Be intentional about moving women into executive roles.
To increase the number of women CEOs, including women of color, companies must be intentional about providing women exposure to the P&L talent pipeline. As we participate in Women's History Month, we honor countless women who have made a difference through contributions both big and small. We have heard of many of these women, like Elizabeth Cady Stanton and Susan B. Anthony. But today there are women making a difference for future generations in ways we don't know about. Just last year, the number of women running Fortune 500 businesses set a new record. While this progress is exciting, the report, Women CEOs in America: Changing the Face of Business Leadership, shows that there is far to go before the number of women business leaders equals the number of male leaders.
Progress begins with the establishment of a profit and loss (P&L) talent pipeline. P&L responsibility is the most important role an executive can have in the management of a business. The report confirmed its importance: more than 90% of CEOs have had significant P&L responsibility prior to taking on the CEO role. This experience is not a recommendation; it is a prerequisite for the job.
The P&L pipeline can identify women for the role of CEO, but they must be given the opportunity to learn how to manage a P&L first. When I was looking to further my career, I discovered a P&L role with a $500 million budget but recognized that I wasn't going to be given the opportunity if I didn't speak up. When I did, my manager informed me that I couldn't handle the role because I didn't have P&L experience. After working with a mentor on how to successfully run a P&L, I obtained a role that managed an even bigger budget than the position I initially wanted. By fostering a culture that allowed me the opportunity to learn the P&L role, my manager supported the advancement of my career, which in turn provided opportunities beyond the role of CEO. Leaders must be intentional about supporting learning opportunities, as well as promoting involvement in peer community groups where women can make connections and gain a further understanding of the traits that help individuals with P&L responsibilities thrive, such as a “buck stops here” mentality and the confidence to be willing to influence events for a company at the highest levels. By intentionally advocating for and sponsoring women in the P&L pipeline, we can prepare them for high-level executive roles.Preparing for P&L experience can start early in a career. If we define P&L responsibility as having full responsibility for revenue generation, expense management, resource allocation choices and net profit, preparation for that responsibility involves understanding all the aspects of the business. Functional experience in several areas is helpful, such as finance, HR, operations or marketing, to name a few, because it helps a candidate understand how these efforts blend together to satisfy customers. With that said, I believe work experience that gets a candidate in touch with and close to the customer and the market, such as customer service or sales, can be most beneficial. This experience teaches candidates to see opportunities, hear needs and persuasively translate those needs so the organization can anticipate and respond to uniquely satisfy those market demands.
Don't underestimate the role boards play in setting up opportunities for women CEOs. Boards make a difference by asking the right questions when looking to fill leadership positions and executing succession planning at every level, ensuring that there are strong women candidates in the pipeline for each role. They also make sure the right candidates are being heard. One goal C200, a global organization dedicated to the development of women as business leaders, has set is to ensure that every group that is presented for CEO consideration includes a woman and a woman of color. That starts by having qualified women with experience in significant P&L roles. When leadership works to guarantee female candidates are being prepared and considered, we accelerate progress. This isn't about women not having ambition or credentials. According to Anna Mok, president and CEO of Ascend Leadership, “Women have both in spades, so it's about the intentionality of people making those decisions.”
Celebrating the accomplishments of women who are moving up in the P&L pipeline provides momentum. Keeping women leaders at the forefront of both the public and their companies helps women learn from their experiences. The fear of the unknown often stops women from seeking P&L responsibility. If a woman doesn't experience what is required of a P&L executive or CEO, then she'll never know if it's right for her. Boards need to be intentional about celebrating women and their accomplishments. Women are frequently written off for leading differently, but corporations that moved from no women in the CEO role, on the board or in other leadership positions to 30% female leadership saw a one-percentage-point increase in net margin, or 15% increase in profitability for a typical firm, according to the Peterson Research Institute.
Corporate America should work with the C200, Ascend and Catalyst, in collaboration with the Women's Business Council, to accelerate the goals we have set for women CEOs. By 2025, we are aiming for 15% of Fortune 500 and S&P 500 CEO roles to be filled by women, and 10% of female CEOs to be women of color. Being intentional about advancing women in the P&L pipeline helps us increase the number of women leading businesses nationally.