An analysis published recently in the Journal of Applied Psychology finds that US companies are nearly two-and-a-half times more likely to appoint an Asian-American CEO when they are in decline than when they are succeeding. This suggests that Asian-Americans are often put in “glass cliff” situations, appointed to precarious leadership roles that others don’t want to risk taking—and stereotypes of Asian-Americans may be driving this phenomenon. Jane C. Hu discusses the study’s findings at Quartz:
In their analysis, the researchers found that Asian-American leaders tapped to lead declining companies also faced a glass cliff, experiencing shorter tenures as leaders than white leaders in the same position. Even when Asian Americans were asked to lead companies that were not in decline, they were in charge for about half as long as white CEOs (3.25 years versus six years).
The researchers also ran a few online experiments to dig deeper into people’s perceptions of Asian-American leaders. In one study, participants read a fake article, either about a struggling company or a successful one. They were then asked to rate how important they thought certain behaviors were in a leader, like working weekends or forgoing a bonus. People who read the article about a struggling company were more likely to think that “Alex Wong” would make a better CEO than “Anthony Smith”; compared to the white candidate, the Asian-American leader seemed like a better match for participants’ idea of a selfless leader. In a different study, participants rated the CEO “Alex Wong” as more likely to be self-sacrificing, and in a third study, participants chose an Asian-American executive to lead a struggling company.
Asian-Americans occupy a unique place in the conversation about diversity and inclusion in the US: Unlike black or Hispanic Americans, they are not underrepresented in professional fields, but Asians still frequently report experiencing discrimination on the job and are markedly less likely than their white peers to be promoted into leadership positions. A landmark study on racial inequality in the US tech sector last year found that white men and women were twice as likely as Asians to become executives and held almost three times as many executive jobs, with Asian-American women particularly underrepresented in these roles.
In 2016, a study from Arizona State University found that female CEOs were significantly more likely than their male peers to be targeted by activist investors. A new study by University of Alabama management professors Vishal K. Gupta and Sandra Mortal and the University of Missouri’s Daniel B. Turban comes to the same conclusion. The authors present their findings at the Harvard Business Review:
To test this, we analyzed data from 3,026 large U.S. firms between 1996 and 2013. We identified activist investor activity by looking at Securities and Exchange Commission (SEC) records. Shareholders who acquire more than 5% of the voting stock of a public company with the intention of influencing management are required by the SEC to file a Schedule 13D form. We found over 1,500 13D filings for 1,090 firms in our sample. …
We found that firms in our sample led by male CEOs were targeted by an activist 6% of the time during the study period, versus 9.4% when the CEO was female. Wolf pack attacks occurred for male and female CEOs at 1% and 1.6%, respectively. Even though these differences appear small, this means that firms with female CEOs were 50% more likely to be targeted by activists and approximately 60% more likely to be targeted by multiple activists.
The authors had hypothesized that investors were susceptible to gender role stereotypes that associate men with stronger leadership skills, and thus would be more inclined to scrutinize the actions of female CEOs, whom they either consciously or unconsciously believed to be less competent:
Lands’ End announced on Monday that CEO Federica Marchionni, who had come to the company less than two years ago from a role as the head of Dolce & Gabbana’s US operations, was stepping down immediately, Bloomberg reported. Most reports are depicting Marchionni as having been forced out, and connecting her ouster to a failed attempt to transform the casual, outdoorsy clothing retailer into something more of a luxury brand, as Fortune’s Phil Wahba does here:
As part of her re-invention attempt, the company unveiled slick ad campaigns, including one that featured work by acclaimed photographer Bruce Weber. But one ad landed the Italian executive inadvertently in the middle of the U.S. culture wars: a marketing piece early this year that profiled feminist icon Gloria Steinem on its website and in its spring catalog earned the ire of customers with pro-life views, a problem for a retailer that sells a huge amount of uniforms to Catholic schools. Soon after, Marchionni did an about-face, apologizing for the ad, only to anger customers on the other side of the abortion debate. …
In addition to the failed re-invention, Marchionni tried many moves, from an executive suite shakeup to launching home goods in an already busy segment. Lands’ End, trying to gin up online sales, also announced the very risky move this year of starting to sell through Amazon.com. She has also tasked her team to improve Lands’ End supply chain after out-of-stocks deprived it of sales, and conversely, overstocks created pressure to cut prices in an already promotional environment.
At the Wall Street Journal, Suzanne Kapner and Joann Lublin likewise depict her sudden departure as the result of trying to make too many fundamental changes to the company’s culture, too suddenly. The pace and scale of these changes incurred losses that were too much for the board to bear, and as a result, she didn’t have enough time to realize her vision. Meanwhile, Marchionni apparently had a hard time getting her people on board with the changes she was making:
A new study from Arizona State University’s W.P. Carey School of Business has found that female CEOs are much more likely than men to face activist investors, Fortune’s Valentina Zarya reports:
Indeed, researchers found that, all else being equal, female CEOs have a 27% likelihood of facing activism at some point in their careers. Practically speaking, that means one out of every four women who take the helm of a major public company will have to deal with an activist investor. For male CEOs, on the other hand, the likelihood is basically zero, said ASU lead researcher Christine Shropshire. … “Female leadership is often stereotyped as interactive, collaborative and engagement-oriented, while male leadership is typically categorized as authoritative and powerful,” Shropshire noted, adding that one potential reason women are more likely to come under fire is because activist investors think they’ll be able to sway them more easily.
Another possible explanation: The “glass cliff” theory posits that women are more likely to get the top job when a company is in trouble. Activists who buy into that idea may already be primed to see something amiss with a company when it’s run by a woman. “There have been several previous studies that find a negative market reaction to the appointment of a female CEO,” Shropshire noted. Activist attention may simply be an extension of the same trend.
Then, of course, there’s the possibility that investors (a heavily male-dominated community) simply think women CEOs are less competent and don’t trust them to make leadership decisions on their own. If that’s the case, they’re mistaken, as Zarya adds, pointing to a study from last year indicating that companies headed by women tend to outperform the market. Other research in the past year has also shown that enterprises with women leaders, both in the boardroom and the C-suite, tend to be more competitive, reputable, and profitable, though one of these studies found no specific link between the presence of a woman CEO and increased profitability.
Although Yahoo CEO Marissa Mayer says she is staying on as the Internet pioneer is acquired by Verizon, the Wall Street Journal’s Deepa Seetharaman reports that “few executive recruiters and Silicon Valley investors expect her to stick around after the sale is completed”:
And while Ms. Mayer is certainly young enough to lead another company, experts say it is tough to rebound from a rookie reign many observers see as pocked by mistakes that complicated an already-difficult turnaround. Yahoo’s revenue stalled and it failed to deliver consistent profitability.
That makes it unlikely that she will land a job at the top of another public company anytime soon, but she still has a bright future ahead of her:
Another possibility is a role as an investor or adviser to fledgling companies, some people said. Or Ms. Mayer could bring her product expertise to an operational role at another company. “There will be no shortage of tech startups that would love to talk to her about having her be their CEO,” said Iain Grant, partner at executive search firm Riviera Partners. He added that venture-capital firms in Silicon Valley would also covet Ms. Mayer’s experience. …
Theresa May, the UK’s new prime minister, is the second woman in history to hold that title, yet her position is hardly enviable. Tasked with managing Britain’s withdrawal from the EU after her colleague Boris Johnson, who had aggressively supported it, bowed out of the running for the premiership, May could easily be seen as having to clean up someone else’s mess (she had not favored Brexit herself but has committed to implementing it). At the Conversation, Psychology professor Julia Yates holds her up as an example of a woman on the “glass cliff”—in a leadership position nobody wants, because circumstances point to a high likelihood of failure:
In 2003 The Times published the results of a survey which appeared to show that having women on executive boards was detrimental to the success of the companies they served. It seemed that following the appointment of a women CEO, the share price and performance of the company declined. Research published two years later told a different story. Michelle Ryan and Alexander Haslam decided to probe the data and looked at the direction of travel of share prices before the appointment of new CEOs. They found that female CEOs were more likely to be appointed to organisations whose share prices were already falling.
So failing companies were not the result of female CEOs; female CEOs were the result of failing companies. And this of course meant that the female leaders had an uphill struggle in trying to make their organisations successful, and ultimately were more likely to fail. The called the phenomenon the “glass cliff”. …
This glass cliff effect has been seen in a range of other arenas in the private and public sectors, including politics. Examining data from the 2005 UK election, one study of Conservative MPs showed that, while female MPs tended to have won fewer votes than male MPs, this was entirely explained by the fact that they were standing in seats which were less safe.
Jena McGregor at the Washington Post recalls some other recent examples of women put in similar positions: