From the College of Humanities and Social Sciences
Research
Christy Glass and Alison Cook

Associate professors Christy Glass (left) and Alison Cook (right) study leadership diversity in business. They aim to understand the mechanisms that help drive nontraditional leaders to the top.Photo by Tyson Bybee.

Exposing the Glass Cliff

Name a woman at the helm of a Fortune 500 company. Now name one who isn’t Marissa Mayer. Stumped? Here’s why: Women hold less than five percent of the nation’s highest posts in business, and there are so few minority CEOs they don’t comprise a statistically valid sample to even study.

Two Utah State University scholars, Alison Cook, associate professor of management at the Jon M. Huntsman School of Business, and Christy Glass, associate professor of sociology, examined the conditions under which nontraditional leaders rise to elite positions and how firms performed once they were hired. The pair found merit alone doesn’t give women and minorities the key to the executive suite and that the composition of the board of directors can affect whether or not they succeed.

“In a perfect world we’d all be hired based on our merit,” Glass said. “But with regards to executive hires, it’s almost never based on anonymous resumes.”

It often boils down to which candidates the board knows or knows about. Cook and Glass believe firms aren’t opposed to hiring women and minorities to top positions, they just aren’t in the network to be considered for them. And the common rationale for hiring candidates one knows personally and professionally makes sense, they argue.

“They’re not strangers to you,” Glass said. “I think it’s really smart to focus on people you know and have reason to have confidence in. That’s just natural. That’s rational. The problem is if all of the decision-makers are white males … then it’s not rational for them on some level to appoint a stranger that they don’t know anything about. And I think that’s asking a little too much.”

What isn’t asking too much, they say, is to identify internal pathways to leadership for women and minorities, and to appoint individuals to influential positions that do know the reputations of nontraditional candidates.

“You can’t pull people up who aren’t ready, you risk confirming biases [about their leadership abilities],” Cook said. “You need to be putting women and minorities in those other roles so that they get that experience and can become the right people.”

Last year, the professors tested a known theory in business called the glass cliff phenomenon—the idea that women are more likely to get promoted to leadership positions when a firm is struggling, placing them in a precarious position from the start. They compiled two longitudinal datasets of all CEO transitions among Fortune 500 companies from 1996 to 2000 and NCAA Division I basketball coaches from 1979 to 2009 (to build a statistically valid sample of minorities). Their analysis confirmed the glass cliff theory also applies to minorities, and identified a separate mechanism they dubbed “the savior effect.”

It arises from the fact that women and minorities are allotted nearly a year less time on the job before being replaced by traditional leaders. Cook and Glass advocate for more transparent hiring practices at the executive level to force decision-makers to expand the candidate pool beyond their own social networks. Since 2013, the pair has published four papers in journals, including Social Problems and the Strategic Management Journal. They have another five in the pipeline.

Cook and Glass recently expanded their line of inquiry to study the effect CEO and board diversity has on firm performance, defined as return on assets. They also analyzed the influence of diversity on business practices such as product innovation and quality, and on equity measures such as corporate social responsibility and community affairs. The professors built another dataset that included every member on the board of directors for every Fortune 500 company between 2000 and 2010.

“This is sort of an upper body that we don’t always talk about,” Cook said. “We often focus on the face of the company, the CEO, but it was amazing all of the direct effects board diversity had—whether it was supplier diversity, product innovation, environmental strengths for a company, corporate governance strengths for a company, transparency—they’re all more positive with a diverse board.”

Preliminary findings indicate a female CEO significantly improves some business practices such as product innovation. Having a diverse board also drove some positive business practices. The scholars suspected having both could be a powerful combination—it wasn’t.

“It doesn’t have a cumulative effect,” Glass said. “Firms with a woman CEO and a gender diverse board are not as innovative, are not as equitable, are not as strong as firms with a male CEO and gender diversity on the board or a woman CEO and less diversity on the board.”

However, male CEOs with all male boards didn’t have the best outcomes either. The professors posit a female CEO with a diverse board may perceive implementing innovative business policies as too risky, whereas a male CEO with strong women on the board may be pushed to explore best practices. They also found minority leaders depend less on the diversity of the board, and more on the support of individual members.

“Women need a critical mass, whereas minorities need powerful supporters,” Glass said. “Board composition matters for the success of nontraditional CEOs, but it matters in different ways.”

Another finding of note was that the average age of the board was important for nontraditional leaders’ achievements. Female CEOs with older boards proved more innovative and likely to pursue best business and equity practices than those with greater gender diversity. The professors suggest having the support of more traditional boards may signal to female CEOs that they have the freedom to make bold moves.

As they begin the next phase of their research—interviews with nontraditional executives—they press firms to be strategic in how and who they hire to top posts. For instance, utilize a new type of mentoring practice referred to as sponsorship, which creates political partnerships and is designed to pull individuals up the ladder. “It’s important when you’re in those positions of power that you don’t just look for someone that’s just like you to pull along,” Cook said.

Glass’s message to the top brass is simple: “Listen and do something. The bottom line is if companies are serious about leadership integration, then they need to be serious about board composition. Because it shapes who your leaders are and your board composition over time.”