' ransom. His solution is for Boards of Directors to grow spines and start to demand more accountability for performance.
To me, spineless Board members are hardly going to solve this situation. Rather, developing significant pools of executive talent are more likely to be the answer. Imagine hundreds of thousands of highly qualified women who remain in the workforce with the potential to join the C-suite. Imagine if every company had an intelligent way to develop its leadership talent, using on the job training, executive education and enriching feedback. Imagine, as my colleague Linda Hill from Harvard has proposed, if you could find leaders in less conventional ways than the up or out hierarchies we traditionally rely upon? Guess what—fewer companies would have to rely on expensive outsiders, there would be more talent available and the ability of a few highly regarded players to demand extraordinary compensation could be diminished. Maybe that's a more constructive plan than hoping for Board members to exercise discipline in the midst of a frenzied bidding war.