BUSINESSWEEK ONLINE : NOVEMBER 22, 1999 ISSUE
WORKING LIFE

The Glass Ceiling: The CEO Still Wears Wingtips
Jobs that lead to the top remain overwhelmingly female-free

There was lots of cork-popping earlier this month when, fresh on the heels of Carleton S. Fiorina's appointment as CEO of Hewlett-Packard Co. (HWP), Andrea Jung was tapped to head ailing Avon Products Inc. (AVP) Just two years ago, Jung and three other women were passed over for the post, which went to Charles R. Perrin, a former Duracell International chief executive who didn't have a speck of cosmetics experience. With Jung's appointment, a woman would finally be leading the company at a time when it is attempting to reclaim its original ''Avon Lady'' luster.

That makes Jung the newest insider of a very small club: female CEOs of America's top corporations. Jung and Fiorina join existing members Marion O. Sandler of Golden West Financial Corp. (GDW) and the embattled Jill E. Barad of Mattel Inc. (MAT) These women have triumphed against odds so steep that they make getting into Augusta National, the world's most exclusive golf club, look easy. Is the fact that Corporate America can finally produce a foursome of female CEOs really something to celebrate?

The truth is, when it comes to the uppermost echelons of power, the glass ceiling is still miles from the junk heap. Click on the snazzy Web sites of America's biggest corporations and you'll see all the right rhetoric about diversity. Exxon (XON) is ''committed'' to it, Time Warner (TWX) ''embraces it,'' and at Compaq Computer (CPQ), there's a ''walls down environment.'' But a generation or longer after women began flooding the labor market, these companies, along with 103 other giants of American industry, have not a single female corporate officer, according to a report released on Nov. 11 by Catalyst, the not-for-profit New York-based women's research organization. This at a time when women make up half the labor force as well as middle management.

Why is the wingtip-and-whisker culture still so prevalent at the top? ''Women are in the wrong place, in the wrong jobs,'' says Catalyst President Sheila Wellington. In its census of women in power this year, the organization found that a scant 11.9% of corporate officers of the 500 companies they assessed are women. Of those women, only 27.5% are in line jobs--positions that have responsibility for profit and loss. The rest of female corporate officers are in staff roles, such as human resources and public relations. While those positions are important, they don't make or break the bottom line--and rarely, if ever, lead to the top job.

Following the money also tells the story. Of the 2,353 top earners in the companies assessed by Catalyst, only 77 are women--a paltry 3.3%. Even in the much storied meritocracy of high tech, according to the Women in Technology Center, women still make only 83 cents for every dollar men earn. That's not surprising, since Catalyst says only 9.4% of high-tech corporate officers are women.

Much of the response to why pale, male faces still adorn most of Corporate America's annual reports goes something like this: Things are changing, albeit slowly. But this oft-cited assurance that the scene at the top will soon include more female faces is debunked by a recent study by Dan R. Dalton, dean of Indiana University's Kelley School of Business, and his wife, Professor Catherine M. Daily. The researchers found that things aren't getting better for women at the top--they're getting worse. In their study, Dalton and Daily established that 85% of the time, the successor to a CEO in a large corporation becomes an inside director first. Of the 1,250 inside directors of the 500 biggest companies by sales that the researchers analyzed, only eight were women in 1998--three fewer than there were 10 years ago.

WIDESPREAD PATTERN. Dalton and Daily wondered if women fared better outside large, public corporations. So they also looked at 100 small, fast-growth businesses. In 1998, there were five women serving as inside directors of those companies, the same number as a decade earlier. ''It doesn't make any difference if it's the Super Bowl or a cauldron of smaller companies, the pattern doesn't change,'' Dalton says. ''Women are not CEOs. And the argument is, frankly, they are not in a position to become CEOs.''

But while women aren't making headway toward the corner office, they are making baby-step gains in senior management. Catalyst, which has been studying women in business since 1962, invented its census four years ago. It has found that the number of female corporate officers has grown 37% since then. Still, that's off a tiny base of 8.7% in 1995, vs. this year's 11.9%. Since companies are so tight-lipped when it comes to reporting on these issues, Catalyst has to rely on public documents available for a start in its research: 10-K reports, proxies, and its own analysis and research. It's an imperfect system, since one of its key metrics--corporate officers--is based on each company's subjective definition of who that is. For example, BankAmerica Corp. (BAC) and State Farm Insurance are roughly the same size as measured by revenue. But BankAmerica reports having five corporate officers, while State Farm counts 221. So Catalyst's female head counts may not tell the whole story of each company, tied as they are to the size of that specific officer corps.

Still, Catalyst's is one of few such measures out there. And the data do show some progress over time and identify which companies are faring better than others. Certainly, at some companies, women are making great strides. Of the 500 companies Catalyst studied, 41 have 25% or more women corporate officers. Among them: Southwest Airlines Co. (LUV), where 33% of corporate officers--8 of 24--are women, a number at least double the level of its airline competitors.

This might come as a surprise for a company that got its start by mandating the hiring of Raquel Welch lookalikes in hot pants and go-go boots. But since Southwest has toned down its 1970s emphasis on sex appeal, replacing it with a watered-down emphasis on the fun of travel, it has become an incubator for women leaders. ''This has been a good-ol'-boy industry, and I wouldn't say that's changing a lot,'' says Colleen C. Barrett, executive vice-president for customers. But Barrett, the No. 2 officer at the company, credits the difference at Southwest to CEO Herbert D. Kelleher's gender blindness, which she says he has displayed since she started as his secretary fresh out of community college 30 years ago.

''Southwest Airlines is a meritocracy,'' Kelleher says. Of the 10 people on his executive-planning committee, three are women--an almost unheard-of number in Corporate America. Besides Barrett, the other women are Elizabeth P. Sartain, vice-president for people, and Joyce C. Rogge, vice-president for marketing. At Southwest, says Rogge, ''it's not 'where did I go to school? Do I have an MBA?' It's not the pedigree kind of stuff.'' The airline's informality in the skies is reflected on the ground at its Dallas headquarters, where employees' kids often tramp through the halls and decorate co-workers' offices with colored drawings. This, Rogge says, makes women feel rewarded for juggling careers and children, not penalized.

Another company that has unusually high numbers of women in senior roles, according to Catalyst, is Minneapolis-based retailer Dayton Hudson Corp. (DH) Thirty-five percent of the company's corporate officers are women, and of those, 38% are in line jobs. The highest-ranking woman at the company, Department Store Div. President Linda L. Ahlers, is also one of the few top-earning women in Corporate America and ''the best department-store executive in America today,'' says analyst Gary Balter of Donaldson, Lufkin & Jenrette Inc.

TURNAROUND. Before Ahlers took over the division four years ago, the stores--Dayton's, Hudson's, and Marshall Field's--were limping along with operating margins of 5%, three points behind what the industry leaders were doing. Ahlers dumped the Macy's and Lord & Taylor strategy of stuffing mailboxes with sales-promotion fliers nearly every week. She cut sale days from 120 to 60, instead focusing on merchandising and becoming the second-best service provider behind Nordstrom (JWN). By deploying a crackerjack team of stylewatchers across the globe to spot the next hot thing, she made sure the stores had the same chic items gracing the pages of fashion glossies and an all-smiles, we'll-take-anything-back salesforce who knew their stuff. This blend of worldly fashion savviness and Minnesota nice was a hit, enabling Ahlers to pull off the equivalent of a retailing hat trick: boosting operating margins to 8% while focusing on service and slashing promotions. Last year, the divisions' comparable-store sales growth of 4.5% was the best in the industry, which usually posts gains in the 2%-to-3% range.

Women execs tend to fall into two camps on the glass-ceiling issue: those who believe it exists and those who, like Ahlers, don't. ''I think if you think there's going to be a glass ceiling, you start limiting yourself, and it becomes a self-fulfilling prophecy,'' Ahlers says. ''One of the most important things is to release that and find a company where there isn't one.'' But despite Ahlers' success, most industry watchers say she's not a candidate to succeed CEO Robert J. Ulrich, 56. In fact, none of the women at Dayton Hudson is. And the top brass at the ultrahip Target division are all men. The succession situation is the same at Southwest: All of Kelleher's most likely heirs are men.

NOT MOVING. The scene at these two companies is reflective of Corporate America as a whole. Women are making gains in senior management, but they're not moving closer to becoming CEOs. Part of the problem, says Deloitte & Touche partner Mary Ellen Rodgers, is that top brass has focused on getting women into management but not on grooming them to become leaders. ''We have really focused no attention on what to do with women once they are partners, and none of the other Big Five firms have either,'' says Rodgers.

It's certainly not because people don't want to see more female leaders. In a recent poll of 800 likely voters, 51% of men and women said they are very comfortable with the idea of a woman as the chief executive of a major U.S. company, according to Democratic pollster Celinda Lake. ''People have an appetite for women's leadership,'' Lake says. ''They believe there aren't enough women in leadership in business, and they want that leadership on emerging workplace issues.'' Women, the voters said, would be more family-friendly, deal with downsizing more effectively, be more trustworthy, and instill better values in a corporation.

But the voters also felt that women lacked the toughness they want to see in a CEO. That echoes what researchers have been saying for years: that women tend to bear down, work hard, deliver outstanding results, and then hope to get promoted. Men, on the other hand, are more apt to barge into the bosses' office and demand that promotion--along with a big raise and a juicy assignment. ''I think a lot of this comes from women's experience in the educational system, where working hard and performing well meant you got top grades,'' says Jean Lipman-Blumen, a professor at Claremont University's Peter F. Drucker Graduate School of Management. Lipman-Blumen also notes that women are less apt to realize that lunching with a colleague--and participating in informal, political networking--can sometimes be a lot more effective for career-building than eating at your desk.

It sounds like both sexes have something to learn. But will Corporate America adapt before it's too late? Already, women are bailing in record numbers to start their own businesses. This is at a time when managers are desperate to hang on to people with top-level skills. Instead of making an example of a few standouts, the guys upstairs had better start working on enlarging the club.

By Michelle Conlin in New York, with Wendy Zellner in Dallas

To read a letter to the editor about this story, click here.

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