Blog — Jeffrey Kanige

How Turnaround Assignments Affect CEO Careers

A troubled company can offer a ladder through the glass ceiling, the opportunity comes with a price

By Jeffrey Kanige

The concept of the glass ceiling is well-known. Cultural and structural barriers make climbing to the top of the corporate world difficult for women. However talented they may be, many women cannot break through to the top job. But researchers have identified another dynamic affecting how women get ahead. Studies show that women who aspire to the corporate office have a better shot in tough times.

Michelle Ryan, a professor at the University of Exeter in England, and Alexander Haslam, who now teaches at the University of Queensland in Australia, identified this phenomenon a decade ago and dubbed it the “glass cliff.” Simply stated, the hypothesis holds that women are more likely to attain leadership positions during crises than when all is calm.

For a prominent – and recent – manifestation of this dynamic, look across the Atlantic. In June, the vote by British citizens to leave the European Union brought down Prime Minister David Cameron’s government, touched off a stock market selloff and sent the country’s currency reeling. At this less-than-propitious moment, Theresa May was chosen to lead the U.K.

Psychologists have attempted to determine what forces drive the formation of the glass cliff. For example, Susanne Bruckmüller, at the University of Erlangen-Nuremberg in Germany and Nyla Branscombe from the University of Kansas, examined the role assumptions about gender may play. Writing in the British Journal of Social Psychology in 2009, the two researchers noted that their findings “suggest that stereotypes about male leadership may be more important for the glass cliff effect than stereotypes about women and leadership.”

Checking the data

But what do the numbers show? Is there such a thing as the glass cliff? And if it exists, what effect does it have on the careers of women who find themselves perched on the precipice? Using data from BoardEx, the relationship mapping service of The Deal, I concluded that the glass cliff is real and that it may hinder the career moves of women who accept corporate challenges.

For this study, conducted while I worked at The Deal, I examined CEO changes at S&P 500 and FTSE 100 companies from 2005 to 2015. In all, BoardEx data show that 676 new CEOs were hired at those companies during that period. Of those, 40, or 5.9%, were women -- evidence that the glass ceiling remains solidly in place.

Of the 40 women who were hired as CEOs, 17 were hired into turnaround or distressed situations – defined as those companies experiencing either financial reversals or leadership crises related to improper conduct. Thus 42.5% of the women hired as CEOs at major public companies during this 10-year period were given glass cliff assignments.

How does that compare to the men? Of the 636 men appointed as CEOs during the study period, 102, or 16%, were hired into turnaround or distressed situations.

And what are those brave souls doing now? Mainly, something other than running a public company. Of the 17 women hired by troubled companies, only six, or 35.3%, are currently serving as CEOs. At the same time, nearly half of the men – 50, or 49% -- remain ensconced atop public companies.

What does it all mean?

None of these findings should be taken to mean that women fail more often than men. In fact, if the psychological research is correct, women may get tougher assignments. And in some cases, men preceded women in some of the most difficult jobs. For example, Marissa Mayer and Carol Bartz both took on the unenviable task of trying to resuscitate Yahoo; but so did Terry Semel, Jerry Yang and Ross Levinsohn. Other than a brief recovery under Semel, the company remains a problem child.

And when Verizon takes over Yahoo, Mayer will no longer be the CEO of a public company, adding to the count of women left outside the C-Suite after tackling a turnaround.

The numbers do suggest, however, that Profs. Bruckmüller and Branscombe are correct: Boards are evaluating men and women differently when choosing new CEOs for troubled companies. Given the stakes, both for the individuals involved and for shareholders, that process deserves more scrutiny. Are boards too often putting women in no-win situations? Are men refusing these assignments, believing that they have better options? Are those same options foreclosed for women? Certainly, the disparity in the numbers of women hired as CEOs over the 10-year study period suggests that men do have more opportunities. What will it take to improve those numbers? If we can answer those questions, boards and the candidates they consider for CEO posts will be able to make better decisions.

Looking Ahead

Bruckmüller and Branscombe are careful not to ascribe nefarious motives to those who prefer women over men in crisis situations. They and other researchers suggest that, in fact, women often represent desirable change in the context of a failing company historically run by men. “Our findings indicate that women find themselves in precarious leadership positions not because they are singled out for them, but because men no longer seem to fit,” they write. “There is of course a double irony here: When women get to enjoy the spoils of leadership (a) it is not because they are seen to deserve them but because men no longer do, and (b) this only occurs when, and because, there are fewer spoils to enjoy.”

In fact, enjoyment may be out of reach for many women in high-profile roles. Just ask Cynthia Carroll. When she was appointed as CEO of Anglo American plc in 2007, Carroll was a groundbreaking choice to lead the international mining company. She was given the task of cleaning up what one report described as an “unfocused, bureaucratic sprawl” and improving a poor safety record.

While analysts gave her credit for beginning the process of turning around the company, Carroll faced skepticism from shareholders and, especially, from former deputy chairman Graham Boustred. In a 2009 interview, Boustred called Carroll “hopeless” and declared that it was hard to find a good female CEO “because most women are sexually frustrated.”

Carroll, who turns 60 in November, stepped down in 2013 and currently serves on three boards as a non-executive director. Anglo American was her first, and remains her only, CEO job.

How common is Boustred’s attitude? Perhaps more common than we’d like to acknowledge. If so, the best cure for the glass cliff may be the elimination of the glass ceiling.