Why the Next Mary Barra May Be a Long Time Coming

Courtesy of BusinessWeek. By Jeff Green

Mary Barra made corporate history seven months ago when she became the first female chief executive officer of a major global carmaker. Yet for all the gains women at the highest levels of U.S. companies have made, most are still in the wrong jobs if they want to follow Barra’s career path.

That’s because unlike Barra, who’d been in charge of General Motors’ (GM)product development for two years before her appointment, a majority of top-ranked women at companies in the Standard & Poor’s 500-stock index aren’t in the kinds of operational jobs—think division heads or senior managers in charge of key product lines—that usually lead to the corner office. Rather, 55 percent of them are in functional roles—top lawyers, finance chiefs, and heads of human resources—according to data compiled by Bloomberg.

About 94 percent of the S&P 500 CEOs held senior operations positions immediately before ascending to the top job, and the relative scarcity of women overseeing product lines or entire businesses has slowed their advance to the pinnacle. The data suggest that the next generation of female executives is not positioned to capitalize on the growing recognition by many companies, includingGoogle (GOOG) and Apple (AAPL), of the lack of diversity within their executive ranks.

Recruiters say women are left off the CEO track at numerous points during their corporate careers. Young women lack female role models who have flourished within operations, so they tend to start in functional or support positions such as human resources. Later, boards—which remain predominantly male—often fail to identify promising female executives who can be moved into operational slots.

Dawn Lepore, now a director at multiple companies, says she probably wouldn’t have been hired as CEO of Drugstore.com in 2004 if she hadn’t first run a Charles Schwab (SCHW) unit. “It’s very hard to move from a functional role to a CEO job,” she says. “You usually can’t just go from CFO or head of marketing to CEO. More women need to get into these operating jobs. The fact that I’d run a revenue unit with revenue of $1 billion made a huge difference.”

Women make up about half of the total U.S. workforce. The 24 female chief executives in the S&P 500 today, although a record, is still less than 5 percent of the total. In the layers just beneath the top job, women account for about 8 percent of the five highest-paid executives at each S&P 500 company, according to 2013 proxy filings. About 70 of those top-ranked non-CEO women were in operating jobs, based on data compiled by Bloomberg.

To produce female CEOs, more corporations must make a conscious effort to spot future leaders early in their careers and push them toward operational jobs, according to management experts. Boards also need to actively groom more female presidents, chief operating officers, and heads of units who will become role models for the next generation.

In other words, more Mary Barras. An engineer by training, the 52-year-old spent more than 30 years at GM, where she gained increasing responsibilities, including as a plant manager and vice president for manufacturing engineering.

Another example is Susan Cameron, who returned from a three-year retirement to retake the top job at Reynolds American (RAI) in May. From 2001 to 2004 she was CEO of tobacco company Brown & Williamson before it combined its U.S. businesses with Reynolds, where she was CEO from 2004 to 2011. She’ll remain the Reynolds chief after it completes its $25 billion purchase of rival Lorillard (LO).

Other recent appointments to CEO include two female former COOs: Lockheed Martin’s (LMT) Marillyn Hewson and General Dynamics’ (GD) Phebe Novakovic. “Women need to get into these line roles, demand it, and focus on it as their career path,” says Lepore, who is now a director at AOL (AOL)RealNetworks (RNWK), and Coupons.com (COUP), and a past director at Wal-Mart Stores (WMT) andEBay (EBAY).

Many companies fail to think far enough in advance about future CEO candidates, says John Wood, vice chairman at executive recruiter Heidrick & Struggles. Doreen Wright, former chief information officer of Campbell Soup (CPB) and Nabisco(MDLZ) and a board member at Crocs (CROX), says not enough is being done to get women promoted up the specific operational rungs of the career ladder. “It’s not the step of the president to CEO; it’s the step before that,” says Wright, who wasn’t personally interested in the top job. “There’s plenty of women, so why aren’t they making it to the business [unit] president role? That’s the problem.”

Share this post