Nav: Home

FSU research finds troubling disadvantages, including bias, against women in business

July 17, 2018

TALLAHASSEE, Fla. -- Women CEOs in America are paid less, have shorter tenures and their companies are punished in the stock market, even when their firms are just as profitable as those run by men, according to new research from Florida State University.

In addition, women CEOs are less likely to serve as board chair of their companies, and they have a much tougher time landing the top job because there is significantly less demand for their leadership compared to men.

"This research should be eye-opening to people, and I hope they take a closer look," said Michael Holmes, FSU's Jim Moran Associate Professor of Strategic Management. "We hope this sets the record straight on past research, some of which has produced conflicting results, and now people can build on this aggregation of findings."

To set the record straight, Holmes and Assistant Professor of Management Gang Wang conducted an exhaustive study focusing on the influence of gender on CEOs' careers. The business management experts conducted a meta-analysis, examining the entire body of research completed over decades, and they pored over 158 previous studies investigating gender, companies' hiring choices, and the impact of those decisions.

One of the key findings in that body of research reveals an extreme underrepresentation of women CEOs. Only 5.4 percent of Fortune 500 companies had female CEOs in 2017, and that figure was the all-time high in the United States.

"The situation for women leaders is probably worse than you think right now," Holmes said. "Many women who become CEOs are absolute rock stars. They have graduated from elite schools and risen through the corporate ranks faster, but they get paid less, are less likely to be a firm's board chair, have shorter tenures in the job and are more likely to lead distressed firms. We wondered, 'What's going on here?'"

That question prompted Wang and Holmes to embark on a two-and-a-half-year research project, published today in the journal Organizational Behavior and Human Decision Processes. The study identifies a number of factors that hinder female CEOs and CEO candidates among stock market investors, corporate boards, managers, and more generally, across American culture.

Wang and Holmes grouped those factors into two basic marketplace forces: demand-side and supply-side influences that combined to stifle women's ability to get CEO jobs.

Demand-side factors reduce demand for female CEOs by limiting the willingness of companies to hire women for the job. One example of that attitude is known as "in-group favoritism," a phenomenon that causes people to view others who are similar to them as more competent. In the corporate world, where men dominate leadership jobs and company boards, that attitude means leaders tend to hire people like themselves.

The FSU research also notes the hiring process for CEOs can be influenced by gender-role stereotypes. In American culture, as well as many countries worldwide, the perceived traits of a good leader, such as aggressiveness and risk-taking, are generally seen as masculine qualities.

"Because of that bias, men have advantages obtaining and succeeding in leadership positions, while women leaders are more likely to be disliked and viewed as socially inept, due to the perceived role incongruity," the researchers wrote in the paper.

The other marketplace force influencing corporate hiring decisions, according to Wang and Holmes, is a supply-side issue. They report more women choose to leave the workforce for a variety of reasons, including family changes, lack of career advancement or perhaps outright discrimination.

In addition, the study points to a larger sociological influence on hiring CEOs. Men are socialized from childhood to display traits associated with leadership -- being forceful, aggressive, even pugnacious -- and those characteristics are generally less common among women, Holmes said, perhaps because women are raised differently.

"Females are more likely socialized to care for the home or be nurturing," he said. "Men start to develop characteristics that might help them become a CEO early in childhood, whereas fewer women do. That reduces the supply of female candidates for CEO jobs."

Wang and Holmes also documented a clear bias in the stock market against women CEOs. When they used accounting metrics to compare companies with similar financial results, for example, profits, firms run by women CEOs experienced worse stock performance than those led by men.

Wang and Holmes wrote that investors and stock market analysts, most of whom are men, likely had less direct experience with women CEOs, were influenced by in-group favoritism and gender-role stereotypes, and saw more women opting out of careers. As a result, the researchers concluded those factors prompted many investors to treat the stocks of companies led by women more harshly.

"Women have come a long way in the workforce in terms of their overall numbers and acceptance, but when it comes to stock market investors evaluating a CEO and a company that they don't know, I think investors may subconsciously discount that firm because the leader is female versus male," Holmes said. "It seems when investors take an overall look at firms, biases creep in, and people may not even be aware of them."

The research team hopes future studies focus on ways to reduce biases resulting from demand-side and supply-side forces. They believe too many women either have been pushed out of careers or opted out because they faced an uneven playing field.

Their research provides practical ideas for young women who hope to become a CEO someday, such as pursuing early and fast promotions because, as their research shows, women who do break through to become CEOs are often younger with fewer years of experience than men.

"These women have earned their place at the top," Holmes said. "But the data shows things are different for women -- the workforce does not offer a level playing field.

"I hope when people read the research, they have some 'aha' moments with the findings, as well as the explanations. By showing these firms perform the same as companies led by male CEOs, let's get beyond the idea that women can't be good leaders. Clearly, they are good leaders. They often just aren't rewarded equally."

Rich Devine and John Bishoff, former FSU doctoral students, contributed to this research.
-end-


Florida State University

Related Leadership Articles:

These four values lessen the power of transformational leadership
Transformational leadership is considered one of the most effective ways to motivate and inspire employees.
Preventing toxic work environments through ethical leadership
Recently published research from SDSU management professor, Dr. Gabi Eissa and University of Wisconsin -- Eau Claire management professor, Dr.
Women, your inner circle may be key to gaining leadership roles
According to a new Notre Dame study, women who communicate regularly with a female-dominated inner circle are more likely to attain high-ranking leadership positions.
Feminine leadership traits: Nice but expendable frills?
The first study to examine tradeoffs in masculine versus feminine leadership traits reveals that stereotypically feminine traits -- like being tolerant and cooperative -- are viewed as desirable but ultimately superfluous add-ons.
Men in leadership gain from psychopathic behavior, women punished
People with psychopathic tendencies are slightly more likely to be a company boss, but a new study finds men are allowed a pass for those inclinations while women are punished.
Leadership and adaptive reserve are not associated with blood pressure control
Primary care leadership and practice resilience can strengthen organizational culture.
Values and gender shape young adults' entrepreneurial and leadership
Young adults who are driven by extrinsic rewards and money and less by a sense of security are more likely to want to become entrepreneurs and leaders, according to a recent study.
Ethical leadership can have negative consequences, Baylor University researchers say
A new Baylor University study published in the Journal of Business Ethics reveals that ethical leadership compounded by job-hindrance stress and supervisor-induced stress can lead to employee deviance and turnover.
Gay men and lesbian women less likely to be employed in a leadership position
Gay men and lesbian women face discrimination when seeking leadership positions due to the sound of their voice, a new study in the Archives of Sexual Behaviour has found.
Dan Sinars represents Sandia in first energy leadership class
Dan Sinars, a senior manager in Sandia National Laboratories' pulsed power center, which built and operates the Z facility, is the sole representative from a nuclear weapons lab in a Department of Energy leadership program that recently visited Sandia.
More Leadership News and Leadership Current Events

Best Science Podcasts 2019

We have hand picked the best science podcasts for 2019. Sit back and enjoy new science podcasts updated daily from your favorite science news services and scientists.
Now Playing: TED Radio Hour

Rethinking Anger
Anger is universal and complex: it can be quiet, festering, justified, vengeful, and destructive. This hour, TED speakers explore the many sides of anger, why we need it, and who's allowed to feel it. Guests include psychologists Ryan Martin and Russell Kolts, writer Soraya Chemaly, former talk radio host Lisa Fritsch, and business professor Dan Moshavi.
Now Playing: Science for the People

#538 Nobels and Astrophysics
This week we start with this year's physics Nobel Prize awarded to Jim Peebles, Michel Mayor, and Didier Queloz and finish with a discussion of the Nobel Prizes as a way to award and highlight important science. Are they still relevant? When science breakthroughs are built on the backs of hundreds -- and sometimes thousands -- of people's hard work, how do you pick just three to highlight? Join host Rachelle Saunders and astrophysicist, author, and science communicator Ethan Siegel for their chat about astrophysics and Nobel Prizes.