Jane Fraser at a 2018 interview in Sao Paulo, Brazil, . Photograph: Rodrigo Capote/Bloomberg
News from Wall Street rocked the financial world: Citibank named Jane Fraser as its new CEO, making her the first woman to lead a major U.S. financial firm. While her ascension undoubtedly knocks at Wall Street’s glass ceiling, it doesn’t crack it open. It really means that in one firm, the stars aligned in one woman’s favor. To break the glass ceiling for CEOs, firms need more diverse boards.
One may think that hiring a woman CEO isn’t newsworthy–after all, women have been half of all higher education graduates for decades. But with this announcement, Fraser joins a very exclusive club of only 4% of public company CEOs, since men hold 96% of these top positions. More men named John, or even James, hold CEO positions than all women CEOs combined in the U.S.. Nearly all of them are white–only four CEOs among the top 500 firms are Black– and none is a Black woman.
For women in the leadership pipeline, their male colleagues will be 19 times more likely to attain a CEO position than they will. The cisgender men who run the corporate world exclude women and other sexes and genders from leadership. For Fraser, the CEO position isn’t winning the lottery, because she worked hard for it, but it seems nearly as unlikely. This is only truer for finance as a field, which historically has been one of the most male-dominated. None of the top banks have ever had a woman at the helm.
Fraser’s success matters because it offers a glimmer of hope to women who have been working hard to climb the corporate ladder. Many women drop out of the running because their firms put them on the mommy-track, even as they promote male parents. Additional challenges impede women of color. And as the #MeToo movement made apparent, corporate sexual harassment has chased many employees–mostly women–out of the leadership track.
Why was Citi the first bank to name a woman CEO? Surely it wasn’t the only bank to have impressive programs with the goal of including women in leadership. Across the corporate world, lip service to inclusion has become almost a necessity.
Citi stands out because it has the most inclusive board of any of the banks. Citibank’s board is nearly half women–47% to be exact. By contrast, the average board among top ten banks has 31% women. That 31% is actually relatively high for the overall corporate sector, which has around 20% women on boards. It nearly meets the goal of critical mass, the level of representation necessary for underrepresented groups to have a real voice in decision-making.
Citi, however, has had a critical mass of women on its board for a while. It also has a woman, Diana Taylor, as the chair of the Nominating Committee, which vets CEO candidates. Why does having women on boards matter? Experiential diversity is necessary for effective governance, otherwise boards find themselves blinded by groupthink. This is especially relevant for the most important role a board plays:selecting the CEO.
Why men tend to name other men to run firms raises interesting questions, but here I want to focus on why I suspect boards with women would prove more likely to hire women CEOs.
First, research indicates that women on boards may be more methodical. They will, as board members I interviewed expressed, “ask idiotic questions,” because appearing weak may scare them less. A more methodical group will analyze who has the skills that match the firm’s needs. In focusing on the skills and experience of the candidates, a gender-diverse board may prove more adept at selecting the right person for the job, and for reasons other than that the candidate seems like a good fit. In short, gender-diverse boards may be better equipped to overlook sex. A gender-diverse board may not only be more likely to choose a female CEO, but also may “temper the overconfidence of male CEOs,” as Afra Afsharipour, a corporate law professor recently noted.
Second, male board members may look askance at a woman’s resumé if she’s had a care work gap in her trajectory. They may fear a lack of what Harvard anthropologist Rosabeth Moss Kanter called “total devotion” to the firm. Given how our society delegates most care work to women, it is more likely that women on the board will understand, or possibly even value, care work experience.
Third, to board members, the profile of male candidates–their experience and their self-presentation–reads as that of a CEO. It’s not surprising for any observer to have this reaction, since nearly all CEOs and C-suite executives are men after all. With their near monopoly over corporate power, these men define what leadership skills look like. They then promote people who conform to their masculinized work norms. Women handle candidates differently. They may focus more on skills and experience. Yaron Nili, a corporate law professor, has argued that including women in board leadership roles, as Citibank has, can improve governance. When it comes to a CEO job, women are just another kind of outsider. As outsiders, they may recognize relevant skills and experience in other outsiders, including people of color.
Citibank’s new woman CEO, Jane Fraser, is one data point in a sea of male CEOs. We can debate the consequences of this anecdote, but one thing is clear: her ascension suggests that a diverse board may be more willing to make the leap and hire an outsider CEO. One who isn’t a man.
