Reinventing the CEO

The number of female chief executive officers in Australia remains low, particularly in ASX-listed companies, with unconscious biases and lack of succession roles cited as challenges in creating a more diverse range of leaders.

According to the Federal Government’s Workplace Gender Equality Agency, women made up about half of the employees in the 2020-21 financial year, however only 19.4 per cent of Australian chief executive officers were women.

Publicly listed ASX100, ASX200 and ASX300 companies paint an even more dire picture – the Australian Institute of Company Directors (AICD) 2022 Gender Diversity Progress Report found that only 10.5 per cent of ASX200 companies and 11 per cent of ASX300 companies were chaired by women.

Meanwhile, census data conducted by Chief Executive Women found that of the 28 chief executive officer appointments at ASX300 companies in the 2021-22 financial year, only four were women.

PwC Australia Partner Elizabeth Shaw said diversity at top leadership levels in Australia was falling victim to biases based on past organisation leaders.

“The data is fairly compelling that, through conscious and unconscious bias, we have traditionally been much more comfortable appointing chief executive officers who look like the previous occupants of the role,” she said.

“While there have been successful efforts to increase gender diversity, particularly on boards, the underrepresentation of women in chief executive officer positions is taking longer to address."

“We have been talking about diversity, inclusion, benefits, business cases and initiatives for a while now.

“It is clear that a step change is required to challenge traditional notions of what leadership looks like and to reflect the evolving need of organisations, their workforce and their stakeholders.”

With the 2022 Gender Diversity Progress Report highlighting that more than half of ASX300 chairs had a career in a background as a chief executive officer, AICD Managing Director and Chief Executive Officer Mark Rigotti said significant progress in diversity had been made at board and committee levels, however, the same progress had yet to translate at chair level.

“Given that the most likely career background for an ASX chair is as a former chief executive officer, progress will be slow until more women are appointed in the role,” he said.

Ms Shaw said one of the challenges women faced in attaining chief executive officer positions was the lack of female candidates in particular C-suite roles.

“Women tend to cluster more in head of legal, head of people and corporate affairs-type roles, which haven’t traditionally been seen as chief executive officer succession roles in the past,” she said.

“In order to build more robust talent pipelines, organisations should be ensuring their high-potential women are given the opportunity to demonstrate the skills and experiences they need to reach the highest levels.

“If your next chief executive officer needs to demonstrate they can lead particular divisions or manage a profit and loss statement, good succession planning will ensure high-potential women are given these opportunities as they progress.”

The AICD report also found that four ASX200 companies listed did not have any women on their boards.

Addressing conscious and unconscious bias

Ms Shaw said much of the bias was deeply rooted, drawing on traits historically associated with men such as confidence and decisiveness.

“We’ve all grown up seeing the majority of leadership positions occupied by men, with women taking on the vast majority of unpaid care and domestic work – to challenge those deep-seated notions takes conscious effort,” she said.

According to Ms Shaw, an evolving workplace with individuals of various backgrounds requires a range of leaders for the best organisational performance.

“Organisations and leaders are being asked to do different things, and public, shareholder and media expectations are not the same either,” she said.

“The workforce is more diverse than ever before and there is a greater demand for leaders who are able to manage people from a wide variety of backgrounds in a way that is inclusive, collaborative and empowering.”

How organisations can implement change

Ms Shaw said companies could adopt certain processes to ensure greater opportunity for employees while also improving performance.

“Challenging perceptions about what the ideal candidate looks like can open organisations up to not only increased gender balance but also more innovation and diversity of thought, as candidates from different backgrounds, industries and occupations are considered,” she said.

“Furthermore, ensuring there is sufficient diversity and bias interrupters across all critical stages of recruitment and promotion helps to minimise the impact of bias.”

When it comes to promotion into leadership roles, Ms Shaw said many organisations were guilty of rewarding confidence over competence and overlooking more suitable candidates.

“Often we reward confidence at the expense of competence,” she said.

“Organisations need to make sure they have systems in place to help identify and encourage people who have not put themselves forward for opportunities or promotion despite having the capability to succeed.

“Many of the organisational systems and processes that we see require people putting themselves forward for promotion or advocating for themselves, and some women and some people from different cultural backgrounds approach those things quite differently.

“If an organisation is solely waiting for people to come forward and advocate for themselves, they might be reinforcing a certain type of person who is more comfortable doing that and, therefore, miss out on some great talent.”